Liability
Liability Insurance pays to someone else for Bodily Injury and/or
Property Damage which you may have caused them and for which you may be
legally liable. The first two (2) numbers referenced above (100/300) are
the policy limits of a potential pay-out to cover your Bodily Injury
Liability. Your insurance company will pay up to $100,000.00 to any one
(1) person and no more than a total of $300,000.00 to three (3) or more
people who may have sustained a Bodily Injury in the same covered
accident. The last number (50) means that your insurance will pay up to
$50,000.00 to the owner of any property you may have damaged and for
which you may be legally liable. When a state has a mandatory insurance
law, it is Liability Insurance that is being referred to.
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UM (Uninsured Motorist)
"UM" stands for "Uninsured Motorist" Coverage. This will cover you if
you sustain a Bodily Injury in an auto accident in which the other party
was at fault and the other vehicle was uninsured. Like the "100/300"
part of the "Liability" example referenced above, this coverage pays
only for Bodily Injury . . . NOT Property Damage. You would be able to
collect from your own insurance company what you would have been able to
collect from the other driver's insurance company for your Bodily
Injury. The numbers "100/300" represent the limits of what the insurance
company will pay to any one (1) insured ($100,000.00) or no more than
$300,000.00 in total to three (3) or more injured insured.
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P.I.P. (Personal Injury
Protection)
Personal Injury Protection pays for medical expenses and other basic
out-of-pocket expenses of the driver and/or passengers of a covered
vehicle that are injured as a result of an accident. This type of
insurance is required in states with No-Fault insurance laws. In many
other states it is offered as optional coverage.
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UIM (Under Insured Motorist)
"UIM" stands for "Under Insured Motorist" Coverage. Like "UM"
coverage, this coverage will benefit the insured if he/she sustains a
bodily injury in an auto accident where the other vehicle is at fault.
If the other driver HAS insurance but NOT ENOUGH insurance to pay you
FULLY for the value of your Bodily Injury Claim, the benefits of your
UIM Coverage become available to you. Your UIM Coverage will pay you the
difference between what your Bodily Injury Claim is FULLY worth and the
policy limits you collected from the other insurance company (up to your
policy's individual and/or aggregate coverage limits). If you sustained
a Bodily Injury in an auto accident and you collected from your own UM
coverage, you MAY be able to also collect under your UIM coverage as
well. This is referred to as "stacking". In some states and dependent
upon some policy verbiage, it may well be possible to "stack" your
benefits. To get answers that are more "on-point" to your specific
situation, we suggest you talk with an insurance attorney local to you.
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Medical Payments
The term "MED" as used in this example typically stands for "Auto
Med-Pay Coverage" and the dollar amount noted reflects the maximum
benefit amount collectable by any one (1) insured for each covered
accident. This coverage is designed to reimburse an insured for
treatment expenses incurred due to an auto-accident-related injury
(regardless of who may have been at fault in the accident). Special
note: Whether the Med-Pay coverage on your auto policy is
proprietary, surplus, subrogatable, limits the definition of "insured"
or has coverage limits relative to accident circumstance (vehicle
occupant vs. pedestrian) can vary from state to state and even insurance
company to insurance company. We recommend you clarify what Med-Pay
limits may apply to your coverage when you are buying your policy. If
your agent can't SHOW you the answer to your question . . . get yourself
another agent!
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Collision Coverage
Collision Coverage is designed to protect your VEHICLE against loss
or damage from a collision. The "ACV- $500.00" part means the most your
insurance company will pay to you is the ACV (Actual Cash Value) of your
vehicle LESS $500.00. If the cost to repair the covered damage to your
vehicle is less than the ACV, your insurance company will pay for the
cost of repairs LESS $500.00. Collision Coverage is typically based upon
ACV limitations. However, some insurance companies offer RCV
(Replacement Cost Value) Collision Coverage. This means the potential
maximum benefit you may collect under this coverage is increased to what
it would cost to REPLACE your existing vehicle . . . NEW! As the
potential maximum benefit is greater with RCV Coverage than with ACV, so
is the premium higher for RCV Coverage. Nonetheless, we wanted you to
know that RCV coverage is probably available to you. We go into greater
detail about the distinctions between RCV and ACV coverages in the
How much will be
paid section of our
Auto Insurance Claims page.
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Comprehensive Coverage
Comprehensive Coverage is designed to protect your VEHICLE against
loss or damage from other than a collision (fire, theft, vandalism,
flood, glass breakage, etc.). The "ACV-$200.00" part means the most your
insurance company will pay to you is the ACV (Actual Cash Value) of your
vehicle LESS $200.00. If the cost to repair the covered damage to your
vehicle is less than the ACV, your insurance company will pay for the
cost of repairs LESS $200.00. Comprehensive Coverage is typically based
upon ACV limitations. However, RCV Coverage is also available as
described in the Collision Coverage paragraph above. Most insurance
companies will offer (for a slight add'l premium) "0" deductible on
Safety Glass Breakage. This means that if your windshield is damaged,
your Comprehensive Coverage will replace the windshield at no cost to
you. We recommend you consider this optional coverage.
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Towing
Towing Coverage is simply that. Your insurance company will reimburse
you (or accept direct billing) for the cost of towing the insured
vehicle from a place of breakdown to the nearest appropriate service
facility. Most insurance companies have a maximum limit they will pay
out on Towing Claims but some companies have virtually no maximum limit,
so check this out when you buy your policy. Most insurance companies
will only offer Towing and Rental Reimbursement Coverage if the insured
vehicle already has Collision and Comprehensive Coverage with that same
company.
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Rental Reimbursement
If your insured vehicle is disabled because of a loss covered under
Collision or Comprehensive Coverage, Rental Reimbursement Coverage will
reimburse you for the cost of renting a temporary substitute vehicle
while your insured vehicle is out of service. This coverage usually has
a maximum $ limit per rental day, as well as a maximum $ limit per loss
occurrence. Daily and occurrence limits can vary greatly from company to
company. Be aware of these limits when you buy your policy. We recommend
you consider including this coverage with your Auto Insurance Policy.
If your Auto Insurance Policy has ALL the coverages explained herein
you will have what could be considered "FULL COVERAGE"! The limits of
coverage and amounts of deductibles will vary on a situation to
situation basis. The need for Collision, Comprehensive, Towing and
Rental Reimbursement Coverages should be based upon weighing the value
of the vehicle to be insured against the cost of the premiums for those
coverages. However, ALL OTHER COVERAGES REVIEWED HEREIN ARE RECOMMENDED
AS A MINIMUM ACCEPTABLE AUTO INSURANCE POLICY!
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D.O.I. Surveys / Records
You should now have a basic understanding of Auto Insurance Policy
Coverages and should be better prepared to decide which coverages you
wish to have included in your Auto Insurance Policy. SUGGESTION:
Dig out your current Auto Insurance Policy and review it in light of
what you have learned here. You may have some deficiencies you will want
to address IMMEDIATELY!
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