Encyclopedia article covering topics such as types, principles, indemnification, the insurance industry, and controversies.
Auto Insurance Terms Glossary
Bodily Injury Liability: Physical injury or death to a third party for which the policyholder is legally liable. This coverage is commonly referred to as "BI" and is usually written together with Property Damage Liability (see definition below).Collision: This coverage pays for the damage and loss of use of the policyholder's vehicle resulting from an accident caused by collision with another vehicle or object, such as a sign.
Deductible: The amount predetermined by the policyholder that must be paid out-of-pocket before the insurance company will pay toward a loss.
Gap Insurance: An optional coverage that will pay the difference between the value of the vehicle at the time of a total loss and the amount remaining on the loan for the vehicle.
Insured: Those persons covered by the automobile insurance policy. Examples of an insured are the policyholder (also called the "named insured"), resident relative and someone using the vehicle with permission.
Medical Payments: This coverage pays for medical and funeral expenses resulting from an accident regardless of fault. Medical Payments coverage also will cover injuries to passengers in your car or someone else's car you are driving with permission as well as injuries sustained in an auto accident by you or a family member.
Other-than-collision: Commonly known as "comprehensive," this coverage pays for the damage and loss of use of the policyholder's vehicle resulting from an accident caused by an event other than a collision or overturn. Such events may include theft, vandalism and fire.
Physical Damage: A collective term commonly used to describe types of coverage that apply to damage to your vehicle. These types of coverage include collision and other-than-collision (a.k.a. "comprehensive")
Property Damage Liability: Damage to someone's physical property, including loss of use, for which the policyholder is legally liable. This coverage is commonly referred to as "PD" and is usually written together with Bodily Injury Liability.
Rental Reimbursement: An optional coverage that will reimburse the policyholder for the cost of a rental car if required due to a covered loss. This coverage may pay part or all the cost of a rental car.
Underinsured Motorist: Similar to Uninsured Motorist, this coverage pays for bodily injury sustained by a covered person resulting from an accident with an at-fault driver who does not have enough insurance to pay for the injuries.
Uninsured Motorist: This coverage pays for bodily injury sustained by a covered person resulting from an accident with an at-fault driver who is uninsured or flees the scene of the accident.
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