Car Insurance Terms Explained
Car insurance can be downright confusing when you're trying to compare
policies. Here is a
quick guide to common insurance language and what the terms mean in real
English..
Accident
What auto insurance is designed to cover. Accidents may be considered either at
fault or not at fault. If you have at fault accidents on your driving record,
your rates will be higher.
Additional Insured or Additional Interest
A person or entity, other than the named insured or covered person, who is
protected under the named insured's auto policy. If an auto is leased, the
leasing company may want to be listed as an Additional Insured as well as a lien
holder or loss payee. This protects the leasing company if it's named in a
lawsuit for an accident caused by a policyholder.
Anti-Theft Device
Devices intended to prevent theft or vandalism, or to assist in the recovery of
a stolen vehicle. Some examples include etched VIN numbers, car alarms, the
"Club" and other such devices, etc.
Assigned Risk
A poor risk that an insurance company is compelled to cover under state laws.
Automobile Insurance
Insurance designed to protect against losses involving automobiles. All types of
policies, including basic liability, collision and comprehensive, etc. come
together to constitute automobile insurance.
Basic Limits of Liability
These vary locally, they are the lowest amounts of liability coverage that you
can legally buy in your state.
Bodily Injury Liability
The legal definition for causing physical harm to another person.
Classic Car Insurance
A special type of coverage, which applies to collector cars, that could not be
otherwise insured through regular channels.
Collision Insurance
A policy that covers the damage to your own vehicle in the event of an accident.
Combined Single Limit
Bodily Injury and Property Damage coverage combined into one single amount of
coverage.
Comprehensive Coverage
A policy that covers the damage to your own vehicle in caused by an event other
than an auto accident. For example, theft, vandalism, etc would be covered by
such a policy.