Bodily Injury Liability. The amount the insurance company will pay for physical injury or death to a third party in an accident you are responsible for. Also covers a lawsuit if you are sued for injuries, including lost wages, economic damages, and/or pain and suffering. This coverage is commonly called “BI” and is usually combined with Property Damage Liability.

Collision Coverage. Collision coverage pays for the repair and loss of use of your car due to an accident caused by a collision with another car or object, such as a light pole.

Comprehensive Coverage. This type of coverage is responsible for damage to or the loss of your car due to any cause other than collision (such as hail, vandalism, flood, fire, theft, and so on). Your lender may compel you to add this coverage if you are paying lien payments on your car.

Deductible. The amount of money preset by you that must be paid out of your own pocket before the insurance company will begin to pay towards a loss.

Gap Insurance. A voluntary coverage that pays the difference between the worth of your car at the time it is totaled and the amount still owed on it.

Insured. Those covered by your car insurance policy. Examples usually include you (the “named insured”), resident relative, and anyone operating the car with your authorization.

Medical Payments. This covers medical/funeral costs as a result of an accident, without regard to who is “at fault.” Medical Payments coverage will also pay for injuries to passengers in your car or someone else’s that you are driving with their consent, as well as injuries incurred in a car accident by you or a member of your family.

Other-Than-Collision. Please see definition for “comprehensive coverage.”

Physical Damage. A collective term frequently used to explain the kind(s) of coverage that apply to damage to your car. This normally includes collision and comprehensive.

Property Damage Liability. Damage to another person’s physical property, including loss of use, for which you are responsible. Also covers an attorney if a lawsuit is filed against you for property damage. This coverage is normally called “PD” and is usually combined with Bodily Injury Liability.

Rental Reimbursement. An elective coverage that compensates you for a rental car expense (covering part/all of the rental cost) if necessary as a result of a covered loss.

Underinsured Motorist. Not unlike Uninsured Motorist, this coverage covers bodily injury suffered by a covered person as the result of an accident with an at-fault driver who does not have sufficient coverage to pay for the covered person’s injuries.

Uninsured Motorist. This coverage covers bodily injury suffered by a covered person as a result of an accident with an at-fault driver who does not have insurance coverage or flees the scene.

Custom/Non-factory Equipment Coverage. Covers customizable features and non-factory items such compact disc players, cellular phones, and CB radios.

Towing/Labor Coverage. Compensates you for towing expenses incurred when your car must be towed to a repair shop or a different location because it is no longer drivable or is severely damaged.

Liability Coverage. This coverage compensates other people for damages that arise as a result of an auto accident that you are found to be at fault in. It also covers an attorney to defend you if you are sued for those damages. The two types of liability coverage are Bodily Injury and Property Damage.

Umbrella Liability. A policy that acts like an umbrella above your other types of coverage. You must maintain a specific amount of liability coverage (i.e. auto and homeowners) before you are eligible to purchase an umbrella policy. This coverage takes effect if you are sued for injuries or damage that equal more than the maximum liability coverage of your auto policy.

Emergency Roadside Assistance. Nearly all insurance companies include optional emergency roadside assistance. They occasionally are categorized as motor clubs or roadside service plans. These plans fundamentally offer aid for a range of roadside troubles. Rudimentary roadside emergency assistance normally includes lockout services, towing, trip interruption coverage, and similar travel planning advantages, with variable costs.

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