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Insurance policies can play a big part in our lives. Disaster strikes on some level and you need to replace your belongings, require help with a financial or liability issue, or just need to get a dent fixed. It is something that you pay for every month/year and hope you never need it. But there will probably be a point when you will and should already have a good understanding of what your coverage will pay for and what it won’t.
Reading your policy is the best way to get a grasp of your coverage. Unfortunately, insurance policies are notorious for being, let’s say, hard to read. Learning definitions of policy terms is a great way to begin deciphering the industry-speak and legalese with which insurance policies are written. Here are a few more common terms for auto insurance policies:
Adjuster – A person who investigates and settles insurance claims.
Binder – A temporary insurance contract that provides proof of coverage until you receive a permanent policy.
Collision coverage – Pays for damage to your car without regard to who caused an accident. The company must pay for the repair or up to the actual cash value of your vehicle, minus your deductible.
Comprehensive coverage (physical damage other than collision) – Pays for damage to or loss of your automobile from causes other than accidents. These include hail, vandalism, flood, fire, and theft.
Liability insurance – Pays for injuries to the other party and damages to the other vehicle resulting from an accident you caused. It also pays if the accident was caused by someone covered by your policy, including a driver operating your car with your permission.
Liability limits – The maximum amount your liability policy will pay. Your policy must pay at least $15,000 for each injured person, up to a total of $30,000 per accident, and $5,000 for property damage per accident (unless you have a Low Cost Auto Policy). This basic coverage is called “15/30/5” coverage.
Medical payments and personal injury protection (PIP) – Both pay limited medical and funeral expenses if you, a family member, or a passenger in your car is injured or killed in a motor vehicle accident. PIP also pays lost-income benefits.
Uninsured/underinsured motorist (UM/UIM) coverage – Pays for your injuries and property damage caused by a hit-and-run driver or a motorist without liability insurance. It will also pay when your medical and car repair bills are higher than the other driver´s liability coverage.
Your insurance professional can provide a wealth of information about your auto policy and any other coverage you may have. Make an appointment and go over what insurance protection you have and what you may need.