Auto Insurance Glossary

Policy Terms

Deductible: The amount of money you must pay to repair damages to your vehicle before the insurance company pays. 

Policy: A contract detailing what the insurance company will cover after an accident. Policies may have one type of coverage (liability), or multiple (liability, comprehensive, PIP, etc.).

Premium: The amount of money you  pay for a specific auto insurance policy.

Basic Coverage

Collision Coverage: If your car collides with another vehicle or object, the insurance company pays to repair your car (after you pay the deductible).

Comprehensive Coverage: If your car is damaged in an incident other than a collision (severe weather, theft, vandalism, etc.), the insurance company pays to repair your car (after you pay the deductible). 

Liability Coverage: If you are at fault in an accident, the insurance company pays for the victims’ bodily injuries and/ or property damage. Your damages are not covered. Find out if your state requires minimum liability insurance

Coverage Add-Ons

Medical Expense Coverage: Regardless of who is at fault, if you and your passengers are injured in an accident, the insurance company pays for your medical expenses. 

Personal Injury Protection (PIP): Regardless of who is at fault, the insurance company pays for your medical expenses, lost wages, and/ or funeral expenses. 

Rental Reimbursement Coverage: If your car is disabled and you need a substitute vehicle, the insurance company pays for a rental car. Most policies have per day and per loss dollar limitations.

Towing and Labor Coverage: If your vehicle becomes disabled, the insurance company pays for emergency roadside assistance and/ or towing costs. 

Uninsured Motorist Coverage: If an uninsured/ underinsured driver injures you or your passengers, the insurance company pays for your medical bills. 

Uninsured Motorist Property Damage: If an uninsured/ underinsured driver damages your car, the insurance company pays to repair your vehicle.