Car insurance terms explained
Shopping for car insurance or dealing with a claim can be confusing, especially when a lot of unfamiliar industry-specific language is used. Knowing basic insurance industry terms can help you understand what you may want to include in your policy.
At DPM Insurance Group, our brokers and CSRs are available to customize an insurance plan that makes sense for your needs, and will assist you through the process. But having a general understanding of what certain terms mean may help you ask the right questions and gain a better understanding when purchasing your policy or making a claim.
What is comprehensive insurance?
Comprehensive insurance covers damage to your car caused by events that are out of your control. Think of it as coverage for anything that could happen when your vehicle is parked. The specific details of comprehensive insurance vary, so that’s why it makes the most sense to talk with your broker to go over your options.
Here are some non-collision incidents that are covered under most comprehensive policies:
- Vandalism, fire, riots and explosions
- Windshield and glass damage
- Falling objects like tree branches
- Weather events such as storms, hail, wind, floods, lightning and earthquakes
- Accidents with animals
What is collision insurance?
Collision insurance covers you when there is a collision with another vehicle, whether you are hit by someone else or if you are the cause of the accident. In some cases, it may also offer protection if your car collides with the ground or an object.
Both comprehensive and collision insurance have deductibles. The lower your deductible, the higher your premium will be. Conversely, the higher your deductible is, the lower your premium will be.
Here’s what coverage collision insurance offers:
- A collision with another vehicle or object
- Coverage for your car on its own, in situations like a rollover accident
- Someone crashing into your parked car
- An accident in a car you’ve rented
In most situations, collision insurance does not cover:
- Injuries to other drivers in the event of an accident
- Vandalism or theft
- Accidents with animals
- Losses other than auto damage from a collision
What is liability coverage?
Liability coverage is the part of your auto insurance policy that covers damage that you cause to other drivers in an accident. More specifically, liability coverage covers vehicle and property damage. In order to legally drive and operate a vehicle, this insurance is mandatory coverage that must be included on your car insurance policy.
If you’re at fault in a car accident, your liability coverage helps cover the cost of legal expenses arising from damages caused to other drivers, pedestrians or property, up to your policy limit. Some other liability coverages include:
- Bodily injury liability, which covers the financial cost of an injury or death resulting from an accident caused by you. It can cover medical bills, loss of income claims, as well as pain and suffering damages that may come about as a result of legal action.
- Property damage liability, which covers property damage to someone else’s property that was caused by you. This can relate to another person’s vehicle, their home and/or landscaping.
DPM’s brokers and CSRs can explain about the different types of liability coverage for yourself and others should you find yourself in an unforeseen circumstance.
What is uninsured and underinsured coverage?
If you find yourself in an accident caused by a driver without insurance, uninsured coverage simply means that you’ll be covered for any damage costs. This coverage will help pay for expenses, up to your policy limits, if you are hurt or if your car is damaged.
There are two kinds of coverage built into an uninsured policy:
- Uninsured property damage, which will cover damage to your property, including your car.
- Uninsured bodily injury, which will cover income losses, medical bills and other related costs from a covered accident.
Underinsured coverage helps you pay for any expenses if you’re in an accident caused by a driver with an insurance policy with limits that are not enough to cover the damages. Similar to uninsured motorist coverage, underinsured coverage includes property damage and bodily injury damage.
Both uninsured and underinsured coverage protects you from drivers with little to no insurance. Having this coverage offers another layer of financial protection from irresponsible drivers.
Get the right car insurance coverage for your needs
Not all car insurance policies are equal. At DPM Insurance Group, we work with our clients to protect them from events in and out of their control. Consult with an experienced insurance broker or CSR from DPM Insurance group to learn more.