Understanding Insurance Terms
Insurance terminology can be confusing. We've simplified the most common terms to help you understand your coverage better.
Damage to Property
If your car damages someone else's vehicle, home, fence, or belongings, your insurance may help pay to fix or replace that property.
Medical Costs
Covers medical bills if you or others are hurt in a covered accident. These costs can add up quickly and include hospital visits, ambulance fees, etc.
Potential for Lawsuit
If you're involved in an accident, the other party might sue you. Insurance can help protect your personal assets by covering legal defense and settlements.
Bodily Injury Liability
Pays for injuries or death you cause to others in an accident. This includes hospital bills, lost income, and pain and suffering. Required in most states.
Collision Coverage
Pays to repair or replace your car after a collision (e.g., hitting another vehicle or object), no matter who's at fault.
Commercial Vehicle Insurance
Needed if you use your vehicle for business purposes (like deliveries, client visits, or transport). Personal auto policies usually don't cover business use.
Comprehensive Coverage
Covers non-collision damage like theft, fire, vandalism, falling objects, or weather (e.g., hail, flood, tornado).
Hired and Non-Owned Auto Liability
For businesses: covers accidents involving rented vehicles or employees' personal vehicles used for work.
Liability Coverage
Basic coverage that pays for damage or injuries you cause to others. Includes bodily injury and property damage.
Medical Payments Coverage (MedPay)
Pays medical/funeral expenses for you and your passengers after an accident, regardless of who's at fault.
Personal Injury Protection (PIP)
Broader than MedPay. Pays for medical costs, lost wages, and more for you and passengers after an accident, regardless of fault. Required in no-fault states.
Property Damage Liability
Covers damage your vehicle causes to another person's property (like a car, building, or mailbox).
Uninsured / Underinsured Motorist Coverage
Covers your injuries and damages if the at-fault driver has no insurance or not enough to pay your costs.