Auto Insurance Definitions
The following definitions are simplified. For a complete understanding, you should read your policy. Before choosing coverage's, we recommend consulting with your independent agent.
Losses from property damage, medical and legal costs, and lost income add up to billions of dollars annually for automobile mishaps. Automobile insurance plays an important role in protecting consumers from serious financial losses that can result from such accidents.
Liability | Uninsured and Underinsured Motorists Coverage's | Medical Payments
Property Damage Liability Comprehensive | Collision | Rental Reimbursement
Liability
This refers to a situation where you are at fault in an accident and you have injured other people or damaged their property. Your insurance company will pay the other people for their injuries and for their damaged property. This coverage includes the legal expenses that might be incurred defending you in court. This coverage does not pay for injuries to you and your family or for damages to your own Automobile .
Bodily Injury Liability
Pays your legal defense costs and claims against you if your car injures or kills someone. Covers family members living with you and others driving with your permission. There are various "limits of liability" available to choose from. The higher the limit of coverage, the more the company will pay on your behalf if you are found negligent. Some companies offer "split limits" where the bodily injury limit is split between the amount the company will pay for any one injured person and the total amount that could be paid for all injured people. A separate figure refers to the amount of property damage liability coverage. An example would be $100,000 bodily injury per person, $300,000 bodily injury per accident and $50,000 property damage per accident. You will see this written on our application as 100/300/50.
Other times, a "combined single limit" of liability is offered where any combination of bodily injury and property damage can be paid from one limit (e.g. $300,000 Combined Single Limit).
Obviously, the higher the limit you choose, the better the coverage but the higher the premium.
Property Damage Liability
Pays your legal defense costs and claims against you if your car damages another's property. Does not cover your property, including your auto.
Uninsured and Underinsured Motorists Coverage's
This coverage protects you and your family members and guests in your vehicle for injuries sustained in an auto accident where another vehicle is at fault and caused by an uninsured/underinsured, or hit-and-run driver. where that vehicle did not have liability insurance, or which had a limit lower than your limit of uninsured motorist coverage. For example, if you carry an uninsured limit of $300,000 and you are injured in an auto accident by someone who has no liability insurance, then you could collect up to $300,000 from your company. In the same situation but where the other vehicle had $50,000 of liability coverage, you could collect under underinsured motorist coverage. You could collect potentially the difference between your coverage limit of $300,000 and the other vehicle's liability limit of $50,000.
Payments you receive from other sources such as workers compensation benefits or disability benefits reduce the amount you can collect from your policy. If you purchase an option called uninsured motorist conversion coverage, then your limit of coverage cannot be reduced by the above mentioned sources.
Normally, your insurance company will give you a limit of coverage equal to your limit of liability coverage (i.e. if you carry $300,000 liability coverage, then you will be given $300,000 uninsured motorist coverage). You have the option of purchasing a lower limit or a limit up to twice the limit of liability limit on your policy. Uninsured motorists coverage does not pay for damages to your car. Uninsured or Underinsured Motorist. Pays for costs related to injuries or property damage to you or your family members and guests in your car caused by an uninsured, underinsured, or hit-and-run driver.
Medical Payments or Personal Injury Protection.
This coverage pays medical Expense resulting from a accident to you and occupants of your car . It pays for your medical bills no matter who is at fault. This is an optional coverage in Illinois but an important one in many cases. Also pays for you or your family members injured while riding in another's car or while walking. A variation of this coverage is reparations benefits which in addition to medical payments, also pays a limited amount for loss of wages because of injury sustained in an auto accident or funeral expenses in case of death.
Comprehensive Physical Damage.
Comprehensive, sometimes referred to as "other than collision", pays for the damage to an owned vehicle listed on your policy. It pays for most causes of damage other than collision. Examples of covered perils resulting from fire, hail, theft, vandalism and glass breakage. Among the exclusions are collision and mechanical breakdown. A deductible of at least $250 normally applies. The higher the deductible you choose, the lower the premium.
Collision Physical Damage
Collision coverage pays for repairs of damage caused by upset of your covered vehicle or impact with another vehicle or object. As with comprehensive, a deductible applies, and choosing a higher deductible will reduce your premium. or in plain language, .Pays for repairs of damage to your car caused by a collision with another vehicle or any other object, regardless of who was responsible
Rental Reimbursement
This coverage pays toward the cost of renting a replacement vehicle in the event that your covered auto becomes inoperable because of a covered peril. Such as a Car accident or theft of your vehicle. If you insure your vehicle for comprehensive or both comprehensive and collision, then you can add this coverage to your policy. NOTE "This does not apply to mechanical breakdown of your automobile."