Auto Insurance: Important Definitions
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United States law dictates that every car owner must be covered under some type of auto insurance. This law exists in order to protect the car owner against bodily damages he may suffer in an accident as well as damages caused to his car. This also protects other individuals from damages that he may accidentally cause.
Auto Insurance Coverage defines the responsibilities and obligations of the policy holder (the person who insures his car) in case his car is damaged or stolen, or he is involved in a car accident.
Here are some important definitions:
Property Coverage: this describes the amount of coverage available to a policy holder whose car was damaged in an accident, or through other means, such as vandalism. It also includes the theft of his car. Obviously this is an option every car owner should want to obtain.
Liability Coverage: this covers the the policy holder's legal responsibility for property damage or bodily injures he causes. Basically, it protects the policy holder than no matter what, the insurance company will protect him - to an extent defined in his policy - from property or bodily damage caused by him.
Medical Coverage: this term defines how much money the insurance company would be willing to pay for injuries and necessary hospitalization that were sustained during an accident, as well as the costs of rehabilitation afterward. At times it may also include wages that were lost by the injured person while he is incapacitated.
The next few items are standard policies:
There are numerous types of auto insurance policies that exist to compensate for damage or loss sustained, and expenses incurred, by the car owner in cases of loss, injury or property damage. Here are several types of such policies:
Third Party: this is the most basic insurance policy available and protects a policy holder in the event he accidentally damages someone or their property. It is also the cheapest car insurance available.
Fire and Theft: this type of policy protects a car owner from situations where his car is either burnt or stolen, but it does not protect him from other situations, such as property damage or medical injuries.
Collision: if this option is included, the policy holder is not financially responsible for repairing his car when it is involved in a car accident, even in the even he caused it. Pretty good option to have.
Personal Injury Protection (PIP) or Medical Payments (MedPay): this type of policy reimburses medical bills of the driver and his passenger regardless of whos at fault for causing the accident. It also protects against lost wages while the injured person cannot work.
Comprehensive: this is the best type of auto insurance and the most expensive one as well. It offers virtually all protections to the policy holder ranging from accidents, medical bills (at least partially), fire damage, theft, and even natural disasters ("acts of god"). It even partially covers the cost of items stolen from a car!
There are also more specialized types of policies:
There are many types of special auto insurance plans, for special scenarios. Here are several examples.
Classic car insurance: this policy targets owners of antique cars (cars that are older than 25 years), and is equivalent to a comprehensive car insurance. There are usually extra conditions in the policy, such as a limit on the number of miles the car owner may drive in a year's time.
Rental Reimbursement: this type of policy simply insures a policy holder in case his car is unavailable - he is given a replacement rental car for this period.
No matter which policy you may have, it is essential that you are intimately familiar with its details as this could have significant financial repercussions when the time comes. For instance, some auto insurance plans only reimburse 80% of the value of a stolen car - the reason being, to avoid fraud (car owners from staging theft of their own cars).
Article Source: Articlelogy.com
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