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Insurance Essentials
Understanding Your Insurance Policy
The auto insurance terms and definitions listed below will help you understand what you're buying when you shop for car insurance or other types of vehicle insurance.
Bodily Injury Liability Coverage (BI)
If an insured person is legally liable for an accident, BI coverage pays for injuries / death to people involved in the accident other than the insured driver. BI also pays for legal defense costs if you are sued. Certain exclusions may apply.
Comprehensive Coverage
If your insured vehicle is damaged due to an event other than a collision, Comprehensive coverage will pay for the damage. This includes damages from fire, theft, windstorm, flood and vandalism. If your vehicle is stolen, Comprehensive covers transportation and loss of use expenses when applicable.
Collision Coverage
When your insured vehicle overturns or collides with another object, Collision coverage pays for the damage to your vehicle. Collision coverage also may extend to a non-owned vehicle or one rented for personal use that is in your custody or that you are operating. Certain exclusions may apply.
Declaration Page (Dec Page)
Also known as an auto insurance coverage summary, this page is provided by your insurance company and lists the following:
- Types of coverage you have elected
- Limit for each coverage
- Cost for each coverage
- Specified vehicles covered by the policy
- Types of coverage for each vehicle covered by the policy
- Other information applicable to the policy
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Coverages A and B provide protection to the dwelling and other structures on the premises up to the policy limits.
- The policy limit for Coverage A is set by the policy owner at the time the insurance is purchased. This is the amount the insurance company will pay to have your home or dwelling rebuilt in the event of a covered cause of loss.
- The policy limit for Coverage B is usually equal to 10% of the policy limit on Coverage A.
- Coverage C covers losses to the insured's personal property. The policy limit on Coverage C is equal to 50% of the policy limit on Coverage A.
- Coverage D covers the additional expenses that the policy owner may incur when the residence cannot be used because of an insured loss. The policy limit for Coverage D is equal to 20% of the policy limit on Coverage A. This covers extra costs to rent a hotel room, set up utilities etc.
- The coverage limit on Coverage E - Personal Liability - is determined by the policy owner at the time the policy is issued. Liability options are usually $100,000, $300,000, $500,000 and $1,000,000. It is best to discuss with an agent how much liability insurance to buy. The coverage limit on Coverage F - Medical Payments to Others - is usually set as $1,000 per injured person.