|Glossary of auto insurance terms
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Comprehensive major medical -- A policy with
a low deductible and high maximum coverage limits,
as well as a co-insurance provision, which combines
basic coverage with major medical coverage.
6. Discount -- A reduction in the cost of your auto insurance premium. Insurance companies offer discounts for everything from a teenage driver's good grades to a car's safety equipment including airbags, an anti-lock brake system and a security alarm.
7. Emergency road service -- This part of an auto insurance policy pays for the cost of having your car towed after it breaks down.
8. Gap insurance -- A type of insurance offered on financed and leased vehicles. It pays the difference between what you owe and what the vehicle is worth in the event the car is stolen or destroyed. Some leases build gap insurance into the terms of the lease but not all do.
9. High-risk driver -- If you have accidents or tickets on your driving record, many insurance companies will classify you as a high risk driver and charge you more for insurance.
10. Liability insurance (auto) -- This part of an auto insurance policy covers the injuries and damage you cause to other drivers and their vehicles when you are at fault in an accident. If you are taken to court, liability coverage will apply to your legal costs. Most states require drivers to carry liability coverage. The amount of coverage varies by state.
11. No-fault insurance -- If you live in a state with no fault insurance regulations, your auto insurance policy pays for your injuries no matter who was in the wrong in an accident. No fault insurance states include Colorado, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania and Utah.
12. Personal injury protection -- See medical payments coverage. This part of an auto insurance policy pays for medical expenses and lost wages to you and any passengers in your vehicle after an accident.
13. Uninsured driver or motorist -- This part of an auto insurance policy covers injuries to you caused by a driver without insurance. Most states require drivers to carry uninsured motorist coverage. Some states include damages to your car in this coverage.
Medical payments coverage -- This part of an
auto insurance policy pays for medical expenses and
lost wages to you and any passengers in your vehicle
after an accident. It is also known as personal injury
protection, or PIP.