Explaining Those Complicated Terms In Automobile Insurance Policies

car in chains - KoganSelecting automobile insurance is much more than just choosing an automobile insurance company. Every day, we are bombarded by advertisements for automobile insurance. Whether you choose the company with the lizard, the caveman or the good neighbor, you need to understand that what you are buying is not actually a mascot but protection for yourself and your family. There are differences in policy terms and conditions, which make a significant difference in the type of protection you provide for yourself, your family or your passengers. These choices can have lifelong-lasting consequences on your finances and your ability to seek medical care or compensation should you or your loved one be in a motor vehicle accident.

By way of this article, I am going to explain some basic terminology, which is used to provide different types of coverage within your automobile insurance policy. These terms effect the type of coverage you purchase and must be selected by you at the time of your renewal. In the Commonwealth of Pennsylvania, it is mandatory to have automobile insurance coverage. However, there are many drivers who, for a variety of reasons, choose to let their automobile insurance lapse. These drivers are a danger to themselves and to you on the road, and the types of policy you choose when selecting your automobile insurance can effect how you are protected from accidents involving these other drivers.

Here is a list of a few terms with definitions. The first decision you must make when selecting automobile insurance to cover your vehicle is whether you want to buy Full Tort or Limited Tort coverage. Limited Tort means that you can sue for limited recovery after an accident. This means that, while you can sue for medical bills, you cannot seek repayment for pain and suffering. Most people choose Limited Tort over Full Tort because they are looking to save money on their monthly premiums. While saving money on your monthly bills may sound like a good idea, the realty is that Limited Tort will cost you more in the long run.

Full Tort coverage means, beyond your medical bills, you can seek compensation for your pain and suffering. It may cost slightly more on your monthly premiums, but it enables you to recover money that you need if you are involved in an accident. It is important to understand that Full Tort is the best form of protection for the future. If you are involved in one serious accident, you will more than make up for what you are paying.

Uninsured motorist coverage protects you if you are in an accident with a driver who caused the accident but did not carry liability insurance. As I previously stated, there are many drivers in the state who choose not to have automobile insurance. Uninsured motorist coverage protects you in those situations.

Underinsured motorists coverage, on the other hand, steps in when you are in an accident with an at-fault drive whose liability limits are too low to cover the damage or medical expenses. The at-fault drivers insurance will typically pay for all damages up to the policy limits, and then your underinsured motorist coverage will cover the excess amount up to the limits that you select. Like liability insurance, uninsured and underinsured motorist coverage breaks down into two types: bodily injury and property damage. Under uninsured/underinsured motorist bodily injury coverage, medical expenses, lost wages, injury related expenses for you, any permissive or permitted driver and your passengers are covered. It also provides coverage for injuries sustained in hit-and-run accidents. If your car is damaged in an accident with an uninsured or underinsured driver, uninsured or underinsured property damage coverage steps in to help. Unlike uninsured motorist bodily injury coverage, this coverage does not protect against damage caused by hit-and-run collisions.

Pennsylvania is about 1 in 20 states nationwide that allows stacking insurance. Stacking uninsured/underinsured motorists policy is an option that allows to increase the limits you select for your uninsured and underinsured bodily injury coverage. Limits increase based upon the number of cars you are insuring. Keep in mind that this increased level of protection typically will raise your insurance premium. For example, if you have stacking and limits of $100,000/$300,000 for uninsured motorists bodily injury coverage, and if you are insuring two vehicles, then your limits would double to $200,000/$600,000. Since “stacking” is the application of more than one policy limit to the same loss or occurrence, if you only have one vehicle on your policy, then there will be no coverage to stack. The stacking option is one of the choices that you must make when purchasing your insurance.

Gap insurance can help make sure your car is paid off after an accident. If your insured car is totaled in an accident, or stolen and unrecovered, your auto insurance may give you a settlement based upon your cars actual cash value and not what you paid for it. Since cars depreciate in value quickly, your settlement may not cover what you still owe on your automobile loan or lease. Gap insurance is an optional insurance coverage for newer cars that can be added to your collision insurance policy. It would pay the difference between the balance of a lease or loan due on a vehicle and what your insurance company pays if the car is considered to be a total loss. Without the proper coverage, the gap between what you have paid and what you owe can be substantial. Most automobile lenders require gap insurance when you are taking out a loan. If you lease your vehicle, lease gap insurance may already be included in the cost. It is important to make sure that you do not pay double. If you are purchasing a new car, you may want to contact your own insurance agent to determine whether or not gap insurance is already included in your policy.

Clearly, the terms that I have described above are complicated and effect not only the type of coverage that you provide for yourself and your family, but also the cost of your monthly premiums. While in today’s world, we are all looking to save money, it is very important to understand that very slight increases in the cost of monthly premiums could have a dramatic effect on your ability to protect yourself and your family in case of an accident. I cannot strongly recommend enough that you make the extra effort to get the most coverage possible within your family budget.

If you have any additional questions about this article, in terms of the definitions or what it would it would mean to be in an accident, you can always feel free to contact my office at (800) 975-LAW1 or mkogan@hgsklawyers.com.

Staff Writer

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