|Ohio Auto Insurance Terminology In Plain English|
Bodily Injury And Property Damage Liability: Limits of liability means there is a limit on the amount your insurance company will pay for accidents for which you are liable. If you get into an accident and you are cited by the police as at fault, then you are financially liable for the injuries and vehicle damages of the other people involved. If you carry the state minimum limits of liability, your insurance will cover up to $12,500 per person up to $25,000 per accident for the medical bills of the other people involved in an accident for which you are cited, AND it will pay up to $7,500 per accident for property damage (other vehicles, telephone poles, signs, etc.). If the amount of damage exceeds your limits of liability, then you could be sued for the difference. Therefore, your limits of liability should at least be equal to the value of your assets (home, business, savings, etc). Accidents caused by sliding on the ice, hydroplaning, and swerving to miss an object are considered at fault by the police and insurance companies.
Uninsured / Underinsured Motorists Coverage (Abbreviated UM /UIM): If you are injured and/or your car is damaged by an uninsured motorist who is at fault for the accident, your UM coverage will protect you up to the limits stated in your policy. If you are hit by an underinsured motorist (meaning that the amount of your damages exceeds the limits of liability carried by the person who is cited in the accident), your UIM coverage will help compensate you for the difference. UM/UIM coverage can be less than or equal to your limits of liability-- the choice is yours. The law does not require you to carry UM/UIM coverage and you have the option to reject it. However, before you choose to reject it, keep this in mind: Even though the law does require liability insurance, there are still a large number of uninsured motorists out there. This should be taken into consideration when deciding to accept or reject UM/UIM. Also, keep in mind that UM/UIM coverage is relatively inexpensive and the benefits far outweigh the cost.
Medical Payments (Med Pay For Short): If you get into an accident and you are at fault, Med Pay covers what your health insurance doesn't, up to the limit stated in your policy. Med Pay also covers such things as injuries caused while changing a tire, slipping on the ice when stepping in or out of a vehicle, arms, legs and fingers getting caught in the car door, and some other incidents that are not accident related.
Physical Damage: Physical damage coverage compensates you for damages to your own vehicle. There are two types of physical damage coverage: Collision covers damages to your car if you are in an accident and either you or no one was cited by the police as at fault. Comprehensive (Comp for short) covers non accident related incidents, such as rocks hitting the windshield, fire, theft, vandalism, and hitting an animal.
Deductible: The deductible is the amount you have to pay for a comp or collision loss. For example, if your comp deductible is $500 and vandals cause $3500 worth of damage to your vehicle, then you would pay $500 and your insurance would pay $3000. The higher the deductible, the lower your cost of insurance and vice versa. The collision deductible has a greater influence on the price of insurance than the comp deductible.
Full Coverage = Liability + Physical damage. Full coverage is often misinterpreted to mean that everything is covered. Full Coverage doesn't automatically include rental reimbursement, towing, gap coverage, or additional equipment. These optional coverages must be selected before the need for them arises.
Towing and Labor: Towing and labor is similar to roadside assistance. It helps in situations when you run out of gas, get locked out of your car, or need to have your car towed. For example, if your car breaks down and needs to be towed, your towing and labor coverage (if you have it) will pay up to the limit stated in your policy to cover the costs. If your towing limit is $50, the insurance company will reimburse you up to $50 (If the towing charge is less than $50, your insurance will pay that amount).
Rental Reimbursement: If your vehicle is not driveable due to an incident covered by comp or collision, you will be reimbursed for the cost of a rental car up to the limits stated in your policy. Rental Reimbursement does not cover the cost of a rental car if your vehicle is inoperable because of a mechanical breakdown.
Additional Equipment Coverage: This covers theft or damage to certain car accessories that are not factory installed, such as CD players, radios, truck caps, custom wheels, and special antennas. Custom paint, pinstripes, and special bodywork is also covered under Additional Equipment Coverage. These things must be listed separately on your policy to be covered, even if you have Full Coverage. Detachable items must be covered under a Homeowner's or Renter's policy.
Loan/Lease Gap Coverage: If a car is totaled in an accident, or if it is stolen and not recovered, Physical Damage only covers the Blue Book value, minus the deductible. It doesn't cover depreciation or the cost of financing a vehicle. Gap coverage ensures that you will break even in the event of a total loss, instead of still owing money on your loan or lease. Many auto insurance companies do not offer this coverage. Check with your agent to find out how to get this coverage.
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