Auto Insurance Glossary
Your auto insurance policy will provide protection under a variety of circumstances. The following example may help you understand which auto insurance coverages are designed for a given event.
Bill is driving his new car on Main Street, more concerned with the vehicle's gadgets than watching the road. Unfortunately, he collides with a car in front of him stopped at an intersection. The car is occupied by Michelle and her two sons. The collision deploys Bill's airbag. He incurs a broken nose and his front fender is severely damaged. Michelle suffers a strained neck, her car is damaged and both boys bruise their knees. How will Bill's auto insurance policy come into play and will it protect his financial well-being?
Because Bill is clearly at-fault, the bodily injuries sustained by Michelle and her sons are covered by John's bodily injury coverage. Michelle's damaged car will be repaired under John's property damage coverage. Medical expenses for Bill's broken nose and his loss of income if he misses time from work will be taken care of by his personal injury protection coverage. Bill's new car will be repaired through Bill's collision coverage, subject to the selected deductible. If the car is towed to a garage, the costs will be covered through his towing and labor coverage. If the car is in the shop for an extended period of time, Bill' will need to rent a car. The rental reimbursement coverage he selected will help defray these expenses. All of these coverages will be paid subject to the selected limits and/or deductibles of the insurance policy. If expenses incurred are greater than Bill''s purchased limit, John's assets may be sacrificed. Although this example is extreme, it should help you to better understand the importance of auto insurance.
Alarm
An alarm is considered to be an audible sounding device, such as a motor vehicle's horn, bell, siren, or other sounding device, that can be heard at a distance of at least 300 feet for a minimum of 3 minutes.
Active Anti-theft Device
An active device disables the vehicle by making the fuel, ignition, or starting system inoperative. A disabling device is classified as active if a separate manual step is required to engage the device. An example of an active step is the use of a remote control on the ignition key.
Anti-hot Wiring Anti-theft Device
A circuit or method that prevents a motor vehicle from starting, including ignition interrupts, starter interrupts, or fuel interrupts.
Anti-theft Device
An anti-theft device is a manufacturer-installed or after-market device that triggers upon entry to the vehicle. It prevents operation of the fuel, ignition or starting systems. It must be permanently installed. Portable equipment does not qualify for this discount.
At-fault Accident
An at-fault accident is one in which you are legally held responsible for the accident.
Auto Shutoff And Reset Anti-theft Device
A system by which an alarm device sounds for not more than 4 minutes, shuts off, and immediately rearms itself.
Bodily Injury Coverage (BI)
pays for bodily injury incurred by others and caused by you (i.e. you are at fault and therefore liable). Bodily Injury can be referred to as a third-party coverage, since it will not pay for your own bodily injury. Some expenses resulting from bodily injury include ambulance service, doctors' fees, emergency treatment, physical rehabilitation, and loss of income or earning capacity as well as legal and court costs. Bodily Injury limits are in a 'split' form For example, split limits of 100,000/300,000 mean the company will pay as much as $100,000 to each injured person, but not more than a total of $300,000 per accident. Bodily Injury protects your assets - we strongly recommend purchasing high limits (i.e. 100,000/300,000 or more) if you have significant assets to protect, such as home, cars and savings. In general, the higher the limit selected, the more expensive the coverage. A minimum limit must be purchased since Bodily Injury is mandatory,
Comprehensive Coverage
helps cover damage to a car resulting from incidents other than those governed by collision coverage. Examples of this may include damage or loss resulting from fire, theft, vandalism, falling objects or certain natural disasters or accidents resulting from a collision with an animal. To obtain this coverage, please choose a deductible, which represents the portion of damages you would pay before your insurance coverage would activate. If you do not wish this coverage, simply choose "No Coverage."
Collision Coverage
helps pay for repairs to a vehicle damaged by a collision with another vehicle or object. Examples of this include a collision with a tree, trash can or garage door. Collision may also provide coverage if a car rolls over even if another vehicle is not involved. To obtain this coverage, please choose a deductible, which represents the portion of damages you would pay before your insurance coverage would activate. If you do not wish this coverage, simply choose "No Coverage."
Deductible
represents the amount paid by you (in other words, your out-of-pocket expense) before the insurer will pay benefits. In general, the higher the deductible you select, the lower your premium cost.
Drugs And Alcohol Awareness Training Discount
this discount is applied when insured submits proof of voluntary attendance and successful completion of a drug and alcohol driving awareness program that has been approved by the Texas Education Agency under the Texas Driver and Traffic Safety Education Act.
Driver Fitness Discount
Operators who are 70 years old or older are classified as 'with Driving Fitness' if all such operators listed on the policy have provided, within the last year, certification from a licensed physician that the operator's vision, health and physical condition permit the safe operation of a motor vehicle.
Group Discount
Applied when the named insured maintains membership in or association with an approved group that has established a relationship with Response Insurance
Glass Sensor Anti-theft Device
An electronic device that activates the alarm device if it detects the sound of breaking glass or metal in contact with glass.
Hood Restraint And Backup Battery Anti-theft Device
The hood restraint is a device preventing full access to under-hood components, including chain restraints that allow hood opening a maximum of four inches, a mechanical or electrical device that physically locks the hood down, or a mechanical or electrical device that prevents the hood mechanism from operating. The backup battery is an auxiliary power source that trips an alarm device if the main power source is disconnected or if wires to the alarm device are cut or disconnected.
Insured's Spouse
The insured's spouse usually is entitled to receive the same coverage as the named insured if he or she lives in the same household.
Limits
or limitations, are caps on the dollar amounts of coverage you are entitled to receive under the policy. Different types of coverages, such as bodily injury, property damage and medical payments, among others, have different limits set -Within the range of limits offered, the policyholder generally chooses the limits for each coverage type.
Major Violations
Examples of major violations are:
- Driving under the influence
- Leaving the scene of an accident
- Driving while license suspended or revoked
- Drag racing
- Reckless driving
- Filing a fraudulent insurance claim
- Permitting an unlicensed driver to operate a motor vehicle
Medical Payments Coverage
This coverage pays for necessary medical and hospital expenses. You, household relatives, and other persons occupying your car are protected. Individuals covered under the policy may also be protected when injured as a pedestrian. This coverage may vary depending upon the state.
Named Insured
The named insured is the individual who is primarily insured under the policy and generally receives the most extensive coverage under it.
No-fault Coverage
No-fault coverage pays for injuries to you and certian other eligible individuals regardless of who is at-fault.
Passive Device
disables the vehicle by making the fuel, ignition, or starting system inoperative. A disabling device is classified as passive if a separate manual step is not required to engage the device.
Personal Injury Protection Coverage (PIP)
pays for reasonable medical expenses, as well as a percentage of your lost earnings, if not specifically excluded, and is subject to the limit you select. You, household relatives, and other persons occupying your car are protected. Individuals covered under the policy may also be protected when injured as a pedestrian. Therefore, PIP is first-party coverage, since it will not pay benefits for those injured in another car (protection is provided through bodily injury coverage). also referred to as "No-fault" coverage since benefits are awarded regardless of fault.
Property Damage Coverage
pays for property damage incurred by others that was caused by you (i.e. you are at fault and therefore liable). Property Damage can be referred to as third-party coverage, since it will not pay for your own property. Property Damage serves to protect your assets. If you have significant assets to protect (i.e. home, cars, savings), we recommend purchasing high limits (i.e. 50,000 or more). If expenses incurred by the third party are greater than your purchased limit, your assets may be sacrificed. In general, the higher the limit selected, the more expensive the coverage. Property Damage is mandatory, and therefore a minimum limit must be purchased.
Rental Reimbursement
This coverage pays toward the expenses to rent an auto if you have a loss (covered under your Comprehensive or Collision coverage) and your auto is disabled longer than 24 hours. Rental Reimbursement may also be referred to as Extended Transportation Expenses, dependent on the state, which provides the same coverage.
Tort Types - Limited Or Full
Under the "Limited Tort" option, your right and the rights of your family members to seek financial compensation for injuries caused by other drivers are limited. Selection of the "Limited Tort" option will reduce your insurance premium.
Under the "Full Tort" option, you maintain an unrestricted right for you and the members of your household to seek financial compensation for injuries caused by other drivers.
Towing And Labor
If your auto is disabled, this coverage pays up to $50 for the towing or labor at the place of disablement subject to the selected limit.
Traffic/Moving Violations
Examples of violations are:
- Speeding tickets
- Failing to signal
- Improper turning
Ultrasonic Sensor Anti-theft Device
An electronic device that activates the alarm device if an ultrasonic field is disturbed inside the motor vehicle.
Uninsured Or Underinsured Motorists Property Damage
This coverage protects your auto, if damage is caused by a driver with no liability insurance, or by an underinsured driver, or by a hit-and-run driver who is held legally responsible for the damage.
Vehicle Identification Number (VIN#)
is a 17-digit alphanumeric code that identifies the make, model and sub model of your vehicle. It also provides information about safety features that are standard on that vehicle. It does not indicate the name, address or any other personal information about the owner of the vehicle. To find your vehicle identification number, look for a label in your engine compartment or on the body of your car when you open your driver's-side door. You may also find it on your bill of sale or your registration,
Violation
pertains specifically to a traffic moving violation and involves an illegal operation of a motor vehicle.
Some violations include, but are not limited to:
- Speeding
- Driving under the influence of alcohol
- Leaving the scene of an accident
- Failure to stop at a stop sign or light
- Illegal lane change
- Improper turning
- Following too closely
- Evading police
- Illegal transfer of explosives
- Failure to obey a safety zone
- Driving without lights
- Obstructing traffic
- Window ID System
Auto Insurance Glossary
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