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Coverage Explained terms
What the policy actually covers, line by line.
Bodily injury liabilityThe part of auto liability insurance that pays for injuries or deaths you cause to other people in a crash, plus your legal defense.Combined single limitOne liability limit covering all bodily injury and property damage from a crash, instead of separate per-person, per-accident and property caps.Liability coverageThe part of a car insurance policy that pays for injuries and property damage you cause to others, plus your legal defense, up to your limits.Liability limitsThe most a liability policy will pay for injuries and property damage you cause, usually written as three numbers such as 100/300/100.Minimum coverageThe least car insurance a state lets you carry to drive legally, usually liability coverage at set limits and sometimes PIP or uninsured motorist coverage.Policy limitThe most an insurer will pay for a covered loss under a coverage, stated per person, per accident or per vehicle on your declarations page.Property damage liabilityThe part of liability coverage that pays for damage you cause to other people's cars and property, such as fences, buildings and poles.Umbrella policyExtra liability insurance, usually sold in amounts of $1 million or more, that pays after your auto or home liability limits run out.Collision coveragePays to repair or replace your own car after it hits another vehicle or object, or rolls over, regardless of fault, minus your deductible.Collision deductible waiverAn option that pays or waives your collision deductible when an identified uninsured driver is at fault for damaging your car.Comprehensive coveragePays for damage to your car from causes other than a crash, such as theft, fire, hail, flood, falling objects, vandalism or hitting an animal.Declarations pageThe summary page of an auto policy listing who and what is insured, the coverages, limits, deductibles, premium and policy period.Excluded driverA specific person listed on a policy as not covered to drive the insured cars, often used to keep a high-risk household member from raising premiums.ExclusionA provision in an insurance policy that removes specific people, vehicles, uses or causes of loss from coverage.Full coverageInformal shorthand for a policy combining liability with collision and comprehensive, the mix lenders usually require. It is not a defined policy type.Household memberA person who lives in your home, usually a relative, whom auto policies often cover automatically and may require you to list.InsuredAny person a policy protects, including the named insured, household relatives and often permitted drivers, depending on the coverage.Medical payments coverageCoverage that pays medical and funeral costs for you and your passengers after a crash, whoever was at fault, usually in limits of a few thousand dollars.Named driver policyA car insurance policy that covers only the drivers specifically listed on it, rather than anyone who borrows the car with permission.Named insuredThe person or business listed by name on the declarations page as the policy's owner, with the broadest coverage and most rights under the contract.Permissive useCoverage for someone who drives your car with your permission but is not listed on your policy, typically on an occasional basis.Personal auto policyThe standard contract form behind most U.S. car insurance, with parts for liability, medical payments, uninsured motorists and damage to your car.Personal injury protection (PIP)Coverage that pays medical bills, part of lost income and related costs for you and your passengers after a crash, no matter who caused it.Policy periodThe span of time a car insurance policy is in force, usually six or 12 months, from its effective date to its expiration date.PolicyholderThe person or business that owns an insurance policy and pays for it, with the right to change or cancel it.StackingCombining uninsured or underinsured motorist limits across several vehicles or policies to raise the total available for one injury claim.Underinsured motorist coverageCoverage that pays your injury costs when the at-fault driver has insurance, but not enough to cover what you are owed.Uninsured motorist coverageCoverage that pays injury costs for you and your passengers when a driver with no insurance, or a hit-and-run driver, causes the crash.Uninsured motorist property damage (UMPD)Coverage that pays to repair your car when a driver with no insurance damages it, often with a small deductible and caps set by state law.DeductibleThe amount you pay toward a covered loss before your insurer pays the rest, set per claim for coverages like collision and comprehensive.Disappearing deductibleAn optional program that lowers your collision or comprehensive deductible by a set amount for each claim-free period, sometimes to zero.Full glass coverageAn option that pays for windshield and window repair or replacement with no deductible, usually added to comprehensive coverage.Accident forgivenessA policy feature that stops your premium from rising after a first at-fault crash, either earned through loyalty or bought as an add-on.Agreed valueCoverage where you and the insurer set a car's value when the policy is written, and that amount is paid if the car is totaled, with no depreciation.Custom parts and equipment coverageOptional coverage for aftermarket add-ons and modifications, such as custom wheels, stereos and lift kits, beyond a standard policy's small allowance.EndorsementA written amendment to an insurance policy that adds, removes or changes coverage, such as rideshare use, rental coverage or OEM parts.Gap insurancePays the difference between a totaled car's actual cash value and the larger balance still owed on its loan or lease.Loan/lease payoff coverageOptional coverage that pays part of what you still owe on a financed or leased car if it is totaled or stolen and the payout falls short of the loan.New car replacementOptional coverage that pays for a brand-new car of the same make and model if a recent car is totaled, instead of its depreciated value.Rental reimbursementOptional coverage that pays for a rental car or other transportation while your car is repaired after a covered claim, up to daily and total limits.Roadside assistanceOptional coverage or service that sends help for breakdowns, such as towing, jump-starts, flat-tire changes, lockouts and fuel delivery.Towing and labor coverageOptional coverage that reimburses towing and on-the-spot repair labor when your car breaks down, up to a set amount per incident.