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Auto Insurance Key Terms

By Rica Espiritu

When getting an auto insurance for your car, knowing the meanings behind certain key terms used will help a lot in understanding the policies available as well as their coverage. This will help you determine how to distinguish between different types of auto insurance packages and know their different benefits. Here are some of the most common terms that you might encounter when shopping for auto insurance.

Bodily Injury Liability (BI) – term used for coverage of bodily injuries or death of the other driver and/or passengers in a car accident where the policy holder may be responsible or at fault. It usually covers for medical bills and possible loss of income due to the car accident.

Property Damage Liability – liability coverage for cases where the policy holder’s car damages another person’s property. Although it usually pertains to the other car that the policy holder may be responsible for damaging, it may also extend to other forms of property including a fence, house or any other property damaged as a result of the car accident.

Comprehensive Coverage – refers to coverage for losses or damages of the car in cases of events other than a collision. Comprehensive coverage may provide protection for the car in case it may be stolen or incurs damage caused by floods, fire, or by animals.

Collision Coverage – refers to coverage for damage on the car caused by collision with another car or object. Coverage is usually limited to the cash value of the car.

Personal Injury Protection (PIP) – refers to coverage that will pay for the medical expenses of the insured driver to treat injuries as a result of a car accident. It offers protection regardless of who is at fault at the car accident.

Uninsured Motorist (UM) – provides protection for car damages in a car accident in cases where the car owner at fault doesn’t hold liability insurance. It may also refer to an under-insured motorist who causes the car accident but does not have sufficient auto insurance to cover for the damages incurred.

Rental Reimbursement – this refers to coverage for renting a car while the damaged car is not drivable and being repaired as a result of a covered car accident. It usually involves providing a daily allowance for a rental car.

Gap Coverage – also known as loan/lease payoff, this refers to coverage that supplements either a comprehensive and collision coverage. It aims to cover for loans or leases still outstanding for a totally damaged car that may be beyond repair or use. It usually covers for the total value of the car less applicable deductibles and the car’s salvageable value.

The author of this auto insurance article writes for, a blog filled with information on how auto insurance works, tips, the issues, common auto insurance inclusions, ways to lower your auto insurance and lots more.

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Article Citation
MLA Style Citation:
Espiritu, Rica "Auto Insurance Key Terms." Auto Insurance Key Terms. 10 Jul. 2010. 5 Aug 2014 <>.

APA Style Citation:
Espiritu, R (2010, July 10). Auto Insurance Key Terms. Retrieved August 5, 2014, from

Chicago Style Citation:
Espiritu, Rica "Auto Insurance Key Terms"

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