Auto Insurance Terms

Posted on behalf of Gordon & Doner on Sep 08, 2015 in Insurance Claims


It only takes a second for an auto accident to occur, but the effects of an accident can last a lifetime. No one ever expects to be involved in a collision, but when it does happen, you’ll be glad that you have auto insurance coverage to help you recover damages from the crash.

Once you’ve been involved in an accident, the insurance company will try to get you to settle your injury claim as quickly as possible. As with any industry, insurance adjusters have their own jargon that the average person may not understand. It is critical that before signing anything, you fully understand what your provider is saying.

Oftentimes, injury victims will sign documents, believing that their insurance company is acting in good faith, but will ultimately limit the amount of compensation they can be awarded for their losses, regardless of the severity of their injuries.

We urge you to consult with one of our experienced Florida auto accident attorneys at Gordon & Doner after being involved in a crash. With their help in addition to the following glossary of commonly used auto insurance terminology, your chances of recovering fair compensation for your losses significantly increases.

To begin exploring your legal options, simply complete the Free Case Evaluation form to the right.

Common Florida Auto Insurance Terms

  • Automobile Liability Insurance

Coverage available if the insured individual is legally responsible or liable for damages, including physical injury or property damage, caused by a motor vehicle accident.

  • Collision Insurance

Coverage for property damage that is not covered under Comprehensive Insurance.

  • Comprehensive Coverage

Provides coverage for property damage caused by an event other than a collision, including theft, fire damage or cracked windshield.

  • Deductible

Monetary amount the insured individual must pay before the insurance company provides coverage.

  • Economic Damages

Quantifiable, out-of-pocket expenses including current and future medical bills, lost wages and loss of earning capacity.

  • Financial Responsibility Law

The law that requires all drivers to carry some type of auto insurance coverage. In some states, drivers are permitted to have a bond or cash deposit to show ability to pay for negligent driving as an alternative to having an auto insurance policy.

  • Liability Coverage

Insurance coverage that pays for damages caused by the actions of the insured individual.

  • Medical Payments Coverage (MP or Med Pay)

Coverage for medical expenses and/or funeral expenses for the insured individual and the passengers in their vehicle, regardless of who was at fault in the crash.

  • Monetary Threshold

A cutoff point for damages, which, when met, allows an injury victim to file a lawsuit to recover economic and non-economic damages related to the collision.

  • Multi-Car Discounts

Discount sometimes available if more than one vehicle is on the same insurance policy.

  • No-Fault Insurance

Allows insured individuals to recover economic damages from their own insurance provider, regardless of who was at fault for the accident.

  • Non-Economic Benefits

Damages related to loss of quality of life, including pain and suffering, mental anguish and loss of consortium. Non-economic benefits are often difficult to quantify.

  • Personal Auto Policy (PAP)

The most common type of auto insurance policy that covers the insured individual for a personal liability, property damage, medical bills and uninsured or underinsured motorist coverage.

  • Premium

The cost of insurance coverage for a specific risk over a specified time frame.

  • Property Damage Liability (PD)

Coverage for when the insured individual damages another’s property with their car. Can include damage to another’s vehicle, buildings, telephone or utility poles, fences and garage doors.

  • Term

The length of time an auto insurance policy is effective. Generally, policies are issued for term lengths of six months to one year.

  • Umbrella Policy

Coverage for losses that go beyond the dollar amount limit of an insurance policy.

  • Underwriting

The process of accepting or rejecting an insurance application, including risk selection and classification of an applicant’s insurability.

  • Uninsured or Underinsured Motorist (UM)

Coverage for damages caused by a driver who is uninsured or has inadequate coverage to recover losses incurred.

  • Usage

Refers to the purpose for which an individual uses their vehicle and is considered during underwriting when the individual applies for auto insurance coverage.

  • Verbal (or Descriptive) Threshold

Similar to a monetary threshold, this refers to a description of the type of injury a victim must sustain in order to file a lawsuit to collect damages.

 

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