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Auto Insurance Terms

Auto insurance termsIt only takes a second for a Tennessee auto accident to happen, but the effects from the collision can last a lifetime. No one ever expects to be involved in a collision, but youll be glad that you have auto insurance coverage to help you recover losses when you find yourself in a car accident.

After a car accident, the insurance company will likely try to get you to settle shortly thereafter. Insurance adjusters have their own jargon that the average person may not understand, so it is important to fully understand what your adjuster is saying before signing any documents.

It is not uncommon for injury victims to sign documents, believing that their insurance company is acting in good faith, but ultimately end up limiting the amount of compensation they can be awarded, regardless of the severity of their damages.

The following list of terms is commonly used by auto insurance providers. With the help of this glossary in addition to assistance from an experienced Tennessee auto accident lawyer at Greg Coleman Law, your chances of receiving fair compensation for your accident increase significantly.

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, such as 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 medical bills, future medical expenses, 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 allowed 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 car accident.

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 car accident.

Multi-Car Discounts

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 in the car accident.

Non-Economic Damages

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

Personal Auto Policy (PAP)

Most common type of auto insurance policy that covers the insured individual for 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 applicants 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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