Jan. 18, 2011 – Insurance Coverage Explained

Posted by: JonWhalen  /  Category: Insurance

They’re using those “insurance words” on me again!

“Full Coverage”,  MEANS , You have insurance to cover up to , the actual market value of your vehicle .This is only true once you have satisfied the portion of risk you have contracted to be responsible for if a covered loss occurs. That risk is commonly called your ” deductible “.

“Deductible”,MEANS , the portion of risk you have contracted with your insurance company to self insure before your insurance coverage kicks in and pays you benefits.

“Collision Coverage”,MEANS , you have coverage for collision damage , up to the actual market value of your vehicle.

“Comprehensive Coverage”, MEANS , you have coverage for damage caused by ” acts of nature “, fire , theft , vandalism, and damage caused by mechanical component failure. this coverage is also limited to the actual market value of your vehicle.

“Broad Form Collision Coverage”, MEANS , that if you have a collision loss that is not your fault , you bought coverage that

includes paying for damage , from the first dollar of covered loss. In other words you have ” no deductible ” to pay with this type of coverage.

“Standard or Basic Collision Coverage”, MEANS , you always have to pay the deductible amount you chose when you bought the insurance,before your collision insurance will pay anything on a collision loss.This is true whether you are at fault or not with this type of coverage.

“Limited Collision Coverage”, MEANS , you only have collision insurance when a

collision loss happens and ” it’s not ” your fault. A collision loss that ” is ” your fault has no coverage at all. When a ” covered loss ” happens, it’s limited to the actual market value of your vehicle and may have a deductible that applies before coverage kicks in. This depends on the coverage you chose when you bought the policy.

“PL / PD Coverage”, MEANS, {Property Loss / Property Damage}, MEANS , You only have insurance to cover damage you cause to others , property or person. It means you have no coverage on your property if a loss occurs , at all.

“Gap Insurance”, MEANS , you have insurance to pay off your vehicle loan if a property loss occurs and the colateral ( your car ) has depreciated more than what you still owe on it. Remember insurance coverage is limited to the actual market value of your car , not what you owe yet. I advise you want this kind of insurance anytime you might owe more on a car than it’s actual market value , because your insurance company in a total loss situation won’t be giving you enough to pay it off.

“Rental car coverage”, MEANS , you purchased a rider on your vehicle insurance policy that provides you with a predetermined dollar amount per day to rent a vehicle while your’s is in the shop for repair of a ” covered loss ” , or if your vehicle is undrivable because of a ” covered loss “.Most of these riders for rental are limited to a maximum benefit of 30 days, and only cover the amount of money per day that you chose when you bought the policy.

“Betterment cost”, MEANS , when the insurance company pays to fix something that got damage on your car from a covered loss. And they fix it to a level thats better than what that item was prior the loss , the insurance company may or may not access a portion of that repair cost to the insured. They justify betterment on the clause in your vehicle policy that says they owe you the money to return your vehicle back to the condition it was in prior the loss . And they ” can ” access the insured for costs required if the indicated repairs take the car to a ” higher ” quality level than it was prior covered loss.

“Depreciation cost”, MEANS , the amount of cost for a ” wear item ” being access to the insured when that item is replaced with a new component because of a covered loss. Example : A tire thats half worn out is ruined when the accident happens, and a new tire is installed, the insurance company will only pay for the portion of tire thats left,so you would be expected to pay for half the tire expense. Betterment is normally accessed on items like tires , batteries , audio systems, shocks , struts , steering parts and driveline components that have a lifespan thats less than the life of the vehicle.

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