The Winding Road of Automobile Insurance
A personal automobile insurance policy is an important part of today's mobile society. However, like any type of insurance, there is a maze of options, terminology, and costs associated with insuring your automobile.
Here's a quick look at some key components of a typical automobile insurance policy.
Comprehensive: This is the "plain vanilla" of automobile insurance. Also referred to as auto liability coverage, it protects the "named insured" from liabilities as listed in the insurance contract. Liabilities typically covered include injury to others or damage to the property of others as a result of a car accident. In addition, comprehensive coverage generally protects the insured while driving someone else's car or rental vehicle.
Collision: Although this type of coverage can considerably add to a policy's overall cost, it's a valuable component, especially if you own a newer or higher priced automobile. Also referred to as auto physical damage coverage, it covers the damage to or theft of the automobile insured through the policy. Generally, coverage pays for repairs or provides for the replacement or reimbursement of a "totaled" or stolen vehicle, not to exceed the vehicle's fair market value (FMV).
Medical Payments: Some policies have separate costs for coverage associated with medical expenses of the named insured or others riding in the insured vehicle. In many cases, these expenses are covered even if the named insured is not at fault, or if the named insured is not driving the vehicle. Coverage is generally limited to a stated dollar amount in the policy (e.g., 2,500 per person).
Uninsured Motorist Coverage: This coverage helps pay for damages or medical expenses (exceeding the limits of medical payments coverage) in an accident caused by an uninsured motorist. Because some states do not require automobile insurance, or some "risk takers" illegally drive an uninsured vehicle in a state where automobile coverage is mandatory, there is always the chance you could be in an accident and the other party involved is uninsured. If the other party is at fault, you’ll be hard-pressed to recover damages. For this reason, uninsured motorist coverage is often a valuable addition to a policy.
Repair or Replacement Coverage: This coverage guarantees that repairs to your car will be made at full replacement cost or your car will be replaced with a new model that is comparably equipped. Availability of this coverage varies from state to state.
Motor Vehicle Loan/Lease (Gap) Coverage: This coverage pays the balance of your lease or loan if there is a total loss to your car.
Extended Non-Owned: This type of coverage is for use when the insured also has an owned automobile. Extends liability coverage to a non-owned vehicle (such as a corporately owned vehicle) which is furnished for regular use.
Named Non-Owner: This type of coverage is for use when the insured does not own an automobile. Provides liability coverage for a non‑owned vehicle (such as a corporately owned vehicle) which is furnished for regular use.
Tort Option Selection - Notice to Named Insured
A. "Limited Tort" Option - The laws of the Commonwealth of Pennsylvania give you the right to choose a form of insurance that limits your right and the right of the members of your household to seek financial compensation for injuries caused by other drivers. Under this form of insurance, you and other household members covered under this policy may seek recovery for all medical and other out-of-pocket expenses, but not for pain and suffering or other non-monetary damages unless the injuries suffered fall within the definition of "serious injury" as set forth in the policy, or unless one of the several other exceptions noted in the policy applies (ask your agent, broker or company for description of "serious injury" and the exceptions).
B. "Full Tort" Option - The laws of the Commonwealth of Pennsylvania also give you the right to choose a form of insurance under which you maintain an unrestricted right for you and the members of your household to seek financial compensation for injuries caused by other drivers. Under this form of insurance, you and household members covered under this policy may seek recovery for all medical and other out-of-pocket expenses and may also seek financial compensation for pain and suffering and other non-monetary damages as a result of injuries caused by other drivers.
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