The following list of terms are commonly used in the field of car insurance. Being familiar with them will help you understand your minimum lawful requirements when it comes to taking out your annual personal auto insurance policy if you are based in the US. The definitions also relate to auto insurance in general across many countries however, so you may find it useful to take time and check if you are familiar with their meanings.:

Uninsured/Underinsured Motorist This generally represents the level of cover provided for yourself, and relatives and other occupants that may travel in the insured vehicle, in the event that some or all of you sustain bodily injury in an accident in which the driver of another motor vehicle is legally responsible and does not have insurance (uninsured) or does not have enough insurance (underinsured). In the US state of Nevada, for example, state law requires that this cover must be offered by an auto insurance company to the insured (Statutes 687B.145(2)), but does not have to be accepted by the insured ie. it is not part of the mandatory minimum liability cover required under the law of that state. Diminution in Value This refers to the possible reduced value of your car after damage and repair. The rule in general is that a vehicle that has never been in an accident may, in some cases, be considered more valuable than a fully repaired vehicle. If your insurance policy provides for collision or comprehensive coverage under which your vehicle is being repaired, the loss to your vehicle will be measured by the language in the policy, and may not include any diminution in value. For claims against negligent parties’ property damage liability policy, such loss of value may be compensable under some circumstances.   Medical Payments This component of your personal car insurance covers the costs of all reasonable and necessary medical expenses, without regard to legal liability, that may result from accidental bodily injury while driving, or being a passenger, in an insured vehicle during an accident or indeed being struck as a pedestrian by a motor vehicle.  “MedPay” is generally bought in nominal amounts, such as $1,000, to provide a means for quick payment of minor medical bills without having to deal with the courts or other insurance companies. This cover, like the uninsured/underinsured cover must be offered by the insurance company in most US states for example (eg. Nevada Revised Statutes (NRS) 687B.145(3)), but does not have to be accepted by the insured.  Bodily Injury/Property Damage Liability This cover protects you financially if you injure someone else or damage someone else’s property while driving your car. You must be legally liable for the injuries or damages to activate these coverages. Most countries around the world enforce a minimum level of public liability insurance for this very reason ie. it is to protect other people namely from your potential dangerous mistakes. All US states requires that every driver carry some minimum level of liability insurance.

By: Jon James J.