Insurance Coverage Definitions
Auto insurance is packaged into different coverage types. Some coverages such as liability insurance are mandatory. Others are optional, but can protect you and your family from ruinous financial consequences if you have an accident. Below is a breakdown of each car insurance coverage type to help you understand more about what each protects. Next to each type is a term that is usually associated with that coverage type (i.e. BI and PD) and additional information to help you decide on coverage levels.
You can find brief definitions of most other car insurance terms in our insurance terms glossary.
Bodily injury liability | Property damage liability | Comprehensive (Other Than Collision)
Collision | Uninsured motorist bodily injury | Underinsured motorist bodily injury
Uninsured motorist property damage | Underinsured motorist property damage
Personal injury protection | Basic and additional reparation benefits
First party benefits | Medical payments | Work loss
Gap insurance | Rental car reimbursement | Towing and labor
Mechanical breakdown | Custom parts and equipment
Accidental medical protection | Property protection | Accidental death benefit
LIABILITY COVERAGE (LIABILITY)
BODILY INJURY LIABILITY (BI):
Covers other people's bodily injuries or death for which you are responsible. It also provides for a legal defense if another party in the accident files a lawsuit against you. Claims for bodily injury may be for such things as medical bills, loss of income or pain and suffering. In the event of a serious accident, you want enough insurance to cover a judgment against you in a lawsuit, without jeopardizing your personal assets. Bodily injury liability covers injury to people, not your vehicle. Therefore, it is a good idea (and usually a company requirement) to have the same level of coverage for all of your cars. Bodily injury liability does NOT cover you or other people on your policy. It is mandatory in most states.
Learn more about your bodily injury liability coverage and how much you should buy.
PROPERTY DAMAGE LIABILITY (PD):
Covers you if your car damages someone else's property. Usually it is their car, but it could be a fence, a house or any other property damaged in an accident. It also provides you with legal defense if another party files a lawsuit against you. It is mandatory in most states.
Learn more about what your property damage liability coverage does, and how much you should buy.
Related Coverage:
Limited Property Damage, which is available in Michigan. It provides protection if you are at fault in an accident that causes damage to another vehicle.
PHYSICAL DAMAGE COVERAGE (COMP AND COLL)
COMPREHENSIVE COVERAGE (OTHER THAN COLLISION, OTC, COMP):
Covers your vehicle, and other vehicles (in limited scenarios) you may be driving for losses resulting from incidents other than collision. For example, comprehensive insurance covers damage to your car if it is stolen; or damaged by flood, fire, or animals. It pays to fix your vehicle less the deductible you choose. To keep your premiums low, select as high a deductible as you feel comfortable paying out of pocket. This coverage is not required by a state, but your lender or lease company may require it.
Learn more about what comprehensive coverage covers, and whether you should buy it.
COLLISION COVERAGE (COLL):
Covers damage to your car when your car hits, or is hit by, another vehicle, or other object. Pays to fix your vehicle minus the deductible you choose. To keep your premiums low, select as large a deductible as you feel comfortable paying out of pocket. For older cars, consider dropping this coverage, since coverage is normally limited to the cash value of your car. This is not required by a state, but if you have a loan or a lease then the lien holder will require it.
Learn more about your collision coverage, and whether you should purchase it.
UNINSURED AND UNDERINSURED MOTORIST COVERAGE (UM)
UNINSURED MOTORIST BODILY INJURY (UM):
Covers you, the insured members of your household and your passengers for bodily/personal injuries, damages, or death caused by an at-fault uninsured or hit-and-run driver. If you are involved in an accident where the other driver is at fault but has no insurance, your policy will cover your medical expenses, up to the limit on your policy.
Learn more about uninsured bodily injury coverage and how to make a decision on purchasing it.
UNDERINSURED MOTORIST BODILY INJURY (UNDUM):
Covers you, the insured members of your household and your passengers for injuries, damages or death caused by the negligence of a person with insufficient insurance. If you have an accident with a person whose coverage cannot meet your damages, your policy will meet the difference-up to the limit of liability listed on your policy.
Learn more about underinsured motorist bodily injury coverage and the factors you should weigh before buying it.
UNINSURED MOTORIST PROPERTY DAMAGE (UMPD):
Covers your auto when property damage is sustained by an insured and the negligent operator does not possess insurance. If you don’t have collision coverage, uninsured motorist property damage coverage pays up to a certain amount for repairs to the insured car (some states have limits at $3,500; some are lower and some are higher). If you have collision coverage, uninsured motorist property damage coverage only pays your collision deductible (in some states).
Uninsured motorist property damage alone is not enough to cover all potential car repair/replacement costs, and only applies if you are involved in an accident caused by a driver without insurance coverage.
Learn more about what uninsured motorist property damage coverage does, and whether you need to buy it.
UNDERINSURED MOTORIST PROPERTY DAMAGE (UNDPD):
Covers when property damage is sustained by an insured and the negligent operator possesses insurance, but the limits of liability carried by the negligent driver are not sufficient to cover the damages.
If you don’t have collision coverage, underinsured motorist property damage coverage pays up to a certain amount for repairs to the insured car (some states have limits at $3500, some are lower and some are higher). If you have collision coverage, underinsured motorist property damage coverage only pays your collision deductible (in some states). Underinsured motorist property damage alone is not enough to cover all potential car repair/replacement costs, and only applies if you are involved in an accident caused by a driver without enough liability insurance coverage.
Do you need this coverage? Learn more about the pros and cons of underinsured motorist property damage coverage.
OTHER COVERAGE TYPES
PERSONAL INJURY PROTECTION COVERAGE (PIP or MEDEX):
Covers within the specified limits, the medical, hospital and funeral expenses of the insured, others in his vehicles and pedestrians struck by him. It is only available in certain states. Depending on the state, the covered parties and the amount of protection may vary.
Learn who can be covered and when it's smart to buy personal injury protection coverage.
BASIC AND ADDITIONAL REPARATION BENEFITS (BRP or PIP):
Basic reparation benefits will cover medical up to the selected amount. In some states, additional reparation benefits is available to extend additional benefits. Additional reparation benefits is usually primary over any health insurance. This coverage is optional, and you cannot combine medical payments coverage with this coverage.
Learn more about purchasing basic and additional reparation benefits coverage.
FIRST PARTY BENEFITS - MEDICAL (FPB OR MEDEX):
First party benefits cover several areas of insurance coverage; however, this definition is for First Party Benefits-Medical. Similar to medical payments coverage and personal injury protection, FPB helps pay for your medical expenses if you or relatives living in your household are injured in an accident. Specific limits and coverages vary by state, but typically these services include:
- Related medical and surgical treatment
- Essential rehabilitative services (physical therapy, speech pathology, etc.)
- Necessary dental, psychiatric, psychological, and optometric treatment
- Ambulance and nursing service
- Required medications, medical supplies, and prosthetic devices
MEDICAL PAYMENTS (MEDPM):
Covers medical expenses to you and your passengers injured in an accident. There may also be coverage if as a pedestrian a vehicle injures you. This coverage applies regardless as to who is at fault. Medical payments may also cover policyholders and their family members when they are injured while riding in someone else's car or when a car hits them while on foot or bicycling. Coverage is limited to the terms and conditions contained in the policy.
Learn more about the benefits and costs of medical payments coverage.
WORK LOSS:
Also referred to as optional basic economical loss, this coverage helps you, drivers listed on your policy, and your passengers recover lost wages if you are unable to work due to accident-related injuries.
Learn more about what work loss coverage does and whether you should purchase it.
GAP INSURANCE (GAP):
Also referred to as gap or loan/lease payoff, this coverage is optional for buyers who have leased or financed their cars. To buy this coverage, you must have collision coverage and comprehensive coverage.
This coverage protects you if your car is declared a total loss and will reimburse you for the difference between the actual cash value of your car at the time of the loss and the amount that is owed to the finance company. It is usually much cheaper to buy gap insurance from an insurance company than from a car dealer.
Learn more about how to decide if you should buy gap coverage and where you can buy a policy. There are a lot of conditions for gap insurance; see the most common questions about gap insurance for even more information.
RENTAL CAR REIMBURSEMENT (RREIM):
Covers renting a car if your car is not drivable or while your car is being repaired because of a covered accident.
Learn more about the limits and costs of rental car reimbursement coverage.
TOWING AND LABOR (TL):
Also, referred to as tow club, emergency road service, emergency roadside service, this coverage is only available if you purchase comprehensive coverage and/or collision coverage. Some policies limit coverage to pay only when a claim has been issued against your physical damage coverage (an accident). Coverage limits are different for each carrier, but typically, this is what is covered.
Some towing plans are available from independent companies. Learn more about typical towing and labor coverage from insurance companies, and about the coverage you can buy through other third-party companies such as AAA in "Towing your dead car: Who ya gonna call?"
MECHANICAL BREAKDOWN (MBI)
Mechanical breakdown insurance covers repairs to mechanical parts of your vehicle that break. Unlike collision and comprehensive coverage, mechanical breakdown insurance covers your car’s mechanical parts that break in events not related to an auto accident.
Learn about what mechanical breakdown coverage does, and decide whether you need to buy it.
ACCIDENTAL MEDICAL PROTECTION PLAN (AMPP):
Also referred to as Accidental Death and Dismemberment, this covers you (or family under a family plan) while driving or riding in any private passenger vehicle. Defined accident medical expenses are paid directly to you without a deductible.
Learn more about whether accidental medical protection plan coverage is a smart buy.
PROPERTY PROTECTION INSURANCE (PPI):
This is required coverage in Michigan. It provides protection if you cause damage to properly parked vehicles or fixed properties such as buildings or lampposts in the state of Michigan.
Learn the details of property protection insurance.
ACCIDENTAL DEATH BENEFIT (ADB or ADD):
Also, referred to as accidental death, accidental death indemnity. this coverage pays a death benefit pays if bodily injury causes the death of you or a covered family member.
Learn more about whether accidental death benefit coverage is necessary.
CUSTOM PARTS AND EQUIPMENT (CPE):
Also, referred to as additional customized parts or equipment, customized parts and equipment, electronic equipment, this covers permanently installed custom parts or equipment other than those installed by the original manufacturer.
Examples of customized equipment include:
- Any dealer-installed equipment that is not offered by the original manufacturer
- Special equipment on vehicles, vans, and trucks, including: running boards, brush bars, roll bars, undercarriage lighting, fog lights, bed liners, camper shells, trailer hitches, etc.
- Customized wheels, spoilers, suspensions or performance-related equipment
- Stereo, sound recording and television equipment
- Customized paint or decals
Put your zip code in above and get a quote. CarInsurance.com's online quote form has the most comprehensive coverage section, specific to your state with further definitions and guidance. You can also ask licensed insurance agents questions about any coverage option.
Disclaimer: This information is provided for information purposes. They are not intended to substitute informed professional advice. These responses should not be interpreted as a recommendation to buy or sell any insurance product, or to provide financial or legal advice. Please refer to your insurance policy for specific coverage and exclusion information. Please read our Terms of Service.
