Auto Insurance Definitions

Understanding the key terms in auto insurance can help you make informed decisions about your coverage. Here’s a breakdown of essential auto insurance definitions:

Bodily Injury Liability
Bodily injury liability is mandatory for car owners in California. This coverage pays for medical expenses, lost wages, and pain and suffering for others involved in an accident where you are at fault.

Collision
Collision coverage pays for property damage to your vehicle. It applies to collisions with other vehicles or objects.

Collision Deductible Waiver (CDW)
If you’re in an accident with an uninsured motorist, you'll typically need to use your own collision coverage and pay the deductible. However, if you have collision deductible waiver coverage (CDW), your deductible will be waived if your insurer determines that the at-fault party is uninsured.

For example, if you have a $500 deductible and are hit by an uninsured driver, the CDW will cover your deductible, allowing your collision coverage to pay for the remaining repair costs. Note that this waiver applies only when there is identifiable contact with another vehicle; hit-and-run accidents are usually not covered unless the driver is later found.

Comprehensive
Comprehensive coverage protects your vehicle from non-collision-related damage, such as theft, vandalism, fire, or hail. Glass is also covered under comprehensive coverage.

Loan/Lease Gap Coverage
This coverage pays the difference between what you owe on your vehicle and its actual cash value if it's declared a total loss. For example, if you owe $15,000 on your vehicle but it's only worth $10,000 at the time of a total loss, gap coverage will help cover the $5,000 difference.

Medical Payments
Medical payments coverage helps pay for accident-related medical expenses for you and your passengers. If you have a comprehensive health insurance plan, you may not need extensive medical payments coverage.

Original Equipment Manufacturer (OEM)
If you prefer to have original factory parts installed in your vehicle after an accident, you should consider adding OEM coverage. Without this coverage, insurers often use aftermarket parts, which may be of similar quality but are not the original manufacturer’s parts. Not all insurance carriers offer this option.

Uninsured/Underinsured Motorist Coverage
This coverage protects you if you are involved in an accident with a driver who lacks insurance or whose insurance is insufficient to cover the costs. It can help pay for your injuries and, in some cases, damage to your vehicle if the other driver is at fault.

Rental Car Reimbursement
If your vehicle is in the shop for repairs after an accident, rental car reimbursement coverage provides you with a rental car while your car is being fixed. This coverage typically requires comprehensive and collision insurance.

Roadside Assistance and Towing Coverage
While collision and comprehensive coverage protect your vehicle from damage, they do not cover the costs of towing it to a repair shop. Roadside assistance and towing coverage can be added to your policy to assist with gas fill-ups, battery jumps, tire changes, and towing. Be sure to check whether you have basic towing (up to 15 miles) or extended towing (up to 100 miles).

Property Damage Liability
If you are found at fault in an accident, property damage liability covers the costs associated with repairing or replacing another person’s property, such as their vehicle, a fence, or a pole.