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Moinot Insurance Group, LLC

Creating peace of mind by protecting your personal and business assets.




If you feel like you need to take a foreign language course to "speak insurance" don't worry, you're not alone! But, you need to at least understand the basic auto insurance terms because they spell out what you are and aren't covered for in your policy. Here is a translation of some basic insurance lingo:

$25/50/15 - You will see three numbers when you are buying liability coverage. They represent (in the $ thousands) your liability limits for per-person bodily injury, bodily injury for all persons injured in any one accident, and property damage liability. Most states require a mandatory minimum amount and insurance companies offer the option to purchase more.

Automobile Liability Insurance - Protection in case others hold you legally responsible for bodily injury and/or damage to property losses incurred as the result of a motor vehicle accident. In other words, coverage in case you cause an accident where there is either physical or property damage to other people. This is a general term that covers bodily injury (BI) liability and property damage (PD) liability. See explanation of limits, above.

Bodily Injury Liability Insurance (BI) - BI pays for injuries to other people when the insured vehicle's driver is legally at fault.

Collision Coverage - Optional coverage for when your car is damaged as a result of colliding with another object—a brick wall, for example, or a rollover. It also can come into play if you hit a pothole that severely damages your car. This insurance applies only to your car. It doesn't cover whatever the car collided with (that's what your property damage liability is for). According to 2004 data from the National Association of Insurance Commissioners, 72 percent of insured drivers carry this coverage.

Comprehensive Coverage - Optional coverage for when your car is stolen or damaged in ways that don't involve a collision. Examples include: hail damage, glass breakage, fire, vandalism, damage from an animal, flood, earthquakes, falling objects and theft. The price of comprehensive insurance is affected by the risk of loss, meaning the likelihood that an insured car will be stolen or damaged, and the car's value at the time of the loss. According to 2004 data from the National Association of Insurance Commissioners, 77 percent of insured drivers carry this coverage.

Deductible - This is your out-of-pocket expense that you agree to pay for losses up to set amount, such as $250 or $1,000. If you can afford to carry a higher deductible on collision and comprehensive coverage, you can substantially lower your costs.

Medical Payments Coverage (MP or Med Pay) - This coverage (usually optional) pays the doctor, hospital bills, and funeral expenses for injuries to you and the passengers in your car, regardless of who causes the accident, up to the policy limits. Med Pay is sold in states with traditional tort insurance laws. In states where Med Pay is optional, drivers may choose to rely on their own and their passengers' own health insurance to cover resulting injuries. Most insurance companies offer a wide range of coverage amounts.

Monetary Threshold - In some "no-fault" states, a dollar amount for medical and rehab expenses that must be reached in order to file a lawsuit for damages for non-economic damages (i.e. pain and suffering) against the driver who caused the accident. For example, under Colorado's old no-fault law, you could sue for pain and suffering if you racked up a threshold of $2,500 in medical expenses (nullifying the no-fault law).

No-Fault Auto Insurance - There are different versions of no-fault auto insurance laws in 12 states and Puerto Rico. In theory, the system is supposed to discourage lawsuits by allowing policyholders to recover financial losses from their own insurance company without having to prove that anyone is at fault in an accident. Motorists may only sue for injuries and for pain and suffering if their case meets certain minimum conditions.

Non-Economic Benefits - Intangible benefits, such as pain and suffering, inconvenience, emotional stress, impairment of quality of life, loss of consortium, etc.

Personal Injury Protection (PIP) - This a package of first-party medical benefits that provides broad protection for medical costs, lost wages, loss of essential services normally provided by the injured person (i.e. childcare, housekeeping), and funeral costs. It is usually associated with a no-fault auto insurance system.

Property Damage Liability (PD) - This coverage is for when you damage someone else's property with your vehicle. Usually it's someone's car, but it can apply to other property such as buildings, utility poles, fences and garage doors.

Third Party - In an insurance contract, a third party is anyone other than the policyholder and the family members covered under the insurance policy. The policyholder is the first party. The insurance company is the second party in the contract. Anyone else is a third party.

Uninsured/Underinsured Motorist Coverage (UM) - It pays (up to the coverage limit) the insured person and other passengers in the vehicle when they're injured as the result of an accident where the at-fault driver is uninsured, underinsured or a hit-and-run. This also comes in a second form - UMPD - to cover damage to your vehicle if hit by an uninsured or underinsured driver. However, most people do not purchase the second form because they carry collision and comprehensive coverage.