What Does It All Mean?
Insurance companies use terms that are difficult for some folks to translate so it can be understood. We will attempt to help define some terms and try to simplify them so they are easier to understand.
Comprehensive or “Comp”: This term refers to coverage for your car. The best way to put it is that this coverage refers to damage to your car caused by everything other than a collision. The “Comp” coverage should include things like theft, vandalism, hail, falling objects, glass (windshield) breakage, flood, insects, anything other than collision. This will also include hitting an animal or person. Hitting a deer that tears up the front of your car would be considered a “comp” claim. What it won’t cover are the usual things such as wear and tear, intentional acts, war, manufacturing defects, and so on. The “comp” coverage on your car is about the broadest most comprehensive type of insurance that you can buy because it includes things such as flood, earthquake, rodents, vermin, and insects. Remember each company is different so it is important to read your policy or talk with your agent. This coverage usually has a deductible, which means, the customer pays the deductible FIRST, before the insurance company will pay. The higher the deductible, the lower the premium charge.
Collision: This term is fairly well understood. This is when your car is damaged by a collision with another vehicle, bike or object. Remember that hitting an animal is not a collision. If a kid on a bike hits your parked car that is a collision. If you hit a pothole that is a collision, or hitting a ditch would be a collision. Hitting a tree or other stationary object is a collision. This coverage also usually has a deductible.
ACV: This term refers to Actual Cash Value or in english, the value of the car. What is the book value or retail value of the car just before the moment of loss. Many factors are involved in determining the “value” such as the year, make, model, current mileage, options, and overall condition of the car. Insurance companies have extensive data bases to calculate these values based on the area of the country you live and what price the car could be reasonably be sold. This is often a source of great frustration with people because it never seem “fair”. Our web site has a link to the NADA and to auto-trader to help folks determine the ACV or value of their car.
Bodily Injury Liability: This is very important coverage that pays on behalf of the customer for injuries they caused in an accident. Included in this coverage are defense costs. This means the insurance company will hire and pay for the defense of a suit against the customer who may or may not have caused an accident. Even though most accidents don’t involve injuries, when there are injuries, the medical bills, time off work, pain and suffering costs can really multiply. The law requires owners or operators of motor vehicles to have this coverage, the call it financial responsibility. There is usually no deductible for this coverage. Some people call this the insurance for the other guy.
Un-insured and under-insured bodily injury: This is a fun one. First of all, this coverage is designed for INJURY only, not for coverage for a car. This coverage is activated in the event that YOU are injured in an accident, and you are not at fault AND the person(s) at fault has no or less insurance than you. Then you can collect injury, pain and suffering, loss of work, and such against the person who CAUSED the accident from your own policy. A lot of claims are paid under this coverage because 20% (or so) of Ohio drivers do not carry any liability insurance. This coverage protects the customer from financial loss just like the “regular” bodily injury does.
We recommend people carry high deductibles to help keep their insurance premiums down, but we also recommend people consider and carry high limits of liability. We are a very litigious society and one mistake that leads to an accident can dramatically affect a persons financial future or worse wipe out their life time of savings.