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Confusing Insurance Terminology Cleared Up

it-5Insurance terminology can be very confusing.  The language used can be arcane, archaic, and downright confusing, but with a little help it can be cleared up to understand.  Wise Insurance Quotes.com is in the information and enlightenment business.  We sought out the most misunderstood terms in the insurance game.  Here is what we found.

Personal Injury Protection:  Surprise!  Rather than being a “gotcha”, personal injury protection (PIP) actually covers more than you think it does.  In addition to providing medical coverage for you and your passengers (which you already knew) personal injury protection covers medical expenditures for the people that are injured by your vehicle.  A person versus pedestrian accident is a traumatic experience for everyone involved, but most of all the pedestrian.  Ambulance, hospital, surgical, rehabilitation, outpatient, and even lost wages are covered by personal injury protection.  Michael Thierson from the Pennsylvania Department of Motor Vehicles has this to say about how much PIP is right for you.

Save Money on Your Next Insurance Policy. Shop Rates Fast. “If you’re middle aged or older with extensive insurance coverage, you won’t need heavy amounts of PIP coverage. Conversely, if you’re young with limited health insurance, you’ll want higher amounts of PIP coverage. This bears especially true if you’re a young parent.”

Gap Coverage:  Many people believe that gap coverage is a little goody that takes care of their deductible should they have a claim.  Not even close.  Gap coverage is the difference between what your insurance company believes that your car is worth (the blue book value used) and what your payment coupons say that you owe on the car.  If you were to, God forbid, crack up and total your showroom new car within a week of driving it off the lot, the difference (gap) between “value” and “owed” would be significant.  Your gap coverage takes care of you in that event.

No Fault Auto Insurance:  This is the worst culprit of all.  People tend to believe that no fault auto insurance means that they will not be held to blame if they drive down the road steering with their feet and plow into a school bus.  After all, it’s no fault, right?  Actually it’s misnamed.  No fault insurance was instituted to hold down the number of lawsuits filed as a result of traffic accidents.  It just means that, if you have an accident, your company pays for your repairs and the other person’s insurance pays for his.  You will still be held accountable by the courts as well as by your insurance company in the form of higher premiums or cancelled coverage should you prove to lead the league of drivers in irresponsible behavior.

 

 States that have no-fault systems:

Florida,

Michigan,

New Jersey,

New York,

Pennsylvania,

Hawaii,

Kansas,

Kentucky,

Massachusetts,

Minnesota,

North Dakota,

Utah.

Nine of these states are considered just “No-Fault” and three are considered “choice” states.  In a so-called “choice” state, drivers can choose a no-fault system policy or a policy based on traditional tort liability law.  The three “choice” states are Kentucky, New Jersey and Pennsylvania.

 

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