Understanding Basic Insurance Terminology
Clients often call to ask about letters they receive from their own insurance companies. Insurance adjusters use template letters with a lot of complex language in order to communicate with people. In fact, it sometimes seems as though the insurance companies do not want their customers to know what’s in their contracts. So, let’s take a look at some of the common terms and types of coverage and explain what they mean.
A policy is a contract that sets forth the relationship between the “insurer” (the company) and the “insured” (the person who pays the company premiums). This is a contract, but it is often controlled by state and federal laws that govern what types of things can be included in such a policy.
This means to protect. An insurance policy is designed to “indemnify” the individual, meaning “protect” that individual in the event of some event that causes a loss.
Losses can be confusing. A stolen car is clearly a loss. But if you break your arm, you may not generally think of it as a loss, although it is. To an insurance company, any damage, injury, wreck, or other type of event that may result in money being paid is considered a loss.
Types of Coverage
An insurance company “covers” losses. This means it agrees in the policy contract to pay for things that cause a damage or loss. The types of things an insurance company agrees to pay for are called “coverages.” The following are the main types of coverage most people will have, although each state has different rules and people can have other kinds of coverage as well. If your insurance company refuses to protect your or you suspect they are breaking your policy contract, you may have a bad faith claim. You should contact an attorney to discuss, but you can also make a complaint to the state.
Insurance that pays other people for the injuries or damages that you cause. If you run a stop sign and hit someone, causing them thousands in vehicle damages and medical bills, your liability coverage is intended to pay these damages so that you don’t have to.
- Defense Costs
If you hurt someone or caused them a loss, they may bring a lawsuit against you to collect their damages and losses. Your insurance policy contract will likely have a provision that says the company will hire a lawyer on your behalf to defend the case.
- Uninsured Motorist
If you are injured by someone who did not carry liability insurance, your policy may include this important, optional coverage that is designed to compensate you in the same way you would have been compensated had the other person had liability insurance.
- Underinsured Motorist
If the person who hit you had liability insurance, but it was not enough to pay for all of your injuries and damages, you may carry optional underinsured motorist coverage, which is intended to make up the difference between the other person’s insurance limits and the amount you have. So, if the person who caused the collision had $50,000 in coverage, but you carried $100,000 in underinsured coverage, if your losses exceed the $50,000, you can collect up to your own limit after collecting the other person’s limits.
- Medical Payments
One of the least utilized optional policy benefits is “med pay.” This is intended to cover your medical bills and those of your passengers. It is not based on fault. It pays even if you caused the wreck. It is not intended to compensate for pain and suffering – just medical expenses. However, it can help cover expenses that your health insurance may not pay, such as deductibles, co-pays, or out-of-network expenses.
Discuss Your Case with an Attorney
If you’ve been involved in a motor vehicle collision in the Tampa Bay area, there are probably a lot of questions going through your mind. While someone else may have caused the crash, it is important that you share your own insurance information with your lawyer so that he or she can make sure you are fully compensated for your losses. Call (877) 767-1032 for a free case evaluation today. With offices in Tampa, Clearwater, and Hudson, Roman & Roman, P.A. makes it convenient to get caring and experienced legal representation anywhere in the Bay area.