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Auto Insurance Glossary

Definitions to Help You Make Better Decisions

Although auto insurance is mandatory in most states, you’ve got choices when it comes to types of coverage and how much you want to purchase. Does comprehensive and collision coverage make sense for an older vehicle? What’s a deductible, and how does that relate to a premium? What’s uninsured motorist coverage, and do you need it? Here are definitions of some of the common terms you may come across as you’re shopping for auto insurance.

Bodily Injury

Bodily injury liability coverage is required in most states for good reason: This is what shields you financially if you injure another person—instead of paying out of your own pocket, your insurance company foots the bill. Since medical bills can quickly add up, you should carefully consider how much bodily injury protection you can afford.


This coverage pays to fix your vehicle if you’re in an accident, up to your vehicle’s value (as determined by the insurance company based on sales of similar vehicles in your area). This means if your truck sustains $10,000 in damage but is only worth $5,000, you will get the lesser amount.


Comprehensive coverage pays for non-accident vehicle losses such as fire, hail or theft. Similar to collision coverage, the maximum you can collect with comprehensive coverage is the vehicle’s worth as determined by the insurance company.


In order to discourage frivolous claims, insurance companies include deductibles with their policies. This form of cost-sharing is the amount you agree to pay when you have a claim. For example, with a $500 deductible, a $1,200 fender-bender repair will cost you $500, and the insurance company will pay $700.

Medical Payments

Not to be confused with bodily injury coverage, which pays for medical costs incurred by third parties that you may injure with your vehicle, medical payments coverage pays for medical costs incurred by you and/or the passengers in your vehicle.

Personal Injury Protection

Also known as “no-fault” insurance, personal injury protection is similar to medical payment coverage in that it pays for medical costs for you and your passenger(s), but it is more robust, often covering things like lost wages if you can’t work, ongoing care costs and more. This protection is required in some states but not others.


A premium is the amount your insurance company charges to provide your coverage. Drivers with clean driving records and good credit scores often get the best rates, though other factors like age, gender and location also come into play. Typically, you can choose to make premium payments monthly, semiannually or annually.

Property Damage

A mandatory coverage in most states, liability coverage for property damage is what pays to repair or replace someone else’s damaged vehicle or other property if you are at fault in an accident.

Uninsured Motorist

Even though most states require it, some drivers do not carry auto insurance. If you are in an accident caused by an uninsured motorist, this coverage will pick up the costs that should have been paid by them or their insurance company, so you aren’t left holding the bag.


The more informed you are, the more you can save, so check out these great articles on auto insurance or find out more in our Auto Insurance Resource Center

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