Common Terms Relating to Personal Auto Insurance

The following 7 terms are important to understand when searching for automobile insurance:

1. Bodily Injury/Property Damage Liability
   These coverages protect you if you injure someone else or damage someone else’s property while operating your automobile. You must be legally liable for the injuries or damages to activate these coverages. Nevada law requires liability insurance.
2. Collision
   This protects against damage to your vehicle resulting from a collision with another vehicle or object regardless of who is at fault. If the other driver is at fault, your insurance company may have a legal right to seek reimbursement from the other driver or the other driver’s insurance company.
3. Comprehensive
   This insures you against theft or other damage to your vehicle resulting from causes other than collision, such as theft, wind damage, falling objects, fire and vandalism.Collision and comprehensive coverages are subject to a deductible selected by the insured. Other coverages that may be sold include towing, rental/reimbursement and mechanical breakdown.
4. Diminution in Value – This refers to the possible reduced value of your vehicle as measured before a loss to the vehicle and after the repair of that vehicle. The idea is, all other things being equal, that a vehicle that has never been in an accident may, in some cases, be considered more valuable than a fully repaired vehicle. If your insurance policy provides for collision or comprehensive coverage under which your vehicle is being repaired, the loss to your vehicle will be measured by the language in the policy, and may not include any diminution in value. For claims against negligent parties’ property damage liability policy, such loss of value may be compensable under some circumstances.
5. Insurance Scores – An insurance score is credit-based information used by some insurance companies to help determine the premium charged for insurance. An insurance score used in insurance underwriting and premium calculation has no relationship to the FICO score, which is typically used by lenders to evaluate the credit-worthiness of a borrower. Most insurers utilize their own proprietary insurance score methodologies, which can lead to a wide variation in the insurance score from insurer to insurer.
6. Medical Payments – This pays for reasonable and necessary medical expenses, without regard to legal liability, resulting from accidental bodily injury while operating or occupying an insured vehicle or being struck as a pedestrian by a motor vehicle. “MedPay” is often purchased in nominal amounts, such as $1,000, to provide a means for quick payment of minor medical bills without having to deal with the courts or other insurance companies. This coverage must be offered pursuant to Nevada Revised Statutes (NRS) 687B.145(3), but does not have to be accepted by the insured.
7. Uninsured/Underinsured Motorist – This protects the named insured, the named insured’s resident relatives and occupants in the insured vehicle, if they sustain bodily injury in an accident in which the owner or operator of another motor vehicle is legally liable and does not have insurance (uninsured) or does not have enough insurance (underinsured). This coverage must be offered pursuant to Nevada Revised Statutes 687B.145(2), but does not have to be accepted by the insured.