Insurance 101 | Covered Insurance Solutions

Glossary: Insurance Terms and Definitions

Coverage

Description

Limits*

Policy Effective Date

Description When would you like your new policy to begin? Receive a Discount for purchasing a policy at least 7 days before you need it!

Limits N/A

Required N/A

Bodily Injury Liability
Required: Yes

Description Limit of insurance available for claims arising from physical injury to a person, including sickness or disease, for which the insured is legally liable due their negligence. This coverage is required in most states and may be purchased as split limits (separate limits for bodily injury per person/ bodily injury per accident/ property damage) or as combined single liability limits (one limit applies to all bodily injury and property damages).

Limits Minimum - 25k per person / 50k per incident
Recommended - 100k / 300k

Required Yes

Property Damage Liability
Required: Yes

Description Limit of insurance available for claims arising out physical damage to property of others caused by negligence of the insured.

Limits Minimum - 15k per incident
Recommended - 50k

Required Yes

Medical Payments or Personal Injury Protection
Required: Varies by state

Description Limit of insurance available for claims arising from bodily injury to the insured or passengers of the insured vehicle, regardless of fault. Provides coverage for medical and funeral expenses, up to the limit listed on the policy. Can also provide coverage for injuries sustained by the insured while a passenger in someone else's car and when struck by a vehicle when walking or cycling. Limit of insurance applies per injured person.

Limits Minimum - 5k per person
Recommended - 50k

Required Varies by state

Collision
Required: No

Description Covers up to vehicle replacement value. You select deductible for this coverage, which will affect the price of the coverage.

Limits Covers up to vehicle replacement value. You select deductible for this coverage, which will affect the price of the coverage.

Required No

Comprehensive
Required: No

Description Optional insurance coverage for damages to vehicles resulting from several events other than collision. Comprehensive insurance provides coverage for damages to the insured vehicle resulting from theft, vandalism, damage from hitting animals, fire, falling objects, glass damage and natural disasters such as flood, wind and hail.

Limits Covers up to vehicle replacement value. You select deductible for this coverage, which will affect the price of the coverage.

Required No

Uninsured or Underinsured Motorist Protection
Required: Varies by state

Description Optional insurance coverage for bodily injury and/or property damage to the insured/ insured vehicle, resulting from negligence of another party, for which there is no insurance coverage available or the available insurance coverage is insufficient.

Limits In colorado, same as bodily injury limits
Minimum - 25k per person / 50k per incident
Recommended - 50k / 100k"

Required Varies by state

Rental Car Reimbursement
Required: No

Description Optional insurance coverage that reimburses the insured for expenses resulting from renting a vehicle due to a covered cause of loss.

Limits Minimum - None
Recommended - Yes

Required No

Deductible
Required: Yes

Description The dollar amount the insured is responsible for paying in the event of a covered loss; the claim payment is reduced by the deductible amount. Deductibles may come in the form of a dollar amount or a percentage amount. Higher deductibles generate a premium reduction as the insured is essentially retaining more of the risk but it is very important to consider what you can really afford to pay out of pocket in the event of a loss.

Limits 100 - 2000

Required Yes

Loan Payoff Coverage

Description aka Gap Coverage, this optional insurance coverage is triggered when a total loss of an insured auto occurs and limit of insurance is less than the remaining loan amount.

Limits N/A

Required N/A

*Limits vary by state

How do I cancel my current insurance?

Do you currently have insurance and are looking to switch providers? If you are already a customer of Covered then just give us a call and we can handle it for you! (833-487-2683) If you are not yet part of the Covered family then we have provided a short form that you can fill out to get you started!

We will generate a PDF document that you can print and send by mail, or email to your current provider with the relevant details for canceling your current insurance. Note that different providers might require additional information from you so this form may not be sufficient to complete your cancellation.

Find the form here!

In which states does Covered sell insurance?

Covered Insurance is currently operating in 48 states, shown on the map below. We are constantly expanding our reach, so check back soon if your state isn’t on the list.

Covered Map

Is it bad to file an insurance claim?

There is nothing inherently wrong with filming a claim. However, if the cost to repair or replace something is hovering right around the price of your deductible, you should consider not filing a claim (since you’d already be paying your deductible anyway).

If you’re in a fender bender or have minor damage to your home after a storm, it’s better to first get an estimate, then decide if you want to contact your carrier and file a claim.

Top 10 Auto Insurance Claims Terms

Handling an auto insurance claim is serious business and is often complicated. Make sure you know these common terms:

Collision vs. Comprehensive Coverage

Collision coverage helps pay for damage to your vehicle if it hits another car or object, is hit by another car, or rolls over. Comprehensive coverage helps pay for damages to your vehicle that are not caused by a collision. Examples include theft, vandalism, hitting a deer or other animal, storms, and certain natural disasters. Typically, comprehensive coverage also covers glass damage.

Deductible

The fixed dollar amount that is your responsibility as the policyholder. For example, if your policy includes a $1,000 deductible, you will be required to pay that amount towards the repair of the damages, or that amount will be deducted from your payment if your vehicle is damaged beyond repair or a settlement check is sent to you directly.

Depreciation

Your car may lose value over time due to factors such as age, wear and tear, and obsolescence. When Travelers is determining the value of your vehicle, depreciation will be among the factors considered.

Investigation

All claims need to be investigated. This may entail reviewing the details of your accident, contacting witnesses and assessing the damages.

Liability Coverage
If you cause an accident, hurt someone or damage property, this coverage may provide compensation to the harmed party or pay for your legal expenses if you are sued. This coverage is required in most states.

Loan/Lease (Gap) Coverage

If you are making payments on your car and it is damaged during an accident or a Total Loss, this coverage may pay all or a portion of the cost difference between your outstanding loan amount and the actual value of the vehicle.

Rental Coverage
If you have rental coverage and your car is damaged during an accident, this coverage may pay all or a portion of the costs associated with renting alternative transportation.

Roadside Assistance/Towing

If your vehicle cannot be driven as a result of damage or mechanical failure, Travelers may be able to help. Depending on your policy coverages, there may be charges for which you will be responsible.

Subrogation

If another person is responsible for the damage to your property, Travelers may seek reimbursement from that other person or that person’s insurance carrier. If there is a recovery, you may receive reimbursement for some or all of your deductible.

Total Loss

When a vehicle is considered unsafe to use or damaged beyond repair.

What is a deductible?

Your deductible is the amount you have to pay in order to file a claim. Let’s say your deductible is $500. If you are in an accident and need to pay $2000 to fix your vehicle, your insurance will reimburse you for $1500 (the amount you needed minus your deductible).

When you shop for insurance, you can choose to either have a lower or higher deductible, but this will affect your premiums (the amount you pay monthly, yearly, or twice a year to get coverage).

What is a premium?

Your premium is the amount your pay monthly, yearly, twice a year to receive coverage. Depending on your policy, location, and other facts (such as marital status, claims history, etc.) this amount can vary considerably.

In general, your premium is lower if you choose to have a higher deductible. This means that while your regular payments are lower, you will pay more out of pocket if you need to file a claim.

What is actual cash value coverage?

Actual cash value coverage means that your insurance carrier will factor in depreciation when calculating how much an item is worth today.

Let’s say you have a 5 year old TV that cost $1000 when you originally bought it. If you have Actual cash value coverage, you’ll get how much the TV is worth after factoring in 5 years of depreciation. The TV will likely be worth much less than when you bought it.

Learn More

What is replacement cost coverage?

This type of coverage pays the amount it will cost to replace damaged property (due to a covered cause of loss) with new comparable goods, despite the age or condition of the damaged property.

Let’s say you paid $500 for a TV 5 years ago. If you’re TV is destroyed in a fire, you’ll get whatever amount it would cost to go out and buy the exact same TV today.

Learn More

Frequently Asked Questions about Insurance 101

Glossary: Insurance Terms and Definitions

How do I cancel my current insurance?

In which states does Covered sell insurance?

Is it bad to file an insurance claim?

Top 10 Auto Insurance Claims Terms

What is a deductible?

What is a premium?

What is actual cash value coverage?

What is replacement cost coverage?

Questions? Coffee? Laughs?