The Pennsylvania Insurance Department is here to
help you understand automobile insurance. In the
next few pages you will learn about auto insurance,
types of coverage available, and some tips on how to
shop and what to do if you are in an accident.
There is no such thing as a “full coverage” auto
insurance policy. Insurance coverages and policies can
vary. The information in this guide is intended to help
you understand auto insurance. The information is
general and not specific to your insurance policy. If
you have specific questions about your coverage, you
should consult your agent or insurance company.
What Is Automobile Insurance?
Automobile insurance is a
contract between you and
your insurance company. It
protects you against financial
loss if you are in an auto
accident. Auto policies
contain a variety of required
and optional coverages. You
agree to pay a fee, called the premium,
and in return, the insurance company
agrees to pay for certain losses as
defined in your policy. Having the
right insurance coverage may prevent
you from suffering a large financial loss
in the event of an automobile accident.
Is Auto Insurance Mandatory in
the Commonwealth?
Drivers must purchase and maintain auto insurance
to legally drive in Pennsylvania. This is called
maintaining “financial responsibility” on your
vehicles. A lapse in insurance coverage may result in
the suspension of your vehicle registration. Operating
a vehicle without the required insurance
may result in a fine, the suspension of
your driver’s license, and the forfeiture
of your license plate and registration
sticker. Restoration fees and proof of
insurance must be provided prior to
having either registration or driving
privileges returned. Insurers are
required to report policy terminations
to PennDOT. Drivers are responsible for
providing proof of continuous coverage.
What Are the Required
Coverages in Pennsylvania?
When you purchase auto insurance, there are certain
coverages that are required and others that are
optional. The required coverages are:
Required coverages in Pennsylvania:
« Medical Benefits
« Bodily Injury Liability
«
Property Damage Liability
Required coverages in Pennsylvania:
« Medical Benefits
« Bodily Injury Liability
«
Property Damage Liability
Medical Benefits
This coverage pays the medical bills for you and
others who are covered by your policy, regardless of
fault, if there are injuries resulting from an accident.
The minimum limit is $5,000. Higher limits are
also available.
Bodily Injury Liability
If you injure someone in an auto accident,
this coverage pays damages for which |
you are liable, such as medical and
rehabilitation expenses. The minimum
limit is $15,000/$30,000. The $15,000
pays for injuries to one person, while
the $30,000 represents the total available for
one accident. Higher limits are also available.
Property Damage Liability
If you damage someone’s property (such as his or her
car) in an accident and you are at fault, this coverage
pays for repairs to that property. The minimum
limit is $5,000. Higher limits are also available.
Some companies offer a combined single limit of
$35,000 which meets the bodily injury liability and
property damage liability minimum requirements.
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What Do Policy Limits Mean?
The coverage limits are the most your insurance
company will pay for injuries to any one person,
all persons injured in an accident, and for property
damage. If you do not have enough liability
Please refer to the Glossary found on page 11 for definitions of the terms in bold face.
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coverage, and you are found at fault for an accident,
you may be responsible to pay for anything your
insurance does not cover.
What Are the Optional
Coverages in Pennsylvania?
Auto insurance policies also offer a variety of
additional optional coverages that can be purchased.
These include:
Uninsured Motorist (UM)
This coverage applies to you, relatives residing in
your household, and your passengers if injured by an
at-fault uninsured motorist or hit and run driver.
This does not cover damage to property.
Underinsured Motorist (UIM)
This coverage applies to you, relatives residing in
your household, and your passengers if injured by
an at-fault motorist who does not have enough
insurance to pay your claim. This does not cover
damage to property.
Stacking of UM or UIM
When you stack your UM and/or UIM
coverages, your limit of coverage for each
covered vehicle on your policy is multiplied by
the number of vehicles on the policy. You can also
stack your UM and/or UIM coverages to receive
uninsured or underinsured motorist
coverage from more than one policy under
which you are insured. By law, stacked
coverage applies unless you reject it. You
will pay less in premiums if you reject
stacked coverage.
Funeral Benefit
Funeral Benefits pay, up to the limit specified in
the policy, for funeral expenses if you or a family
member dies as a result of an auto accident, regardless
of who was at fault in the accident.
Income Loss
This pays a portion of your lost wages when injuries
sustained in an auto accident keep you from working.
Collision
Collision coverage pays to repair damage to your
car as a result of an accident. Most banks or lenders
require you to buy this coverage to receive a car loan.
Under Pennsylvania law, the insurance company
applies a $500 deductible unless you request a
lower amount. Generally speaking, the higher your
deductible, the lower your premium.
Comprehensive
Comprehensive coverage pays for theft or
damage to your car from hazards such as fire, flood,
vandalism, and striking an animal. Most banks or
lenders require you to buy this coverage to receive a
car loan. There are various levels of deductible that
may be purchased.
Extraordinary Medical Benefits
This pays for medical and rehabilitation expenses that
exceed $100,000, up to a maximum limit of $1.1
million.
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Accidental Death Benefit
Accidental Death Benefit pays a specified dollar benefit
to the personal representative of a person who dies as
a result of injuries sustained in an auto accident.
Rental Reimbursement Coverage
Rental Reimbursement Coverage pays—up to the
limit on your policy, your expenses to rent a vehicle
if the vehicle on your policy sustains a covered
comprehensive or collision loss.
Towing Coverage
This reimburses you, up to the limit of
your policy, for towing and labor costs
for your covered vehicle. This coverage is
usually only available if comprehensive
and collision is carried on your vehicle.
GAP Coverage
Guaranteed Asset Protection (GAP) will
pay the difference between an insurance company’s
payment for a totaled vehicle and the balance of a
vehicle loan. This coverage is traditionally purchased
when an individual is buying a new vehicle.
These policies do not pay for deductibles, missed
payments, or late fees and many times have a limit
to the amount they will pay. Check your policy
carefully when choosing to add GAP coverage.
How Are Rates Determined?
When you are ready to purchase insurance, the
insurance company or producer (agent) will
ask you a series of questions and, based on your
answers, will decide whether or not they will accept
you as a policyholder. This practice is known as
underwriting. By law, insurance companies may
not unfairly discriminate by using underwriting
standards based on things such as race, religion,
nationality, ethnic group, age, gender, family size,
occupation, place of residence, and marital status.
Certain items will be taken into consideration when
figuring your premium, such as the type and age
By law, insurance companies are
prohibited from charging different
rates based on an applicant’s race,
religion, national origin, and gender.
By law, insurance companies are
prohibited from charging different
rates based on an applicant’s race,
religion, national origin, and gender.
What Should I Know Before I
Start to Shop?
You need to know what coverages you want, as well
as the limits and deductibles you desire. Also, you
should have the following basic information available
on all drivers in your household:
«
All drivers’ names, ages, and marital statuses;
«
Driving record (accidents and moving violations);
«
Estimated annual mileage driven;
«
Full vehicle identification number;
«
Year of vehicle;
«
Cost of vehicle; and
«
Special equipment, such as anti-theft devices,
airbags, etc.
of the vehicle, its safety features, where the vehicle
is garaged, the average number of miles driven in a
year, the coverages and limits chosen for the policy,
and the driving history of the drivers, to name a few.
Some companies may use your credit history when
determining your premium. Companies cannot use
it to increase your rate when you renew. By law,
insurance companies are prohibited from charging
different rates based on an applicant’s race, religion,
national origin, and gender.
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What Questions Should I Ask?
The insurer will ask you questions and use the
answers to decide whether to insure you and how
much your premium should be. You should also ask
questions to be sure you are getting the coverage you
want and from an agent and insurer you trust.
Here are some questions you should ask your agent
or company representative when you
shop for auto insurance:
«
What coverages
am I required to
have in this state?
«
What is the
minimum amount
of liability insurance
coverage this state
requires me to carry?
«
Are these liability limits high
enough to cover me if I have an
accident and I am at fault?
«
How much would it cost me to buy more than
the minimum amount of liability insurance
coverage?
«
Do I need collision and comprehensive
(sometimes called “other than collision”)
coverage?
«
What deductible should I have for collision
coverage? For comprehensive (sometimes called
“other than collision”) coverage?
«
Will this policy cover me if I let someone else drive
my car?
«
Will this policy cover me if I have an accident in a
rental car while on vacation?
«
Will this policy cover me if I have an accident
while traveling for work?
«
If my car is totalled, how is the value of my
vehicle set?
«
Can I choose any body shop or glass shop to
repair my car? Does the policy pay for original
manufacturer’s parts or aftermarket parts?
«
If my car is disabled, will this policy pay for a
rental car while it is being repaired? Is there any
cap or limit?
«
If my car is disabled, will this policy
pay to have it towed to a garage or body
shop?
«
How much can I save with
a higher deductible?
«
What discounts are
available?
«
What other types
of property do you
insure? Can I qualify
for a discount if I buy
both policies from your
company?
«
What are my payment options? Can I
pay monthly or quarterly? If I do, is there
an extra charge?
«
How do I report a claim?
«
What coverage is available if I drive for a TNC like
Uber or Lyft?
Teen Drivers
Insuring a teen driver is often a significant additional
cost for parents. Some companies require that a
teenager be added to the policy upon obtaining his/
her learner’s permit. Check with your insurance
company to determine their requirements. Many
companies consider younger drivers to be a higher
risk, and this often translates into higher premiums.
Your child may be eligible for discounts. Ask your
insurance company if discounts are offered for good
grades or completed driver education courses.
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Mature Drivers
Taking a driver safety training course is an excellent
way to keep your driving skills sharp, and it can
also earn you a reduced rate on your car insurance
if your carrier offers such a discount. Pennsylvania
law requires insurance companies to provide at least a
five percent premium discount for each vehicle on an
auto policy under which all named insureds are 55
years of age or older and have successfully completed
a driver improvement course that meets the standards
of PennDOT.
Individuals must take an approved course every
three years to continue to be eligible for the discount.
They may be disqualified if, within three years
of completing the course, they are involved in a
chargeable accident, convicted of a moving violation,
or are convicted—or have Accelerated Rehabilitative
Disposition (ARD)—for driving under the influence of
alcohol or a controlled substance.
Insurance companies recognize that mature drivers
face unique challenges as they get older, and they will
reward those mature drivers who take the initiative to
minimize risk by enrolling in approved driver training
courses.
Know How to Save
Discounts
Most insurance companies offer discounts for
safer drivers, safer cars, drivers with multiple
types of policies, good students, and more.
There are also a variety of discounts that are
required by law, like the mature drivers
discount mentioned above. Ask your insurance
company today and you could start to save.
Limited or Full Tort
If you are in an automobile accident, you are able
to recover out-of-pocket medical and certain other
expenses. Limited tort offers you significant
savings on your premium but you are not able
to recover certain damages—such as payments for
pain and suffering—unless the injuries meet one of
the exceptions in the law. With full tort, you have
unrestricted rights. If you fail to specially elect limited
tort, you will be deemed to have elected full tort.
Deductibles
By choosing higher deductibles on comprehensive
and collision coverage, you may be able to lower
your policy cost. Just remember that the deductible
you choose is what you are responsible for paying
out of your pocket in the event you file a claim.
Where to Buy Insurance
Now that you know all about what to look for when
choosing your auto insurance, let’s talk about where
to buy a policy.
Agents
Agents are individuals
available locally to
address your car
insurance needs. Local
agents can be independent
or captive. If your agent is
independent and not exclusive
to one insurance company, he or
she can compare policies and sell you the one that best
meets your needs from among the
multiple insurance companies he
or she represents. If your local agent
is a captive agent, he or she
exclusively represents one
insurance company.
Direct
Some insurance companies sell
their policies directly over
the phone or Internet
without using agents. In
some cases, you can
choose to interact with a
direct company exclusively
over the Internet.
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Many companies have payment plans that allow you
to pay the premium over a period of time, sometimes
for an extra fee. If you decide to buy a policy on a
payment plan, find out the applicable installment fees.
If you use a premium finance company to pay for
your insurance, the monthly payments may be easier,
but the total of payments could be larger. Finance
A good rule of thumb is to get quotes from at least
three different insurance companies. Make sure your
quotes are for the exact same coverages and limits.
Cost can vary significantly among companies. Ask
for copies of the insurance policies. It is important to
read the policies to understand the differences in
coverage from policy to policy and especially
what is excluded. No two policies are exactly
the same.
Things to Keep in Mind
Make sure you know the length
of the policy term. The most
common policy terms are six
months (semi-annual) and
one year (annual). While
policies sold for a term of
less than one year may
require less money up front,
they will be re-priced at the
end of the policy term. Keep
in mind that an insurance
company can only non-
renew you on the annual
anniversary of when your
policy was initially written,
even if the policy term is less than 12 months.
Remember, you are ultimately
responsible for the accuracy
and completeness of the
information on your application.
Remember, you are ultimately
responsible for the accuracy
and completeness of the
information on your application.
agreements are separate contracts that often include
a limited power of attorney that gives the finance
company some authority over the termination of
your
policy. Moreover, if the policy is cancelled, the
insurance
company must remit all return premiums
to the
finance company, which will apply them to your
account.
Personal effects and equipment such as
cellular telephones, compact discs,
CD players,
and custom stereo
speakers and systems
that are not
permanently installed in the vehicle
by the manufacturer generally are not
covered, unless specifically declared and
added to the policy.
Read before you sign. Remember, you are ultimately
responsible for the accuracy and completeness of the
information on your application.
Should You Drop Comprehensive
and/or Collision Coverage on an
Older Car?
It may not be cost-effective to have comprehensive
or collision coverage on cars worth less than $1,000.
What Happens if I Can’t Get
Auto Insurance Because of
My Driving History?
Pennsylvania’s Assigned Risk Plan is a
program that offers car insurance to those
who are unable to get coverage on their own.
All insurance companies writing automobile
insurance in the commonwealth are required
to participate in the plan. Applicants are
assigned to insurance companies in proportion to
the amount of business each company writes in the
commonwealth. To learn more about the Assigned
Risk Plan you can visit www.aipso.com or contact
the plan’s customer service office at (401) 946-2800
or toll-free at (800) 477-6146.
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After You Purchase Insurance
After you purchase automobile insurance you will
receive your policy. Your policy is a contract between
you and your insurance company. You should take
time to read your policy. Every policy includes a
declarations page (below). It lists the insurance
company, your name, the policy number, vehicles,
coverages, deductibles, limits, cost of premium,
and effective and expiration dates. If you have
questions, contact your insurance agent or company.
They are responsible for serving your policy,
including responding to any questions you may have
regarding the terms in your policy. If you purchased
a policy directly from the insurance company, a
company representative should be able to respond
to your questions. If you still have questions, you
may choose to email, write, or call the Pennsylvania
Insurance Department’s Bureau of Consumer
Services. We will be happy to answer your questions.
*Please refer to pages 2 and 3 for the Required Coverages and Optional Coverages in Pennsylvania.
*
*
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The Pennsylvania
Insurance Department
Whether you have a general question,
or want to file a complaint, you can
get help at Consumer Services online
at www.insurance.pa.gov or contact
us toll-free at 1-877-881-6388.
What Do I Do if I Am in an
Accident?
If you are in an accident you should exchange
information with the other driver. If there are injuries,
call 911. Be sure to obtain the name, insurance
company name, and phone number of each of the
other drivers. If you cannot obtain this
information, write down the license
plate number of each of the other
drivers. Other important information is
as follows:
«
The year, make, and model of each of
the other cars;
If you are in an accident you should
exchange information with the other
driver. If there are injuries, call 911.
If you are in an accident you should
exchange information with the other
driver. If there are injuries, call 911.
Be sure to pay your premium. Pennsylvania law
does not require companies to extend a grace period
for premium payments. If your insurance company
does not receive your premium by the due date, the
company can cancel your policy.
Keep your proof-of-insurance card in your car at all
times.
What if I Drive for a
Transportation Network
Company Like Uber or Lyft?
If you drive for a Transportation Network Company
(TNC) like Uber or Lyft, you want to understand
what coverages, if any, the TNC has in place that
will cover you. While the TNC should have coverage
in place, you may also want to have your own
coverage. Most personal auto policies do not provide
coverage while you are carrying a passenger for hire.
However, there are insurers who do offer to endorse
coverage onto your policy—usually for an additional
premium. It is important not to drive for a TNC
until you are sure that the coverage you need is in
place to protect you.
What Should I Do if I Receive a
Cancellation or Non-Renewal
Notice from My Insurance
Company?
First, contact your insurance producer (agent)
or company for specific details. Pennsylvania law
allows companies to cancel or non-renew policies
for certain reasons. If you still are not satisfied with
your company’s explanation, submit a statement
detailing the reasons you disagree with the action to
the Pennsylvania Insurance Department. To preserve
your appeal rights, the statement must be
received by the Insurance Department within 30
days of the company’s mailing of the notice.
What if I Don’t Understand All
the Terms in My Policy? What
Should I Do?
Discuss with your insurance producer (agent) or
company the terms in your policy. If you purchased
your policy directly from the insurance company, a
company representative should be able to respond to
your questions. If you still have questions, you may
choose to write or call the Pennsylvania Insurance
Department’s Bureau of Consumer Services.
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you that it has accepted or denied your claim or
provide you with a written explanation of why
more time is needed.
«
An insurance company must complete its
investigation within 30 days of its receipt of notice
of your claim, unless the investigation cannot
reasonably be completed within 30 days. If the
investigation cannot be completed within 30
days, for every 45 days thereafter, the insurance
company must provide you with an explanation
for the delay and state when a decision on
the claim may be expected.
Vehicle Repairs
The choice of where your vehicle is repaired
is up to you. Be sure to do your research
when choosing an auto body repair shop.
Some questions to ask:
«
How long has the shop been in business?
«
What is the shop’s reputation in the
community?
«
Does the shop offer a lifetime warranty?
«
Has the shop worked with your insurance
company in the past?
Ultimately, the insurance company
is responsible for returning
your vehicle back to its pre-
damaged condition.
Ultimately, the insurance company
is responsible for returning
your vehicle back to its pre-
damaged condition.
Filing a Claim
To file a claim, call the phone number on your proof-
of-insurance card as soon as possible. The insurance
company will assign a claims adjuster to investigate
the claim. You should cooperate with the adjuster’s
investigation of your claim. Take notes and keep
track of the dates of conversations you have with
your adjuster.
If you, the insurer, and the claims adjuster disagree,
first try to resolve the differences with your insurer.
Your agent may be helpful. Don’t feel rushed or
pushed to agree to something you aren’t
comfortable with.
Insurance companies, by law, must investigate
your claim fairly and promptly.
«
An insurance company has 10 working days to
acknowledge its receipt of notice of your claim
unless payment is made within these 10 days.
«
If you submitted a claim to your own insurance
company, it has 15 working days after receipt
of properly executed proofs of loss to inform
«
If there are witnesses, their names and contact
information; and
«
If an officer comes to the scene, his or her name,
badge number, police report number, and contact
information.
After the accident, write down the date, time, and
location. If possible, take photos. Write down what
happened. This will assist you when reporting the
claim to your insurance company.
Whether an insurance company recommended the
shop or not, the most important thing is a quality
repair.
If you choose an auto body repair shop that charges
more than the appraised amount to repair the vehicle,
you may be responsible for costs in excess of the
appraised amount.
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The Pennsylvania
Insurance Department
Whether you have a general question,
or want to file a complaint, you can get
help at Consumer Services online
at www.insurance.pa.gov or contact
us toll-free at 1-877-881-6388.
Pennsylvania law permits the use of non-OEM/
aftermarket parts but “the operational safety of
the vehicle shall be paramount in considering the
specification of new parts.” This consideration is
vitally important for parts involving the drive train,
steering gear, suspension units, brake system, or tires.
Aftermarket parts are usually made by a company
different than the original part manufacturer. Be
sure to consult with your auto body repair shop or
insurance company if you have any safety concerns
or part fit concerns when aftermarket parts are used
to repair your vehicle. If aftermarket crash parts
are included in a vehicle appraisal, it must include a
statement that the appraisal has been prepared based
on the use of aftermarket crash parts, that the
use of these parts voids the existing warranty on the
part being replaced, and the aftermarket crash part
shall have a warranty equal to or better than the
remainder of the existing warranty.
Used parts are original equipment (OE) from your
vehicle’s manufacturer. Be sure to consult with your
auto body repair shop or insurance company if you
have any safety concerns about parts being used to
repair your vehicle.
Ultimately, the insurance company is responsible
for returning your vehicle back to its pre-damaged
condition. If the company uses new parts to replace
parts damaged on an older model vehicle, you may
be responsible for additional costs as the vehicle is in
better condition than before the accident.
What Happens if My Vehicle Is a
Total Loss?
A vehicle is a total loss when the cost to return it
back to the pre-damaged condition is more than the
value of the vehicle or the vehicle is damaged too
severely for repairs. There are different methods that
can be used to calculate the replacement value of your
vehicle. If you have questions regarding the method
used, contact your insurance agent or company.
Many people make monthly payments on their
vehicle. Depending on the agreement between the
lienholder and the owner, the insurance payment
can be made directly to the lienholder, the owner,
or both. If the actual cash value is less than you owe
on the vehicle, you may be responsible to pay the
difference to the lienholder. If you believe your loan
is more than the cash value, there are products that
are available at that time that may eliminate or offset
these costs.
One such product provided by insurance carriers is
Guaranteed Asset Protection (GAP) Coverage, which
will generally pay the difference between an insurance
company’s payment for a totaled vehicle and the
balance of a vehicle loan. This coverage is traditionally
purchased when an individual is buying a vehicle.
GAP coverage does not pay for deductibles, missed
payments, or late fees and many times there is a
limit to the amount it will pay. Check your policy
carefully when choosing to add GAP coverage. If
you have questions about GAP coverage, ask your
insurance agent or company.
Another product that may be purchased in relation
to a vehicle loan is a Debt Cancellation Agreement
(DCA). When this product is sold by the bank issuing
the vehicle loan, it is not considered insurance, but
it functions similar to GAP Coverage. A DCA is an
agreement between the loan issuer and the debtor to
cancel any remaining debt if the debtor experiences
a total loss and the amount of debt on the vehicle
exceeds its actual cash value. Also similar to GAP
Coverage, this product is traditionally purchased at
the time that the vehicle is bought.
Auto Insurance Glossary—a
Supplement to the Automobile
Insurance Guide
These definitions are offered to give you a
general understanding of the terms you may hear
that are associated with automobile insurance. Please
note that your individual company may define
similar terms differently. The definitions page in
your policy
is the final authority regarding
your coverage.
Adjuster
The person who manages the various aspects of
a claim and determines what will be paid out in
accordance with the policy and the facts.
Aftermarket Crash Part
A non-original equipment manufacturer (OEM)
replacement part, either new or used, for any of the
non-mechanical parts that generally constitute the
exterior of the motor vehicle, including inner and
outer panels.
Appraiser
The person who evaluates the damage caused by an
accident or other covered loss and determines the
amount to be paid under the policy terms.
Assigned Risk Plan
A program where drivers can get coverage when
insurance companies are unwilling to sell them a
policy.
Binder
A short-term agreement that provides temporary
insurance coverage until the policy can be issued or
delivered.
Bodily Injury Liability
If you injure someone in a car accident, this
coverage pays damages for which you are liable,
such as medical and rehabilitation expenses.
Cancellation
The termination of a policy at a date other than its
annual anniversary date.
Claim
Notice to an insurance
company that a loss has occurred
which may be covered under the terms and
conditions of the policy.
Collision
Pays to repair damage to your car as a result of an
accident. Most banks or lenders require you to buy
this coverage to receive a car loan.
Commission
A portion of the policy premium that is paid to
an insurance producer (agent) by the insurance
company as compensation for the producer’s work.
Comprehensive Coverage
Pays for theft or damage to your car from hazards
such as fire, flood, vandalism, and striking an
animal. Most banks or lenders require you to buy
this coverage to receive a car loan.
Declarations (DEC) Page
Usually the first page of an insurance policy, it
contains the full legal name of your insurance
company, your name and address, the policy
number, effective and expiration dates, premium
payable, the amount and types of coverage,
deductibles, the vehicle(s) that are covered on the
insurance policy, and the vehicle identification
numbers (VIN).
Deductible
The amount a policyholder is responsible to pay
up front before covered benefits from the insurance
company are payable. This is applicable to
comprehensive or collision coverage only.
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Endorsement
A written agreement that changes the terms of an
insurance policy by adding or subtracting coverage.
Exclusion
A provision in the policy that explains what is not
covered.
Extraordinary Medical Benefits
Pays for medical and rehabilitation expenses that
exceed $100,000, up to a maximum limit of $1.1
million.
First Party
The named policyholder (insured) in an insurance
contract and any relatives residing in the named
policyholder’s household.
Full Tort
You retain unrestricted rights to bring suit against
the negligent party.
Funeral Benefits
Pays, up to the limit specified in the policy, for
funeral expenses if you or a family member dies as
a result of an auto accident, regardless of who was
at fault in the accident.
Income Loss
Pays a portion of your wages when injuries
sustained in an auto accident keep you from
working.
Insured
The person(s) entitled to covered benefits in case of
an accident or loss.
Insurer
The insurance company who issues the insurance
and agrees to pay for losses and provide covered
benefits.
Lienholder
A person or business, usually a bank or financial
firm, that retains the title of a vehicle while the
purchaser pays off the loan.
Limited Tort
Limited Tort offers you significant savings on your
premiums. You are still able to recover out-of-
pocket medical and certain other expenses; however,
you are not able to recover certain damages—such
as payments for pain and suffering—unless the
injuries meet one of the exceptions in the law.
Limits
The maximum amount of benefits the insurance
company agrees to pay under an insurance policy
in the event of a loss.
Minimum Limit
The state-mandated minimum mandatory amount
of benefits.
Medical Benefits
Pays medical bills for you and others who are
covered by your policy, regardless of fault.
Non-Renewal
The termination of an insurance policy at its annual
anniversary date.
Policy
A contract that states the rights and duties of the
insurance company and the insured.
Premium
The price paid to the insurance company for a
policy.
Premium Finance Company
A lending institution that finances automobile
insurance premiums for a fee.
Producer (agent)
An individual or organization authorized to sell,
solicit, negotiate, and service insurance policies for
an insurance company.
Property Damage Liability
Covers damage to someone’s property (such as his
or her car) resulting from an accident in which you
are at fault.
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Quotation or Quote
An estimate of the cost of insurance based on the
information supplied to the insurance producer
(agent) or company. This amount may change
depending upon findings during the underwriting
process.
Rental Reimbursement Coverage
Pays—up to a defined amount—your expenses
to rent a vehicle if you have a loss covered under
comprehensive or collision benefits. Coverage is sold
based on a daily amount of expense, subject to a
maximum limit.
Single Limit Liability
Some companies offer single limit liability coverage,
which pays—up to the specified limit—damages
for which you are liable under bodily injury and
property damage coverages.
Stacking of UM or UIM
When you stack your UM and/or UIM coverages,
your limit of coverage for each covered vehicle on
your policy is multiplied by the number of vehicles
on the policy. You can also stack your UM and/or
UIM coverages to receive uninsured or underinsured
motorist coverage from more than one policy under
which you are insured. Stacked coverage applies
unless you reject it.
Subrogation
The process of recovering the amount of claims
damages paid out to a policyholder from the legally
liable party. When a company pursues the legally
liable third party, they are required to include the
policyholder’s deductible in the recovery process if
requested by the policyholder. The company must
then share any subrogation recoveries with the
policyholder on a proportionate basis.
Surcharge
An extra charge applied to the premium by an
insurance company, usually applied as a result of
at-fault accidents or moving violations.
Third Party
An individual other than the policyholder or the
insurance company who has suffered a loss and
may be able to collect compensation under the
policy, due to the negligent acts or omissions of the
policyholder.
Total Loss
Damage or destruction to real or personal property
to such extent that it cannot be rebuilt or repaired
to its condition prior to the loss or when it
would be cost-prohibitive to repair or rebuild in
comparison to the value of the property prior to the
loss.
Towing Coverage
An optional coverage of an automobile policy that
pays a specified amount for towing and related
labor costs.
Underinsured Motorist (UIM)
This coverage applies to you, relatives residing in
your household, and your passengers if injured by
an at-fault motorist who does not have enough
insurance to pay your claim. This does not cover
damage to property.
Underwriting
The initial 60-day time frame wherein the company
processes and investigates the information provided
on the application. The results of this process
determine acceptability and the premium.
Uninsured Motorist (UM)
This coverage applies to you, relatives residing in
your household, and your passengers if injured
by an at-fault uninsured motorist or hit and run
driver. This does not cover damage to property.
Questions?
For more information on
auto insurance, visit:
www.insurance.pa.gov
and click “Auto” under
Coverage
or
call the department at
1-877-881-6388
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Rev. 10/2016 v3
