Car Insurance Terms

Know the terms of your car insurance policy.

Car insurance is not only a legal requirement for owning and operating any vehicle, but it also offers peace of mind. However, the amount and costs of auto insurance can vary with your needs and wants. According to the principle of indemnity, the objective of insurance is to restore the insured person(s) to the financial position they held prior to the loss. A good car insurance policy includes different individual coverages. Each coverage protects you from different types of losses.

Coverage Types

• Bodily Injury Liability*: If you are responsible for a car accident, bodily injury liability coverage pays for the medical costs of the people who are injured (not including yourself).
• Property Damage Liability*: Similar to bodily injury liability, this coverage pays for property damage done to another car or physical property (fence, wall, etc.) when you are responsible for the accident. It will not include covering damage to your own vehicle.
• Personal Injury Protection (PIP) (aka No-fault Insurance)*: Coverage in which your own insurance company pays you for medical, hospital and funeral expenses resulting from a car accident, regardless of who's at fault. It can sometimes also cover your passengers and/or other types of expenses.
• Uninsured/Underinsured Motorist Coverage (UM/UIM)*: A portion of a standard auto insurance policy that provides coverage for injuries you and others suffer when you're involved in an accident with an uninsured driver, or a driver without adequate insurance. 
• Collision Coverage: This coverage helps pay to repair or replace your car if it's damaged in an accident with another vehicle or object
• Comprehensive Coverage – Coverage that helps pay to replace or repair your vehicle if it's stolen or damaged in an incident that's not a collision.

*These coverages are required in the state of Kansas.

What is SR-22 insurance?

An SR-22 is a certificate of financial responsibility required as a consequence of being a high-risk driver (with driving violation convictions) and issued by the state or a court order. It is not an actual insurance policy, but a form filed with your state by the insurance company. This form serves as proof your auto insurance policy meets the minimum liability coverage required by state law. Typically, the form itself is not expensive, however auto insurance companies may charge higher premiums for the high-risk status. In some states (including Kansas) you may be required to have an SR-22 form on file even if you don’t have a car. 

Insurance Contract Terms

Car insurance is a contract between you and the insurance company. All contracts contain, by law, certain identifiable terms, and elements. For car insurance, you may see these terms used and should know what they mean:

• Deductible: The amount of money an insured person must pay before their insurance policy starts paying for covered expenses.
• Premium: The payment required for an insurance policy to remain in force. Auto insurance premiums are usually quoted for either 6 month or annual policy periods.
• Declarations Page: A document that identifies the kinds and amounts of coverage in the insurance contract and the costs.
• Effective Date: The date the insurance policy goes into effect and coverage begins.
• Limit: The maximum amount your insurer may pay out for a claim.
• Primary Use: The primary use of the car insured (e.g., to work and back).
• Underwriting: Process by which an insurer determines whether an insurance application will be accepted usually calculating the level of risk that is involved and the rates for the the contract.
• Grace Period: Some auto insurance policies have a grace period that allows customers to make a payment after the due date. But many companies will not accept a payment after the date shown on a cancellation notice. Online payments and EFT can prevent policy lapses.
• Lapse: The expiration of a right or privilege when one party does not live up to its obligations during the time allowed. A lapse in auto insurance coverage may result in paying higher premiums for a new policy, because insurers have determined that drivers who maintain continuous coverage are less likely to make an insurance claim that those who let a policy lapse.

Additional Coverages

• Medical Payments Coverage (MedPay): Helps with medical expenses associated with an auto accident.
• State-required Minimum: Minimums of coverage determined by each state.
• Gap Insurance: Helps cover the difference on the auto loan if your car is totaled and the value deemed less than the amount owed on the loan.
• Uninsured Motorist Coverage: Protects you if you are hit by a driver with no auto insurance.

Coverages Required in Kansas

To read more about coverage requirements in the state of Kansas go to:
insurance.kansas.gov/auto-insurance/. You can also get tips on how to lower your car insurance premiums.