Insurance Basics

Coverage Definitions for Auto Insurance

Comprehensive

Pays for the cost (less your deductible) of repairs due to damage caused other than by collision. If your vehicle cannot be repaired, it covers the actual cash value of your automobile when it is damaged by fire, theft, vandalism, glass breakage, windstorm damage and a number of other circumstances. (Your deductible is the amount of the repair bill that you must pay before your Comprehensive or Collision coverage begins.)

Collision

Pays for the cost (less your deductible) of repairs when your car is damaged in a collision with another vehicle or object. For unrepairable vehicles, it covers actual cash value and applies regardless of fault. Normally covers costs above your deductible. In some cases, the deductible will be waived. (Your deductible is the amount of the repair bill that you must pay before you Comprehensive or Collision coverage begins.)

Lender named as Loss Payee

When you finance your vehicle the lender files a lien against the vehicle. On your registration they show up as the Legal Owner. Once you complete all of the payments your lender releases the lien and you own the vehicle outright. However, until you payoff the loan, the lender keeps the lien in place to secure or collateralize the loan. If you do not make the payments this lien allows the lender to repossess "their" vehicle.

Naming your lender as "Loss Payee" on your policy extends your physical damage coverage to your lender. This is necessary since the lender "owns" the vehicle until you pay off the loan. If you receive a claim payment from your insurer, your lender
is named on the claim check along with you the "Named Insured". Also when you policy is initiated, canceled renewed or coverages are amended, your lender is notified by your insurer.

Naming your lender as Loss Payee is required under your loan contract.

This outline of coverages is for informational purposes only. It is not intended to replace the professional advise of a licensed insurance agent hired by you to protect your assets.