An explanation of various Automobile Insurance related terms.

Limited Tort, Stacking, Uninsured Motorist Coverage, Deductible, the list goes on and on. These are all terms that are present in your automobile insurance policy, but I have found that many of my clients do not know or understand what these terms mean. This article will attempt to give you a basic understanding of common Automobile Insurance related terms.

Limited Tort is the big one these days. Most people have heard of it, but few know what it means. Limited Tort is a selection on your automobile insurance policy that essentially waives your right to sue another driver for pain and suffering if you have been injured in an accident. Hopefully, that caught your attention. By selecting Limited Tort, you are agreeing that you cannot sue another driver for pain and suffering if you are injured in an automobile accident. I have found that many of my clients, or potential clients, have selected the Limited Tort option without a true understanding of what it means. They do so because selecting that option saves them a few dollars on their insurance premium. The savings, I have found, amount to approximately 5 to 10 percent of the total policy premium (that is merely an estimate, contact your agent for exact savings). To some, that is a sizable savings, but to others, at least those who understand what Limited Tort means, that is a risk not worth taking. There are a few exceptions that will allow you to sue a driver if you have selected the Limited Tort option, but those are for another article.

Uninsured Motorist Benefits are benefits that cover you if you are injured by another driver who does not have automobile insurance coverage, or if you are struck by a phantom vehicle (a hit and run vehicle). These benefits are meant to provide you with compensation for lost wages and/or pain and suffering that you incur as the result of a vehicle accident.

Underinsured Motorist Benefits are benefits that cover you if you are injured by another driver who does not have enough automobile insurance coverage to adequately cover you for your injuries and damages. For instance, in Pennsylvania, the minimum amount of insurance coverage that a driver must carry on his policy is $15,000 for personal injury. If you are involved in an accident with a driver who maintains only the minimum coverage, and you sustain a serious injury, $15,000 will likely not fully compensate you for your injuries. In this instance, you would file a claim for Underinsured Motorist Benefits to attempt to receive additional compensation.

The next automobile insurance term that we want to look at is Stacking. Stacking is the combining or adding of either Uninsured Motorist Benefits or Underinsured Motorist Benefits. Stacking means that you can collect from either more than one auto insurance policy that you hold, or that you can collect the limits of your policy for each vehicle that is covered by your policy. In the first instance, if you are injured you by another driver who fails to maintain automobile insurance, you can bring a claim against your Uninsured Motorist coverage on the vehicle that you were operating. If you own a second vehicle, that is insured with another company, you can bring another Uninsured Motorist claim against that policy, if your injuries and/or damages are substantial. Another variation of stacking is where you own more than one vehicle on a policy. If you have selected stacking, you can receive the equivalent of your policy limits for each vehicle that you have on your policy, if your injures warrant that.

The final term for today is Deductible. A Deductible is the amount that you have to pay for damages to your car if you are involved in an accident that is your fault. Your insurance company will pay for any damages amounts that exceed the deductible amount that you have chosen. A typical deductible is $500, though other options include $100, $250 and $1,000. Typically, the higher deductible that you choose on your policy, the cheaper your premium is.