In the car insurance world, ‘benefit’ refers to the amount of money paid by your insurer to cover a claim. If you make a claim for car repairs after an accident, for example, then you’ll receive a benefit to cover the cost of repairing your vehicle to pre-loss condition.
When you sign an insurance contract, your insurance company is agreeing to pay you a benefit in certain circumstances. The insurance company is taking on risk in exchange for insurance premiums. If certain circumstances occur, then the insurance company is required to pay you a benefit.
Benefits are different from claim limits. A claim limit is the maximum amount an insurer can pay for a claim. A benefit can be any amount – it could be the maximum limit of your policy or it could be a smaller amount.
Types of Benefits
Insurers pay benefits for all different types of expenses, including vehicle repairs, medical bills, and more. Common types of benefits paid by insurance companies include:
Bodily Injury Benefits: Bodily injury benefits include medical bills for yourself, your passengers, and any other people injured as a result of your actions. It can also include lost wages and other personal expenses incurred by you or other people.
Property Damage Benefits: Property damage benefits cover the cost of repairing your vehicle or other damaged property after an accident.
Rental Car Benefits: Many car insurance policies provide rental car benefits. If your car is in the shop for repairs, then your car insurance company will cover the cost of renting a car for the duration of repairs.