09/07/2024
Auto Insurance Terms You Should Know
Take a look at the average car insurance policy and you will come across a number of terms that might be more than a little confusing. In order to ensure that you’re making the right decision and have a firm grasp of the auto insurance basics, we’ll explain some of the most commonly used terms below.
Actual Cash Value:The fair market value of stolen or damaged property; the amount required to replace stolen/damaged property, rather than the amount paid for said property originally.
Anti-Theft Device:Any device that discourages theft of an automobile, including alarm systems, stereo anti-theft systems, and the like. In some cases, this may provide you with a discount on your car insurance premiums.
At-Fault:The driver determined to have caused an accident, and who is legally responsible for the damages. Some states allow for comparative fault, where multiple at-fault drivers can share the liability for a single accident.
Bodily Injury:A physical injury to any person involved in an automobile accident.
Cancellation:The termination of insurance coverage during the coverage period.
Car Insurance Policy:An insurance policy issued on a specific vehicle (or vehicles) and specific drivers to cover the risks involved with operating the vehicle on the road.
Claim:Informing the insurer that an incident has occurred involving an insured vehicle.
Claim Adjuster:The individual responsible for investigating claims and settling them with the insured party.
Claimant:The person asserting their right to recovery on an auto insurance policy, generally the vehicle owner, but sometimes the lender or another party.
Collision Coverage:Specific coverage for collision-related damage, separate from comprehensive coverage.
Collision Deductive Waiver:Available in some states as a replacement for UMPD if you have collision coverage, this is a waiver stating that in the event that you are hit by a negligent or uninsured driver, your collision deductible will be waived.
Comprehensive Coverage:Coverage for damage other than collision for your vehicle. This can include theft, vandalism, hitting a deer, damage due to falling rocks or trees, and most other damage to a vehicle that doesn't involve its collision with another vehicle or object.
Declarations:A list of specific items/vehicles being insured, as well as other elements of your policy, including coverage amounts, premiums, etc.
Deductible:The amount of out of pocket costs you must pay before insurance becomes payable. Note that you may have different deductible amounts for different coverage types.
Endorsement:Sometimes called a rider; an item added or removed from your insurance policy.
Exclusion:Incidents, circumstances, drivers, and other conditions that are specifically listed in your policy as not covered.
Expiration Date:The date on which your insurance policy will cancel if not renewed.
Insured:The name(s) of anyone protected under a car insurance policy.
Insurer:The car insurance company issuing the policy.
Liability Coverage:Property damage and bodily injury coverage that pays for damage to the other driver/vehicle if you are fault for the accident. This coverage is required in most states.
Limit:The maximum amount payable with your insurance policy.
Material Misrepresentation:False statements made by policyholders during the application process.
Medical Payments:Payment for medical costs, rehabilitation, and funeral costs for the insured and others within a covered vehicle.
Policy:The agreement/contract between you and the insurer.
Policy Limit:The maximum your policy will pay out.
Premium:The amount you must pay per agreed period for insurance coverage.
Property Damage:Damage to property – vehicular or otherwise – caused by the insured.
Quote:An estimate of insurance costs.
Reinstatement:When coverage is restored after policy cancellation. The insured must cure the reason for cancellation before the policy can be reinstated.
Surcharge:An additional charge on your insurance policy, generally resulting from a traffic violation or accident.
Underwriting:The process of determining risk and insurability before issuing an insurance policy.
Uninsured Motorist Coverage:Bodily injury and/or property damage coverage for the policyholder in the event of an accident involving an uninsured motorist.
Now that you know the auto insurance basics, you can make an informed decision regarding the protection you purchase. If you’re ready to move forward, we invite you to get a quote. 8019801620
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