Insurance lingo can be hard to understand and when it comes to car insurance, you want to be sure you fully grasp what is included in the policy. Here are 10 important terms related to car insurance that you should know:
- Premium: The amount of money you pay to an insurance company in exchange for coverage. It is usually paid on a monthly or annual basis.
- Deductible: The amount you are responsible for paying out of pocket before your insurance coverage kicks in. For example, if you have a $500 deductible and file a claim for $2,000 in damages, you would pay the first $500, and the insurance company would cover the remaining $1,500.
- Liability Insurance: This coverage pays for damages or injuries you cause to others in an accident. It typically includes both Bodily Injury Liability (covers medical expenses, lost wages, and legal fees) and Property Damage Liability (covers damage to someone else’s property).
- Comprehensive Coverage: This coverage protects against damage to your vehicle from non-collision incidents, such as theft, vandalism, fire, falling objects, broken windshield, hitting a deer, or natural disasters.
- Collision Coverage: This coverage pays for damage to your vehicle in the event of a collision, regardless of who is at fault.
- Uninsured/Underinsured Motorist Coverage: This coverage protects you if you are involved in an accident with a driver who doesn’t have insurance or has inadequate coverage. It helps cover your medical expenses and damages. NOTE: This coverage does NOT cover the physical damages to your vehicle.
- Medical Payments Coverage: Auto medical payments coverage pays medical bills up to your coverage limit for you and any passengers riding in your vehicle in case of an accident, regardless of who is at fault.
- Coverage Limits: The maximum amount an insurance policy will pay for a covered loss. It is important to select appropriate coverage limits based on your needs and potential risks.
- Claim: A formal request made to the insurance company to receive compensation for a covered loss or damages.
- Insurance Policy: The contract between you and the insurance company that outlines the terms, conditions, coverage details, and exclusions of your insurance agreement.
Understanding these basic car insurance terms can help you navigate the insurance process and make informed decisions when selecting coverage. It’s always a good idea to review your policy and consult with your insurance provider to clarify any specific terms or coverage details. RCI is here to help!