Understanding car insurance can be overwhelming. It’s important to know what you are signing up for when it comes to your vehicle coverage. To help make this process easier, we’ve compiled a list of key terms you should know before agreeing to any car insurance policy. Here are 10 terms that will help you navigate the world of auto insurance.
Premium
A premium is the amount that is paid on a regular basis in exchange for coverage from an insurance company. The size of your premium depends on factors such as age, driving record, location, and type of vehicle.
Deductible
A deductible is the portion of a claim that the insured pays out-of-pocket before their insurance kicks in. Generally, higher deductibles lead to lower premiums but can result in more out-of-pocket costs if an accident occurs.
Comprehensive Coverage
This type of coverage helps pay for damage not caused by an accident with another vehicle (e.g., theft or vandalism).
Collision Coverage
Collision coverage helps pay for damages caused by an accident with another vehicle or object (e.g., tree or pole).
Liability Insurance
Liability insurance helps cover legal expenses if someone else is injured in an accident caused by you or another driver listed on your policy.
Uninsured/Underinsured Motorist Coverage
If you get into an accident with a driver who doesn’t have enough (or any) liability coverage, this type of coverage can help cover your expenses and damages caused by the uninsured/underinsured driver.
Gap Insurance
Gap insurance can help cover any difference between what you owe on your loan and what your auto insurer covers after a total loss due to theft or an accident.
Medical Payments Coverage
This type of coverage helps pay medical bills if you are injured in an auto accident regardless of who was at fault.
Rental Reimbursement
Rental reimbursement provides money towards renting a vehicle while yours is being repaired due to covered losses such as collision or comprehensive claims.
Roadside Assistance
Roadside assistance provides emergency services such as jump starts and tire changes at no additional cost if part of your policy agreement.
Claims Adjuster
A claims adjuster investigates accidents and determines how much money should be paid out according to policies and laws governing each state they operate in.
Navigating car insurance can be tricky but understanding these 10 terms will ensure that you know exactly what kind of coverage you’re getting when signing up for a policy—and how much it will cost! Knowing these terms will also give you a better understanding when talking about car insurance with agents, friends and family members so that everyone involved will be on the same page about what’s being offered and why it’s necessary for all drivers to have adequate protection against potential losses due to accidents or other situations covered by auto insurers nationwide!
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