Auto insurance is not only a legal requirement in most states, but carrying car insurance can protect your personal assets if you are in a car accident. Insurance policies include a lot of confusing technical terms. It is important to have enough auto insurance to protect yourself and your property, but buying more insurance than you need is not necessary. This guide will explain the most common terminology to help you understand car insurance before you purchase an insurance policy.
Claim
A claim is a request for payment under your auto mobile insurance policy. You will be required to submit a police report to the claims adjuster when you file your claim. Some insurance companies will send an adjuster to the accident scene to assess the damage while others rely on information from the authorized repair shop.
Comprehensive Coverage
Comprehensive coverage pays for damages caused by occurrences other than collisions. This coverage may be required if your car is financed. Examples of losses that would be covered by collision insurance are theft, flooding, damage caused by hitting an animal and hail. This coverage only covers loss of or damage to the vehicle. Any personal items that are stolen from your car will not be covered under comprehensive coverage.
Declarations Page
The declaration page of an insurance policy details the amounts of coverage in each category. On this page of the insurance document you will also find the auto mobiles covered, their vehicle identification numbers and a breakdown of the premium.
Deductible
Your car insurance deductible is the amount of money you will have to pay before you receive a benefit from the insurance policy. Deductibles can be adjusted to increase or decrease the yearly rate you will pay for your insurance. It is important for your deductible to be set at an amount you can afford to pay if you are in an accident.
Liability Coverage
Liability coverage pays for the damages you cause to another vehicle in an accident. Most states require all drivers to carry liability insurance. If you purchase a policy with only liability coverage and you cause an accident, your policy will not pay for damages to your car or your medical expenses.
Minimum coverage
The minimum coverage amount is determined by each state for its residents. If your state has a minimum car insurance law, you will be required to carry a policy with at least the minimum coverage.
Premium
An auto insurance premium is the amount you pay for your coverage. The amount you will pay for your auto insurance depends on a variety of factors including driving history, previous claims and credit score. Rates may be lower or higher based on who will be driving the vehicle, whether the car is driven for personal or business purposes and the crime rate in the policyholder’s neighbourhood. Premiums are computed as yearly rates but most insurance companies allow their customers to pay monthly. They may charge a small convenience fee to accept monthly premium payments.
Uninsured Motorist Coverage
This coverage may be included in a policy or added for an extra fee. Uninsured motorist protection pays for your vehicle damage and medical expenses if the other driver is at fault and does not have insurance.
