Common Car Insurance Terms to be Familiar With
Benefit - The amount the insurance company pays when you file a claim.
Bodily Injury Liability - This covers the medical expenses for injuries caused to other people.
Claim - Request for reinbursement for damages or loss.
Collision Coverage - Covers damage caused to your car during an accident with another vehicle or stationary object.
Comprehensive Coverage - Covers damage that isn't caused due to an accident - such as theft, fire, or natural disasters.
Deductible - This is the amount you agree to pay out of pocket in the event of an accident. The higher your deductible, the lower your premium.
Discount - Anything that will lower your premiums. Common discounts include multi-car discounts, good driving discounts, and safety devices discounts.
Emergency Road Service - Pays for the cost of having your car towed or jumped in the event of a breakdown.
Endorsements - These are changes to the original insurance contract, such as adding a driver to the policy.
Exclusion - Anything that is not covered by the insurance policy.
Extraordinary Medical Coverage - This coverage protects you in case you suffer injuries that require serious or long-term medical care.
Full Coverage - This means that you have met all the minimum coverage requirements for the state you reside in. This doesn't necessarily mean you will be covered in all accident situations.
High-Risk Driver - Someone that has several accidents or tickets on their driving record. The definition of high risk driver dffers from company to company.
Income Loss Coverage - Covers you in case you can't work due to accident-related injury. Sometimes it's a part of personal injury protection.
Indemnity - A predetermined amount paid for a covered loss.
Liability Insurance - Covers injuries and damage caused to other people and property in an accident which you are at-fault. This includes legal expenses.
Limits - The maximum amount the insurance company will pay for your losses.
Medical Payments Coverage - Pays for the medical expenses and lost wages for you and any passengers in your vehicle after an accident. Also known as personal injury protection (PIP).
No-fault Insurance - Certain states have no-fault insurance regulations where the car insurance company will pay for your injuries no matter who is at fault.
Personal Injury Protection (PIP) - See Medical Payments Coverage
Premium - The amount charged for an insurance policy.
Property Damage Liability - Pays for damages caused to someone else's property.
Rental Reimbursement - Pays for the cost of a rental car while your car is in the shop for repairs.
Surcharge - Charge added to your policy after a traffic violation or accident where you were at fault.
SR-22 - Document that shows proof of insurance.
Underinsured Driver Coverage - Covers injuries or damage caused by a driver without enough insurance to pay for your medical expenses.
Uninsured Driver Coverage - Covers injuries or damage caused by a driver with no insurance.
Each week, I'll keep you up-to-date on the latest car deals and news that might affect your purchase. This includes...
- Best Rebates, Incentives, and Lease Deals
- Latest Car Buying Scams and Tricks
- The Best & Worst Time to Buy a Car
- Which Cars You Should Avoid