You need to know commonly-used car insurance jargon to grasp what your car insurance company is actually telling you—or not telling you!
You might notice a whole lot of car jargon on your policy. And when they talk about how much you owe, it won’t work out well for you if you don’t understand what they mean. To stay a step ahead, you must be familiar with car insurance jargon and know what commonly used car insurance terms mean.
That way, you will get affordable car insurance. Also, you won’t be in for any nasty surprises later! Like learning that you don’t have coverage for something you thought you did in the event of an accident, theft, or other problem.
Adjuster
An adjuster is an employee or contractor of an insurance company who reviews the damages/injuries caused during an accident and approves claim payments.
Claim
Probably the most commonly used car insurance jargon, ‘claim,’ is pretty easy to understand. Quite simply, it is the formal request to the insurance provider for payment under the terms of your policy.
When your vehicle is damaged, you must file a claim with your insurance company to receive compensation. If someone else damages your car, they should be alerted. Still, it’s also a good idea to contact your own insurance company.
Collision insurance
Optional coverage that reimburses you for vehicle damage caused by a collision with another vehicle or other object (e.g., a guardrail, or a tree) when you are at fault. Note that collision coverage does not cover mechanical failure or normal wear and tear on your vehicle. But it does cover damage caused by potholes or rolling your vehicle.
Comprehensive coverage
Comprehensive coverage covers theft and damage caused by incidents other than an accident. It includes fire, vandalism, hail, flood, falling boulders, and other calamities.
Credit-based insurance score
Another commonly used car insurance jargon is credit-based insurance score. It is nothing but the confidential ranking created by insurance firms based on your credit history. Insurance companies may use this score to decide the cost of your insurance policy. A good credit score indicates responsible money management. Therefore, it’s a reasonably good predictor of whether or not someone will submit an insurance claim.
Deductible
This is the amount deducted from an insurance payout for which you are responsible. For example, suppose your collision coverage has a $500 deductible, and an accident causes $2,000 in damage to your automobile. In that case, you pay $500 and your insurance covers the remaining $1,500. Your liability coverage has no deductible.
Gap insurance
The value of a new car begins to deteriorate as soon as you drive it off the dealer’s lot. If you lease or loan the car, you will be liable for the full amount owed if something happens to it. However, your collision and comprehensive insurance will only cover the car’s true market value. Gap insurance pays the difference between what the vehicle is worth and what you owe on it. You can obtain this coverage via the car dealer or your insurance company. Gap insurance is typically included in lease payments for rented autos.
Liability coverage
Most states mandate liability coverage. This implies that if the driver causes an accident, they are legally responsible for paying for the damages. After paying the damages, the insurance company might refuse to continue insuring the driver or raise their premiums. This isn’t always the case. It may vary depending on the nature of the accident, the length of time the driver has been covered with the firm, and whether or not they have been in additional incidents.
Premium
We weren’t really sure whether to include this particular car insurance jargon or not. But, on the off chance that someone does not know what it is, here goes. The cost of your insurance policy, payable annually, semi-annually, or in monthly installments, is the premium.
Property damage liability
Property damage liability is insurance that compensates people for damage caused by you or another driver operating your vehicle. The damage may be to another vehicle or property, including a fence, building, or utility pole.
Totaled
If the cost of repairs goes over the vehicle’s value, it is considered totaled. Suppose your vehicle is totaled, and you have comprehensive and/or collision coverage. In that case, an insurer will pay you the full market value of your car or the policy maximum, whichever is greater, minus your deductible if you are at fault.
Umbrella liability
Umbrella liability provides additional coverage above and beyond the limitations of your ordinary liability plans. This will give an extra layer of protection for your assets if someone sues you. Your umbrella policy also covers claims that come under the purview of your homeowners insurance policy.
Uninsured/underinsured motorist coverage
Uninsured motorist coverage will compensate you if an accident is caused by a driver who does not have insurance or in the event of a hit-and-run. Underinsured motorist coverage will cover the shortfall between your losses and the policy coverage limit of the driver who caused the accident in a serious accident.
That’s pretty much the A to Z of car insurance jargon. If anything continues to bewilder you, the Way.com auto insurance team is always available to help!
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