If you are getting ready to purchase car insurance, it is essential to understand the terminology of the business. Understanding the language used in the business will help you navigate finding the right cover insurance coverage more efficiently.
The first term you are going to hear when shopping for auto insurance is the term is "coverage." Coverage is used to refer to what is and isn't included with your auto policy. The coverage that you are offered in your policy can change based on what type of insurance policy you craft. You can include different types of coverage in your policy, such as rental reimbursement or comprehensive coverage, or you can leave different types of coverage off your policy. What is covered and isn't covered will impact the overall cost of your policy.
Policy is the term used to refer to all of the coverage that you have chosen to be included with your auto insurance. Your policy is all the details related to your coverage.
If you get into an accident you will have to file a claim with your insurance company in order for your insurance to pay for the damages. A claim contains all the details of your accident so that your insurance company can determine if the incident was covered, whose responsibility it is to cover, and what they have to pay for.
The deductible is the amount that you have to pay before your insurance company pays money on a claim that you file. Basically, your deductible is the financial share that you will pay for any claim you file.
The amount of your deductible can vary from very little to quite a lot. Generally, smaller deductible amounts where you are taking less financial responsibility will increase your premium. Larger deductible amounts, where you are taking on more financial responsibility, will decrease your premium.
The premium is what you pay for your insurance policy and coverage. The premium amount is based on the level of risk that the insurance company determines they are taking to provide you with insurance. This is what you pay the insurance provider to keep your vehicle insured. In the car insurance world, your premium generally is a set amount for six months of coverage, which you can pay in full for the six months, or that you can break into six monthly payments.
At the end of six months, the insurance company will reevaluate the risk of providing you with insurance and will issue a new premium amount. This may be slightly higher or lower than your previous premium based on changing on the data points they use to determine your risk, such as your driving history.
If you come across a term you don't understand when shopping for insurance, don't be afraid to ask the insurance agent for clarification on what that term means. There is a lot of industry jargon used in the car insurance industry that you may not encounter in your day-to-day life. For more information, contact an auto insurance agent.