Unraveling the Mystery: Demystifying Auto Insurance Jargon
0
0
Contents
Introduction
If you’ve ever shopped for auto insurance, you know that it can be a daunting and frustrating experience. Every company uses its own terminology to describe the various types of coverage, and this can make it difficult to compare prices between providers or even figure out what you’re getting in return for your money. Fortunately, once you learn these terms, shopping around should become easier:
Bodily injury liability
Bodily injury liability coverage pays for the injuries or death of others. The limit of this coverage is set by state law, and it’s required in all states except New Hampshire (which does not require auto insurance). If you’re at fault in an accident and bodily injury liability doesn’t cover enough to pay for your victim’s medical bills, then your own health insurance may step in as part of its own coverage–but that depends on what type of policy you have.
If you cause an accident and don’t have enough bodily injury liability protection, then your assets could be at stake if victims sue you for more than what they can get from their own policies or through settlements with their own insurers: Your home might go into foreclosure; collections agencies will come after any money set aside for retirement; even family pets could end up homeless!
Comprehensive coverage
Comprehensive coverage is an option that covers you for damages to your car that are not caused by a collision. It will pay for things like vandalism, theft, fire or flood damage. In some states it also covers glass breakage and windshield cracks.
If you have comprehensive insurance and your car is damaged by something other than a collision (for example: vandalism), then this type of insurance will cover those costs as well. This type of coverage has two names: “comprehensive” or “other than collision.”
Comprehensive coverage usually costs more than collision coverage because it provides more protection. You should consider whether you need this type of protection before purchasing it since there may be some situations where it’s not necessary (such as if your car isn’t worth much money).
Deductible
The deductible is the amount you’ll have to pay before your insurance company will start paying for damages. The lower the deductible, the higher your premiums will be–and vice versa.
If you have a $500 car loan on a vehicle that’s worth $10,000 and has full coverage with a $500 deductible:
- If someone hits your car while it’s parked in front of your house and totals it, they would be responsible for paying off both your loan balance ($9000) plus any additional expenses like body work or replacement parts if needed (let’s say another $1000). This means that even though the accident wasn’t their fault they still have to come up with $10k total before they can legally drive away from this situation!
- If instead of having full coverage with such high deductibles we had only liability insurance instead then if someone hit our parked car we would only need cover half those costs–$5000 in this example scenario–before being able to get back on road again ourselves since liability only covers bodily injury claims made against us by third parties who may have been injured during an accident involving our own vehicle.”
Collision insurance
Collision insurance covers damage to your car. It’s not a substitute for liability insurance, which protects others in the event of an accident. Collision coverage can be purchased as an add-on to your auto policy, or as part of a comprehensive plan (which also includes comprehensive and/or uninsured/underinsured motorist coverage).
With collision coverage, you pay more each month but have lower deductibles–and that means lower out-of-pocket expenses when something goes wrong with your vehicle. In other words: If you get into an accident, this type of car insurance will help cover the cost of repairs or replacement so that it doesn’t come out of pocket!
Comprehensive-collision coverage
Comprehensive-collision coverage is a type of auto insurance that protects drivers against losses caused by events other than accidents, such as fire or theft. It’s important to note the difference between comprehensive and collision: collision covers damage to your car caused by an accident with another vehicle or object, while comprehensive covers everything else (like floods).
If you want comprehensive insurance, here are some things to keep in mind:
- You can buy it through your state’s Department of Motor Vehicles (DMV) office or at an insurance agent’s office; most states require this type of coverage for any vehicle registered there. * The cost varies depending on what type of car/truck/SUV you drive as well as where you live–for example, if you live in Florida versus California and want full coverage for both types of vehicles listed above then expect costs around $1,800 per year (accordingly priced depending on how many miles driven annually).
Property damage liability
If you’re like most people, when it comes to auto insurance, you know that you need to have a certain level of liability. In fact, many states require drivers to carry this type of coverage. But what exactly is property damage liability?
Property damage liability pays for damages caused by your car that result in injuries or property damage (other than injury). For example: If your car hits another vehicle and causes thousands of dollars worth of damage, this type of insurance will cover that cost–up until the limit specified by your policy (which varies from state-to-state). This coverage also extends beyond cars: If someone slips on ice outside your home because there wasn’t any salt on it and breaks their arm while trying not fall down stairs into traffic below them (true story), then property damage liability would kick in again!
You should consider purchasing more than just minimum amounts required by law because some accidents are more costly than others–and they happen more often than we’d like them too!
To be a good shopper, you need to know the basics.
The basics of auto insurance are important for any shopper. Knowing what you need and how to get it can help you save money on your premiums, but it also sets the stage for an informed discussion with your agent when making decisions about coverage.
Knowing the basics is a good starting point in any purchase, whether it’s a car or a house (or even something as simple as buying groceries). For example, if someone doesn’t know how much they should pay for groceries each month, they won’t be able to shop effectively–they will either overspend on items or buy less than necessary.
Conclusion
To be a good shopper, you need to know the basics. Understanding what coverage options are available and how they work can help you make informed decisions about your auto insurance policy and save money in the long run.
