Car insurance is a contract between you and an insurance company that protects you from financial loss if you are in a car accident or your car is stolen. It can also help pay for medical expenses if you are injured in an accident.



Here are 10 terms you need to know about car insurance:

1. Coverage: This refers to the types of protection your car insurance policy provides. The most common types of coverage include:

  • Bodily injury liability: This covers the medical expenses of the other people involved in an accident if you are at fault.
  • Property damage liability: This covers damage to the other people's property if you are at fault.
  • Collision: This covers damage to your car if you are in an accident.
  • Comprehensive: This covers damage to your car from theft, vandalism, fire, and other perils.

2. Claim: This is a request for payment from your insurance company for a loss covered by your policy. You will need to file a claim if you are in an accident or your car is stolen.

3. Deductible: This is the amount of money you will pay out of pocket before your insurance company starts to pay for a claim. The higher your deductible, the lower your premium will be.

4. Premium: This is the amount of money you pay to your insurance company for your policy. Your premium is based on a number of factors, including your driving record, the type of car you drive, and the coverage you choose.

5. Declarations page: This is a summary of your car insurance policy. It includes your policy number, the coverage you have, your deductible, and your premium.

6. Full coverage: This is a term used to describe a car insurance policy that includes collision and comprehensive coverage.

7. Liability insurance: This is the minimum amount of car insurance required by law in most states. It covers bodily injury and property damage liability.

8. No-fault insurance: This is a type of car insurance that pays for medical expenses and lost wages, regardless of who is at fault for an accident. No-fault insurance is required in some states.

9. Policy: This is the contract between you and your insurance company that outlines the terms of your coverage.

10. Totaled: This is a term used to describe a car that is so badly damaged that it is not worth repairing. If your car is totaled, your insurance company will pay you the fair market value of the car.

Additional terms you may need to know:

  • Accident forgiveness: This is a policy feature that will not raise your premium if you are in an accident that is not your fault.
  • Gap insurance: This covers the difference between the amount you owe on your car loan and the car's fair market value if it is totaled or stolen.
  • Pay-as-you-go insurance: This is a type of car insurance that bases your premium on how many miles you drive.
  • Usage-based insurance: This is a type of car insurance that uses sensors to track your driving habits and bases your premium on how safely you drive.

Understanding these terms will help you make informed decisions about your car insurance coverage.

Remember, car insurance is a complex subject, and it is important to talk to your insurance agent to get the coverage that is right for you.