Is your agent fluent in English? It’s possible you might believe so, until you take a look at your auto insurance policy. It can be difficult to discern the English from the legal-ese, insurance-ese and big-word-ese that is mixed up in most policies. This makes it difficult for average drivers to understand the policy without having a dictionary and a thesaurus.
A good understanding of auto insurance terminology is essential for any insurance shopping venture. How much do you really know about auto insurance terminology?
1. At Fault – This one is more complicated than it sounds. In the auto insurance dictionary, there are two versions of “At Fault”. A person is considered “at fault” in an accident if they cause it. “At fault” insurance, as opposed to no fault insurance, means that the person “at fault” will be responsible for all the costs.
2. Bodily Injury Liability is a part of your insurance that covers you for outpatient, outpatient, and emergency room bills.
3. Comprehensive Coverage – No matter what your religious beliefs are, it’s clear that “Acts of God”, can cause serious damage to your car. Your comprehensive auto insurance will cover the cost of repairs to your vehicle caused by Mother Nature.
4. Collision Insurance – While your liability insurance may pay for other people’s damages if you are in an accident, it doesn’t cover your own. You should make sure that you have collision coverage. Collision can get you back on your feet after an accident, or to total your vehicle. It will also give you a check so that you don’t have to spend weeks trying to find the money.
5. Continuously Insured- Your insurer may have a different definition of continuous insured than yours. While most of us don’t consider it when we are late on a payment or our coverage expires after a few days of being in force, your insurance company will not be impressed. Continuously insured is continuous insurance. There are no exceptions.
6. Deductible – This is the amount you owe them when you file an insurance claim for auto coverage. It’s the $5 you contribute towards dinner. But instead of being single digits, it can hit double or triple.
7. Garaging Location – The place where you park your vehicle. This is misleading. It doesn’t really matter if you have a garage.
8. Limit – This is the maximum amount that your insurer will pay for your auto insurance claims. This is usually separated on a per-person and per-incident basis.
9. No Fault Insurance – It doesn’t matter who you are with no fault auto insurance. Your auto insurance will take care you and theirs. (But only the driver who is at fault will see their insurance rates rise.
10. Premium – This is the monthly payment you make to your insurance company for the privilege of being insure.
11. Primary Use – This is the most important use of your car. They’re not looking for anything. They are just looking to verify that you are not a salesman on the road for forty hours per week. A commercial policy is required for relative risk and all other business use.
12. Uninsured/Underinsured Motorist Coverage – Not everyone has the good sense to stay continuously covered by an auto insurance policy. You could end up spending years trying to get money for repairs if you happen to be one of these drivers. Your insurance company will pay the bill for uninsured motorist coverage. This saves you time and money. The rest can be worked out later.
