Understanding insurance terms can help you get the most out of your car Insurance. Most terminology used in insurance is confusing and makes it difficult for car owners to understand their policies. This can prevent those who buy auto insurance from taking full advantage of its coverage.
Important Auto Insurance Terms You Should Know
To help you understand your auto insurance, Access to car insurance explained the following 10 must-know insurance terms.
- Insured: This term refers to the person who purchases an auto insurance policy and pays the premium. A policyholder can own and pay for insurance, but cannot own the insured car.
- At-fault accident: This is a car accident that you cause, in whole or in part. Your auto insurance typically pays up to the limit for victim injury and property bills. It can also pay your legal fees if you are sued.
- Car insurance claim: This is a request made by an insured to the automobile insurance company to cover the cost of repairing the vehicle, treatment of injuries and other associated costs.
- Collision coverage: This is a type of coverage that covers an accident involving a single car, such as hitting a tree. It is generally required when purchasing a vehicle on loan.
- Full coverage: Comprehensive coverage pays for auto repairs after a collision with an animal and specific non-collision problems such as fire, car theft and falling objects.
- car insurance quote: This is an estimate of the cost an insurer will charge for your insurance.
- Deductible: A the deductible is a predetermined amount amount that insurance subtracts from an insurance settlement. For example, if the total cost of your damages is $5,000 and you have a deductible of $500, you will receive a claim check for $4,500.
- Personal Injury Protection (PIP): This type of car insurance reimburses the cost of treating your injuries, regardless of who is responsible for the accident. It also covers costs that MedPay would not cover, such as physiotherapy and lost earnings.
- Prime: This is the cost your insurer expects you to pay, either annually, monthly or every six months.
- Insurance Form SR-22: This is an official document that you may be asked to prove that you have sufficient car insurance. Insurance companies fill out this form to help you restore or maintain your driving privileges after a traffic violation.
What is an “additional insured”?
Investopedia defines additional insured as a status associated with general liability insurance policies where a group or individual not named in the policy is included in the coverage. It protects the insured persons or individuals under the policyholder’s insurance, and they can even file a claim in the event of a lawsuit. They are usually co-owners of vehicles, a lessee or someone driving vehicles owned by another person.
What happens to your insurance when you add someone to your policy?
Groups or individuals added to a policy are additional insureds and added through an endorsement called an endorsement. According The balance, once a policyholder includes a person through an additional insured, anyone listed in the coverage can seek compensation from the insurer. Additional insured persons or groups are also notified of vehicle and insurance cover changes.
Please note that insurance companies consider the risk associated with additional insurance to be minimal. Therefore, the cost of the additional insured is generally low compared to the cost of your premium.