Car Insurance Terms: Defined
By: Good2GoPublished: August 24, 2016
Want to be an auto insurance expert? It’s not an easy task, which is why it’s so important to talk to someone who is an expert when you’re shopping for auto insurance. You can get a head start by learning a few basic phrases unique to auto insurance. These key terms can help you understand the fundamentals of how car insurance works.
If you’re involved in an accident, this is the amount of money you pay out-of-pocket before your insurance company covers the rest. If you’re in in a fender bender and you have a covered loss of $3,000 but your deductible is $500, then you will pay that upfront and your insurance company will cover the remaining $2,500. High deductible plans often result in a lower monthly premium, and the reverse applies to low deductible plans with a more expensive monthly rate.
This type of car insurance coverage is for non-collision related physical damage done to your vehicle. This could include theft, hail, floods, fires, or impact with an animal. Comprehensive insurance will cover the costs of the incident, minus your deductible. This coverage is usually optional unless you are buying or leasing your vehicle, at which point it is usually required by your financing or leasing company.
Car insurance coverage that will cover damages incurred to your vehicle by another car or object is called collision insurance. It’s subject to a deductible, which you’ll pay out-of-pocket before your insurance company covers the rest.
Your insurance coverage period starts as soon as you begin paying your premium. Most auto insurance policies must be renewed after 6 months, but Good2Go guarantees you the same low rate for a full year.
This is the person who files a claim or formal request to his or her insurance company to cover a specific accident or loss.
The amount of money a policyholder pays to be insured. Premiums are determined by several factors depending on the type of insurance and the coverage provided. The kind of car you drive, where you drive, and how much you drive are just a few things considered when calculating a premium.
The three different classifications used to identify other drivers on your policy. They are either rated (active drivers on your policy), excluded (people who are not allowed to drive the vehicles on the policy and are not covered in the event of an incident), or listed (residents in your household who do not drive the vehicles on your policy).
A person who is on the car insurance policy but is not the principal driver of the insured vehicle is considered an “occasional driver.” This might be a spouse, child, or relative who you would want to be covered in the event of an incident involving your vehicle.
This is usually a bank or another financial firm who has either leased a vehicle to you with an insurable interest, or given you money on loan to buy it. They are also included on your policy since they have a secured interest in the car.
Vehicle Identification Number (VIN)
Your VIN is unique to your vehicle formed by a combination of 17 letters and numbers used to identify the make, model, and year of a car. The VIN is typically found on the driver’s side of the car’s dashboard, the vehicle registration, or the title. VIN numbers are important because it can provide a vehicle history report for someone who is interested in purchasing a car, to see if it was ever involved in an accident.
If you’re looking for inexpensive, minimum coverage car insurance, Good2Go can help you get on the road. You can visit good2go.com for a free quote in minutes.