Important Auto Insurance Terms Every Client Should Know

It’s no secret that people in the insurance game speak a whole different language than the rest of us. If you’ve ever been sitting across the desk from an agent and thought he was speaking a different language, you’re not alone. It’s not that anyone is trying to be difficult; it's just that there really is some special terminology in the business. So, we’ve gone ahead and developed a quick primer on the things you absolutely must know when you’re ready to get an auto insurance policy.

Premium

The premium is the amount of money that you agree to pay to the insurance agent for the coverage that is provided. Most premiums can be paid in full at the time of purchase or in installments over the period of the policy. The acceptance of the premium payment binds the insurance company into the insurance agreement. 

Deductible

This is the amount of money that the insured motorist must pay before the insurance pays  a claim. There are often different deductibles for different parts of a comprehensive auto policy. In general, the higher the chosen deductible is, the lower the premium will be.

Bodily Injury Liability

A bodily injury liability policy pays for medical costs incurred to people outside of your vehicle when you are involved in an accident. This could include other drivers, their passengers and any pedestrians who may be hurt. Depending on the extent of your coverage, it could also pay for legal fees incurred from fighting a claim.

Collision Coverage

Collision coverage will pay to fix any damages to your vehicle due to an accident while you are behind the wheel. It covers both vehicle to vehicle and vehicle to object collisions.

Physical Damage or OTC Coverage

This coverage is often known as comprehensive coverage and covers damage to your vehicle that is not the result of a collision. This can include things like scratched paint from an encounter with a shopping cart or any other damage done while you are not in car.

Med-Pay

Med pay covers injuries to yourself and your passengers due to an accident. Some policies will also cover pedestrians.

Property Damage Liability

This is the portion of your auto policy that covers damages that you do to another person’s vehicle in an accident. It can also cover objects such as mail boxes, lawn plantings and other personal property that might be hit by your car.

No-Fault Insurance

Several states have “no-fault” laws that prevent motorists from suing each other in the event of an accident. In these states, all insurance claims are covered by the driver’s own insurance.

Underinsured and Uninsured Motorist Coverage

This coverage is essential. It will pay for any damages that happen to you, your passengers and your car in the event that you are hit by a driver without insurance coverage or with so little coverage that your claims cannot  be fully covered.

Gap Insurance

Gap insurance covers the difference in price between the blue book value of a car and the cost to purchase a new one of the same make and model. This is essentially a new car policy that covers the depreciation that occurs once a new car is driven off the lot for the first time.

While insurance lingo may be full of unique terminology, knowing these ten terms will help you get exactly the right coverage for your particular car. So, next time you go in to buy auto insurance, you’ll be able to hold up your end of the conversation and not be stuck with a blank look on your face.

For more information about Columbus auto insurance, call Gardiner Allen DeRoberts Insurance at 866-846-4488.