Car Insurance 101: 10 Terms You Need To Know
Talking about insurance can be stressful and confusing, especially when the lingo does not make sense. Schools also do not focus on informing us about the importance of insurance. So we will be providing a list of ten common car insurance terminologies. Educating yourself about car insurance will help prepare you when buying or inquiring about car insurance for personal or commercial usage.
1. Liability
The moment you decide to use a car, you are responsible for any damages or injuries you may cause. It is your legal obligation to be able to reimburse others for any damages you may cause. It is mandatory to have liability insurance for your car to cover claims and compensations sanctioned to you.
2. Comprehension Coverage
You never know what might happen when you are on the road or when your car is parked outside. Comprehensive coverage covers theft and other damages caused to you or your car other than a collision. Comprehensive coverage covers fire, vandalism, floods, etc.
3. Financial Risk
What is the probability that you will get in an accident? Insurance companies will run a risk assessment of drivers to determine the probability that you might get into a fender bender. Different characteristics are considered to determine what financial risk you might pose in the future. Some of these attributes include but are not limited to age, driving history, credit score, etc.
4. Collision Coverage
Need a little extra car coverage? Collision coverage is an option to get reimbursed for damages to your car, another vehicle, or object, regardless of fault.
5. Claim
Making a claim is your official request to your insurance company about getting paid for your settled policy.
6. Deductible
A deductible is the amount of money you would have to pay out of pocket in the case of an accident. Although you may have car insurance, it might not fully cover all the expenses depending on the amount of coverage you purchased in the first place. The remaining amount after your insurance coverage is the deductible. You are responsible for paying the remaining amount.
7. Gap insurance
Your new car loses its value right off the jump from the moment you purchase it. If you crash your car, you are still responsible for paying the entire amount, even if your standard insurance does not cover your vehicle's original price. Gap insurance is the middle man; it will help you pay were your standard insurance left off. For more information on Gap Insurance, click here.
8. Property Damage Liability
So you crashed into a fence; what now? Property damage liability will help reimburse the damages you or another person driving your car caused. This type of coverage is for items that you ruined.
9. Umbrella Insurance
Umbrella insurance is an additional extension to your liability coverage beyond the standard policy limits of regular insurance. Umbrella insurance is an extra layer of protection for your car, home, or boat. It is an added layer of protection in the case of legal fees, etc.
10. Uninsured/underinsured motorist coverage
You may have insurance, but what happens if the driver that crashes into you does not have insurance or their insurance is minimal to the expenses? They are still responsible to cover the cost of the accident.
Becoming knowledgeable about all types of insurance is necessary to be prepared for unforeseeable events. Car insurance is just the first step. To learn more about different types of insurance, click here.
Let Griffith Insurance & Financial Services, Inc. help you choose a policy that will fit your individual needs. Protecting your assets, whether personal, business, or both, is our goal.