The Most Important Car Insurance Terms that Every Individual Should Know
When hunting for car insurance, you’ve got to know the lingo that is occasionally tossed around to understand what you’re getting yourself into.
Unfortunately, most people do not take the time to know the car insurance landscape, eventually paying more for insurance than what they had budgeted. Or worse, they might come across an unscrupulous individual posing as a car insurance dealer get duped!
That being said, here are some of the most commonly used car insurance terms that you might come across when looking for your ideal auto insurance.
This specific coverage deals with payments regarding any damages made to your vehicle, regardless of who was responsible for the accident. So if you happen to drive a classic, or just recently bought a new car, collision coverage is extremely important.
Additionally, if you finance your car, then collision coverage might just be mandatory in some instances.
This kind of coverage deals with payments regarding your car that is not caused by any collisions with another car. For example, say you hit a deer on your way to work, then the damaged would be paid for by this coverage.
Similar to collision coverage, if you’ve recently bought a new car, then this coverage is extremely vital.
A deductible is money that you pay directly from your own savings when making repairs from an accident before the insurance comes to play. Of note is that the higher the amount of deductible that you have, the lesser the monthly premiums you will pay.
This is a comprehensive summary regarding your coverage. It talks about certain features of the coverage, like the type, the vehicle that it covers, and the total limit of the coverage.
Before defining this, you’ve got to understand that there is no such thing as ‘full coverage.’ On the other hand, the term full coverage refers to a car insurance policy that has the inclusion of a liability coverage. For instance, the policy might have roadside assistance, uninsured motorist coverage, among many others. Hence, it is considered a full coverage.
The best way to define gap insurance is by using an example. As you are by now aware, once you buy a car from a dealership, its value begins depreciating the moment drive out with it. So let’s say your car had a value of $50,000; this figure might drop down to $40,000 in the say, two months. So if you’ve been paying premiums of $1000, you will technically owe $48,000 on a car whose worth now is $40,000.
So in the event that you’re involved in an accident, your insurance policy will only be eligible to fork out $40,000, leaving you with $8000 to address. Even if you won’t be able to drive the vehicle anymore.
That being said Gap Insurance is ideal for individuals who are leasing a car, but if you own a car, then it is not the most ideal insurance cover to consider.
This refers to the least amount of insurance that your vehicle needs to have. Normally, liability insurance covers injuries and damages to the other party when an accident is as a result of a mistake you made. However, it does not cover any injuries/damages to your vehicle.
That being said, liability insurance is of two types. First is property damage liability which pays for any damage done to the other party’s car, or any property damage during the accident. On the other hand, there is bodily injury liability that covers the other party’s injuries as well as death.
No-fault insurance is a type of insurance cover that pits each of the parties in an accident to have their insurance covers pay for any injuries to each policy owner regardless of who caused the accident in the first place. However, this kind of insurance does not cover any property damage that takes place.
This insurance was first created in order to cut back on the number of motorists suing each other even when the injuries that occurred were minor. That being said, if the injuries are severe, then you are expected to pay for the difference that remains after the no fault-insurance cover has been paid.
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