Deciphering the Jargon: Breaking Down Auto Coverage Terminology
Its impossible to know the true value of auto coverage until you know the right language and for many, navigating the verbiage and jargon of the auto insurance system can be a difficult and overwhelming task. From comprehension of the basics to understanding the complexities, deciphering the most commonly used auto coverage terms can help you better assess your coverage options.
When considering auto coverage, agent- speak can be like a foreign language. To make sure youre getting the coverage you need, bottom line terms are key and applicable to how much coverage you purchase and how much you pay for it. To keep auto coverage jargon confusion to a minimum, its important to call out terms youre unfamiliar with in order to make sure your coverage meets your needs.
Comprehensive and collision are two widely used auto coverage terms that are often intermixed. Whats the difference? Comprehensive insurance covers damage or loss due to non-collision events, think theft, vandalism or if you drive into a tree. Collision insurance, in contrast, pays for protection and repair if you hit another vehicle or if youre rear-ended.
Uninsured/Underinsured Motorist Coverage is another popular coverage type that ensures protection from an accident caused by a driver who doesnt have auto insurance or not enough insurance. Personal Injury Protection, also known as PIP, is often state-mandated and helps to pay for an injured persons medical bills, lost wages or funeral costs after an auto accident.
Gap Insurance is a term expressed as a percentage of added protection for certain drivers. Say you owe $30,000 on the financing of your new vehicle and its only worth $25,000 after an accident. Gap coverage can help cover that gap, and you can decide how much coverage you need in order to make sure youre protected financially.
No Fault insurance is a legally required coverage in certain states that covers damages regardless of who is at-fault in an accident. No-fault auto insurance allows injured parties to receive financial compensation for damages regardless of blame. States that dont have no-fault insurance are considered at-fault states, meaning whoever is at-fault in an accident carries more of the financial responsibility.
Liability Insurance is a coverage type thats required in most US states and provides protection for drivers in the event of an auto-related injury or death to another party. The minimum amount of liability coverage is usually set by state laws, though many drivers decide to purchase higher levels of coverage for additional protection.
Roadside Assistance coverage helps provide recovery services such as towing, battery jump-starting, and repairs, while also helping with lockout services, flat tire service and fuel delivery, depending on the level of coverage chosen. Its important to note that the coverage and services vary by state and insurance provider.
Though there are similarities to auto coverage terminology, consumer understanding can be easily enhanced by asking the right questions and being aware of what’s available. Whether youre a first-time car buyer or a long time driver, taking the time to research and understand the most important terms is essential for making the most informed decision when deciding whats right for you.
When youre ready to begin shopping around for auto coverage, its important to be mindful of any of the different tiers applicable to your situation. Factors such as deductibles and limits of liability need to be discussed with a qualified agent to ensure you get the appropriate coverage to meet your specific needs.
In addition, if youre wondering if you can purchase coverage to keep points off your driving record, youll be disappointed to find out that this isnt an available option. However, some auto insurance companies offer discounts on coverage for those who have had no accidents or violations in the last few years.
Once you understand what auto coverage terms mean and why theyre applicable to your life, its time to get to the bottom line and figure out which coverage type makes the most sense for you. Many drivers will get the maximum coverage they can afford, because you never know when a situation may present itself that justifies the need for added protection.
Its not uncommon to be confused about what type of coverage you should have and what limits are right for you. In addition to actually going over your coverage options with a licensed agent, you can also periodically review policy options online to ensure that your coverage remains up to date.
No matter where you are in the auto coverage process, its worth taking the time to understand and apply the most important coverage terminology. That way, you can make sure youre understanding what youre paying for and receiving the maximum value for your auto insurance dollar.
When youre ready to start shopping, the pricing on auto coverage policies can vary widely, so never take the first price youre offered at face value. Instead, think about asking questions such as: Is there a loyalty discount that I am eligible for? Do I qualify for any additional discounts? Can I add particular coverage without raising the premium too much?
Its also important to understand the implications of certain terminology related to discounts for those with multiple policies, whether that’s auto insurance, homeowner’s insurance, health insurance etc. Furthermore, its beneficial to inquire about discounts that are related to being a safe driver, good student or having a clean driving record whenever possible.
There are numerous other discounts and benefits you may be eligible for that will reduce your annual auto coverage premium, making adding coverage for all the important elements more accessible. As you research, remember to review your coverage periodically to ensure you’re on track for maximum coverage coverage while also keeping costs reasonable.
You dont have to be a wiz when it comes to auto coverage terminology, but taking the time to learn and understand the most important aspects of your policy can mean the difference between under insurance and optimal coverage when it comes to financial protection. Keep these basics in mind and youll be well on your way to securing the proper coverage for your needs.