How to Shop for Car Insurance: Know the Insurance Policy Terms

Easily Understand Auto Insurance with These Common Policy Terms

As the driver of a vehicle, you know that accidents, damages, theft, and other unexpected events can happen. In most states, car insurance is necessary to adequately protect you as the driver, the passengers that may be traveling with you, your vehicle, and other vehicles and individuals.

Reviewing your auto insurance policy upon renewal is essential, especially if there has been a change in the number of drivers, passengers, or vehicles that may need to be covered on your policy.

Auto Insurance Terminology That You Should Know in 2021

It’s important to know who and what is covered when it comes to your auto insurance coverage or are shopping for car insurance coverage. An insurance agency can help you determine what insurance companies may best cover your needs and provide car insurance quotes to you. Still, it is beneficial to know what exactly you are looking for before having the discussion.

We’ve put together the most frequently used car insurance terminology below for you to better understand what your policy covers in the event of an incident. This terminology will help you know what is covered, along with what may need to be brought to your attention to update your current policy or obtain an auto insurance policy. 

Though it’s common not to want to think about using an auto insurance policy, accidents do happen, as do thefts and damages to our vehicles. That’s why it is always necessary to have sufficient coverage and to know what your policy actually covers. Plus, it is required by law in most states.

At-Fault Accident

An at-fault accident is an auto collision that is either caused or partially caused by you. In this instance, your insurance provider will pay for the damages and/or injuries of those involved to you, your passengers, or the other driver and passengers that were involved up to the maximum amount under your policy liability limits.

Collision Coverage

Under collision coverage, you are insured up to the value of your vehicle, damages, and the cost of repair to your car that has occurred in a one-car accident incident. This type of insurance coverage is often required by car loan lenders as well.

Comprehensive Insurance Coverage

Comprehensive insurance coverage covers the repair of damages to your vehicle from factors other than an auto collision. These damages could include fire, theft, falling objects, collision with animals, and more.

Declarations Page

The declarations page of your car insurance policy lists all the essential details of your policy. These items could include your vehicle’s VIN number, your contact information, individuals covered under your insurance policy, your policy limits, included coverages, and more.

Exclusion

An exclusion is something that your auto insurance policy will not cover.

Full Coverage Car Insurance

A full coverage car insurance policy includes liability insurance, collision coverage, and comprehensive coverage. It is essential to know the difference between liability coverage and full coverage to better understand what your policy actually covers. Liability coverage protects against damage that you caused to other people and property while on the road; full coverage is insurance for any damage that has occurred to your vehicle.

Gap Insurance

Gap insurance coverage will cover the difference between your current car loan balance and the dollar value of your car if it is totaled or stolen when the loan balance is higher.

Insured & Additional Insured

An insured is an individual who is a family member of the policyholder included under the auto insurance policy. These individuals are often listed in the family auto insurance as additional insureds or lessors of the vehicle.

Liability Insurance

Liability insurance pays for the hospital and medical bills and property damage of those involved in a car accident that you caused. This insurance coverage also covers legal bills if you are sued as a result of the collision. Liability limits are determined in three numbers; as an example, we’ll say 100/200/50, which is a maximum of $100,000 for each injured individual under the bodily injury policy, a maximum of $200,000 in coverages for each accident, and a maximum of $50,000 in property damages. Remember, the limits depend on your policy and the state in which you live.

Liability Limit

The liability limit is the maximum amount that is payable under each coverage item. Auto insurance liability limits often contain limits for bodily injury and property damage. As an example, 30/50/15 is a maximum of $30,000 bodily injury per person, a maximum of $50,000 bodily injury per accident, and a maximum of $15,000 of property damage limits.

Non-Standard Auto Insurance

Non-standard auto insurance is a particular type of auto insurance for high-risk drivers. Drivers who need non-standard auto insurance are individuals with a history of prior accidents, speeding tickets, or are new drivers.

Personal Injury Protection (PIP)

Personal injury protection (PIP) is coverage from your insurance provider that will pay for hospital, medical, and/or funeral expenses due to a collision, regardless of who is at fault. It could also cover the cost of your passengers, depending on the insurance provider.

Premium

A premium is an amount you pay for your insurance coverage. Premiums can be paid monthly, bi-annually, or annually, depending on your policy.

Primary Owner/Insured

The primary owner, or the insured, is the main driver on the car insurance policy and is also the vehicle owner.

Underinsured Motorist Coverage

Underinsured motorist coverage protects you if you have been injured in a collision with another vehicle whose liability coverage is not enough to pay for the damages. This policy may pay for lost wages, hospital and medical bills, pain and suffering, and property damage.

Uninsured Motorist Coverage

Uninsured motorist coverage can cover hospital and medical bills, lost wages, pain and suffering, and damages to your vehicle if the other driver is uninsured.

What Determines the Price of an Auto Insurance Policy?

Before you shop for car insurance, you need to understand what coverages you need. Getting involved in a car accident can result in being injured, the injury of someone else, damages to your property, or damages to the property of others, so these unforeseen circumstances should not be taken lightly.

Your driving history, along with the coverages that you require, helps to determine the price of your auto insurance policy, but you don’t have to go through it alone. 

Here at Bray & Oakley, an experienced car insurance agent will guide you on your search for the perfect auto insurance policy by providing car insurance quotes and shopping the best auto insurance companies. 

Whether you’re looking for a new full coverage auto insurance policy or your driving record is less than perfect, Bray & Oakley is here for you!

Need a Car Insurance Quote?

Ready to find out more about your car insurance options and how you can save money? 

Bray & Oakley is a full-service independent agency offering automobile, home, business, health, and life insurance coverage. We have served the Logan, West Virginia area since 1920 and Kentucky since 2014.

Contact Bray & Oakley today to get a car insurance quote right now.