Auto Insurance Quotes and Policies: Commonly Used Terms

(04/20/2012) Auto insurance quotes can sometimes seem like they're written in another language. But with a few key terms down pat, you can confidently and knowledgeably compare car insurance quotes and select the right auto insurance for you.

    • Bodily Injury Liability: The legal liability for causing death or injury to another person.

    • Collision Coverage: Insurance that covers your car in the case of damage by another car, tree, or side of a building.

    • Comprehensive Coverage: Car insurance covering damage not caused by a collision, including theft, fire, and weather damage.

    • Claim: A request for reimbursement after an accident or damage. “Claims adjusters” are the people working for the insurance company that will assess the damage and the request.

    • Deductible: The out-of-pocket amount you must pay before an insurance company provides additional coverage.

    • Depreciation: The reduction of your car's value over time due to age and wear.

    • Discount: Reduced monthly rates provided for specific situations, such as:

      ~ Multi-Car - more than one vehicle insured on same policy
      ~ Defensive Driver course - successfully completed this course offered/approved by the DMV
      ~ Good student - driver is a student who receives good grades
      ~Anti-theft features - covered car has features like steering restraints

    • Gap Insurance: Insurance covering the difference between the outstanding amount owed on a vehicle and its replacement value.

    • Liability: Legal obligation to pay for damage to people and/or property. Often coincides with being found legally at fault for damage.

    • Liability Coverage: Insurance covering damages to people and/or property in case the driver and policyholder is found liable.

    • Limits: The maximum amount an insurance company will pay. Limits can exist per incident, per person, and per year.

    • No-Fault Insurance: Car insurance covering covers costs no matter who is at fault in the accident. Only available in some states.

    • Personal Auto Policy (PAP): Standard car insurance that includes liability, medical payments, uninsured motorist, and physical damage protection.

    • Premium: Regular payments billed by the insurance company to the policyholder. Typically premiums are due monthly.

    • Replacement Value: The full cost to repair or replace damaged property. Does not include deductions for depreciation. Determined in part by consulting the Kelley Blue Book, the master list of cars and their values.

    • Term: The amount of time the car insurance policy is in effect.

    • Uninsured/Underinsured Motorists Coverage: Car insurance covering damages caused by uninsured, underinsured (not enough coverage to satisfy costs) or unidentified (hit and run) motorists.

    • Usage: The primary way you use your vehicle - if you typically use your car to drive to and from work, your usage is “commute.”

    • VIN (Vehicle Identification Number): The unique number assigned to a car, consisting of 17 digits. Necessary for receiving insurance coverage.

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