Most people think of auto insurance as any other piece of paper, but its importance cannot be underestimated, especially with regard to renewals and claims. Knowledge of the basic conditions of car insurance is essential. If you don’t know them, the insurer and workshops can easily maximize profit by forcing you to pay more than you should. In this article, we’ll cover 15 auto insurance terms you should know.
- Actual cash value
Actual cash value or ACV is the value of the car taking into account its make, model, age, mileage and condition.
- Liability for Bodily Injury
It is liability coverage, which covers the financial cost of injury or death resulting from an accident caused by you. In addition, it covers loss of income claims, medical bills, and suffering and pain damages resulting from the legal action. However, you should know that personal injury liability does not cover your medical expenses.
It is the money that the person believes the insurance company should pay him in case of an accident. It may include physical injury, property damage, or both. It is a documented, formal request that you will make to your insurance company to claim compensation in the event of a financial loss. Before you receive the claim amount, the insurance company checks the authenticity of the claim. If your proof of loss is genuine, the company will drop you the check for the determined amount.
- Collision coverage
It is the coverage that pays for damage to your vehicle whether it is your fault or not. When you drive a car that is extremely close to your heart, a brand new car or a classic, this is an excellent cover to invest in. This is also a mandatory expense when financing your car. But if you’re driving a two-decade-old vehicle, this may not be the most appropriate plan for you.
- Comprehensive insurance
Comprehensive insurance covers all damage to your car or any vehicle you drive. In general, this policy covers damage to your vehicle due to flooding, vandalism, falling trees and theft. However, this policy does not cover damage resulting from incidents. Only the damage caused by a collision is reimbursed. Usually, the policy will detail what it covers and what it doesn’t. Therefore, you should read the fine print carefully.
- Declarations page
The page lists the coverage summary, including the limits, the vehicle covered, the type of coverage you have and the cost for each car.
The deductible is the money the insured has to pay to the insurance company before it reimburses you for the claim. For example, if you purchase auto insurance and you are involved in an accident resulting in $3,000 in damages, you must bear a $300 deductible. The company will pay the remaining $2,700 or until the policy is capped.
It is the percentage of loss a vehicle undergoes through regular wear and tear. As the car ages, the depreciation rate increases and the amount you receive from the insurer if the claim decreases.
It implies a change of policy by changing or changing a particular coverage. This allows you to change, reduce or add any terms, conditions or coverage in the policy.
- Family car policy
It is a car insurance with one or more coverages from the listed categories: medical expenses, liability, uninsured motorist and physical damage. Cover is only provided for the private passenger truck or car owned by a private individual.