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Terms for car insurance – what they mean



  Insurance Myths Courtesy of iii.org

Do not be intimidated by specialized insurance language. Below you will find definitions of some of the most common terms used when it comes to car insurance.

Adjuster

An insurance company employee or contractor who reviews the damages and injuries caused by an accident and okay claims payments. ] Liability for personal injury

Usually prescribed by state law, this insurance provision covers costs associated with injuries and deaths that you or another driver cause while driving your car.

Claim

The formal request to an insurance company for payment according to the terms of your policy.

Collision coverage

Optional coverage that compensates you for damage to your car that occurs as a result of a collision with another vehicle or object ̵

1; e.g. a tree or guardrail – when you are wrong. Although collision coverage does not compensate you for mechanical failure or normal wear and tear on your car, it covers damage from potholes or from rolling your car.

Comprehensive coverage

Coverage against theft and damage caused by an incident other than a collision, such as fire, vandalism, hail, flood, falling rocks and other events.

Credit-based insurance points

A confidential ranking developed by insurance companies based on your credit history that can be used to determine the cost of your insurance. A good credit score – an indication of responsible money management – has proven to be a good predictor of whether someone is more likely to submit an insurance claim.

Deductible

The amount deducted from an insurance payment that you are responsible for. For example, if you have a $ 500 deductible for your collision coverage and an accident causes $ 2000 damage to your car, you pay $ 500 and your insurance covers the remaining $ 1500. There is no deductible for your liability insurance.

Defensive driving

Driving in a way that reduces the risk of an accident. Defensive driving techniques include maintaining a safe following distance, scanning the road ahead, keeping both hands on the steering wheel and much more. If you take a defensive driving course, you may be able to get a discount on your car insurance.

Reduced value

The value of a car after being in an accident and repaired. Although the car may look good, it is worth less than the value before the accident. If you are involved in an accident, you may be able to charge for the reduced value of your car, in addition to the repair costs.

Distracted Driving

Driving your car while distracted is dangerous and often illegal. Texting and using your phone are the most well-known distractions, but getting fit with your radio, watching a map or a GPS system, eating and drinking, talking to passengers and makeup also take your eyes off the road – and increase the risk of getting an accident. Traffic tickets for texting or using your phone, as well as accidents caused by distracted driving, can increase your insurance fees.

Gap insurance

As soon as you drive a new car from the dealer's site, its value begins to decrease in value. And if you rent or finance the car, you are responsible for the entire amount you still owe if something happens to it, but your collision and total insurance only cover the car's actual market value. Gap insurance covers the difference between these two amounts – what the vehicle is worth and what you owe on it. The coverage can be purchased from the car dealer or directly from your insurance company. For rented vehicles, the insurance contract is usually rolled into the leasing fees.

Liability

Your legal obligation to indemnify others for any harm or damage you cause. Almost all states require you to have liability insurance for your car, so that if you or someone driving your car causes an accident, the victim will receive appropriate compensation. Compensation for medical expenses for injuries to you or your passengers as a result of an accident where you or someone using your car is at fault. This coverage can also pay lost wages and other related expenses.

OEM and generic car crash parts

Crash parts are those that form a vehicle on the outside of a vehicle – such as fenders, hoods and door panels – and are the most damaged in car accidents. Spare parts provided by the manufacturer of your car are called original equipment manufacturer (OEM) parts. Parts manufactured by another manufacturer are known as generic or aftermarket crash parts and are generally at a lower cost, as safe as matching an OEM spare part.

Premium

The cost of your insurance, paid annually, semi-annually or

Liability damage to property

Insurance cover that compensates others for damage that you or another driver driving your car causes to another vehicle or property , such as a fence, building or tool pole.

Total

A car is summed up if the repair cost exceeds the value of the car. If your car is total and you have extensive and / or collision coverage, an insurance company will pay you the full car value of your car or the police limit, minus your deductible if you are wrong.

Umbrella liability [19659004] Extra coverage outside the boundaries of your regular liability policy. This provides extra protection for your assets if you are sued. Your umbrella insurance also covers claims that fall under your homeowner's insurance.

Uninsured / underinsured car insurance

Uninsured car insurance compensates you when an accident is caused by a driver who has no insurance – or in a hit-and-run. In the event of a serious accident, underinsured car insurance will be the difference between your losses and the coverage limit of the insurance operated by the driver causing the accident.


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