8 Basic Auto Insurance Terms You Need to Know

by Jim Herren
There are eight basic auto insurance terms that will help you understand your auto insurance. These basic terms will allow you to at least be familiar with what you are purchasing and what your policy will pay if you are in an accident. Number 8 is very most important and deserves extra attention.

1. Premium Your Premium is the cost of your insurance policy. Most companies allow you to pay by the month as well six months or yearly.

2. Claim If you get into an accident your claim is a demand for payment under your insurance policy. What you will receive is based on the terms, limits, and conditions of your policy.

3. Deductible Your out of pocket cost when making a claim. You decide when you purchase your policy what your deductible will be. A higher deductible will lower your Premium

4. Collision Coverage known as "Collision" Pays for the repairs to your car when it hits, or is hit by another vehicle or object.

5. Comprehensive Physical Damage Known as "Comprehensive" pays for damage other than a collision. Such as a fire, auto theft, flood or vandalism.

6. Property Damage Liability Pays for damage to other peoples property or auto when your vehicle causes the damage.

7 Bodily Injury Liability This coverage protects you if you injure someone while operating your vehicle.

8. Subject To This term takes the most study and will pay off when you review it before you are involved in an accident. It is often seen as "Subject to the terms, limits and conditions of your policy." it is the meat of your policy and will tell you exactly what will happen, when it will happen, and how much you will be paid should you have an accident.
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Your auto insurance is a contract between you and your insurance company. It is important to know the basics and to review the "Subject To" provisions so that there are no surprises if you are involved in an accident. A few minutes spent with your agent reviewing the details of your policy is time well spent.