Common Auto Insurance Terms

| December 11, 2013

accidentAuto insurance can be filled with complicated terms that could confuse buyers. Learning the meaning behind these commonly used words helps any consumer navigate difficult to understand concepts. This added knowledge could lead to better selections when choosing a policy.

Comprehensive

Insurers use this word to describe incidents that occur for reasons other than a crash. Common issues that fall under this category include storm damage from elements such as hail. Criminal acts such as stolen vehicles would also be part of this section. Any criminal claims will require a full and completed police report detailing the entire event.

Deductible

Policy holders pay a certain amount before insurance begins to cover costs. This upfront expense is known as a deductible. Bloomberg Businessweek recommends every current and future policy owner choose a higher deductible. Companies are more likely to offer discounts as well as special services for customers that select this option.

Proof of Loss

Every claim must have the right paperwork to prove the validity of an accident. This is true even when an agent visits the scene of an accident. Photos are always encouraged to provide added details about the incident. If it is safe, take pictures of the entire scene. Try to show many angles to give the most comprehensive view of this situation.

Bodily Injury Liability Coverage

This type of coverage is used for any injuries related to other drivers and passengers involved in an accident. The term is an extension of standard liability insurance which relates to the damaged property belonging to other individuals.

Exclusion

Insurance companies add exclusions to many policies. The term refers to certain conditions that will void a policy as well as payment after an accident. Such risks vary by policy and could relate to the past driving history of a prospective buyer.

Financial Responsibility Law

The law states that any car owner should be able to meet financial considerations that occur after an accident. Purchasing car insurance is usually considered to be satisfactory for this requirement. Users that search websites such as junkcars.com should consult local authorities for further information about specific details.

Mediation

If an issue arises between the insurance company and the policy holder, the need for mediation may become necessary. Mediators are mutually agreed upon by both parties involved to ensure impartiality at all times. Any costs incurred involving this process may fall to the policy holder in certain situations.

Premium

The amount of money that a customer pays for their policy is known as a premium. Payments can be stretched out over a select period of time or paid all at once. Agents will work with buyers to find the best option for their budgetary needs.

Understanding common auto insurance terms helps consumers find the best policies for their unique needs. Always keep in mind that new words or changes in definitions could occur at any time. Ask reputable insurance agencies to clarify their current position on any subject if there is any uncertainty.

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Source: http://www.businessweek.com

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