You’re a pretty sharp person. After all, you know how to use a computer and everything, right? But when you start wading through all of the terms and jargon associated with auto insurance, even a smart cookie like you can start to get a headache.
Don’t worry — you aren’t alone. Here’s a reference guide for 20 common words or phrases that have to do with auto insurance in California.
20 Car Insurance Terms You Should Know
1. Policy – the actual contract that states that an insurer will provide auto insurance coverage to you under certain conditions in exchange for a fee or premium.
2. Quote – an estimate generated by the insurer of how much you could expect to pay for auto insurance based on the information you provide.
3. Premium – the actual amount of money you pay for an auto insurance policy. This is computed after the insurer checks out the information you provided, including the limits you choose and deductibles, in your application.
4. Deductible – the amount of money you must pay out of pocket to get your car repaired before your insurance kicks in. It’s like a “co-pay” for auto insurance.
5. Limits – the maximum amount of money your insurance company will pay on any given claim for a particular coverage (like property damage, bodily injury, etc.). Note that, typically, legal fees needed to defend you within a covered claim are not considered part of your limits.
6. Term – The length of time during which your auto insurance policy is valid. At the end of the term, you can renew your policy or switch insurance companies.
7. Declarations page – the “summary page” of your policy document. It outlines your name, contact information, vehicles covered, driver names, type of coverage, deductibles, and limits.
8. Endorsement – a change or addendum to your auto insurance policy. Examples include custom equipment, an additional driver, or higher limits.
9. Insurance card – the small card you carry with you whenever you drive which provides proof that you have an in-force auto insurance policy. (Police might ask for this if you get pulled over.)
10. Permissive use â€“ extends coverage to a person that drives your vehicle and is covered by your auto insurance if you have given your permission to that person.
11. Liability insurance – the type of policy which you are required by law to have as a California driver. It pays out for damages for property and to people who may be injured in an accident for which you are responsible.
12. Bodily injury coverage – the category of liability insurance that protects you if you cause injury to someone else in an accident, up to the liability limits that you have purchased.
13. Property damage coverage – the category of liability insurance that protects you if you damage someone else’s vehicle (or house, building, etc.) in an accident, again, up to the limits of coverage you buy.
14. Collision coverage – optional auto insurance that protects you if you damage your own car. This coverage pays the repair costs to fix your vehicle, less your deductible.
15. Comprehensive coverage – optional auto insurance that protects you if something else happens to your car, such as theft, fire, vandalism, etc. This coverage pays either repair costs or money toward replacing your vehicle, less your chosen deductible.
16. Uninsured (or underinsured) motorist coverage – optional auto insurance that protects you if someone who doesn’t have liability insurance damages your car or injures you in an accident.
17. Collector car insurance – a special type of auto insurance designed specifically for classic or custom vehicles.
18. Usage-based auto insurance – auto insurance in which the cost is computed based on your personal driving habits. It involves placing a device in your vehicle that records data about how you drive.
19. SR-22 – a document that demonstrates proof of insurance coverage. It is usually only necessary if you have certain incidents on your driving record (like a DUI, for instance).
20. Anti-theft device – an ignition lock device, a car alarm, a vehicle tracking device or any other product that helps prevent the successful theft of your vehicle.
If you have questions about any of these auto insurance terms or others, the helpful folks at Auto Insurance Specialists can answer them. They can also provide you with an affordable policy that meets all of your coverage needs.
This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms and coverage’s in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.