Car Insurance 101: Common Terms and Definitions
CAR INSURANCE
Car insurance can be complex, but understanding key terms will help you navigate policies, claims and coverage. This guide explains essential definitions to empower informed decisions.
Policy Essentials
1. Premium: The amount paid for insurance coverage, usually monthly or annually.
2. Deductible: The portion of a claim you pay out-of-pocket before insurance kicks in.
3. Coverage limit: Maximum amount insurer pays for damages or losses.
4. Policyholder: The person who owns the insurance policy.
5. Insurer: The company providing insurance coverage.
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Types of Coverage
1. Liability Insurance: Covers damages to others (bodily injury, property damage).
2. Collision Insurance: Pays for vehicle repairs/replacement after an accident.
3. Comprehensive Insurance: Covers non-accident damages (theft, vandalism, natural disasters).
4. Personal Injury Protection (PIP): Covers medical expenses for you and passengers.
5. Uninsured/Underinsured Motorist Coverage: Protects against drivers without adequate insurance.
Claim-Related Terms
1. Claim: Notification to insurer of damages or losses.
2. Adjuster: Insurer's representative evaluating damages.
3. Settlement: Agreement between insurer and policyholder resolving a claim.
4. Denial: Insurer's rejection of a claim.
Additional Terms
1. Broker: Intermediary between policyholder and insurer.
2. Agent: Insurer's representative selling policies.
3. Endorsement: Policy amendment adding/Removing coverage.
4. Rider: Optional coverage addition (e.g., roadside assistance).
5. Exclusion: Specific circumstances not covered by policy.
Insurance Scores and Ratings
1. Credit-based insurance score: Influences premiums based on credit history.
2. AM Best Rating: Evaluates insurer's financial stability.
3. NAIC Complaint Ratio: Measures insurer's customer satisfaction.
Common Insurance Acronyms
1. PIP: Personal Injury Protection
2. UM/UIM: Uninsured/Underinsured Motorist
3. BIL: Bodily Injury Liability
4. PD: Property Damage
5. CDW: Collision Damage Waiver
Frequently Asked Questions
1. What is the minimum car insurance requirement?
2. How do I file a claim?
3. Can I cancel my policy?
4. What affects car insurance rates?
5. What is the difference between comprehensive and collision insurance?
Additional Resources
1. National Association of Insurance Commissioners (NAIC)
2. Insurance Information Institute (III)
3. Your state's insurance department website
4. Consumer Reports
5. AM Best Rating Agency
Conclusion
Understanding car insurance terminology empowers you to make informed decisions, navigate policies and communicate effectively with insurers. Stay protected!
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