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Sometimes drivers don’t fully understand the commonly used terms in their auto insurance policies. Concepts like “comprehensive” and “collision” can be confusing if you don’t know what they mean. It’s necessary to arm yourself with the knowledge of these basic terms so you can be smart about buying car insurance.
Here we define some of the most commonly used terms.
Collision Coverage
This part of your car insurance insures your car against damage that occurs if you get into an accident, regardless of whose fault it is. Your car repairs will be paid for by your insurance company after you have met your deductible. Your deductible is the amount you agree to pay toward repairs, and can range from $150 to $1500. Remember that the higher the deductible, the lower your premium, but it may be difficult to come up with that higher deductible at the time of a claim.
Comprehensive Coverage
Comprehensive covers any kind of damage or loss to your vehicle other than a collision. This could include:
• Getting hit by an animal, like a bear
• Theft
• Vandalism
• Damage caused by acts of God (hurricane, tornado, hail)
Comprehensive coverage also has a deductible that you must pay before your insurance company will pay for repairs.
Liability Coverage
There are two types of liability coverage:
• Bodily injury
• Property damage
Bodily injury covers damages to the other driver and any passengers who may be injured in an accident.
Property damage pays to replace or repair any items that may be damaged in an accident, such as items in the car at the time of the collision, or a light pole or mailbox that may have been hit.
You can choose the amount of liability coverage you purchase based on how much your insurance company will pay per person injured, per accident and the amount paid for property damage. In your policy, liability coverage looks like this:
25/50/45
In this case, your car insurance company would pay up to $25,000 per person and $50,000 per accident, and $45,000 for property damage.
