Common Car Insurance Terms
by James Robinson
Absolute Liability
This is liability without fault, also known as liability without regard to fault or strict liability. You may see this pop up when something considered contrary to public policy happens, even though the event wasn't intentional.
Liability Insurance
In a nutshell, liability insurance is risk transference. Not only does give you protection against loss that arise from third parties, it covers your legal liability from injures to other people or their property.
Collision Insurance
This type of insurance is optional. Collision insurance provides coverage for the insured's vehicle, subject to a deductible, that is involved in an accident. Basically, this covers you whether the accident was your fault or not.
Deductible
Also known as excess, this is the amount you agree to pay toward the total amount of an insured loss, whether it is per claim or per accident. Usually a fixed rate, the deductible must be paid before the policy benefits can be applied to a claim.
Uninsured and/or Underinsured Coverage
This type of insurance is great protection for you and your family if you happen to be hit by someone without insurance coverage. Having uninsured or underinsured coverage allows you and your family's bodily injury to be paid for.
Comprehensive Coverage
Comprehensive insurance covers your vehicle in case of non-collision related incidents such as fire, theft, weather, impact with animals and vandalism.
Gap Insurance
This insurance is good for people who have just purchased a new vehicle. In a nutshell, new cars depreciate right after leaving the dealership lot. Gap insurance covers the difference between what an insurance company says your car's worth and what you would actually owe on the vehicle.
Gap insurance usually only covers theft and accidents, but that can vary depending on the insurance policy. You can also purchase gap insurance from the dealership. However, you can expect to pay even higher premiums.
Property Damage Coverage
This covers any damage you may cause to another's vehicle. Basically, if you cause it, you're covered.
Claim
This is your request for reimbursement concerning a loss covered by your car insurance policy.
Full Coverage
Actually, full coverage isn't really what it sounds like. Technically, full coverage is a combination of collision and comprehensive coverage, meaning that your car's physical damage is covered.
Secondary Driver
Also known as an occasional driver, this person is covered for driving the insured vehicle. However, this coverage does not mean that they're the primary driver.
Jul 24, 2008
Common Car Insurance Terms
