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Auto Insurance Vocabulary: Knowing what they mean


Availing of auto insurance premium is a must for everyone who is driving a vehicle. It serves as a financial security against the unidentified. Accidents come our way in an abrupt manner. It is never gradual thus protection against it must be always be ready.

Getting auto insurance from providers must not be accomplished without proper knowledge about how it works and what are the things it can do and cannot do for one’s safety and protection while hitting the roads.

Now the question is how much do we really know auto policies?

Below are some of the things that we must have knowledge with so that we wouldn’t be stupid at our own risk.

First “excess provision” is not the same as deductible. It is the minimum amount that a claim must be. A “claim” is the customer’s appeal for the loss covered by the policy repayment.

After filing a claim the amount the auto insurance company pays you is called “benefit.”

A portion of losses in the event of accidents is agreed upon by the policy holder is called “deductible.” Having a higher deductible would make the auto insurance premium rate lower. However should anything untoward happen, the huge amount of deductible, if one agreed to pay high deductible, will be shouldered by the policy holder.

In cases where the policy holder would want to change the amount of deductible or if he or she wanted to add some more driver in his or her policy the changes that will be applied to his or her premium is called “endorsements.”

“Limits” is the term used to refer to the maximum amount the auto insurance company will pay out of your losses.

“Full Coverage” does not entail that the policy holder is fully covered anytime, anywhere. This term is used to mean that the entire minimum coverage requirement for the policy holder’s specific state is within the coverage.

“Actual Cash Value” refers to the fair market value or the amount of the commodity from the time it was availed less the value it has depreciated since the date it was purchased.

“Indemnity” is the preprogrammed sum of the payment for the covered loss.

“Tort” is a term used to refer to instances where someone is reckoned as responsible in hurting or injuring someone or damaging other’s property.

These are just some of the terminologies used in the world of car insurance policies. As a consumer these are the things that we must understand entirely so as to avoid any trouble that misunderstanding can bring.