Car Insurance Terms and Definitions

When you are shopping for car insurance you can easily find words that seem confusing. If things like deductible, collision, and comprehensive have you scratching your head, keep on reading to find out what terms you could learn about to better your car insurance situation. If you want to take control of your finances and save on your car insurance, understanding it the best is the best thing to do. These car insurance terms will help to educate you and help you to get the best deals on car insurance.

1. Anti-Theft Device

An anti-theft device is one that you use to deter someone from stealing your car. It can be anything from an electronic car alarm that goes off if your vehicle gets tampered with to a bar that you lock across your steering wheel to prevent someone from driving the car. The two major types of anti-theft devices for cars are passive and active devices. A passive device is like a car alarm. In most cases, you don’t have to do anything to turn it on. It mostly gets turned on when you leave your car. Active devices require you to turn on something or at the very least press a button to activate it. Both devices may help you to get a discount on your car insurance rates.

2. Bodily Injury Liability

This is one of the types of coverage that you can get with your car insurance plan. Bodily injury covers any types of injuries or even death of other people if you are involved in an accident and are found to be at fault. If you don’t have this type of coverage you could be on the hook for a lot of dough because health care costs are quite expensive. Even a basic trip to the ER with health insurance could cost a few thousand bucks so getting covered will help you, even when it’s your fault.

3. Comprehensive

Comprehensive is another aspect of car insurance. It covers you when those weird things happen to your car that is not really your fault but needs assistance to cover. These are things like a natural disaster that washes your car away in a flood, a spray of graffiti or a broken window, or even a tree falling on your car while it’s in the driveway. These are all things that you will want to be covered for. Even when you do not have other insurance on your car because you do not plan on driving it, you can still keep comprehensive on it just in case. It’s a great option because if you stop car insurance altogether, it will be more expensive to insure in the future when you get back on the car insurance train. Also, some leased cars require comprehensive car insurance because they are technically still owned by the leasing company.

4. Collision

Collision is another type of major insurance that is found on your plan. This protects you if you get into an accident that is caused by a collision with another object that is not another car. Telephone poles, trees, and wild animals do not carry car insurance to help you pay for their acts if you collide with them, even if it is not your fault. Collision helps to cover the costs of this if you want to have that extra peace of mind.

5. Deductible

A deductible on your car insurance is the amount you must pay before the insurance kicks in. This is usually around $500 or $1000. There is often a temptation to set a higher deductible to get lower car insurance rates on a monthly basis, but this can be a trap. You might be setting yourself up for failure if you don’t have that extra dough on hand for car repairs. Setting a lower deductible is often a bit better because you can actually pay it when something does go down with your vehicle.

6. Medical Payments

Medical payments is an optional add on to car insurance in most states. It helps to pay for any medical and death expenses for a person no matter who was the at-fault person in an accident. It’s a great type of coverage to get because you never know what the other person’s status is going to be or how much insurance coverage they may have. 

7. Occasional Driver

An occasional driver is someone who is on your car insurance policy but they are not the main driver. They do not drive the car as much as you do and they do not hold the responsibility for the insurance policy, but they are here and able to drive the car due to policies that allow occasional drivers.

8. Premium

Insurance premiums are the amount of money you pay each month or over a specific period to get your insurance policy. Premiums are a large focus of the insurance search because you want to try to pay the least amount possible. If you haven’t tried to search for a new premium to save money, just check it out right here!

9. Rental Reimbursement

When you have a car accident, your vehicle could be out of commission for a while. That’s where rental reimbursement comes in. This type of coverage will get you covered when you have to rent a car. Most plans have some type of a daily limit as to how much they will cover, so make sure you know your plan's limit before you make your daily rental a Hummer or Maserati!

10. Roadside Assistance

It really sucks when you get stuck at the side of the road, which is why Roadside Assistance was invented. This type of coverage will help you get some help! If you just call the number or some providers have an app, someone will be there to help you with your popped tire or other roadside emergencies. It’s a really good idea to get this because tow trucks can be quite expensive compared to the small monthly cost of a roadside assistance plan.

11. SR-22

This is a type of document that you will get if you have been convicted of certain types of moving violations, especially drunk driving. The SR-22 form is a certificate of financial solvency and can be used in lieu of a deposit on a high-risk car insurance plan. If you never had to use this type of form in your life, that would be better, but if you do, now you know what it is.

12. Uninsured & Underinsured Motorist Coverage

Well, you would hope that everyone is as responsible as you and gets the coverage that they need to be safe on the road, but that’s just not true. There are people driving around not only with not enough car insurance but with no car insurance plan at all. This type of coverage on your car insurance plan will save you the hassle of being on the hook for all the payments even if someone who is uninsured or underinsured is at fault for the accident.

13. VIN (Vehicle Identification Number)

Just like that laptop, you bought last year has a serial number, any vehicle that you purchase will have a VIN - a vehicle identification number. It is a way to make sure that your car is what it says it is and a lot of information can be attached to this number. It is 17 characters long and consists of letters and numbers alike.

14. Principal Driver

The principal driver is the person who uses the vehicle most. Sure, there may be other people on the car insurance policy, but this is the person who is usually the main person on the policy and the one who will be driving the car most frequently. 

15. Garaging Location

Even though you may not keep your car in a garage, the garaging location is where you park your car most of the time when you are not using it. It may be in a driveway, on the street outside your home, or in an actual garage. Either way, it’s important to be true because if you say you have a garage when you’re really parking your car on a busy street, you could be liable if anything happens.

Now that you know a lot about some of the most basic car insurance terms, it’s time to get yourself insured. Just fill out this simple form to get a free quote from the top car insurance companies offering quotes in your area. It’s easy to see how much you can save with a no-obligation quote. This is the best way to see how to save on auto coverage because if you don’t get multiple quotes or know all about a car insurance definition then how can you expect to get the best rate possible! See why people keep using this site as the number one go-to destination for both car insurance terms and information, as well as free quotes.