Ten Keywords You Need to Know To Save On Car Insurance

Thursday, May 18, 2017

save on car insuranceIf you have been searching for car insurance lately, you may have been stymied by all the industry terms that are commonly used. The terms and phrases may not exactly be Greek, but they can certainly be annoying and confusing. If you want the best cheap car insurance rates, then learning these commonly used words is one of the best things you can do. If you understand these key words, then you will be able to identify the right policy for you, and make sure you have enough coverage. Getting several quotes and being familiar with the industry jargon is the best way to make sure you are getting a good deal, and the best way to save on car insurance.


  • Deductible-this is the dollar amount that you will pay out of your own pocket before the insurance company covers the rest of your claim. Most car insurance deductibles are between 0$ and $1,500, depending on the type of policy and the company. It is important to understand that deductibles and premiums are directly related. The higher deductible you choose, the lower your premium will be. A higher deductible can save you money on your overall bill, but you have to be prepared to fork over the deductible if you do have an accident.
  • save on car insurance 2Premium-this is what you pay to the insurance company so they will provide you with coverage and pay any claims you may have. Premiums are paid either yearly, or every six months, but can be broken down into monthly payments. Since most of us structure a budget on a monthly basis, this may be the most important number to you personally. If you don’t have the ability to keep an extra $2,000 around to cover a high deductible, then you may be more comfortable paying an extra $30 a month so you won’t have to pay a deductible.
  • Bodily Injury Liability-this is the part of your auto insurance policy that covers you if you have and accident that injures or kills someone. It will fund your legal defense and cover any judgements filed against you if you are sued. It can also pay for lost wages or medical expenses for anyone you injure in a crash. The value of your policy determines how much of this coverage you will have. It does not cover you or anyone else in your car during an accident.
  • Collision Coverage-this is what covers any damage done to your car by hitting another vehicle or object. This is not required by law, but given the high occurrence of fender benders and light pole incidents, most people prefer to have it. The payout is usually limited to the cash value of your car, so if you have an older car that already has lots of dings and dents, you may not need it.
  • Property Damage-this covers any damages your car does to another person’s vehicle or property. Many people buy this coverage to protect them from any lawsuits that may happen because of this kind of damage. Every state except New Hampshire requires drivers to carry a small amount of this type of coverage. What is important to know is that most states have very low minimum requirements for this coverage because the amounts were set decades ago. Be sure you know the amount your policy carries, and try to make a reasonable prediction of how much protection you will need.save on car insurance 3
  • Comprehensive Coverage-this is also known as physical damage coverage or Other-Than-Collision (OTC) coverage and protects you from everything else that is not a collision with another car. Theft, falling objects like tree limbs, broken windows, and other property damage will all be covered in this portion of your insurance policy.
  • No-Fault Insurance-in order to decrease costly lawsuits, some states have a no-fault insurance system. This means that drivers can’t sue each other unless they have been seriously injured. If you live in a no-fault state and are in an accident involving another car, your insurance company pays your claim, not the other driver.
  • Personal Injury Protection-this coverage protects you and your passengers if you get injured in an accident. Some policies will also cover any pedestrian injuries that may have been involved. In no-fault insurance states you will have to add this to your policy, in other states it is an option you can choose when setting up your policy.
  • Uninsured Motorist-this coverage comes in two forms, bodily injury and property injury. Bodily injury covers you and your passengers if you are hit by an uninsured driver. Property coverage will pay for any damages done to your car by an uninsured motorist. Given the fact that one in seven drivers in the U.S. are uninsured, this is very important coverage to have, and worth the extra few dollars to carry it.
  • save on car insurance 4Gap Insurance-if you buy a new car it loses value immediately after you drive it off the lot. If you have the misfortune to get into an accident shortly after buying the car, then the insurance company will only pay for the blue book value, not the amount you paid. That leaves a gap that can sometimes be thousands of dollars. Gap insurance will pay the difference between what you owe and what the car is actually worth according to the insurance company.

That sums up the basic terminology used in the insurance industry, and this basic knowledge will help you decide how much you want to spend on which type of coverage. Knowing the jargon will help you get the best cheap car insurance you can afford, with the best coverage for your unique situation. Of course, there is always more to learn, and there are always changes. Check your auto insurance policy every six months, or at least yearly, to make sure you are getting the best rates, and all the discounts you can qualify for.



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