Insurance lingo can be confusing, especially if you’re not dealing with it every day. Understanding a few key terms can help you feel more confident when reviewing your policy or filing a claim. Here are some common but often misunderstood insurance terms you should know:
1. Deductible
This is the amount you’re responsible for paying out of pocket before your insurance kicks in. For example, if you have a $500 deductible and a $2,000 repair, you’d pay the first $500, and insurance would cover the rest.
2. Premium
The amount you pay for your insurance—monthly, semi-annually, or annually. Think of it like a subscription to keep your coverage active.
3. Liability Coverage
Covers other people if you cause an accident or damage. It doesn’t cover your own injuries or property—just the other party’s.
4. Comprehensive Coverage
Covers damage to your vehicle that isn’t caused by a collision. This includes theft, vandalism, weather damage, or hitting an animal.
5. Collision Coverage
Helps pay for damage to your car when you’re involved in an accident, whether it’s with another vehicle or an object like a tree or guardrail.
6. Underinsured/Uninsured Motorist Coverage
Protects you if you’re hit by a driver who has little or no insurance. This can help cover medical bills and vehicle repairs when the at-fault driver can’t.
7. Endorsement (or Rider)
An add-on to your policy that changes or adds coverage. For example, you might add roadside assistance or extra coverage for high-value items.
8. Claim
A formal request you make to your insurance company for payment after a loss or damage.
Knowing these terms makes it easier to understand what you’re paying for and what protection you really have. If you’re ever unsure about a term in your policy, don’t hesitate to reach out to your agent!