If you’re like most people, reading your car insurance policy makes you wonder what it all means. Some of the legal terms are impossible to understand. You’re not alone in the struggle to decipher the car insurance terms in your policy. So, we’ve put together 10 of the most common terms that are confusing to policy owners.
Common Car Insurance Terms People Don’t Understand
While car insurance is one of the most valuable things you pay monthly, you may not be fully covered. Make sure you know what kind of coverage you have and how much it costs by learning what the terminology means. Here’s a helpful list of the 10 most commonly misunderstood insurance terms.
(1) At Fault
Before your insurance pays out for damages, they must know who caused the accident. Knowing who was at fault allows the insurer to determine their financial responsibility. They need to know if the accident was due to driver negligence. If so, victims should be compensated by the at-fault driver’s insurance.
(2) Covered Loss
Make sure you understand the covered loss terms of your policy. You don’t want to file a claim and discover it isn’t covered. In general, a covered loss is something your insurer will pay for if you, your car, another person, or another person’s property in the event of a claim.
(3) Declarations Page
The declarations page of your policy outlines what is covered by the insurer. It will include the coverages you chose, the limits for each coverage, the costs for each coverage, and the vehicles covered.
(4) Deductible
The deductible is everyone’s un-favorite part of car insurance. It is the amount you agreed to pay out of pocket if you file a claim. Thankfully, your insurer will have to pay more than you do. Here’s how the deductible works.
(5) Coverage Limits
The coverage limits are the maximum amount your insurer will pay if you file a claim. Each state has specific minimum limits that you are required to carry. In South Carolina, you must carry a minimum of $25,000 per person bodily injury coverage and a minimum of $50,000 for all persons injured in one accident.
More Car Insurance Terms You Need to Know
(6) MVR
Before selling you a car insurance policy, the insurance company will want a Motor Vehicle Report (MVR). The report provides details about your driving history for the past several years. It also includes details about your drivers’ license, traffic violations, license suspensions, and accidents you were involved in. This information helps the insurer determine whether you are an at-risk driver.
(7) Primary Use
Your insurer will want to know how often you drive the vehicle. For instance, you use it primarily to commute to work, errands, and pleasure or if it is used for business purposes. They also need to know whether the vehicle is used on a farm. Make sure your insurance company has the correct information to ensure that you have adequate coverage.
(8) Principle Driver
Your insurance company needs to know who drives the vehicle the most. This information needs to be accurate to ensure you have the right amount of coverage.
(9) Premium
You already know what this is, but we want to include it just to be thorough. The premium is the amount of money you pay monthly or annually for car insurance. Several factors affect the premium such as:
- Where you live
- The type of car you drive
- Your age
- The driving history of all drivers
- Primary use of the vehicle
- The deductible you choose
If you’re shopping for car insurance, contact Sandifer Insurance Agency for a free quote. We will compare pricing among various insurance companies to find the most affordable coverage for your needs.
(10) Named Insured
The named insured refers to who the policy covers. For instance, if you are the primary driver, you are the named insured on your policy.
Let Sandifer Insurance Help You Better Understand Car Insurance
Sandifer Insurance Agency is a family-owned business located near historic Cheraw, SC. We have over 40 years of insurance experience. Our customers are important to us and we take the time to assess your insurance needs to get the best coverage at affordable rates.
You may also be interested in other insurance such as homeowners, life, farm, or commercial. If so, we will be happy to provide quotes on those types of policies as well. Also, we can bundle your policies to help you save money.
Contact Sandifer by phone, email, or online to get your free quote.
Sources:
doi.sc.gov/ – Automobile Insurance