Decode Your Auto Insurance Terminology

Decode Your Auto Insurance Terminology

If you are confused by a coded auto policy, here is what you need to know!

If your auto insurance policy is written in what seems to be another language, know that you are not alone in being confused. Every industry has its own terminology, but it when it comes to insurance, every driver, homeowner, and business must face industry terms. As a consumer, it is important to know what you are buying, and that includes knowing certain terms.

Decode your policy by checking out auto insurance terminology!

Premium: This is your monthly bill. Your monthly premium is what you pay for your insurance policy every month.

Deductible: The total amount that you have to pay out-of-pocket before insurance kicks in. If you have a $1,000 deductible on your auto insurance, you are responsible for the first $1,000 of accident-related payments if you file a claim. After this amount, the insurance company will handle the rest – only up to the set limit. Typically, a higher deductible means lower monthly premiums, although there will be higher out-of-pocket costs in the event of an accident.

Property Damage: If the driver is at fault in an accident and there is damage to another person’s property, then this coverage will pay for the damages.

Actual Cash Value: This will be the repayment value for indemnification due to loss or damage of property. In most cases, it is replacement cost minus depreciation.

Replacement Cost: The cost of replacing property without a reduction for the depreciation due to normal wear and tear.

Uninsured Motorist Coverage: There are motorists who do not have any insurance. Even if the other driver does have insurance, he/she may not have a high enough limit. In any case, your uninsured motorist coverage would pick up the rest of the expenses up to the limit of the policy.

With the abundance of technical jargon involved in policy writing and covering claims, it is important to work with a trusted insurance agent who is willing to explain your auto insurance coverage. For professionals to walk you through the process of acquiring the right coverage, visit Mayer Insurance, serving Apple Valley and neighboring cities in Minnesota.