New To Getting Auto Insurance? Know These Commonly Used Terms

Are you brand new to owning a vehicle and need to purchase auto insurance? If so, you may be unfamiliar with some of the terms that are being thrown around. It will help to know about these commonly used terms before you meet with an auto insurance agent.


Every car insurance policy has a premium, which is the amount of money you pay out of your own pocket for the insurance policy. This premium is paid for each term of the vehicle, which could be per year or a half year. If you were to cancel your policy before the term is up, you would receive a prorated rate for the days you did not use your insurance. For example, if your insurance premium is $365 for the year (or $1 a day), and you cancel your insurance policy 60 days before the end of the term, then you would get back $60.


The deductible will be the amount of money you pay when you make an insurance claim, with a higher deductible resulting in a lower premium. You must pay this amount upfront before your insurance provider will pay for the rest of the damage. Make sure that you have enough cash on hand to cover the insurance deductible, because if not, then you will struggle to actually use your insurance.

Liability Coverage

Liability coverage pays for damages that you cause if you were to cause an accident. Liability coverage is made up of personal property and bodily injury damages as well, with there being caps on how much will be paid for each category. For example, it is common for bodily injury coverage to not only have a maximum amount that insurance will pay for the entire accident, but a lower maximum amount of coverage per person. 

Comprehensive Coverage

Think of comprehensive coverage as protection for your vehicle when it is out of your control. This includes natural disasters, theft, vandalism, and things of that nature. While it is an optional type of coverage that you do not have to purchase, it is often recommended for newer vehicles that are still worth a lot of money. 

Collision Coverage

Collision coverage will offer you financial protection for your vehicle if you were to cause an accident. When combined with comprehensive coverage, it can give you some much-needed peace of mind that your insurance policy will cover all the major incidents that can happen to your vehicle.