What Are Some Common Auto Insurance Terms?

Some of the most common auto insurance terms are premium, deductible, collision coverage, bodily injury liability and comprehensive coverage, according to Steve Bowen for QuoteWizard. These terms impact insurance rates, and consumers should understand them to better evaluate their insurance policy and ensure their vehicles are adequately insured in case of an accident.

A premium is the payment made to the insurance company in exchange for coverage under the terms of the insurance policy, explains Bowen. A deductible is the amount of money a policyholder must pay out of pocket before the insurance company makes any payments.

Collision coverage pays for physical damage to the vehicle that results from contact with another vehicle or inanimate object, notes A.M. Best. Bodily injury liability coverage pays for injuries or deaths to people other than the insured driver who are involved in an accident, states Progressive. This coverage includes the legal costs for defending the driver if sued because of injuries caused by the accident.

Comprehensive coverage, also known as physical damage coverage or other-than-collision coverage, pays to repair physical damage caused to the vehicle by something other than a collision, according to Bowen. Examples of damage covered under a comprehensive policy include broken windows, theft and damage caused by a storm.