Car Insurance 101: 6 Terms You Need to Know

Car insurance is one thing you need to absolutely get right. The last thing you need is to be in some type of car accident and then find out you don’t have the coverage you thought you did. This will turn a bad situation into a nightmare! If you’re a savvy California car insurance shopper, this won’t happen to you. You simply need to do a bit of research before you sign up for a new policy, to ensure you know the details and the terms you’re agreeing to. 

Don’t worry; this isn’t going to be like cramming for a big test in high school. A few important terms are all you need to know in order to feel confident you’ve elected the right car insurance policy for you. These terms include:

Claim: This is a really important one! A claim is a formal, documented request that you make to your car insurance company for financial compensation in the event of loss. Depending on the policy, this isn’t always a crash. You can make a claim after a tree falls on your car, for example.

Liability Coverage: This means your insurance policy covers damage that you cause to another driver’s property in an accident. In essence, it is damage you are “liable” for. This is a required provision in just about all auto insurance policies across the country, including here in California.

Bodily Injury Liability: This is similar to Liability Coverage, except it covers the financial cost of an injury or even death as a result of an auto accident you caused. This portion of your car insurance can cover their medical bills, loss of income claims, as well as pain and suffering damages that may be rewarded in a lawsuit. 

Collision Insurance: We’ve talked about coverage for other drivers… what about the coverage for you, your injuries, and your property? Collision Insurance covers you whether you are hit by someone else or if you are the cause of the accident. The amount your insurance will pay to you depends on your deductible. The lower your deductible, the higher your monthly premium will be. This brings us to our next definition…

Deductible: When you have a claim, you pay the first small portion of the financial loss and the company covers the rest. For example, if you total your car in a crash, you may need to pay the first $1,000 and the insurance company writes you a check for the rest to replace it.

Premium: Each month, your car insurance company either sends you a bill that you pay for with a check or they directly take out money from your account. This is your monthly premium. It’s what you pay the company on a regular basis to keep your policy active.

Do you have further questions? Are you ready to choose a new California car insurance policy? Pronto Insurance is here for you! There are many ways to contact us, including reaching out for a free online quote or calling 1-800-949-3274. You can contact customer service by chat on any page of our website during office hours. After hours, you’ll have the option to send an email. It’s just one way we show how dedicated we are to you!