Terms To Understand When Buying Auto Insurance For The First Time

If you are new to buying auto insurance and are purchasing your first policy right now, you will likely have some questions about the terms used with it. This is quite normal for a person who has never purchased auto insurance before, and it is very important to understand some key terms, as this will help you purchase the right types of coverage for your vehicle. Here are three important terms you should understand as you start looking for an auto insurance policy.

Premiums

The word "premiums" is used often in the insurance business, and it simply refers to the costs a policyholder pays for insurance coverage. The most important thing to understand when you see this word and hear the amount of money it will be is knowing the length of time it refers to. Many insurance companies will give you an auto insurance quote that lasts six months, and the premium amount they give you is the amount for insurance coverage for the full six months. To determine the monthly rate, you must divide this amount by six.

Deductible

The insurance agent you talk to will also ask you about the deductible amount you would like to have. This amount will greatly affect the premiums you pay, but it will also affect the amount of money you would need to pay if you caused an accident and had to get repairs on your car. The deductible is simply an amount you are required to pay when you file a claim, and it is the amount that the insurance company will not pay. They will, however, pay the rest of the money for the claim after you pay the deductible. You can choose $500 for this, or more, and you can request quotes for different deductible amounts to see the differences in premiums.

Liability

The other important term to understand is liability. Liability is a type of coverage you probably need to have, due to legal requirements in your state, and it really does not cover you at all. The only thing it does is offer protection to other people if you cause an accident that causes damage to their vehicles. You should always carry liability coverage, even if your state does not mandate this type of coverage.

You can learn more about car insurance and other related insurance terms by contacting an auto insurance agency, like Phillip R Davis Insurance.


Share