The Low Down on Common Insurance Terms

So you just bought a new car at one of the used car dealerships in Providence RI. Congratulations! Now you need to figure out your insurance, right?

Most of the time, people aren’t really sure about what many of the insurance terms even mean. That can make it extremely challenging to know if your policy includes everything you need.

Unless you want to put everything in the hands of your agent and cross your fingers, spend a few minutes reviewing these terms. Then you’ll be prepared when it’s time to talk coverage.

Claim

An insurance claim is an application that you file with your insurance company, asking them to pay for damages after you’ve been in an accident.

Premium

This is the amount of money you pay to your insurance company each month. In return, the company agrees to pay for claims that are covered under your policy.

Deductible

Your deductible is the amount of money you have to pay upfront in order for the insurance company to pay off the rest of a claim.

Insurance Policy

An insurance policy is a formal contract that you have with your insurance company. It states what specific things are covered, the length of time you will be covered for, the amount of your premium, and your deductible.

Collision Coverage

If you have this kind of coverage, your insurance company will pay for any damages to your vehicle after an accident.

Bodily Injury Liability

This coverage protects you if someone is hurt or killed by your vehicle. It can help pay for legal fees if the situation needs to be addressed in a court of law.

Personal Injury Coverage

When this is included in your policy, your insurance company will cover any injuries that you or one of your passengers incurs in an accident.

Property Damage Liability

If you’re driving and you damage someone else’s car, having this kind of coverage will save you from having to pay by yourself. Your insurance company will take care of the other person’s costs.

Gap Insurance

This can be a really important thing to have in your policy because the unexpected does happen. When you buy a new vehicle and leave the lot, the car loses some of its value right away.

But if you were to total the vehicle, the insurance company would only give you exactly what the car is worth, not what you still owe on the loan. Gap insurance covers the difference so you don’t get left hanging.

Now remember, your state has particular requirements for how much coverage you need right off the bat. The rest is up to you. Just keep in mind that opting for less can sometimes lead to major problems if you do have an accident later.