Buying a car is a great achievement, and it should be celebrated. If you already have one, good for you. If you’re just planning on buying one, then you might be wondering what a car insurance is.
Industry terms tend to confuse people in general, so let’s get down to the most important ones that everyone should know and understand.
Terms simplified
- Car Insurance – This is protection for yourself from paying a ton in case of unforeseen events like accidents, natural disasters, and the like. Note that the more coverage your car insurance has, the higher the deductible will be.
- Deductible – This is what you pay from a claim portion much like a downpayment for a house loan. The bank covers say, 90% of the loan, but you need to shell out the 10%. The higher you pay, the lower your monthly premiums would be. Take note that should you figure in an accident, the cost might be higher when you have a high deductible plan in place.
- Premium – It’s the amount you pay for your car insurance policy. Most car insurance companies offer flexible payment schemes, and you can choose to pay monthly, quarterly, or annually.
- Claim – This is something that an insured individual requests from their insurance provider to pay. This usually happens when there’s an accident.
- Liability – When another property is damaged or a person is injured due to an accident, this term is used. It’s a legal responsibility that insurance companies need to pay depending on your coverage.
- Limit of Liability – It’s the maximum or ceiling coverage that an insurance policy can provide.
Now that we’ve covered the basic terms, you may have more questions about the nitty-gritty. It’s best to write your questions down and do more research before deciding on a car insurance provider.
The most crucial part here is to ensure that you get the best coverage for your car in case of any mishaps in the future. Plan ahead, compare rates, and ask all the questions you need before deciding. You can’t go wrong with those.