Whether the vehicle is for personal use or your business, an auto insurance policy is sure to be riddled with confusing jargon. That’s why Michigan First Insurance Agency is here to help you understand your insurance policy every step of the way.
Learn the basics of Auto Insurance with this glossary:
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Actual Cash Value: Insurers use to evaluate what a vehicle was worth before it was damaged or stolen, taking depreciation into consideration.
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At Fault: Drivers are considered “at fault” in an accident when it’s determined they caused the collision to occur.
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Bodily Injury Liability Coverage: If you are “at fault,” this helps pay the medical costs, loss of income, and even funeral expenses of other people involved in the accident.
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Bundling: When you choose to buy several policies under the same insurance provider, such as auto, home, life insurance and more.
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Claim: Any request for payment under the terms of the insurance policy.
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Collision Coverage: Helps pay for damage when the vehicle collides with another car or object.
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Comprehensive Coverage: Pays for damages that’s caused by non-collision events – such as hitting an animal on the road, car theft, vandalism, or hit with a natural disaster.
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Damage Appraisal: Process of assessing the damage on vehicles to determine repair costs for an insurance claim settlement. The policyholder can appeal the appraisal if it seems to low and if they have the proof to prove it.
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Declarations Page: Page of your policy that includes important information – such as who is insured, information about the vehicle that’s covered in the plan, types of coverage and the coverage limits.
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Deductible: Predetermined amount the policyholder will pay before the insurance coverage.
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Depreciation: Value lost from the vehicle’s original price due to mileage, age, and condition.
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Driver Status: People can be added to your policy with one of the follow driver status options:
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Excluded – This person is not allowed to drive the vehicle and won’t be covered in an accident.
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Listed – A member of your household who doesn’t frequently drive the vehicle on the policy.
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Rated – Person that actively drives the vehicle on the policy.
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Exclusion: Things that aren’t covered by the insurance policy.
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Full Coverage: A policy that includes collision, comprehensive, and liability.
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GAP Coverage: “Guaranteed Asset Protection” is optional coverage that helps pay the difference between what the insurer owes and the value of the stolen or totaled vehicle.
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Liability Insurance: If the policyholder is at fault in an accident, this coverage would pay for the other driver’s medical bills, vehicle repairs, as well as legal defense costs if sued.
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Limit: Maximum amount a policy will pay for a given accident – coverage limits may vary.
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Personal Injury Protection (PIP): Helps pay for medical expenses that the insurer and any passengers suffered in an accident.
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Premium: Amount the insurer pays for auto insurance either monthly, quarterly, or twice a year.
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Property Damage Liability: Pays for damage caused to another person’s vehicle or property.
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State-Required Minimum: This refers to the legal minimum requirements that states require residents to have.
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Underwriting: This process involves the insurance company evaluating the risks with insuring the driver and calculating rates.
If you’re unsure about any terms or what you should be looking for in a policy, ask your insurance agent for help. Looking for a quote on auto or commercial vehicle insurance? Call Michigan First Insurance Agency at 844.788.0818.