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Auto insurance terminology to use

Understanding the terminology behind auto insurance is crucial if you want to get a hold of a really competitive policy. Sure, there's always a chance that you'll be able to buy a very good policy right from the start without being taught in insurance specifics. But the odds are certainly against you, so doing some homework is a must if you want to save money on auto insurance. The following short glossary will help you understand the basic terms of auto insurance that are used in any purchasing scheme:

Premium

Premium is the amount of money you have to pay periodically to keep your policy valid and to be able to get coverage when needed. Also known as “rates, premiums depend on a wide set of factors including the technical characteristics of the car you drive and your personal data such as place of residence, education, marital status, driving record and so on. Premiums are also affected by the type and amount of coverage you get with the policy – the more you get the higher are the premiums.

Coverage

Coverage is a very general term denoting the amount of money the insurance company will pay out in case of an insurance situation to you. Now the situations may be different depending on what coverage types you've purchased with your policy. The most common coverage is third party liability which pays out the damage and injury costs to the other party involved in an accident in case you were at fault. However, there are more situations you can get coverage for such as car theft, vandalism, accidents with uninsured drivers and so on.

Deductible

Deductible is a set amount of money you have to pay out of own pocket in order to get insurance coverage from your policy. This amount is usually set around $100 or $250 but you can raise it up to $1,000 and further. Deductible is introduced in order to avoid small claims caused by minor damage to the car that the car owner can deal with on his own. If you choose to increase the amount of deductible the premiums will automatically get lower and visa verso.

Quote

Quotes are the equivalent of price tags in the world of insurance, however they are set individually and depend on a very wide range of factors. Quotes represent the premium you will pay if you will choose to buy a particular policy. auto insurance quotes are calculated each time you fill out the quote form and are different from company to company.