What You Should Know about Car Insurance Terminology

There are a number of terms that are used in auto insurance policies that do not show up in common conversation. These are words that are defined and used specifically within the auto insurance business. If you would like to better informed when it comes to your auto insurance, it may be beneficial to have a grasp of some essential terms you will see.

Before explaining the terms, it is important to remember a few basic facts about car insurance. First, if you don’t have auto insurance you, as the driver, are not protected in any way if there is an accident. If you do not have insurance protection it is possible that you may be held entirely responosible for repayment on injuries or damages. This is especially true if you were at a fault for the accident. On the other hand, if the accident isn’t your fault, you may still have to pay for your medical bills, those of your passengers, as well as repairs or replacement of your automobile. These consequences underscore the need for auto insurance coverage. This fact, of course, explains why most states make some level of auto insurance coverage mandatory.

There are really only five basic terms you might want to understand when reading a policy or discussing it with an agent. Those terms are liability coverage, physical damage coverage, medical coverage, emergency assistance coverage, and unattached equipment coverage.

Of course, for many of you, the first three terms are familiar. They are are used more commonplace when talking about auto insurance in general. The latter two are less familiar. Liability, medical, and physical damage coverage are considered more recognizable to car owners who know a little about insurance or have discussed it in brief. Meanwhile, emergency assistance and unattached equipment coverage are mentioned less frequently and remain more obscure to the average insurance policyholder. They are not typically considered as important as other types of coverage. Still, they do offer some great advantages if added to your policy.

Perhaps the most common term that you will see and hear is liability coverage. Essentially, this is the part of an insurance policy that covers damages caused by you during an accident. As a rule, liability coverage should prove adequate coverage for any possible damages. If you do not have enough of this coverage you may have to pay out of pocket expenses to the person who was the victim in the accident. Physical damage insurance is simply that coverage you used to pay for repairs or a to replace a damaged vehicle. Of course, medical coverage is meant to cover not only you but passengers as well by paying for medical expenses.

The final two terms are a bit different. With emergency assistance coverage you would be getting a form of roadside assistance benefits. Once emergency assistance coverage is added to your policy, you can feel safer knowing that you can make use of towing and other services when your vehicle has a problem. Unattached equipment coverage deals with those aspect of your vehicle that may have been added later, after purchase that are not permanent parts of the automobile. They may be expensive additions like fancy lighting, customizations, or sound systems; all may be eligible for protection under this last form of coverage.

Once you know what these auto insurance terms are all about, you will be better equipped to deal with insurance matters. You will then be able to determine if a policy will do the job you want it to.

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