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What Those Confusing Car Insurance Terms Really Mean

car insurance

Our Experienced Car Accident Attorneys Explain

The car insurance industry is worth billions of dollars. There are tons of insurance companies and policies available on the market. Navigating the market can be confusing, especially when there are so many technical terms and lingo to dig through. We asked our car accident attorneys and the insurance experts in our firm to tell us the common terms clients find confusing and what they really mean. Here is what we gathered.

  1. Insurance premiums

An insurance premium is the amount of money you pay monthly or annually to remain insured. Failure to pay a premium will normally mean that you are no longer insured and that you can’t file a claim is you get involved an accident. Still, if you unfortunately get into an accident contact us and we will assign one of our experienced car accident attorneys to look into your insurance policy and its terms to see how best he or she can file a claim that will get you compensated. The amount of money you will pay as premium can also be referred to as a car insurance quote.

  1. Underwriting

The process by which your insurer evaluates how risky it is to insure you based on a number of factors such as your age, credit score, accident history, vehicle condition, driving history and location. The evaluation of how risky you are will determine the amount of your premium.

  1. Claim

Filing a claim is the act of telling your insurer to pay for damages to your insured vehicle after an accident. For instance, if you get into a car accident and you had insured your car, you will file a claim to get the amount of money you need for repairs.

  1. Deductible

A deductible is a set amount of money you will pay to cover part of your insurance claim. For instance, if you get involved in an accident, and the damage amounts to $4,000, and you have a $1,000 deductible, you will only receive $3,000. Choosing a lower deductible means that your premiums will be higher, while choosing a higher deductible will lower the amount of money you pay as premium.

  1. Third party liability

In case you cause an accident, third party liability coverage will pay for the damages and injuries you have caused if a court finds you liable. Some third party liability policies also pay for legal fees if you are sued. Most states have set minimum amounts that drivers on their roads should have as third party liability coverage.

  1. Policy limits

A policy limit is the max amount of money that your insurer will pay for any claim. For instance, if you have policy limit of 1 million dollars, your insurer is not obligated to pay even a single cent above that amount even if your injuries or damages are worth more than that. However, if you get yourself good car accident attorneys like those in our firm, they will look for compensation from other sources to make sure you at least recover your lost wages and medical expenses.

  1. Endorsement

An endorsement refers to an optional coverage. For instance, if a certain policy provides coverage for damages to A, B, and C and you can pay an additional amount of money to also insure damages to X and Y, then X and Y would be referred to as endorsements.  

  1. Accident forgiveness

Accident forgiveness is an endorsement. It refers to a situation where if you are involved in an accident, and you are found to be at fault, you get to avoid the additional charge on your policy if that car accident was your first.

To learn more about how your insurance policy affects your compensation after an accident, consult knowledgeable car accident attorneys.

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