man writing on paper, car in thought bubble

Important car insurance terms you need to know

Car insurance isn’t always the most exciting thing to talk about, but it is important and there are certain things you should know. Whether you’re a new driver or have been driving for decades, car insurance is something you should be well-versed in. There are some terms that everyone should know, some that are common, some that are more obscure. Keep reading to learn more. 

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4 important car insurance terms you should know 

Deductible 

There is almost a 100% chance you have heard or read this word. Deductibles are like the favorite thing to talk about for insurance agents. A deductible is the amount of money you will have to pay yourself after filing a claim before your insurance provider picks up the rest of it. 

Premium man showing car to cutomer

Your premium is usually closely tied to your deductible. A premium is an amount you actually pay per month to be insured. With a higher deductible, your premium will be lower. With a lower deductible, your premium will be higher. Also, if you get into a car accident or get a speeding ticket, your premium will likely go up since your insurer will view you as more expensive to insure. That doesn’t seem totally fair but that’s how it works. 

You might also want to read: What is the difference between active safety and passive safety? 

Gap insurance 

The value of a brand-new car goes way down immediately after you buy it. If, God forbid, you happen to total a new vehicle shortly after you buy it, your insurance company may only pay for its used Blue Book value. Gap insurance is there to pay the difference between what you owe and what you would be paid if you total your new car. 

Comprehensive coverage 

Comprehensive coverage covers your vehicle for damages not caused by automobile collisions. Natural disasters, falling objects, “acts of God,” and theft all fall under this umbrella. We hope this helps you better understand your auto insurance! 

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