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Insurance Glossary

Auto insurance can be very confusing, considering all the terminology and jargon involved. Below is a helpful list of frequently used car insurance in Texas terms to enable a better understanding of your policy. From first-time car owners to those who would like a quick review, America’s Best Auto Insurance wants to take the time to explain it all and put you at ease with your choices.

Key Auto Insurance Terms Defined

  1. Accident Forgiveness

Accident forgiveness means your rates will not increase after your first at-fault accident with some insurers. Of course, this is an added benefit that may become an important protective hedge for drivers wanting to retain low premiums.

  1. Adjuster

An insurance adjuster is a person who investigates and examines claims to decide the amount the insurance company shall pay. When any claim is filed, an adjuster investigates the accident, solicits evidence, and negotiates settlement on behalf of the company.

  1. At-Fault

Being “at-fault” simply means that you are considered responsible for an accident. In at-fault states, usually the at-fault driver’s insurance pays for the other driver’s property damages and medical bills.

  1. Claim

A claim is a written request to your insurance company for compensation or coverage in case of an accident, theft, or any other covered events. The claim will trigger that process and begin to receive the benefits within your policy.

  1. Collision Coverage

Collision coverage pays to repair your vehicle if it is damaged in a collision with another vehicle or object, or if it rolls over. If you finance or lease your vehicle, this may be a required coverage by the lender.

  1. Comprehensive Coverage

Comprehensive coverage pays for damage to your vehicle resulting from an incident other than a collision, such as but not limited to theft, fire, vandalism, or any natural disaster. It generally is bundled with collision coverage for broader coverage.

  1. Deductible

A deductible is the amount you agree to pay alongside insurance coverage before your plan kicks in. Generally, the higher your deductible is, the lower your premiums will be, while a lower deductible generally means higher premiums.

  1. Exclusions

Exclusions reflect those situations or conditions not covered under your insurance policy. For instance, if your policy excludes flood damage, then you will not be covered against loss from flooding. Understanding exclusions may help you in making active choices when you are selecting additional coverages.

  1. Full Coverage

Full insurance coverage means you have liability, collision, and comprehensive insurance. Though the term “full insurance” is nonscientific, “full coverage” can be attached to mean that your car is covered either from accidents or non-collision incidents.

  1. Gap Insurance

Gap insurance covers the difference between what your car is worth and what you owe if your car is considered a total loss after an accident. This is especially useful for new vehicles that depreciate faster.

  1. Liability Insurance

Most states require liability insurance, which covers you for damages or injuries you cause to other people or their property in an accident, and usually includes bodily injury liability-for medical expenses-and property damage liability-for loss of property.

  1. Medical Payments (MedPay) Coverage

MedPay is coverage that pays your medical bill or that of your passengers in the event of an accident, regardless of whose fault it is. In some cases, MedPay can pay for hospital bills, x-rays, and even funeral expenses.

  1. No-Fault Insurance

No-fault insurance law means that when an accident occurs, both drivers’ injuries and damages are covered by their insurance companies and not by determining which driver is at fault. This type of insurance helps to avoid extended court battles and can speed up the claims process as soon as possible.

  1. Personal Injury Protection – PIP

Personal Injury Protection is a type of no-fault coverage that pays for medical expenses, lost wages, and other costs if you are injured in an accident, regardless of fault. Some states require PIP; in some, it is optional.

  1. Premium

The premium is an amount you pay to have your insurance policy. You may pay on a monthly, semi-annual, or annual basis. Your premium amounts depend on your driving history, location, age, and the level of coverage you opt for.

Why an Insurance Glossary Is Important

Knowing these terms will better prepare you in making educated decisions in choosing and maintaining your car insurance in Texas policy. Here at America’s Best Auto Insurance, we believe transparency and education are very strong tools that enable our clients to make the best choices regarding coverage. Being aware of what “deductible,” “collision,” “liability,” and “full coverage” really mean will give you options that afford you both the most value for your dollar and peace of mind.

Get Professional Help with America’s Best Auto Insurance

Still confused about any of the above terms or how any of these might apply to your policy? Let America’s Best Auto Insurance help you! We have personal consultations that will make you confident and convinced in every part of your coverage.

Contact us today to communicate with a friendly agent who can assist in finding the best policy tailored to your needs. Get the coverage you need, understand the terms that matter, and drive with confidence, knowing you are protected by America’s Best Auto Insurance!

F.A.Q.

What is the insurance glossary, and why is it important?

The insurance glossary is the summary of important words and their meanings about insurance policies. It helps you understand definitions of various terminologies used in your policy to empower you to make informed decisions about coverage, claims, and other aspects of your insurance plan.

Is it true that knowing these terms will help one in saving insurance costs?

Knowing the vernacular, such as "deductible", "collision coverage", and "liability" yourself means you select coverage that best fits your needs and budget. For example, one can save on monthly premiums with ease by knowing how a higher deductible works for them, if they can afford to pay the high amount of costs for repairs should a claim arise.

How does comprehensive coverage differ from collision?

Comprehensive coverage covers damage to your vehicle from causes other than collision, such as theft, fire, or natural disasters. Collision coverage pays to repair your vehicle following an accident if you are at fault. Put together, both coverages can protect your vehicle in a number of situations.

What does deductible mean, and how does that apply to my policy?

A deductible is an amount that one has to pay out of pocket before the car insurance in Texas really kicks in. With a higher deductible, normal monthly premiums will usually be much lower; with lower deductibles, one pays a bit more monthly but less out-of-pocket when filing a claim.

What is meant by "at-fault" in regard to an accident?

Being "at fault" essentially means that you are at fault for an accident. In most states, the insurance of the at-fault driver covers the cost of repair for the other party's vehicle and any other medical expenses.

What are exclusions under a policy of insurance?

Exclusions are specific conditions or risks that your policy does not cover. Understanding exclusions will further enable you to determine whether you have to add coverage for things like flood or roadside assistance that protect against those uncovered events.

How does accident forgiveness work?

Accident forgiveness means your premium will not go up after your first at-fault accident. Just not all insurers offer that, and it is worth asking whether it is available or included on your policy.

How does an insurance claim work?

A claim is a written request you put in to take benefit from your insurance company for damage caused by an accident. Once you file a claim, an adjuster investigates the situation, then calculates the amount to be paid according to your coverage and the extent of the damages.

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