The crazy, detailed language of car insurance lends itself to tons of confusion. Especially after an unfortunate scenario of being involved in a motor vehicle accident says attorney Aaron Crane from Cantor Crane, highly trained and often referred to as a best car accident lawyer in Arizona. People are paying hundreds, sometimes even thousands of dollars each year for auto insurance policies that include all kinds of terms that make no sense at all. Open up your policy sometime and take a quick read. So, what are Medical Payments again? What is a deductible and why do I care?
What exactly does “premium” mean and what factors influence the premiums I pay? Trying to understand these terms while buying car insurance, or especially when dealing with an accident claim is tough and could even require the help of a professional such as a car insurance claims attorney.
While a lot of this terminology is dull, it is also extremely important because it describes the factors determining your car insurance premium costs, and how much money you will get if you happen to cause an accident or someone else causes one and involves you. Here’s an explanation of some common insurance terminology.
Premiums: Your insurance premiums represent the amounts you pay to your auto insurance company in exchange for monetary coverage in case of an accident involving you and/or someone else while driving your car. Many factors determine your premiums such as your age, type of car, driving record, number of past tickets, daily commute and other people that might drive your vehicle. If you’re on a strict budget, try lowering your monthly or annual premiums by increasing your deductible, which we will cover next.
Deductible: This is kind of like a down payment, but you only pay it if and when you make a claim for an accident. It’s the out-of-pocket money you need to come up with first, before the insurance company provides money to cover the costs of an accident. Typical deductibles range from $250 to $500 per accident claim, but you can set your deductible up to $1,000 per accident to shave money off your monthly premiums.
Liability coverage: This is the basic car insurance coverage that all states require you to carry. Unless you’re financing or leasing your car, you could get away with only this type of insurance. Liability coverage protects you in an accident when it’s your fault. This insurance pays the other person when there’s injury to them (called bodily injury coverage) or damage to their property, such as their car (property damage coverage). This type of coverage only pays for the other person though – it does not cover you or your car if you are at fault.
Comprehensive coverage: This type of coverage seems like it should cover everything – is not that what comprehensive means? Sounds crazy, but comprehensive does not cover any damage that comes from a collision! It does cover quite a bit of other damage though, such as vandalism, flood damage, fires or theft. It also covers damage from mishaps such as hitting a deer on the road or having a tree branch fall and break your car’s window shield. Sometimes freak accidents happen and it’s difficult to determine what type of coverage the damage falls under, or an insurer tries to avoid paying you – this is when you may need to consult a car insurance claims attorney.
Collision coverage: This coverage picks up where comprehensive and liability coverages leave off. While your liability coverage pays to fix the other person’s car if you cause an accident, collision coverage is there to pay for collision-related damage to your car.