Getting a quote from an insurance provider is one thing; understanding it is another! We are immediately interested in the cost and whether it can be adjusted, but before asking your insurance provider to knock a few bucks off the bottom line, it’s best to know exactly what coverage is contained in your car insurance quote. Salt Lake City for example, is rated as being one of the most expensive cities in the state to purchase auto insurance. This is often the case in large metropolitan areas as traffic congestion is more dense, theft is more rampant, and the odds of getting into an accident are higher, hence, you pay more for collision or comprehensive insurance. If you understand the quote from your provider and exactly what coverage it contains, you can lower the cost without sacrificing the necessary protection.
A lot of consumers make the mistake of automatically accepting the first quote they get from an insurance company. Sometimes this is simply because they are too lazy or time-pressed to go through the quote themselves, but often it is because they are intimidated by the wording of such a legal document, or they don’t want to seem unintelligent because of their inability to understand the meaning of certain phrases or types of insurance. Other than being a financial mistake, it is unnecessary, as most insurance terms can be explained in a few minutes by a competent agent. Let’s take a look at some of the more common terms so that you can familiarize yourself with them before obtaining your next quote. Some may seem familiar, some not, but understanding them will clarify your quote.
Actual Cash Value (ACV): If your car is totaled in an accident, your insurance provider will pay you the appraised market value of your vehicle.
At-fault: An “at-fault” accident is an accident caused by you. In such a case your policy will be used to pay damages to the others involved, after you meet your deductible limit.
Claim: The request you make to your insurance company to pay for expenses caused by damages that are covered by your policy such as medical expenses or car repairs.
Deductible: This is the amount of money you are responsible for paying before your insurance kicks in. For example; if an accident results in $5,000 in damages, and you have a $1000 deductible, you’ll have to pay $1000 before your insurer pays the remaining $4000.
Limit: The maximum amount your insurance company will pay once you’ve reached your deductible. When that limit has been reached, you are then responsible for any remaining expenses.
Premium: The amount you pay for your insurance, whether monthly, bi-annually, or annually.
Keep in mind that with any insurance, higher deductibles mean lower premiums, and vice versa.