With that in mind, add these terms to your vocabulary.
VocabularyCoverage – The situations in which you are compensated for damages to you, your passengers, your car, and your responsibility to the other people involved in the collision. Coverage usually includes a specific amount of money that is the limit of your compensation. For example, if you have "collision coverage" of $10,000, then total the vehicle when you spill your coffee and drive into an intersection, your insurance will pay you $10,000 to repair the vehicle and pay medical expenses. If the damages cost more, you will not receive it from the collision coverage.
Policy – Your car insurance policy is a statement of the complete agreed upon terms of coverage, payment, and anything else.
Premium – The amount of money you pay regularly to keep your auto insurance active.
Billing Period – The specified times at which you pay for your car insurance. This is usually annually or bi-annually, but it may even be monthly.
Deductible – What you must pay before your car insurance will help. This amount is deducted from the total damage amount to the vehicle. If you have $10,000 of damage and a deductible of $1,000, the car insurance will give you $9,000 - assuming you have the coverage.
***The higher you set your deductible, the lower your premiums will be.***
State RequirementsEvery state has unique requirements with designated minimum coverage. However, some states can be put into the category of "No-fault" states.
This requires that each party's insurance cover their own damages—usually just medical. This is commonly known as Personal Injury Protection (PIP). Even if you are not at fault, your car insurance is required to pay for you.
Some states have what is called a verbal threshold. Verbal thresholds limit you from suing except under certain specified situations.
Other states have a monetary threshold. In these states, you can file a "tort action", which is a civil lawsuit, once a certain amount of damage is reached. Basically, if you are billed for injuries above a certain amount, you can sue for non - economic damage - such as emotional consequences.
In other states, you may be required to have a certain type of coverage and a certain amount of coverage. In the vast majority of circumstances, consumer advocates recommend that you get more car insurance than the bare minimum.