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Policy

Auto Insurance is a contract between the insured and an insurance company. If the insured suffers a covered loss, the insurance company will help pay for expenses. A policy lists all coverages and limits as well as a deductible amount if you have collision and/or comprehensive coverage.

Premium

Car insurance premiums are the amount you pay your insurance company to receive auto insurance coverage. In order to keep your policy from lapsing, you must pay your monthly, bi-monthly or annual premium.

Deduction

An insurance deductible is the amount you must pay before your insurance plan covers the difference. A $500 car insurance deductible leaves you responsible to pay $500 out-of-pocket before your insurance picks up the remaining balance for repairs and other losses.

Claim

A car insurance claim is a formal request for payment to the car insurance company to help pay for damages, loss or liability from a covered incident.

Endorsement

Also called a rider, an endorsement can add coverage, exclude coverage or modify an insurance policy in some other way. Some common types of endorsements include gap coverage, mechanical breakdown coverage and accident forgiveness.

Liability

Auto liability insurance is required in most states so that your insurance policy can help cover losses if you cause damage or injury to another driver, their passengers and/or their property or if you injure pedestrians. There are two components to liability coverage: bodily injury liability and property damage liability.

Collision

Collision insurance can pay to repair or replace your car after a collision-related car accident, even if you are the at-fault driver. Collision coverage is optional and is typically bought along with comprehensive coverage for individuals who require full coverage auto insurance. It is required when financing or leasing a car.

Comprehensive

Comprehensive insurance covers damages to your car that result from non-collision related losses like car theft, vandalism, falling objects and storm damage. It is required when financing or leasing a car but is otherwise optional.

Full Coverage

Insurers, agents, and lenders use the term "full coverage" to describe auto insurance that covers you for damages even if an accident is your fault and if something outside of your control, like a hail storm, causes damage to your car. Full coverage means that you carry collision and comprehensive coverages along with state required coverage.

Declaration Page

The declarations page is the front page of a policy that specifies the name of the insured person, their residence, the policy period and coverages. It also lists deductibles, limits, your user ID and other key data. Insurers informally refer to this document as the dec page.

Named Insured

A named insured is someone, like a spouse or child, who is listed on a car insurance policy. People who often use the insured vehicle should be listed on the policy to ensure coverage.