Terms to Know For Car Insurance


Liability Insurance – Coverage for bodily injury or damage to property that results from an accident.

Collision – Policies that pay for damage to your car as a result of an accident with another vehicle.

Comprehensive – Policies that cover other types of damage to your car – fire, theft, water, etc…

Full Coverage Policy – Includes Collision, Comprehensive and Liability coverage.

Deductible – The amount you will be responsible to pay of the total damages.  For example, your damages total $1000 and you have a $450 deductible.  You pay $450 and the car insurance company pays $450.

GAP insurance – Loan or lease “pay-off” coverage.  This is usually offered by car dealers or car rental agencies.  It will pay down lease contracts/loans if damage to a car results in it being worth less than the remaining amount of the lease contract or loan.

No Fault – In some states, both parties’ insurance companies pay out on claims from an accident.  In other words, no one is “at fault.”  What this also means is that neither party can sue the other in court (note that in some states you can still sue if the damages meet a certain level).  Still, the person determined to have caused the accident based on the police report is the one who will have their car insurance rates and risk rating increased.