5 phrases and terms to understand your auto insurance policy

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You know if you have a car, you need insurance. But do you know what is in your auto insurance policy that protects you? Yes, it may look like a lot of legal jargon, but there are several key points in your auto insurance policy you should go over with your agent and understand very well before purchasing your car insurance. This is because understanding your auto insurance policy doesn’t have to be complicated, just pay attention to a few terms that you should look for in all that paperwork that you get from your agent:

  1. What’s your “policy period” – A policy period is when your insurance policy coverage begins and ends. A policy period can range. Some companies offer six month policies, other’s offer coverage for a year at a time.
  2. Limits and coverages – Limits and coverages tell you the types and amounts of coverage available. On an auto insurance policy, it would cover things such as bodily injury and property damage liability.
  3. Annual Premiums – This will show you the cost for your auto insurance.
  4. Collision vs Comprehensive – Comprehensive insurance provides financial protection for your car from loss to due to fire or theft. While collision insurance protects you from things like hitting a car or backing into a pole.
  5. Underinsured vs. Uninsured – Uninsured or underinsured motorist coverage (optional in some states) is for your protection. Uninsured motorist coverage applies for injuries resulting from an accident with a hit and run driver, or a driver who does not have auto liability insurance. Underinsured motorist insurance is for an accident with another driver who doesn’t have enough auto liability insurance coverage to cover the entire cost of your injury claim.

Check out the infographic, provided by Erie Insurance, for more about these important terms and phrases. Your agent can advise you on your options and help you better understand common insurance terms and phrases, this can help when determining the coverage that is right for your needs.

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