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The terminology involving auto insurance may confuse many people, but even if the terms are confusing, the definitions are simple. Understanding them will help you navigate through insurance claims and documents more smoothly along the way.

Three primary insurance terms you’ll need to know about are collision insurance, deductible and comprehensive insurance.


Collision coverage protects drivers from damages to your vehicle as a result of an accident that is the policy holder’s fault. Most insurance plans pay all repairs up to the current market value of the car. If repair costs are too high, the car may be “totaled,” in which case drivers will receive a check for its value at the time of the crash.

If the accident was not the policy holder’s fault, their insurance company will make a claim to the at-fault driver’s insurance company.


Comprehensive coverage is an optional insurance policy a car owner can add to their plan. It covers damages from unknown acts, animals as well as natural disasters. These situations may include vandalism, hurricane, flood, theft and fire.

Coverage is similar to collision insurance in that repairs are insured up to the fair market value of the vehicle. However, the details of a comprehensive plan and what it covers may vary depending on the agency.


A deductible is the amount of the bill which the policy holder is responsible for in the event of a claim before insurance kicks in to cover the rest of the bill. Deductibles normally range anywhere from $0 to $1,500. The larger share of financial responsibility a consumer takes on, the lower the premiums are. Drivers can also adjust their deductible to save money.

Driving safely and avoiding traffic violations will ultimately lower the cost of your insurance over time. However, regardless of how safe a driver a car owner is, they should always have car insurance. Unfortunately, one in seven drivers in the United States is without auto insurance, which ultimately costs everyone else more money.

The fewer Americans that are insured, the higher monthly premiums become, as insurance agencies are forced to pay up for the damages caused by uninsured drivers.