Key Terms for Understanding Auto Insurance

Most people shopping for auto insurance go through the challenge of understanding the different terms used. It is even harder for people to buy insurance for the first time as the words are foreign to them. To help you understand, Paragon Independent Insurance Agency of Plano, TX takes you through some key terms you should know.

At Fault

At-fault refers to the person/ party responsible for an accident and liable for any harm caused. If you are the one that caused an accident, automatically, you are responsible for all the resulting costs of property damage and injuries. 

Damages

Most people confuse damage with damage, but the two have different meanings in insurance. Damage is the resulting destruction caused after an accident, while damage is the money that the party at fault is required to pay for the destruction of property and the injuries caused. Often, after the liable party is sued, they will pay damages or compensate the person harmed in the accident.

Liability

Liability is the legal responsibility befalling the party that caused property damage or bodily harm during an accident. The party at fault for the damage is required to pay for the costs of repair and the medical treatment of the injured party.

Coverage

This term is used to refer to the different protection offered by an auto insurance company. It includes items covered under a policy, such as liability coverage, comprehensive coverage, and underinsured/ uninsured coverage.

Premiums

The amount of money you need to pay for your auto policy is referred to as premiums. They are paid in monthly installments or annually and the insurance company will determine the premium you pay.

Claim

This is a formal request to your insurer asking for payments depending on your policy terms.

If you reside in Plano, TX, and want to learn more about auto insurance, contact Paragon Independent Insurance Agency. We are ready to answer any questions you may have.