Two people checking damage on their cars after an accident

Auto Insurance Terminology Explained

While securing auto insurance is an essential piece of responsible vehicle ownership, it can be really confusing, especially for shoppers who aren’t familiar with the lingo. We break down 7 common car insurance terms and what they mean below to help make the insurance shopping or claims process a little bit easier.

[Read More: Tips for Washing Your Vehicle In the Winter]

7 Common Car Insurance Terms and What They Mean

Collision Coverage

Collision coverage covers the cost to replace or repair your vehicle if it is damaged in an accident or a collision regardless of which driver was at fault.

Comprehensive Coverage

Like collision coverage, comprehensive coverage covers any damage or replacement needs for your vehicle. However, unlike collision coverage, comprehensive coverage covers damages that occurred due to an incident rather than a collision. Examples of incidents include hail, vandalism, etc. Not all incidents will be covered.

[Read More: Driving in the dark? Follow These Safety Guidelines]

Liability Coverage

couple shaking hands with an employee over paperworkLiability coverage covers the cost to repair or replace someone else’s car or property should you accidentally damage it with your vehicle. While some coverages are optional, drivers are almost always legally required to have liability coverage at a bare minimum.


Your deductible is what you owe out of pocket for any vehicle damages or repairs before your insurance coverage will kick in.


A premium is the cost you pay for your insurance policy. Premiums can be paid monthly, quarterly, bi-annually, or annually. An insurance premium is sometimes also called a rate.


A claim is a request that you make to the insurance company after an accident or incident if you are looking to have them cover damages or repairs. A claimant is the person requesting the claim.

[Read More: How to deter criminals from breaking into your car]

Coverage Limit

The coverage limit is the maximum payout amount that your insurance company will make per claim. Coverage limits vary greatly from plan to plan.

Do you have additional questions about your auto insurance policy? It’s best to call your insurance provider directly so they can go over any plan specifics as they vary depending on your provider.