Learn What Insurance Terminology Means – Important Terms That You Need to Know

Buying vehicle insurance is something that everyone goes through at one time or another throughout their lives. Sometimes it is only a matter of getting coverage, while other times we are more interested in saving a little bit extra on our bill. There are many important terms found in a vehicle insurance policy that can make very big differences should you be involved in an accident.Some common terms that everyone has seen or heard include comprehensive, collision, waiver, primary use and rider. We know what these words mean, or do we? Primary use refers to how the vehicle is driven most of the time. The least expensive way to use a vehicle is for pleasure or leisure driving. We think of comprehensive and collision coverage as “full” coverage meaning our own vehicle is covered for physical damage sustained in an accident. Comprehensive insurance is actually coverage to your vehicle in any event other than an accident such as fire or theft. Collision insurance is covers the vehicle in the event of an accident involving another vehicle or object.What is a waiver? The most common type of waiver is the waiver of a deductible for your own vehicle in the event that you are hit by an uninsured drive are or in a hit and run accident. There are many types of waivers, but in general it means that a portion is set aside for some specified reason. A rider when used in the vehicle insurance policy does not refer to a passenger. A rider means some form of addition coverage added to you and/or your vehicle.Other terms which can be found within a vehicle insurance policy include the term policy holder. The policy holder is the person who is financially responsible for paying the policy premium. The policy premium is the amount that is paid monthly, quarterly, or annually to maintain your coverage.No-fault insurance is an insurance that can be obtained in certain states, such as Michigan. The no-fault insurance policy allows the insured to claim medical reimbursement for injuries sustained in an automobile accident directly from their own insurance company. No-fault means that no one person is being blamed for causing the accident and therefore does not have financial responsibility to the other party.Policy lapse refers to a period of time when the premium on the policy was not paid and therefore insurance coverage was not available. Many companies offer a grace period from the due date for premiums to be paid. After that period has passed, the insurance policy is no longer valid. Loss payee or lien holder refers to a third party which has a financial interest in the vehicle which is covered. This is usually a finance company or private lending institution which will receive payment should the vehicle be involved in an accident resulting the insurance company declaring the vehicle “totaled”. A declaration of “totaled” by an insurance company generally means that repairs to fix the vehicle will cost more than the value of the vehicle.