Confused by Car Insurance Lingo? Posted on November 5, 2020November 6, 2020 by rginsurance Today, we want to cover some of the more misunderstood car insurance terms. Knowledge is power for most things in life, and that doesn’t end with your auto insurance policy! Deductible A deductible is the amount of money you pay out of pocket before your insurance company pays for any damages when filing a claim. Deductibles affect your premium. A higher deductible will allow you to pay a lower monthly premium. If you have a $0 deductible and get in an accident, the insurance company will pay for all the damages, but your premium will be much higher. A lower deductible means you pay a higher premium. A higher deductible means you’ll pay less every month but more when you need to use your insurance. Premium Your premium is what you will pay for your car insurance policy. Your premium can be a rate you pay annually, every six months or every month. Premiums are determined by a number of factors. This includes your age, driving history, location, points on your license, and the number of claims you have filed over the past few years. Collision Coverage Collision coverage protects you if you hit another car, the curb, or an object. If you are leasing a car or financing it, your lender will require you to have collision coverage. This differs from liability coverage, which protects you if you hit another vehicle. Comprehensive Coverage Also called physical damage coverage, comprehensive coverage protects you from damages not caused by collisions. Think of this coverage as protecting you from: Storm damage Broken windows Natural disasters such as earthquakes and hurricanes Theft Falling trees or objects Damage caused when hitting an animal Property Damage Coverage Property damage coverage provides protection if your vehicle hits another person’s car or property. No-Fault Insurance In a no-fault state, your insurance company pays for damages, not the other driver’s insurance company. Bodily Injury Liability If you cause an accident that injures or kills another driver or passenger, Bodily Injury Liability will pay for your legal costs, medical expenses, and lost wages of the person injured. This coverage won’t cover you. That’s why you need Personal Injury Protection. Personal Injury Protection Personal injury protection (PIP) covers you and your passengers when you’re injured in a crash. Uninsured Motorist Coverage This insurance will pay for damages if an uninsured motorist hits your car. Insurance companies offer two types: Bodily Injury which covers you and your passengers when you are hit by an uninsured driver. The second is Property. This covers damages to your car when a driver without insurance hits your vehicle. People often think this coverage pays for the uninsured driver but this is not the case. This coverage protects you and your property if an uninsured driver hits you. Gap Insurance This will cover car owners by covering the difference between what you will get paid by the insurance company and what you owe if the accident totals your vehicle. When driving off a car dealership with a new car the car instantly depreciates usually in the range of about 30%. Without Gap Insurance, your insurance company will only pay the value of the car, not what you currently owe. For example, say you just purchased a new car for $20,000 and the day after driving off the lot your car is totaled. Without gap insurance, your insurance company will pay you $14,000 since this is the new value of the car due to depreciation. This leaves you with a $6,000 difference between what you owe on the car and its value. Gap insurance covers this difference. R&G Insurance Associates is an independently owned and operated insurance company with 5 offices located around Maryland. We pride ourselves on offering a high level of service where clients feel like family. Come visit us at any of our five locations in Rockville, Glen Burnie, Prince Frederick, Lexington Park, and Manchester MD.