Auto insurance is a very huge business these days and there is a whole variety of terms used in this field. It would be great to grasp some definitions and facts related to auto insurance. Thus, next time when you are out searching for your next insurance provider or out on a hunt for a better deal, you will be in good stead with some prior deep understanding of the terms and facts that the agents generally use to confuse you.
Premium: The amount you must pay to the insurance company for getting their insurance policy.
Deductible: The deductible is the price you agree to pay before the insurance starts paying money. So for example a common deductible for auto insurance is $500. If you were to get into at fault accident and the total claim was $4500 then you would have to pay the first $500 before the insurance company would cover the remaining $4000 balance for you.
Liability Coverage: This coverage protects you financially for the damage done to some other person’s property or the body injuries sustained by them in an accident by your fault or by someone driving your car.
Bodily Injury Liability: This covers for the bodily injuries inflicted by you on the other persons involved in an accident by your fault.Property Liability: This covers the damage done to the car and other property of another person involved in an accident by your fault.
Claim: A claim is when you have an accident and you call upon your insurance company to cover the damage. For health insurance this is when you get really sick or injured and you will need some extensive work, hospital stay or surgery. It is true that if you file a claim your premiums could possibly increase in the future because you will know be considered a higher risk.Medical Coverage: It is one of the important coverage options yet the most neglected ones. You know how the medical bills can run into thousands these days, medical coverage pays for the cost of hospital treatment of all the injured persons in an accident done by your vehicle.
Personal Injury Protection: This cover pays the cost of medical treatment, loss of income as well as for the death benefits for you and the fellow passengers in your car, god forbid if an accident happens. It is also known as No-Fault cover, as it pays irrelative of the fact whether the accident was your fault.
Collision Coverage: As the name goes, this cover pays for the damage done to your automobile in an accident. It pays even if the accident happened because you losing concentration. This can apply even to rented or leased cars, check with your insurance company.
Comprehensive Coverage: It is the most expensive coverage option as it covers you for the damage from theft, vandalism, fire, hailstorm, glass breakage, collision with a tree, building or any other object.Uninsured/Underinsured Motorists Coverage: This is actually a boon for you if a slack driver hits you and run away or if you and your fellow passengers get injured in an accident by the fault of an uninsured motorist. The Uninsured motorist cover pays for all the medical bills of the hospital.
Towing and Labor Coverage: If you are driving somewhere in a very good mood and suddenly your car breaks down, how petty you will feel if you just don’t have any assistance to fix that broken car. The towing and labor cover pays the cost of repairing your car. Some insurance companies now even provide roadside assistance in such emergencies, so that you do not frustrate or scuffle.
Low Mileage Credit: If you are not a frequent traveler then this one is for you. Low mileage credit helps you lower the cost of auto insurance policy or earn a credit, if your car runs lesser number of annual miles. Since, you drive less so there is lesser risk of you being involved in accident.
Uninsured Motorists coverage: This is a type of coverage that will cover your car in case you get into an accident with someone who doesn’t have insurance. If this were to happen you would be covered by your own insurance company since the other driver didn’t have coverage.
Underinsured Motorist coverage: This is a type of coverage that you need when you get into an accident with someone who has insurance, but not enough to cover the damages done to your car. Often times people will get the state minimum required for auto insurance and this is almost never enough to cover an accident.
SR-22 Insurance: This is a type of insurance coverage you will need if you get a DUI or some other related high risk coverage.Comprehensive coverage: This is a type of coverage people often refer to as “Full Coverage” because it covers everything you could possibly need related to your auto insurance.
- Buy a Safe Car: Well, obviously luxury, looks, style, handling, comfort and price are all very important factors when you are buying your new car but also keep in mind, after that you have this long running requirement of auto insurance. The cost of auto insurance can run into thousands. A safe car is one with good crash test ratings and extra safety features installed. This will significantly lower your car insurance premium.
- Be a Smart Driver: Driving smartly doesn’t mean that you have to be a sluggishly slow driver. By smart we mean, you must follow the traffic rules, wear seat belt, don’t drive drunk and if you are a parent to an infant then use child seats in your car. Keeping a clean driving record will substantially deflate you premium.
- Buy a Cover other than Liability coverage: According to a data from NAIC, about 77% of all insured drivers also procure comprehensive coverage and about 72% purchase collision coverage, in addition to their liability cover. This helps them pay for the medical bills, repair costs of their cars as well as lost wages and other unseen incidents.
- Auto Insurance costs more in Urban Locales: It is not a hidden fact that in cities cases like car theft, vandalism and fraud are reported very frequently. Thus, auto insurance companies charge more from urban customers than those living in rural area or in countryside.
- Install Safety Equipments: Although, car-manufacturing companies do install safety instruments like airbags and seat belts in cars but still, it would be beneficial on your part if you install additional safety devices such as anti-theft device, your vehicle identification number around the corners of the windows of your car. These precautions are very helpful when you are looking for an auto insurance policy. It will help you save a lot on the premium of your policy.
While buying health insurance you come across a lot of terms whose definitions you are not clear about so rather than going ahead being blithe ignorant towards your lack of knowledge it would be better if you take a few minutes to read and understand what you are dealing with or what the plan actually says.
Health Insurance: It is an agreement between an insurance provider, insurance company, and an individual or a group of individuals, insurance seekers, according to which the policy cover will pay for medical treatments and procedures of the insured persons to a certain limit. In lieu of the cover, the insured people have to pay a premium to the company. Health insurance is a financial risk mitigation tool must to have should a medical situation arise with you.Co-Insurance: It is the amount of money that the insured person needs to pay for the medical services availed by them after a certain pre-decided amount of deductible has been paid to the service provider. Generally, this portion of covered health care costs for which the insured is liable is expressed in percentage.
Co-Payment: It is an arrangement in the health care plans where the insured person needs to pay a certain amount of the costs of health care services. It is different from Co-Insurance in the payable amount being restricted to a certain fixed amount of dollars but not in percentage, as is the case in co-insurance. The insurer makes remaining amount of reimbursement. Some health insurance plans also arrange a provision for separate co-payments for separate medical services.Health Maintenance Organizations: These are commonly referred to as HMO, which is a sort of prepaid insurance plan. Under this indemnity plan, the individual seeking the health insurance or their employer will pay a fixed monthly amount to the insurance company. The fee paid is regardless of the kind and level of the medical services availed. Neither does it take into account the number of visits made to the medical facility employed by the insurance company.
Preferred Provider Organizations: As these are commonly referred to as PPO’s in the insurance language, it is a type of indemnity plan in which the insured persons can avail the health care services of a network of health care professionals that can include doctors, physicians and hospitals. The insured people can also chose to go outside the network but it will lead to higher costs in terms of more deductibles and higher co-payments.Exclusive Provider Organization: It is shortly called EPO in the Health insurance terms. This is more of a restricted PPO where the insured people must only avail the medical services of a specific group or network of healthcare providers. Unless it is sheer emergency the costs of the services received from a non-network healthcare provider is not reimbursed.
Managed Care Plans: These are the health care plans under which the EMO, HMO, PPO are classified. In these plans, the insured person receives comprehensive health care services from a provider in the defined network. The insured persons are even paid some incentives in case they only choose a physician from the specified network for all their medical needs.COBRA: This is Federal government act, which stands for Consolidated Omnibus Budget Reconciliation Act. Under this act, a person working in a company where a group of 20 or more people holds a group health insurance policy then you can choose to buy coverage for yourself for a period of up to 18 months even if you have lost that job or your coverage had been terminated due to some reasons. This act has been a revelation sort of for the people of America in the times of high insurance and medical costs.
Group Insurance: It is a type of health insurance policy where you are covered for all the medical costs incurred by you via your employer or some other entity of which the group is a part. It is the most preferred type of health insurance plan in the US at present.
Maximum out of Pocket Expense: This is the maximum amount in dollars that a member of a group health insurance plan has to pay to the insurer in a year. The insurance provider and the group member both share the expenses of the health care services until the maximum amount is not met however; once it is met, the insurance provider covers the remaining expenses.
