If you’re looking to purchase auto insurance for the first time, you might be scratching your head over all the jargon.
Or maybe you’ve been buying auto insurance for years, without fully understanding what it is that you’re purchasing.
Being fully informed is crucial when purchasing insurance. Keep in mind that the wrong policy might not cover you in the event of an accident.
With millions of car accidents taking place every year, you can’t afford not to be fully prepared.
We’re here to give you simple explanations of five essential auto insurance terms.
Ready to shed some light on things?
Vehicle identification number (VIN)
Your VIN, or vehicle identification number, is a unique collection of numbers and letters. The VIN is assigned to your car by the manufacturer. It’s sometimes known as a ‘chassis number’.
Your VIN identifies various pieces of information about your car. This information includes make, model and year.
The VIN doesn’t change when the car is sold or modified.
Not sure where to find your VIN? It can usually be found on the driver’s side of your dashboard. You can also check on your car registration or title.
Motor vehicle report (MVR)
A motor vehicle report is a state-issued report. It covers your driving history and any issues you’ve had over the last few years.
This could include driving suspensions, violations, and licensing status. Your motor vehicle report may be used by your insurance company to help determine your eligibility. It will also work out how much your policy will cost.
As a general rule, drivers with suspensions and violations on their record can expect to pay an increased premium.
Most states include history from the past three years on your record. Some states, though, cover five years.
Uninsured Motorist Coverage (UM)
In an ideal world, everyone would have auto insurance. Unfortunately, that’s not the case.
In 2015, 15.6 percent of drivers in North Carolina were uninsured.
Uninsured motorist coverage is included in policies to prepare for potential accidents with uninsured drivers.
It means that if you have an accident with an uninsured driver who is legally liable for the accident, you’ll be covered for injuries sustained. This includes your own injuries, or those of other occupants of your insured vehicle.
You can choose an amount to be insured up to, and exclusions may apply.
Vehicles aren’t always damaged in collisions, and comprehensive coverage means you’re covered against several different forms of damage.
This includes damage caused by:
- Extreme weather
Comprehensive cover gives you increased peace of mind by covering you for more than just road accidents.
Your deductible is the amount you agree to pay out of pocket in the event of an accident.
For example, let’s say your deductible is $100 and your car sustains $300 of damage. You’ll pay the first $100, with your insurer paying the remaining $200.
In general, choosing a higher deductible will result in a lower premium.
Understand auto insurance terms before buying
Baffled by all the confusing terms when looking for auto insurance?
Refer to this handy guide to auto insurance terms next time you’re buying a policy. This will ensure that you’re fully informed about what you’re buying.