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Car insurance terms you should know

Everyone has car insurance (we hope so, anyway). You’re supposed to have car insurance, and you can be fined for not having it or even not having proof of it if you get pulled over. If you don’t work in the insurance industry, there can be many confusing terms. Let’s go over some common car insurance terms and phrases that you need to know. Keep in mind that you have probably heard these all before, but maybe you haven’t taken the time to understand what they mean. 

You might also be interested in: Ways you can prevent auto theft 

Important car insurance terms 


This isn’t just unique to car insurance. All forms of insurance involve a deductible and a premium (see below). A deductible is the amount of money you pay out of pocket before insurance actually does anything. If your deductible is $500, you pay everything on a claim up to that $500 amount before your insurer pays the rest of the claim. 


A premium is your regularly scheduled payment to the insurance company. Whether you pay them monthly, quarterly, or yearly, this is basically your fee for having insurance. Keep in mind that premiums and deductibles are directly related. If you choose a plan with a higher premium, your deductible will be lower. If you don’t want to pay as much every month, you will have a higher deductible. 

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Comprehensive coverage 

Also known as physical damage coverage or other-than-collision (OTC), comprehensive coverage gives car owners added security. As the OTC implies, this type of insurance covers damage to your vehicle that doesn’t occur because of a collision with another vehicle. It covers things like theft, storm damage, damage from striking an animal, and damage from a falling object. 

Bodily injury liability 

We sincerely hope this type of coverage is never needed. Bodily injury liability insurance covers you if you are in an accident that results in an injury or death of someone else. It funds your legal defense and can also pay for lost wages or medical expenses. 

We hope this short list helps you out next time you do some insurance shopping! 

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