10 Key Insurance Terms Explained

If you’re searching for Auto Insurance in San Diego, CA or any other city for the first time, you’re likely to come across a range of articles with fancy words. It is necessary to understand what these fancy words (or key insurance terms) mean. Here’s a look at the top 10 terms that are likely to confuse you.

Comprehensive Coverage

In the event your vehicle is insured and gets damaged due to any event other than a collision, comprehensive coverage comes in. This type of coverage pays for damages arising due to flood, fire, vandalism, and theft. If your insured car is stolen, a comprehensive coverage plan will cover transportation costs and any other prescribed expenses.

Declarations Page

An important aspect of your insurance coverage, a Declaration Page (or Dec Page) is provided by your insurance company and included, among other things, the following particulars. Cost per each coverage

• Limits per coverage
• The number and types of coverage you elect
• Types of coverage per vehicle, as covered by the policy
• A detail of vehicles specifically covered by the policy
• Any other information applicable to the insurance policy

Driver Improvement Course

This applies to all drivers aged 55 years or above. Such individuals can undertake a voluntary driver improvement course in order to enhance and refresh their driving skills and abilities. By taking this course, the drivers can qualify for certain discounts- provided that they meet the eligibility criteria.

Lease Payoff Coverage

Also referred to as the “gap coverage”, lease payoff coverage is the difference between the amount you owe on your vehicle and the amount your insurance company pays, in the event your vehicle is stolen and not recovered or is declared a total loss, as deducted by the Comprehensive deductible. This is also called the loan payoff coverage and is explained in the following formula.

The amount owed by the insured
> Less: Amount owed by the insurance company
> Less: Comprehensive/Collision Deductible
> Loan/Lease Payoff Coverage

MedPay Coverage

Medical Pay (MedPay) coverage is optional insurance. It pays for any necessary and reasonable medical and funeral expenses for a covered person. However, these expenses must be incurred as a direct result of an auto accident.

Premium

The amount paid to an insurance company, in exchange for insurance protection.

Principal Driver

This is the person who drives the car most often.

Roadside Assistance Coverage

This coverage plan provides roadside assistance, such as tire change, battery jump-start and locksmith services. Car owners can select these services for any additional premiums if these services are not included in an insurance policy.

The second Name Insured

A named insured is a person in whose name an insurance policy is issued. In some cases, the named insured designates another person on the policy as a second name insured. This designation can even be done by a listed agent. Second, the insured has the same insurance coverage under the policy document as the named insured.

SR-22

It is a document that is required by a court as proof of financial responsibility for certain persons convicted of traffic violations.