Auto insurance basic concepts

Within auto insurance policies and contracts there are some concepts that sometimes people read, but they do not understand too well, that is why we will explaine some basic concepts about auto insurance.

Vehicle’s current value: Most auto insurance companies will pay just for the current value of your car in case of a complete lost, which means no matter what the car cost you the first time you bought it, the insurance company will calculate the real value according to the date and that would be the amount it would cover.

Commercial Use

This means that you use your car mostly for commercial purposes like sales, transportation of merchandise or transportation of employees; it also means that you use your vehicle for work’s errands like going to the bank or to the post office.

Deductible

The deductible is the amount of money you will have to pay every time you use your auto insurance policy before the company can cover any damage.

Endorsement

It is the modification used to suppress, add or change the policy.

Cancelation

It is the action of finishing a policy before the expiration date.

Claim

Claims can vary according to the situation, but overall is a petition to the insurance company to pay you an amount of money according the policy statements.

Declarations Pages

These pages have details of your payments and coverage, this kind of document is frequently sent by the auto insurance company to the policyholder at the beginning of the contract, or every time you make a change on you coverage plan.

Liability

It is a word used to refer to social responsibility, which means that if you ignore a traffic sign like a stop sign or a red light and as a consequence you cause an accident, you have to pay for yours and other people’s damages using your auto insurance policy.

Knowing these terms is very useful when reading or buying an auto insurance policy, so you can understand the contract’s details.