Common Car Insurance Terms Explained

Like just about every professional field, insurance is full of industry-specific jargon and acronyms that can leave the average person scratching their heads, or calling their insurance agent in a panic, asking what something means.  We thought we’d clear up some of the confusion.

Let's take a closer look at an important document most people don't spend much time reading in great depth--your auto insurance policy. Read on for a helpful explanation of some of the most common auto insurance policy terms:

“Binder”.  A temporary insurance policy that shows proof of insurance until the insured receives a permanent policy.

“Comprehensive”. Also called “comp”, this coverage pays for loss or damage to your vehicle from something other than an accident, such as a fire, flood, hail, or other weather-related incidents.  

“Collision”. This coverage pays for accident-related damages, regardless of who caused the accident. The carrier must pay for the repair or up to the actual value of your vehicle.

“Contract”. An insurance policy is sometimes referred to as a “contract”, as it is an agreement between the insurance company and policyholder.

“’Dec page’”. Short for the “declarations” page or called the “dec” for short, this is an important part of an insurance policy because it contains all the vital information about the coverage—the insured’s name and contact information, policy period and limits, and other important details.

“Deductible”. This is the amount the insured must pay in a loss before the company pays out any money.

“Premium”. The amount a policyholder pays to the insurance company to maintain the insurance policy.

“Named Insured”. The named insured is the actual owner of the insurance policy.

“Second Named Insured”.  This is the second person named on the insurance policy who has the same coverage as the primary named insured.

“Vehicle Identification Number”.  Commonly referred to as the VIN, the vehicle identification number is the unique 17-digit code given to every on-road vehicle in the United States.  The VIN is found on the identifying documentation for your vehicle, including your insurance and registration cards.

If you’re still confused or overwhelmed about your car insurance or any other coverage, contact us! We work with several carriers for a wide range of coverage, and as independent agents we have the flexibility to shop around for the best plan for your needs and budget.