Along with the above explained car insurance facts you should have a good idea of what some terms mean when you go shopping for a policy. Some of the terms such as types of car insurance i.e. liability insurance, collision, comprehensive, uninsured, underinsured, have been discussed in earlier articles whereas some more terms that you may come across are descried below.

Actual Cash Value

It is abbreviated as ACV and it can be confusing. At the time of accident the value of the car prior to the mishap is calculated by the insurance company and then they will subtract other charges and pay you the rest. You will be surprised to see that the price of your brand new car that you just bought couple of months back will have 20% less ACV then the purchase price. ACV is calculated after subtracting the depreciation.

Benefit

When you file a claim and it gets settled, the amount that the insurance company pays you is known as the benefit.

Claim

You run into an accident you go to the insurance company and request the payment for the damages. You have a legal right to get the payment because you pay a premium to the insurance company.

Deductible

It is the amount of the total loss that you will pay out of your own pocket if an accident occurs. The rest will be paid by the insurance company. If the deductible is chosen large by you then the premium is significantly smaller.

Endorsements

This is the changes that may occur in the original contract due to buying of a new car and getting it covered under the same policy or if there is another driver that needs to be covered.

Exclusions

Any situation that is not listed on the coverage provided by the policy is known as exclusion and you will not be paid for that if any exclusion occurs.

Full Coverage

Full coverage doesn't mean that you have all the possible coverage but it means that the minimum coverage usually liability coverage that is demanded by all states.

Income Loss Coverage

In case of accident injuries in which you are unable to work this coverage can pay for your treatment during the days you don't work.

Indemnity

Indemnity is a predetermined amount of money that is paid for loss covered in the policy.

Limits

Limits are defined at the time of policy signing that the company will not pay any more above it in case of a loss. Many states have minimum limit instead.

Medical Payments or Personal Injury Protection

It is also known as PIP and it covers only the passengers in the insured's vehicle that ran into an accident. The maximum damage it can repay is the medical treatment costs and the wages that are missed due to leave from work. The policy holder may also be covered while in another owner's car.

SR-22

It is a document containing financial responsibility proof if a customer violates a traffic rule.

Tort

Tort is a legal terminology. When some one is legally declared to have caused damage to his property or have caused injury to some person or damaged his property then the circumstances are described through this term. If you take tort provision then you can limit your right for suing only to non money issues but you can reduce your premium amount.