When you purchase a car or any vehicle for that matter, it is mandatory to have insurance. Even though everyone is aware of this and almost automatically gets the insurance, it is true that many are not familiar with the terms used in the insurance policy. The following are the essential terms that you should be aware of:-

Vehicle can be a term for a car, automobile, truck, motorcycle or any other motorized conveyance used to transport people or products.

Coverage for your vehicle refers to the amount and types of insurance you have purchased in accordance with the law, to legally protect yourself and others.

Term refers to the length of time the insurance policy will be in force. It can be as little as one month, but is usually for six months to one year.

Premium is the amount of money paid to the insurance company to obtain vehicle insurance. The amount charged by the insurance company will be determined by the coverage required, owner’s driving record, the deductible agreed upon, and laws of the state.

Basic coverage or PL and PD (Public Liability and Property Damage) means the insurance will pay for damages to vehicles owned by others, or to their property, but will not pay for damages to your vehicle or property. Included in the PL/PD policy is a limited medical coverage in case of injury, as required by law. In many cases, this is $20,000 for one instance, up to $100,000 for injuries to several people involved in a single accident. This is an example of a minimum coverage policy.

Comprehensive Collision coverage is an insurance policy intended to protect your vehicle in addition to those owned by others, in case of accident. The increased coverage will pay for repairs in full, minus the deductibles. Included in the policy will be repairs for glass breakage, fires and other unforeseen accidents. Procuring a comprehensive policy is normally required by loan companies before they agree to finance the vehicle. In a policy of this type, the amount it will pay for medical care expenses are also higher.

Deductible refers to an amount of money you agree to pay out of your own pocket for any repairs required in the event of an accident. Usually the amount is agreed to in advance. When a deductible is arranged between insurance company and individual insured, there is usually a reduction in the cost of the insurance policy. Each time there is need for a repair, the deductible will have to be paid.

Write Off is a term used when the vehicle would cost more to repair than it is worth. If there is a loan on the vehicle, that would be paid out first, minus the deductible. If there is anything left, it would go to the owner of the vehicle to use as they see fit.

Uninsured Motorist coverage means that if a vehicle does not have insurance and is in an accident with another vehicle, the repairs will be covered to the other vehicle. (The injured party in this case.) Prior to having uninsured motorist coverage, any vehicle involved in an accident with an uninsured party would have no coverage. Any repairs needed would have to be paid for out of pocket even though the injured party had insurance, because the accident was not his fault.