Commonly Used Auto Insurance Terms You Should Know

An auto insurance is a legal requirement in many states and not having an auto insurance policy for your vehicle can land you into trouble with the law or even a jail term. If you live in Colorado, auto insurance is a compulsory requirement.

Apart from it being a law requirement, it’s also important in case of an accident or theft. However, it is important for you to be as informed about the auto insurance terms as possible, this will save you money and make the policy configuration process and claims much easier. Below are some of the most commonly used auto insurance terms. If you live in or around Bailey, CO, you can contact Centennial State Insurance Agency for more information.

Comprehensive insurance

This is an auto insurance policy that will cover any damage to the policy holder’s vehicle that was not sustained in a motor vehicle collision such as an impact with an animal, theft, fallen objects, or fire.

Collision insurance

Collision insurance is the opposite of comprehensive insurance because this type of auto insurance policy insures the vehicle when it hits or is hit by another vehicle or when the car overturns.

Actual cash value

Actual cash value is the fair market price of your vehicle. It is usually compiled by taking the replacement cost of the vehicle minus depreciation.

Subrogation

If your vehicle is damaged because of another driver’s negligence, and you ask your insurance provider to settle your claims of damage to your vehicle, they will ask for the repayment from the other party. This process of payment recovery is called subrogation. Whereby your insurance provider will settle your insurance claims and then they will ask for the refund of the same amount from the party responsible for the accident or from the other party’s insurance company.

Deductible

It is the amount the policy holder will pay when they make claims on their collision or comprehensive insurance policy. Usually, when you get a low priced policy, the deductible amount will be higher. When it’s a higher priced policy, the deductible will be lower.

For further assistance you can contact Centennial State Insurance Agency. Our agents can help start a policy and answer your questions. Also, try our online rating tool for quotes on auto insurance.