Car Insurance Terms to Know

Part of the Sutherland Insurance guide to Auto Insurance in Ontario.

When purchasing car insurance, it's important to understand the terminology used in your policy as it's essential to ensure you're getting the coverage options available to you. A breakdown of some of the most common car insurance terms worth knowing include:

1. Premium

The premium is the amount you would pay to your insurance provider in exchange for coverage. Sometimes depending on the provider, you can pay monthly, semi-annually, or annually. Factors such as your driving history, what car you drive, and your location can influence your premium amount.

2. Deductible

A deductible is the amount you agree to pay yourself before your insurance kicks in to cover the claim. An example would be if your deductible is $500 and your repair cost is $2000, your insurance would cover $1500.

3. Liability Coverage

Liability coverage protects you If you are found at fault in an accident that causes damage to another person's property or injuries to others.

• Bodily injury liability: This would help cover medical expenses and lost wages for the other party
• Property damage liability: This helps cover the cost of repairing or replacing the other party's vehicle or property

4. Collision coverage

Collision coverage pays for repairs to your vehicle if it is damaged in a collision, regardless of who is at fault. It can be particularly useful for newer vehicles.

5. Comprehensive coverage

Comprehensive coverage protects your vehicle against non-collision-related incidents that could include theft, vandalism, natural disasters, or hitting an animal.

6. Endorsements

Also known as riders, are add-ons to your policy that can provide additional coverage or modify existing terms. Endorsement examples could include roadside assistance and rental car reimbursement.

7. Claims adjuster

A claims adjuster is a representative from the insurance company who would investigate and assess the damage from a claim to determine how much the insurer would pay.

8. Gap insurance

If your car is totaled and you owe more on your car loan than the vehicle's market value, gap insurance covers the difference. This is especially useful for new cars that depreciate quickly.

9. Telematics

Telematics is a technology used to track driving habits, such as speed and braking, to determine your insurance premium. Sometimes with the use of telematics, you can receive discounts through your insurer.

10. Exclusions

Exclusions are situations or damages that would not be covered by your policy. Common exclusions include intentional damage, using your car for commercial purposes without proper coverage, or driving under the influence.

11. Policy Term

A policy term is the duration of your insurance contract. At the end of the term, you'll need to renew your policy.

Understanding these terms can help you to make more informed decisions when looking at car insurance. If you have questions about your policy or would like to receive a quote, contact one of our licensed sales brokers today. Our team is here to guide you through the process and find you coverage that fits your needs.

The tips provided in this article are for general informational purposes only and do not constitute professional advice.