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Understanding Your Auto Insurance: Top Terms

understanding your car insurance policy and the terms

There’s so much to know when it comes to your auto insurance policy, and sometimes understanding what the terms mean can be easier said than done. To help you actually understand everything a little better, here is a quick little session that is going to help you get those terms straight once and for all!

Top terms to know about auto insurance

Here are some of the most important basic terms to know when it comes to having a true understanding of your auto policy. Knowing this will help you to understand your car insurance premium and what affects your auto insurance premium.


This is the amount that you’ll have to pay before your policy coverage kicks in. The insurance company will deduct that amount from the total that they pay for a claim, meaning it’s the amount that you will have to pay first.


This is the amount that you will pay for your policy. It’s often paid monthly but can also be paid in different cycles depending on the insurance carrier and how you prefer to pay.

Gap coverage

This is a kind of insurance that will pay out the difference between your car’s value and the policy total when your car is either totaled or stolen, and you put in a claim for it. This is more common with brand new vehicles as you may have coverage and if you total your car, the value may be less than what you owe on it, this will help close the gap.

Liability coverage

This coverage is for injury and property damage as a result of an accident that you cause. It could also cover any kind of legal charges if they decide to sue or press charges, etc.

Collision coverage

If you hit a post or roll your car (or something elsewhere it’s just your car involved), this coverage would be to pay for your repair costs to your car as a result of filing the claim.

Comprehensive coverage

This is for other kinds of coverage, including hitting an animal, having your car stolen, something all onto your car and damage, etc. It’s called “comprehensive” because it’s intended to be vague and cover various things that can impact your car’s safety.

Medical payment coverage

If you are injured in a car accident, or someone in your car is, this coverage will pay for the treatment needed as a result. In this case, it would apply whether you are at fault or whether the other driver was at fault.

Still feeling lost? Get some support!

There’s no reason that you have to figure all of this out on your own! Give Harbour Insurance Services a call at (281) 520-4090 and either meet with us to go over some of the terms you definitely need to know or ask us about specific terms that are still tripping you up. 

Part of being a responsible car owner, and insurance holder, is making sure that you understand what everything means. While there are many who don’t, having a proper education on the most important auto insurance terms means that you’ll be more informed on what to ask about, should you need to, and it also will help you know what you’re covered for and what you aren’t!  You don't know what you don't know, but that doesn't mean it's okay to not be an informed consumer.

Just like when you had to study Spanish vocab, these are some of the most important terms to make sure you keep in your memory as a responsible auto insurance holder! No one said you couldn’t have a cheat sheet, though! Let US be your cheat sheet. Contact Harbour Insurance Services today to learn more about your car insurance policy or to get a free auto insurnace quote.  Don't forget to ensure you are prepared when you are out and about with your car and have an vehicle emergency kit. We've created a list to get you started.