Finding a List of Car Insurance Terminology

Car insurance terminology is explained in this guide, and we provide more ways to find the specific car insurance definitions you need to know when buying a car insurance policy. Insurance agents can provide a list of insurance terms, but read this guide first to learn the car insurance terminology that will save you money on your car insurance rates.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Aug 15, 2020

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Here's what you need to know...

  • There are many places to find definitions for car insurance terms
  • Make sure you get your information from a reputable website if you use the internet
  • Car insurance customer service representatives will be able to answer most of your questions


We live in the information age. We are used to having all the information we need at our fingertips.

When it comes to something like car insurance, we often find a term we need to find a definition for on the Internet. Additionally, there are many sites that have lists of car insurance terminology.

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Your insurance agent is also there to answer any questions you have about your car insurance. If you don’t understand something, feel free to ask!

Can my car insurance company help?

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The car insurance policy itself usually has a definitions section. Whether you have a paper copy or a digital one, you could always find what you need there.

Also, check your car insurance company’s website. Some of them have a glossary of terms or a FAQ section that can answer your questions regarding car insurance terms.

If all else fails, call the insurance company and ask. Their agents are in the customer service business. They are paid to serve you, including answering a hundred questions if you have them.

If you don’t understand what something means, have them explain it to you until you do.

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Enter your ZIP code below to view companies that have cheap car insurance rates.

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Can I trust what’s on the Internet?

You can also do a search online for the meaning of terms, but this can be a tricky business when dealing with a legal document like an insurance policy. Your best bet is to find a reputable site rather than the first place that pops up in your search engine.

What sites are reputable?

  • Company websites
  • Oversight organizations
  • Financial news media

As mentioned before, the insurance company websites themselves often have a glossary of terms on their site. The insurance industry also has oversight and industry organizations whose job it is to help consumers more fully understand insurance.

For example, the Insurance Information Institute has a tremendous amount of information about insurance on its site.

Financial news media often publish information regarding the insurance industry, including the definition of terms.

Their purpose is to educate the public about personal or business finances. An excellent example is the All Business glossary of insurance terms.

What are some terms that would help me save on auto insurance?

Sometimes you need to know what to ask. Here are some terms to discuss with your insurance company when you want to make sure you are paying as little as possible.

A premium is the amount of money you pay an insurance company in order to have insurance. You pay this whether you make a claim or not. It is usually billed once a month, quarterly, or once every six months.

When people talk about saving money on car insurance, they want to lower this particular amount.

Minimum liability is the lowest amount of liability your state allows you to carry to legally drive. Most experts recommend that you carry 100/300/50 insurance. State minimums are usually far lower, so check your liability amount to make sure you are fully protected.

Comprehensive and collision is the part of the policy that covers damage you cause, and is not state mandated.

The deductible is the amount of money you’ll pay a repair shop if you cause the damage before the insurance company will pay the rest of the repair cost. The standard amounts are $250, $500, or $1000.

For instance, if you run into a car and cause $2000 damage to your own vehicle, you will pay the repair shop $500 and the insurance company will then pay the remaining $1500.

The lower the deductible on your policy is, the higher your premiums will be. The reverse is also true. To lower the premium, raise the deductible. Just make sure you have the money to cover the higher deductible so you can get your car repaired.

Discounts are deductions off the premium you would normally pay. There is a multitude of these available from nearly every company.

Some are related to your occupation, like military discounts. Some reward behaviors, like discounts for good grades for students or for a clean driving record. Some companies reward certain demographics, like senior citizens.

Multiple policy discounts are an important, and money-saving, deduction that insurance providers give you if you buy more than one policy from them.

If you have two cars, a home, and a camper, buy insurance policies for all four together from the same company. You’ll save money on the premiums on all of them.

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