Termanology
Car Insurance Policy
When you are shopping around to get an insurance policy for your car, you will come across some terms being very commonly used by everyone who is in the insurance business, from the car insurance broker to your insurance agent. Even the online resources that you access to collect any information about car insurance will talk about some of these terms, and you should be aware of what these terms mean so as to understand important facts about your car insurance. If you are trying to find the best option among different policies, you need to understand all these terms because all of them decide the quality of the insurance policy.
When you buy an insurance policy for your car, the insurance company agrees to reimburse the expenses incurred by you or a third party subsequent to some mishap involving your car under certain conditions. The amount for which the insurance company is liable to you and the nature of mishap that will be covered by the insurance company will be governed by the terms of the policy, and within those terms and conditions specified in the policy document, you can make a claim to the insurance company for the reimbursement of expenses related to any such mishap by following a set procedure.
When you file for a claim to the insurance company for reimbursement of expenses incurred on, say repair of your car subsequent to an accident, you have to deposit a certain amount to the insurance company before your claim is processed. It is basically a fee that insurance company charges to you to process your car insurance claim. It can be compulsory by some companies and voluntary by others. Agreeing to pay a voluntary excess or increasing the excess amount on your part can earn you some discount in the premium that you pay to the insurance company for the insurance of your car.
Car insurance premium is the amount charged to you by the insurance company for agreeing to insure your car for certain accidents or mishaps. The premium depends on a number of car related factors and some personal information about you. In fixing the premium, the company basically tries to assess the possibility of the person who is getting his car insured, getting involved in an accident or some kind of mishap and filing for an insurance claim subsequently. The premium compensates the insurance company for the risk that it is taking, and the company earns profit because of the fact that of all the people insuring their car, there will be claims filed by only a few, not all.