Useful Insurance Terms Defined

Insurance companies like to use very specific terminology to talk about different aspects of their policies. Unfortunately for customers, these are often confusing and difficult to understand. Here are some commonly used phrases explained to help you choose the best insurance policy for you.

• Actual Cash Value – This describes the cost of replacing the vehicle, minus how much its value has depreciated over time with wear and tear.

• Insurance Binder – This is either oral or written proof of insurance coverage for a specified amount of time, usually until an official, permanent policy is worked out and drawn up.

• Total Loss – This refers to a situation in which damage to the vehicle is so expensive in comparison to the value of the vehicle that the insurance company decides that it is no longer worth repairing. Sometimes this is determined by state standards, and sometimes it simply would not be safe to repair the car (e.g. flooded vehicles). A vehicle in this condition may be regarded as “totaled”.

• Replacement Parts – These are the parts that are ordered to replace broken parts in your vehicle. These can either be new or secondhand. In either case, your insurance company should find parts that are in a condition as good as, or better than, other parts in your vehicle.

Contact Us

At Insure on the Spot, we are committed to helping our customers to understand what their policy will and will not cover, in plain language. Contact our Indianapolis car insurance experts at 888-972-SAVE for assistance finding a new policy.