Purchasing auto insurance is one of the biggest money decisions we make and one of the ones we have most control over. We may be locked into a car lease or a credit union loan but we generally have more flexibility when it comes to protecting the vehicle. The answer is to be on the look-out for more affordable insurance, and that means sifting through quotes. However, the value is often deeper than the bottom line price and that means digging into the fine print. But what’s the difference between an “underwriter” and an “adjuster”?
When shopping for an auto insurance policy the key is to understand the terminology and lingo. Pay attention:
Premium – The amount paid by the policyholder to keep an insurance policy in force. Your monthly/quarterly bill is a premium. Since this is basically the amount out of pocket to maintain your insurance, this is the amount you are getting a ‘quote’ for.
Policy Holder – You, the purchaser of the coverage. The INSURED is the person the coverage pays for. This is usually the same party.
Liability Insurance – The coverage the policyholder has to pay for damage to another persons property and to pay for their injuries. This is basically to pay for what is done to someone else and is important for fender benders and larger accidents.
Collision Insurance – The protection received by any damage done to your vehicle by hitting someone else, an object hitting you. With Collision, it doesn’t matter if it is your fault or not.
Additional Insured – Coverage applied to someone other than the policyholder (such as a spouse or child). Very important to understand the range of the umbrella for your policy.
Absolute Liability – Coverage for damages even though there is no proof of fault.
Indemnity – A principal having to do with the value of the vehicle. It states that you should not collect more than the actual value of the vehicle at the time of the accident or loss.
Binder – A temporary agreement that serves as a placeholder until the actual auto insurance policy is issued. The binder costs the same as the policy and has identical terms and conditions.
Economic Loss – The total cost of an accident or injury, which includes things like loss of wages, administrative costs, funeral costs, legal costs and medical bills. These are sometimes the hidden costs of an accident and need to be accounted for when preparing a quote.
Claim – The process of seeking payment on an insured policy.
To answer those first questions…
Underwriter – The auto insurance company to whom you pay your premiums who issues the insurance policy and assumes the risk of you having an accident of some type. The person who decides whether or not you should be insured is also referred to as the underwriter (as well as the insurance agent). The ADJUSTER is the person who settles a claim and investigates liability.
To start the process and find the best auto insurance quotes, use the Free Car Insurance Rate Finder tool at the top of the page.