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Auto insurance terms explained

Like many official documents, an auto insurance policy can be intimidating. At first glance, it may look like alphabet soup, filled with unfamiliar terms. But it helps to understand the C's and D's of auto insurance coverage.

So before you stuff your policy into a file folder unread, consider this: If you were involved in a collision, do you know if your insurance would cover repairs? What if a tree fell on your car during a windstorm? Or what if your car was vandalized? Reading your policy and knowing your coverage before a loss is too important a task to avoid.

This glossary can give you a better handle on your C’s and D’s—referred to in your policy as collision and comprehensive coverage, and deductibles. Understanding these terms can help you communicate with your insurance agent about your options so you can choose the best coverage for your needs. Moreover, it will give you peace of mind on the road.

Collision coverage

Collision coverage typically pays to repair damage your vehicle sustains in an accidental collision with another car or an object, such as a telephone pole or a tree. The coverage is no-fault, which means who caused the crash doesn’t matter. It is generally the most expensive type of coverage, but with a higher deductible (say, $1,000), you can reduce your premiums considerably.

Comprehensive coverage

Comprehensive coverage typically covers auto losses that result from anything other than a collision with another car or object—for example, theft, vandalism, fire, earthquake, windstorm, and other natural disasters. In general, it costs less than collision coverage.


A deductible is your share of your vehicle’s repair bills if you file a claim with your insurer after a crash or other incident. If your deductible is $500 and repairs cost $2,000, you’ll pay $500, and your insurance company will pay $1,500. The amount varies from carrier to carrier, but these days, a typical deductible is between $500 and $1,000. If you have both comprehensive and collision coverage, you’ll carry a separate deductible for each coverage.

No-liability waiver

Although policies differ when it comes to deductible waivers, the no-liability waiver is an industry standard. Also known as the not-at-fault waiver, it means that if your car needs repairs after a crash that’s not your fault, your insurance company will waive your deductible, as long as the other driver can be identified and has liability insurance.

Unisured drivers

In California, 14.7 percent of drivers are uninsured, above the national average of 12.6 percent, according to the Insurance Research Council. Depending on your state of residence, you may be able to add an uninsured collision deductible waiver to your policy. While not free, it means you don’t have to pay your deductible if you’re involved in a collision caused by an uninsured driver. When you make your claim, your insurer typically will need the at-fault driver’s name and license plate number to confirm the other vehicle is uninsured and to apply the coverage.

If you opt not to purchase collision coverage, you may be able to purchase uninsured collision coverage. If you have this coverage and you’re in a crash where an uninsured driver is at fault, your insurance company will cover repairs up to a certain dollar cap (oftentimes up to $3,500). As with the uninsured deductible waiver, the insurer will likely need to verify the vehicle is uninsured before providing coverage.

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