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Auto insurance terms explained

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Like many legal 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 these questions: What if someone drives your car and is involved in an accident? What if you are in a rental vehicle and have an accident? How does the deductible apply to a loss? 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. 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—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.

Uninsured drivers

In California, nearly 17% of drivers are uninsured (the national average is about 13%), according to a 2021 study by the Insurance Research Council.

Depending on your state of residence, you may be able to add Uninsured Deductible Waiver or UDW coverage. Having it means you can reduce your out of pocket expenses if you’re involved in a collision that was not your fault and 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 assist in their investigation in determining if UDW coverage applies. This is typically only available in California, while other states have Uninsured Motorists Property Damage or UMPD 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 need to complete their investigation including verifying the other vehicle is uninsured before providing coverage. In today's economy, car repair costs are at an all-time high, so please keep that in mind when deciding what kind of coverage you will need. 

 Your insurance agent can provide more information. Visit a AAA branch, call (855) 222-5012, or go to

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