Insurance broker is recommending auto accident insurance to clients.

Car accidents are never fun, but understanding the process after one occurs is necessary for every party involved. When any kind of collision happens, whether it’s the first time or the seventh, having some basic knowledge of insurance terms can help ease the entire process.

In insurance, there is an insurer and the insured. The insurer is the insurance company that covers or “protects” the paying party. The insured, is the party that is paying for insurance coverage and that has a written insurance policy.

An insurance policy is a legal contract between the insurer and the insured that is set in place in exchange for paying a premium. An insurance premium is the amount of money that is paid on a monthly or annual basis in order to keep a policy in place. The policy details everything that is covered and not covered when an incident takes place.

Premiums and deductibles go together hand-in-hand. The higher you pay for one, the lower the other’s price will be. The deductible is the amount of money you pay out of pocket after you file a claim for either vehicle repairs or possible vehicle replacement.

If a collision happens and you are not at fault, then subrogation occurs. When subrogation takes place, the at-fault driver’s insurer helps to pay repair costs and possible medical bills. This process makes sure that your insurance company can recover the costs, including your deductible, from the at-fault driver’s insurer. When subrogation goes well, both you and your insurance company should receive a refund.

Sometimes a wreck occurs and it isn’t clear which party is at fault. When this happens, you won’t always be solely responsible for paying for repair costs. In Texas, having to pay your repair and medical bills is dependent upon your percentage of fault, which is determined by the insurer. In an instance where fault percentage is unknown, you might decide to let your insurance company take care of most of the situation by choosing to file a claim with your insurer and pay your deductible. Since the accident was not completely caused by you, there is a chance that your insurer might decide to subrogate the other person’s insurance company in an attempt to recoup some, or all of the cost of the accident. In the end, it is possible that you will get some or even all of your deductible back.

Auto insurance can be a tricky topic if you don’t understand certain terms, so making sure you know a little bit of vocabulary can help you deal with the after effects of a fender bender with a little more clarity.