What is the difference between a premium and a deductible?

Your premium is the amount you pay (monthly or annually) to keep your policy active. Your deductible is the amount you pay out of pocket when you file a claim before your insurance covers the rest. Higher deductibles usually mean lower premiums.

What does 'actual cash value' mean in auto insurance?

Actual cash value (ACV) is what your vehicle is worth at the time of a claim, accounting for depreciation. If your car is totaled, you receive the ACV minus your deductible — not the original purchase price or what it would cost to replace it new.

Auto Insurance Glossary: Terms Explained in Plain Language

June 29, 2026

Glossary sections

Coverage Terms
Pricing & Premium Terms
Claims Terms
Policy & Document Terms

Frequently Asked Questions

What is the difference between a premium and a deductible?: Your premium is the amount you pay (monthly or annually) to keep your policy active. Your deductible is the amount you pay out of pocket when you file a claim before your insurance covers the rest. Higher deductibles usually mean lower premiums.
What does 'actual cash value' mean in auto insurance?: Actual cash value (ACV) is what your vehicle is worth at the time of a claim, accounting for depreciation. If your car is totaled, you receive the ACV minus your deductible — not the original purchase price or what it would cost to replace it new.