How does car insurance work?
Car insurance is a specific type of insurance companies offer that protects drivers and their vehicles in various circumstances. Generally, it covers medical and vehicle repair costs after an accident.
Customers pay premiums in exchange for car insurance policies, which typically last six to 12 months. Policy benefits depend on the type of coverage you choose, such as liability coverage, collision coverage, or comprehensive coverage — or all of them, which is called full-coverage car insurance. Liability insurance pays for damages and injuries to other parties when you’re found at-fault for an accident. Collision and comprehensive coverages protect your vehicle.
When you apply for car insurance coverage, the insurer will assess your risk through its own underwriting criteria and consider various factors when setting your premiums. These factors can include your gender, location, age, and credit score.
If a covered event occurs — such as a collision with another vehicle — you can file a claim with your insurance company. After paying your predetermined deductible, your car insurance will help cover costs associated with the incident so you can fix your car or pay for medical expenses.
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What is a car insurance premium?
In order to get a car insurance policy, consumers must pay a car insurance premium. A car insurance premium is like a subscription for your policy coverage. Generally, you can select a policy length of either six or 12 months.
When paying for your car insurance premium, you can typically pay the total premium up front in one payment for a potential discount, or spread the premium over monthly payments. Insurance companies determine premiums by a set of criteria the car insurance provider considers, including your driving history, current age, location, and how much you drive.
If you file a claim and are found at fault, your car insurance premiums may increase when it’s time to renew your policy.
What is a car insurance deductible?
Many car insurance policies have deductibles that you must pay before the car insurance company covers any qualified costs. The deductible is a set amount, like $500 or $1,000, that you can choose and is your out-of-pocket cost when you file a claim.
If you select a higher deductible, you’ll likely have a lower premium. But if you file a claim, you’ll pay more out of pocket. A lower deductible can mean paying more in premiums.
The car insurance premium is what you pay to have an active car insurance policy. The deductible is what you pay after filing a claim to access your policy’s benefits.
Read More: What to Do if You Can’t Pay Your Car Insurance Deductible
What is a car insurance claim?
After an accident or qualified incident that your insurance covers, you can file a car insurance claim. A car insurance claim is the process of notifying the insurer of the event and seeking financial assistance to cover the losses. 
Filing a claim can happen in different ways. If you have collision and comprehensive insurance, you may let your insurance company know details of the incident, like where it happened, when it happened, and what happened. If another driver is involved, collect their name, contact information, driver’s license, and plate number.  Taking photos of any damage is a smart idea and may help the claims process. Then, a claims adjuster will assess the damage to your vehicle.
Your car insurance company may share a recommended repair shop, but you can choose any repair shop you’d like. Once your insurance company approves a claim, the insurer may issue you a check to pay for the car repairs or send the funds directly to the shop on your behalf.
However, if you’re at fault for an accident in an at-fault state, your insurance company will work with the other party’s insurance company to file a claim for the damage to the other driver’s property. While you might not pay up front for the damage you caused, your car insurance premiums will likely increase when you renew your policy.
If you cause an accident in a no-fault state, where each party’s insurance company handles the damages and costs, you will file a claim with your own insurance company. Each party will then pay their deductibles and work with their insurance companies to assess damages and pay for repairs.