Few people derive pleasure from reading an insurance policy. In fact, most people only glance at the cover page and then bury the policy details in a folder reserved for official and important documents. But it’s critical that you read the policy carefully to know exactly what you’re covered for.

Master these 9 important concepts, and you’ll find it a lot easier to understand your auto policy.

1. Bodily injury (BI)

Bodily injury covers you if you are found liable for injuries that require hospitalization or result in death. BI liability is an integral part of third-party liability coverage. It will also pay for medical expenses and defense costs, as well as any settlements or lost wages incurred by the injured party. (Note that in Quebec, lawsuits are not permitted for injuries sustained in car accidents.)

2. Collision

Collision coverage pays for repairs to the vehicle if it is damaged during a collision with an object or another vehicle, provided the insured driver is at fault or was victim to a hit-and-run. It is not mandatory, though lenders require it to finance or lease a car. The amount of coverage is based on the current value of the vehicle. Collision insurance may not make sense if your car is an older model, but ask your insurance professional to be sure.

3. Comprehensive

Comprehensive insurance covers vehicle theft and damage not covered by collision, such as hail, objects falling on the vehicle, collisions with animals, fires and vandalism.

4. Deductible

A deductible is the amount of money a policyholder has to pay out of pocket before coverage kicks in. Not every policy has a deductible — only collision and comprehensive coverage. Collision and comprehensive coverage costs can be controlled by raising your deductibles.

5. Depreciation

Depreciation is the estimated loss of value of a vehicle. According to Carfax.com, a car can lose up to 20% of its value in the first year alone. Insurers use depreciation during a claim to establish the amount that will be paid out if the policyholder doesn’t have guaranteed asset protection (GAP) insurance.

6. Medical payment

Medical payment or personal injury protection (the terms are used interchangeably) can cover the insured driver’s injuries, those of any passengers and, depending on the policy, even pedestrians.

7. No-fault insurance

No-fault insurance exists in several provinces, including Quebec, Ontario, Alberta, Manitoba and Saskatchewan. The idea behind this system is that drivers (and their providers) can’t sue other drivers (or their providers) for most injuries sustained. This allows the insurance companies to bring down their claim costs because of the drastic reduction in lawsuits. In this system, the insurer pays the policyholder regardless of which driver is at fault.

8. Property damage (PD)

Property damage coverage is also an integral part of third-party liability. PD will cover damages to someone else's property caused by the insured driver. When a claimant’s damages include bodily injury and personal property and the limit of coverage is exceeded, PD claims are limited to $10,000 or $20,000, depending on the province.

9. Uninsured/underinsured

Uninsured or underinsured motorist insurance covers the medical expenses of the insured driver and passengers if they’re victims of a hit-and-run.

Most provinces also have some form of mandatory death and funeral or impairment benefits. Of the 10 provinces, all but Manitoba and Quebec have the right to sue for economic loss in excess of no-fault benefits and the right to sue for pain and suffering, though certain conditions may apply.

Once you master insurance vocabulary, you can truly begin to understand how insurance works. These 9 terms are only the beginning, but they should help you better understand how auto insurance works. Do not hesitate to call your insurance broker if you have any questions about your policy or to reeval