Without a glossary of car insurance terms, no car insurance resource is complete. We have compiled a list containing definitions and terms to help you navigate the often confusing world insurance.
Accident Unexpected, sudden events that cause property damage to an auto or bodily injury to someone. It can be reported or unreported, and may be at-fault or non-at-fault. A collision may refer to an accident involving more than one vehicle.
Accident report form – This is the report filed by police, often called the police report, containing the important information regarding the vehicle collision. This report will include information such as the names and addresses of all involved, vehicle details, property damage, and citations.
Adjuster – This person is responsible for assessing the actual loss on the policy in the event of an accident or another incident. The Insurer will determine how much auto insurance policy will pay.
Agent – This is a licensed and trained individual who is authorized to sell and to service insurance policies for the auto insurance company.
At Fault – This is the amount that you, the policy holder, contributed or caused the auto collision. This is what determines which insurance agency will pay which part of the losses.
Auto Insurance Score – This is a score similar to credit score that evaluates the information in your consumer credit report. These scores are used to determine the price of your auto insurance policy. Your auto insurance premiums could be increased if you have negative marks on your credit reports. This information is used to determine policy pricing in different states.
Automobile Insurance – This is a type of insurance policy that covers and protect against losses involving automobiles. The policyholder’s needs will determine the coverage options available to them. Auto insurance policies offer common coverages such as liability for property damage and bodily injuries, uninsured driver, medical payments and comprehensive.
Binder – This is a temporary short-term policy agreement put in place while a formal permanent policy is put into place or delivered.
Bodily Injury Liability – This is the section of an insurance policy that covers the cost to anyone you may injure. This includes lost wages and medical costs.
Broker – This is a licensed individual who on your behalf sells and services various insurance policies.
Claim – This is a formal notice made to your insurance company that a loss has occurred which may be covered under the terms of the auto insurance policy.
Claims Adjuster – This person employed by the insurance agency will investigate and settle all claims and losses. The representative of the insurance agency will verify the claim and ensure that all affected parties get fair and proper compensation.
Collision – The portion of the insurance policy that covers damage to your vehicle from hitting another object. Other objects include, but not limited to, another vehicle, a building curb, guard rail or tree, as well a telephone pole or fence. A deductible is required. Should they be at fault, their insurance company will pay for the cost.
Commission – This is the portion of the auto insurance policy that is paid to the insurance agent for selling and servicing the policy on behalf of the company.
Comprehensive – This is a portion of the insurance policy that covers loss caused by anything other than a collision or running into another object. A deductible is required. This includes, but is not limited, to vandalism and storm damage, fire, theft etc.
Loss covered – The auto insurance policy covers damage to your vehicle, property, or yourself.
Declarations Page – This is the part of the insurance policy that includes the entire legal name of your insurance company, your full legal name, complete car information including vehicle identification numbers or VIN, policy information, policy number, deductible amounts. This is the main page of an insurance policy.
Deductible amount This is the portion of your auto insurance policy where you must pay the full amount before the Insurance Company will contribute or pay any benefits. This amount can range in price from about $100 to $1000 and can vary between approximately $100 and $1000. Your normal monthly or yearly premium will be lower if you have a higher deductible. This is the part of your auto insurance policy that applies only to collision or comprehensive coverage.
Get Discount – This is a reduction in the overall cost of your insurance policy. There are many reasons why deductions may be granted, including good driving records, grades, marital status, and specific features or safety equipment.
Emergency Road Service – This is the part of an auto insurance policy that covers the cost of emergency services such as flat tires, keys locked in the car and towing services.
Endorsement – This is any written change that is made to the auto insurance policy that is adding or removing coverage on the policy.
Exclusion – This is the portion of the auto Insurance policy that includes any provision including people, places or things that are not covered under the insurance policy.
First Party – This is the policyholder, the insured in an insurance policy.
Gap Insurance – This is a type of auto insurance provided to people who lease or own a vehicle that is worth less than the amount of the loan. Gap Auto Insurance covers the difference between the vehicle’s actual cash value and the loan amount in the event of theft or destruction.
High-Risk Driver – If you have a variety of negative marks on your insurance record including driving under the Influences, several traffic violations, etc. You may be considered a risk by the insurance company. This can increase your insurance premium or render you ineligible for coverage.
Assured – The policyholder(s) who are protected by the policy benefits in cases of loss or accident.
Insurer – Is the Auto Insurance company who promises to pay the policy holder in case of loss or accident.
Liability insurance – This part of an auto insurance policy which legally covers the damage and injuries you cause to other drivers and their vehicles when you are at fault in an accident. If you are sued or taken to court, your liability coverage will cover any legal costs you incur. Drivers in most states are required to have some form of liability insurance. The amount will vary from one state to the next.
There are no limits – This is the portion of the auto insurance policy that explains and lists the monetary limits the insurance company will pay out. The policy holder will be responsible if you exceed these limits.
Coverage for Medical Payments – This is the portion of an auto insurance policy that pays for medical expenses and lost wages to you and any passengers in your vehicle after an accident. Also known as Personal Injury Protection, or PIP.
Report on Motor Vehicles – The motor vehicle report or MVR is a record issued by the state in which the policy holder resides in that will list the licensing status, any traffic violations, various suspensions and./ or refractions on your record. This information is used by insurance agencies to determine their premium prices. This also helps to predict the likelihood of you filing a claim within your policy period.
No-Fault insurance – No-fault auto insurance policies will cover your injuries regardless who caused it. These states are considered no-fault. They include Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, Utah, and Washington, DC.
Non-Renewal This is the end of an auto policy. This date will cause all coverage to cease and the insurer will be released from any promised coverage.
Personal Property Liability – This is the part of an auto insurance policy that covers personal property damage.
Personal Injury Protection (PIP) – This portion of an auto insurance policy pays for any lost wages or medical expenses to you and any passengers in your vehicle following an accident. Also known as medical payments coverage, PIP is also known to be medical insurance.
Premium – This is the amount charged to you monthly, yearly or any other duration agreed upon by insurance company and policy holder and paid directly to the auto insurance company. The type and extent of coverage you select for your vehicle and yourself will determine the premium. Your age, marital status and driving record will all impact your insurance premium prices. Premiums can vary depending on the insurance company and where you live.
Quote – This is the amount or estimated amount the insurance will cost based on the information provided to the agent, broker or auto insurance company.
Rescission.- This refers to the cancellation of an insurance policy that was in effect at the time it was cancelled. The full amount of the premium would be returned.
Rental reimbursement – This is the portion of the auto insurance policy that covers the cost of an automobile rental of similar size should the covered vehicle be in repair from a reported incident.
Replacment Costs – This is the amount of money it would cost to replace a lost or damaged item at it is actually new replacement value. This amount is based on an identical item currently available in the local market.
Salvage – This is the auto insurance policy holders property that is turned over tot eh insurance agency in a loss final settlement. The salvage property will be sold by insurance companies to help recover some of the financial loss that it has suffered due to settlement or loss.
Second Party – this is the actual insurance company in the auto insurance policy.
Surcharge – This is an amount that you add to your auto policy premium for traffic violations or accidents in which there was a fault.
Third Party – This is another person other than the policy holder and auto insurance company who has faced a loss and may be able to collect and be compensated on behalf of the policy holder’s negligence.
Total Loss – This is complete destruction to the insured property of a policy holder. It was determined that it would cost a lot more to fix the item than to replace the property in its original state before the loss.
Towing coverage – This is the portion of the auto insurance policy that covers a specified amount for towing services and related labor costs.
Driver who is not covered – This is the portion of an auto insurance policy which covers injuries to you caused by a driver without enough insurance to pay for the medical expenses you have incurred from the accident. This section of the policy may vary from one state to another as different states include damage to cars in it.
Uninsured Motorist or Driver – This is the portion of the auto insurance policy which covers injuries to you caused by a driver who was without liability insurance at the time of the accident. There are two types of uninsured motorist or driver coverage: uninsured motorcyclist bodily injury and property damage. Uninsured motorist bodily injury coverage covers injuries sustained by you and any passengers in your car when there is an incident with an uninsured person. Uninsured motorist coverage covers property damage to your vehicle if there is an accident with an uninsured person. When you purchase liability coverage for your vehicle, uninsured motorist or driver coverage must be provided. If you decide to decline coverage for Uninsured motorist or driver, you must sign a waiver. A majority of states require drivers that they have uninsured motorist coverage. This coverage may include damage to your vehicle.
Vehicle Identification Number (VIN) – A VIN is a 17 letter and number combination that is the identification of the specific vehicle. It will identify the year, make, and modem of the vehicle. This number is usually located on the driver’s window at the dash. This number can also be found on your vehicle’s registration and title.
