A

• Accident: An unexpected event causing injury or damage.
• Accident Forgiveness: A type of “forgiveness” given by the insurance company to the insurer if the insurer has been accident-free for a certain time period. Upon the first accident after this time period, the premium will not increase.
• Accident Frequency: How many times an accident has occurred, and is used to base premiums.
• Accidental Death Benefit (ADB): An additional death benefit for the insured if the insured person’s death occurs because of an accident.
• Act of God: An event caused by nonhuman actions.
• Actual Cash Value: The difference between replacement cost and depreciation of the property.
• Actuary: Someone who can figure insurance risks and premiums, keeping insurers profitable.
• Adjuster: An insurer’s employee that calculates the damages of the vehicle/property.
• Admitted Company: An insurance company that can legally do business and provide insurance.
• Adverse Carrier: The other driver’s insurance company.
• After-Market Parts: Parts of a vehicle other than those that the manufacturer originally installed.
• Agent: A representative of an insurance company who sells insurance policies.
• Agreed Price: The total price for repairs that is agreed upon by the adjuster and the body repair shop.
• Aggregate Limit: The highest monetary amount that can be paid for a claim.
• Amendment: A change made to any contract.
• Anti-Lock Braking System (ABS): An addition to a normal brake system allowing every wheel of the vehicle to slow down at the same rate.
• Anti-Theft Device: A part of the vehicle that helps to prevent it from being stolen or helps recover it, such as car alarms, VIN etchings, etc.
• Application: A written or electronic request for auto insurance to an auto insurance company.
• Appraisal: A procedure that evaluates how much a vehicle or property is worth, done by an impartial third party.
• Arbitration: A method of resolving an argument using an impartial third party instead of litigation.
• Assigned Risk: A driver or vehicle owner who is not eligible for car insurance in the regular market.
• At-Fault: The driver who caused the accident and is responsible for any damages.
• Auto Damage Adjuster: The person who assesses damages done to the vehicle and writes the repair cost estimate.
• Auto Repair/Claim Repairs: This program allows the driver to complete the vehicle’s repairing in one location.
• Auto Replacement Coverage: A coverage that states your car will be repaired or replaced.
• Auto Theft: The taking of a vehicle without permission, which is covered under comprehensive coverage.
• Automobile Insurance Premium Discounts: A set of discounts offered to drivers if they meet the requirements.

B

• Binder: An agreement stating the insurance policy is in use immediately.
• Blue Book: A source which gives the worth amount of all vehicles.
• Bodily Injury: A bodily injury experienced by a person.
• Bodily Injury Liability: Coverage required by all states that pays for the other driver’s sustained bodily injuries, up to the amount purchased.
• Broker: A person who helps consumers find auto insurance.

C

• Cancellation: The termination of an auto insurance policy. The policy can be canceled by either the driver or the company.
• Car Insurance: A means of insurance that will pay for the damages incurred to the policy holder’s vehicle, as well as the damages incurred to the other driver and vehicle (liability).
• Carrier: Also known as the insurance company or the insurer.
• Certificate of Financial Responsibility: A replacement of auto insurance stating the driver has met the state’s required financial responsibility laws (i.e. SR-22, FR-44, or SR-50).
• Certificate of Satisfaction: A signature made by the insured after evaluating the repairs of the vehicle, indicating all repairs are to the insured’s satisfaction.
• Claim: A request for payment to the insurance company.
• Claim Adjuster: A person responsible for investigating and settling a claim.
• Claim Repairs/Auto Repair: This program allows the driver to complete the vehicle’s repairing in one location.
• Claimant: Individual making a claim.
• Clause: Statements within the policy that explain the meaning of the coverage.
• CLUE Report: Comprehensive Loss Underwriting Exchange Report, which provides information on past claims.
• Collision coverage: Pays for damage done to a vehicle regardless of who is at fault.
• Collision Deductive Waiver: Your collision deductible is waived if you are hit by an uninsured motorist.
• Comparative Negligence or Fault: Claimants may be entitled to recover part of their damages even when they are partially at fault.
• Competitive Estimate: Estimates for repairs from a number of body shop companies, usually requested by the insurer.
• Comprehensive coverage: Covers any damage done to a vehicle other than accident-related.
• Conditions: A specific outline of the insured and the company’s responsibilities.
• Continuous Coverage or Continuous Liability Insurance: The amount of time you have kept constant insurance for your vehicle.
• Contributory Negligence: Claimants may not be able to recover any portion of their damages if they are partially at fault.
• Coverage: Protection and benefits provided in an insurance contract.
• Covered Person: This refers to the policyholder, the spouse of the policyholder, the household family members of the policyholder, and in some cases the passengers in the driver’s vehicle who are covered under the policy.
• Customized Vehicle: A vehicle that has been altered from its original condition from the manufacturer.

D

• Damage: Loss or harm done to a vehicle or property.
• Declaration Page: A page within the insurance policy listing the insurance company’s information, the policyholder’s information, and information regarding the purchased policy.
• Deductible: An amount the insured needs to pay first to the insurer for the coverage to take effect.
• Defensive Driver Course: Courses offered to help drivers improve their driving skills and knowledge.
• Depreciation: A decrease in value of a vehicle (or any property).
• Direct Loss: The immediate reduction in value arising from damage to property.
• Discount: A decrease in premium price when the insured meets certain requirements.

E

• E-Bill: A bill sent to a person by the company electronically.
• Economic Loss: The total financial loss resulting from the death or disability of a wage earner.
• Emergency Roadside Service: Coverage for the times your car has problems while on the road. (See also Towing and Labor.)
• Endorsement: A change to a policy.
• Equipment/Special Equipment: Items that were not part of the original make of the vehicle, or extra features that came with the car.
• Estimate: A prediction regarding how much it will cost to repair the vehicle.
• Exclusion: Something not covered by the insurance policy.
• Expiration Date: The final date of coverage for your vehicle.

F

• Field Adjuster: An insurance adjuster who can meet face-to-face with claimants, does scene investigations, and damage inspections.
• Financed Car: A vehicle that is owned by a loan company; the insured is making payments for the car to the loan company.
• Financial Ratings: Ratings reflect the insurance company’s ability to pay claims due to their own financial stability.
• First Party: Refers to the insured.
• First Party Benefits: Also known as Personal Injury Protection.
• Fraud: A false statement given by insured to insurer that may void the insurance policy.
• Full Glass Coverage: Comprehensive deductible is waived for glass claims (not in all states).

G

• Gap Insurance: The difference between the owed amount to the loan or lease company and the market value. Gap insurance covers the difference when the vehicle has been totaled.
• Garage Location: The exact location of the insured’s garage.
• Good Student Discount: A discount offered to students who maintain a higher grade point average.
• Grace Period: A given number of days after a due date where the premium may still be paid and the coverage is still in effect.

H

• Hazard: An object that may inflict an accident.
• Hit and Run: An accident where someone involved leaves the scene before offering help or giving their information.

I

• Identification (ID) Card: A card given to the insured by the insurer with the insured’s information, proving the insured has auto insurance.
• Inception Date: The auto insurance policy begins on this date.
• Indemnity: When damage or loss takes place, the insured should be restored to the same financial situation before the loss occurred.
• Inspection: The assessment of the condition of a vehicle.
• Insurance: A contract between a person and company stating claims will be paid by the company so long as the person makes regular payments to the company.
• Insurance Fraud: A false accident or injury to obtain payment from the insurance company.
• Insurance Policy: The agreed upon contract between the insured and the insurance company.
• Insurance Score: A score given to a potential insured from an underwriter including the driving history, payment history, etc. showing how they manage their finances.
• Insured: A person covered by an insurance policy.
• Insurer: A company that provides insurance.

L

• Lapse in Coverage: A period of time where the driver’s previous policy has been terminated and when the driver decides to begin a policy again.
• Lender: The company or person who is loaning the money to purchase a vehicle.
• Lessor: The company or person who owns your vehicle and whom you are leasing it from.
• Liability: A responsibility for the damage you’ve done to another person or property.
• Liability Insurance: Coverage by your insurer for any damage you inflict upon another driver or their vehicle.
• Liability Investigation: Investigating who caused the accident.
• Limits of Liability: The highest amount of money the insurer will pay for a claim.
• Line of insurance: The type of insurance.
• Loss: Any damage or injury to a person or property that can be measured monetarily.

M

• Malicious Mischief: Damage done to property with cruel intent.
• Material Damage: Insurance covering losses of property, or loss of a vehicle.
• Material Misrepresentation: Lies told by the insured to the insurer about the vehicle or person to be insured.
• Medical Payments: Insurer will pay the accident-related medical bills of the insured, up to the purchased amount.
• Minimum Limits of Liability: The smallest amount of liability insurance allowed to be purchased.
• Misquote: The incorrect amount for a policy given to the insured by the insurer.
• Misrepresentation: To falsely claim or report something.
• Motor Vehicle Record/Report (MVR): A report from the company issuing a driver’s license while citing accidents and violations that appear on the driving record. It confirms information provided by insurance applicants and policyholders.
• Motorcycle Safety Foundation (MSF): An organization teaching motorcycle safety. Completing their course can qualify the driver for a discount on their insurance.
• Multi-car discount: A discount given by auto insurance companies to policyholders who have more than one vehicle on their policy, instead of having two separate policies.

N

• Named Insured: The insured person on the policy, as well as other drivers who drive the car with permission.
• Named Non-Owner Policy: A coverage offered to drivers who regularly operate a vehicle they do not own.
• National Insurance Crime Bureau (NICB): An organization dedicated to find people who commit insurance fraud.
• Negligence: Not showing a sensible amount of care for another person.
• No-Fault Coverage: Regardless of who caused the accident, this coverage might pay for any medical treatment, lost wages, or other accident-related expenses, and is available in certain states.
• No-Loss Form: A signed document stating no losses have been experienced since a specific date.
• Non-Owned Auto: A vehicle that is not owned or regularly borrowed by the insured for occasional personal use.
• Non-Renewal: When an insurer decides to stop renewing their policy at the end of the policy period.
• Nonstandard company: An insurance company that provides insurance at high rates to drivers who have poor driving records or other problems and cannot get insurance elsewhere.

O

• Occasional Driver: The driver who is not the principal driver of the vehicle, only driving the vehicle occasionally.
• Original Equipment Manufacturer Parts: Parts for the vehicle that came as part of the original vehicle from the manufacture.

P

• Passive Restraint System: A safety system in a vehicle that does not need to be manually activated by the driver or passengers.
• Payment Plans: A the total cost of the premium is divided into equal payments that can be paid over a certain period of months.
• Payment Recovery: When your vehicle has been damaged from the fault of someone else and you choose to use your insurance company rather than the other driver’s insurance, your insurance company will collect the funds from the other driver’s insurance. Also known as subrogation.
• Per Occurrence Limit: The amount an insurance company will pay total for the one incident. For example, if your policy is a 25/50/25, your insurer will only cover up to $50,000 for bodily injury for all of the passengers combined for that one accident.
• Per Person Limit: The amount an insurance company will pay total per person for the one incident. For example, if your policy is a 15/30/25 limit, your insurer will only cover up to $15,000 per person for bodily injury in that one accident.
• Peril: A danger that could be experienced.
• Personal Auto Policy: A policy that provides coverage for liability, physical damage protection, medical payments, and uninsured/underinsured motorist coverage, usually written in simple wording.
• Personal Injury Protection (PIP): Pays for the medical treatment, lost wages, or and additional accident-related expenses, no matter who caused the accident.
• Personal Property: Property other than land owned by an individual.
• Physical Damage: Damage incurred to your vehicle or other property from an accident, vandalism, weather, fire, etc. Insurance is bought to pay for physical damage inflicted by negligent activity.
• Physical Damage Coverage: Pays for any damage done to your vehicle or property, mostly relating to non-accident causes.
• Policy: The contract of insurance between a policyholder and the insurance company. It states how much is purchased and the exact terms of coverage.
• Policy Change: A change made to a policyholder’s policy that is added to the contract.
• Policy Lapse: A period of time when the policy ended and was not immediately renewed. When a policy lapses, the driver is not covered and breaking the law by not having adequate auto insurance.
• Policy Limit: The highest amount the insurer will pay for an incident, whether it’s per person or per accident.
• Policy Period: The amount of time that an insurance policy is in effect (3, 6, 12 months).
• Policy Term: see Policy Period.
• Policyholder: The person who the insurance is for, who owns the insurance policy. Also referred to as insured or named insured.
• Pre-accident Condition: The condition of the vehicle before the accident, including previous scratches, dents, and mileage.

 

 

 

 

 

• Preferred Risk: A level of risk that is preferred over the original level of risk.
• Premium: The price of insurance the policyholder pays to be able to carry the insurance policy.
• Primary Insurance: The first portion of insurance maintained and used on losses before an umbrella policy goes into effect.
• Primary Use: The main reason you use your vehicle (business, personal, etc.).
• Principal Driver: The person who drives the vehicle the most.
• Private Passenger Autos: Vehicles and utility trailers (to be pulled by non-commercial vehicles) used for personal use.
• Pro Rata Cancellation: The canceling of a policy before the end date, where the insured is reimbursed for the remaining portion of the premium not used.
• Proof of Loss: A document or statement made concerning the amount of loss experienced.
• Property Damage Liability: Pays for the damage incurred to another person’s property by the negligent driver.
• Proximate Cause: The action (or lack of) that took place resulting in the damaged property or injured body.

Q

• Quote: An estimate given by the insurance company to a potential client concerning the amount it would cost to purchase insurance from this company. It’s an estimate, which means it could fluctuate and be a slightly different amount at the time of purchase.

R

• Rate: Refers to the rates of each coverage purchased; the number of rates determines the final premium.
• Rating Plan: A plan that determines your final cost of premium.
• Rebate: A decrease in premium charges.
• Rescission: The act of the insurance company voiding your policy all the way back to the start of the policy. The insured is reimbursed for any payments made.
• Reinspection: The review of a vehicle after it has been repaired to make sure it was repaired properly and restored to its original condition.
• Reinstatement: Restoring an insurance policy after it has been terminated. This is different from renewal, as renewal of a policy occurs immediately after the policy has ended. Reinstatement of insurance occurs after a policy lapse.
• Reinsurance: An insurance policy purchased by the insurance company to protect them from liability costs.
• Release: A contract stating every expectation or demand has been fulfilled.
• Renewal: Begins the policy again, keeping it in effect with no period of lapse.
• Renewal Date: The date when the insurance policy will begin again; usually the same date as when the original policy ends. This prevents a policy lapse.
• Rental Reimbursement: An optional coverage that can be purchased to help pay for a rental vehicle while your vehicle is being repaired of accident damage.
• Replacement Cost: The actual cost or market value used to pay for an item that has been damaged or destroyed. Every insurer has different terms in replacing an item.
• Replacement Parts: Parts used in repairing your vehicle. These parts often coincide with the value of your vehicle.
• Replacement Value: The cost to replace a vehicle or property. Subject to terms of the insurer.
• Resident Adjuster: The adjuster assigned to a specific area or region.
• Rider: The person operating or driving a motorcycle.
• Risk: The possible chance of experiencing a loss.

S

• Safe Driver Plan: Also known as “points” on your driving record. Each traffic violation is assigned a number of points, and these points are placed on driving records when received, which increase an insurance premium.
• Salvage: Anything that has been damaged that can be repaired or retrieved.
• Select Repair Shop: Rrepair shop(s) that have been selected by the insurance company to make repairs to the vehicle without an adjuster. (Every driver should be able to choose which body shop they want to use.)
• Self-Insured Retention: Available in umbrella insurance; the insured is responsible for a certain amount of damage before the umbrella coverage starts.
• Short Rate Cancellation: Terminating the policy early and being repaid less than the amount left on the policy.
• Special Investigation Units: A unit of the insurance company specializing in detecting insurance fraud.
• Split Limit: An insurance coverage that is designed, or split, into specified separate amounts, i.e. a 25/50/25 coverage is one that is split for $25,000 for bodily liability per person, $50,000 bodily liability per accident, and $25,000 for property damage.
• SR-22: An SR-22 is a certificate verifying that an individual is maintaining auto insurance liability coverage. A driver will be notified if they need to have an SR-22.
• Stacking of Limits: The adding of the same coverage option amounts for an increased total limit. For instance, this applies when the insured carries two personal injury protection policies in the amount of $50,000 on each policy. The insured is covered now for $100,000 in personal injury protection.
• Staff Adjuster: An adjuster employed by the insurance company to handle claims.
• Subrogation: The action where you go through your insurance company to pay for damages and they go after the other driver’s insurance company to be reimbursed. Subrogation applies when the other driver is at fault but the insured decides to use their own insurance instead.
• Supplement/Supplemental Estimate: An additional amount of repair cost added to the original estimate.
• Surcharge: An additional amount charged by the insurer to the insured, usually in the form of a fee.

T

• Term: The amount of time a contract is enforced or in effect.
• Territory: An exact area (i.e. city, town, etc) where every driver is charged the same premium rate for auto insurance for residing in that area.
• Theft: The taking of property belonging to someone else without permission of the owner.
• Third Party: A person who is not part of an agreement but has interest in the agreement.
• Third Party Claim: A claim involving damage to property or bodily injury of a third party that has been caused by the insured.
• Threshold Level: A point at which the injured party exceeds a monetary amount and may sue the other (negligent) party for the remaining amount to cover medical bills. For example, if the threshold is $8,000, and the insured’s medical bills are $12,000, the insured can sue the other driver for the remaining $4,000.
• Tort: An accidental or intentional wrongdoing towards another person which results in legal liability. A driver can purchase automobile liability insurance to protect themselves from being sued for an unintentional tort.
• Tort Feasor: A person who commits a tort.
• Total Loss: The damage done to a vehicle or property exceeds the amount of its worth.
• Towing and Labor Coverage: Pays for, up to the purchased amount, any towing and labor charges (on-site) you incur.

U

• Umbrella Insurance: Offers additional liability coverage “above” your current limits of your auto and homeowner’s policy.
• Underinsured: A policy holder who does not carry enough auto insurance to pay adequately for damages.
• Underinsured motorist coverage (UIM): Pays for damages inflicted by a motorist who does not carry adequate insurance.
• Underwriter: A person in an insurance company who weighs the risk of insuring individuals.
• Underwriting: The procedure to decide whether or not the insurance company will offer coverage to an applicant.
• Unearned Premium: When paying monthly payments for your premium, an unearned premium is the amount you have not yet used (i.e. when in the second month of your six month contract, there is four months of unearned premium).
• Uninsured motorist bodily injury coverage (UMBI): Pays for your accident related medical expenses when you have been injured by a motorist without auto insurance.
• Uninsured Motorist Property Damage: Pays for your damages, up to purchase limit, when caused by a motorist who does not carry auto insurance.
• Unsatisfied Judgment Fund: A fund that reimburses an accident victim when that victim has not been able to collect awards. Not available in all states.
• Usage: The reason the driver is operating the vehicle (for personal or business).

V

• Vandalism: Vehicle or property has been damaged.
• Vehicle Identification Number (VIN): It’s a 17-digit number that is used to identify a vehicle. This number is etched into the vehicle.
• Void: Due to certain reasons, the contract is no longer in effect. A contract is usually void after the termination date or because of false information given.

W

• Waiting Period: The time between signing up for a policy and the actual start date.
• Waiver of Collision Deductible: Your collision deductible is waived when you carry collision coverage on a vehicle which has been damaged by a hit-and-run or uninsured motorist who is at fault. You must identify the uninsured driver or vehicle.
• Whole Dollar Premium: An insurance premium is usually rounded to the nearest whole dollar.

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