No car insurance resource would be complete without a comprehensive glossary of car insurance terms. To better navigate the sometimes confusing world of insurance, we’ve compiled a list of terms and their definitions.
Accident – This is an unforeseen accident that causes damage to the property of an automobile or a person’s physical injury. The event may be a mistake or non-fault and may be reported or misreported. An accident between two vehicles can be called a collision.
Accident Report Form – This is a report filed by the police, often called a police report, containing important information about a car crash. The report will include the names of all the persons involved, the vehicles involved, the damaged property and the quotation issued.
Adjuster – This is the person who will assess the actual damage reported to the policy after an accident or other incident. They will determine how much the insurer will pay for the auto insurance policy.
Agent – This is a licensed and trained person who is authorized to sell insurance services and provide services for the auto insurance company.
At Fault – This is the amount that you, the policyholder, have contributed or caused the automatic conflict. It determines which insurance company pays part of the loss.
Auto Insurance Score – A score similar to a credit score that evaluates information in your consumer credit report. These scores are used when pricing your auto insurance policy. Negative marks on your credit report can increase your auto insurance premiums. The use of this information for pricing policy varies from state to state.
Automobile Insurance – A type of insurance policy that covers and protects against losses involving automobiles. Auto insurance policies cover a wide range of coverage depending on the needs of the policyholders. Liability for property damage and bodily injury, uninsured motorists, medical care, extensive and collisions are some of the general coverage offered under an auto insurance policy.
Binder – This is a temporary short-term policy agreement where a formal permanent policy is established or distributed.
Physical Injury Liability – This is an insurance policy category that covers the cost of injury to anyone. This may include lost wages and medical expenses.
Broker – This is a licensed person who sells and offers various insurance policies on your behalf.
Claim – This is a formal notice to your insurance company that a loss has occurred which may be covered under the terms of the auto insurance policy.
Claim Coordinator – This person appointed by the insurance company will investigate and settle all claims and damages. A representative of the insurance company receives fair and equitable compensation to verify and confirm all parties involved in the loss.
Collision – Part of an insurance policy that covers damage to your car as a result of hitting another object. May include objects but not limited; Other vehicles, a building, curbs, guard rails, trees, telephone poles or fences. A deductible will apply. Your insurance company will follow the other party’s insurance policy for these costs if they are at fault.
Commission – This is part of the auto insurance policy that is paid by the company to the insurance agent for selling the policy and providing services.
Broad – This is part of an insurance policy that covers losses due to anything other than a collision or a collision with another object. A deductible will apply. This includes but is not limited to vandalism, storm damage, fire, theft, etc.
Covered Loss – This is the loss of you, other people or property or your car that is covered by an auto insurance policy.
Announcement Page – This is part of the insurance policy which includes the full legal name of your insurance company, your full legal name, complete vehicle information including vehicle identification number or VIN, policy information, policy number, discounted amount. This page is usually the first page of the insurance policy.
Deductible amount – This is part of the auto insurance policy which is the amount that the policyholder has to pay before the contribution of the insurance company and any benefits. This amount can be in a wide range of prices and varies between approximately 100 – $ 1000. The more you pay as a discount, the lower your normal monthly / annual policy will be. This is part of the auto insurance policy which will only apply for comprehensive or collision coverage.
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Discount – This is a reduction in the overall cost of your insurance policy. Discounts can be offered for a variety of reasons, including a good driving record, grade, age, marital status, specific characteristics, and automobile safety equipment.
Emergency road service – This is part of an auto insurance policy that covers the cost of emergency services such as flat tyres, locked keys in the car and towing services.
Endorsement – This is any written change that is made to an auto insurance policy that is adding or removing coverage on the policy.
Exclusion – This is that part of an auto insurance policy that includes any provision including people, places or things that are not covered by the insurance policy.
First Party – This is the policyholder, the person insured in the 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 loan amount. Gap auto insurance will cover the amount between the actual cash value of the vehicle and the amount left on the loan if the care is stolen or destroyed.
High-Risk Driver – If you have a variety of negative markings on your insurance record, including driving under the influences, multiple traffic violations, etc., you may be labeled as a risk to the insurance company. This will increase your insurance policy or make you ineligible for coverage.
Insured – Policyholder(s) who are covered by the benefits of the policy in case of loss or accident.
Insurer – is the auto insurance company that promises to pay the policy holder in case of loss or accident.
Liability Insurance – This part of an auto insurance policy that legally covers damage and injuries to other drivers and their vehicles if you are at fault in an accident. If you are sued and taken to court, liability coverage will apply to your legal costs that you incur. Most states will require drivers to carry some variation of liability coverage insurance and the amount will vary by state.
Limits – This is the part of the auto insurance policy that explains and lists the monetary limits to be paid by the insurance company. In case you reach these limits, the policy holder will be responsible for all other expenses.
Medical Payment Coverage – This is part of an auto insurance policy that pays for medical expenses and lost wages to you and any passengers in your vehicle after an accident. It is also known as personal injury protection or PIP.
Motor Vehicle Report – A motor vehicle report or MVR is a record issued by the state in which the policy holder resides that will list the licensing status, any traffic violations, various suspensions and/or retractions on your record. It is one of the tools used in determining the premium prices offered by the insurance agency. It is also used to determine the likelihood of a claim being made by you during your policy term.
No-fault insurance – If you live in a state with no-fault insurance laws and regulations, your auto insurance policy pays for your injuries, regardless of the cause of the accident. No-fault insurance states include; Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, Utah and Washington, DC.
Non-renewal – This is the expiration of an auto insurance policy on the given expiry date. From this date all coverage will cease and the insurer will be released from the promised coverage.
Personal Property Liability – This is the part of the auto insurance policy that covers any damage or loss caused to the personal property of another person.
Personal Injury Protection or PIP – This part of an auto insurance policy pays you and any passengers in your vehicle for any lost wages or medical expenses after an accident. PIP is also known as medical payment coverage.
Premium – This is the amount charged to you monthly, yearly or for any other term as agreed by the insurance company and the policy holder and paid directly to the auto insurance company. A premium is based on the type and amount of coverage you have on your vehicle and the coverage you choose for yourself. Other factors that can affect your insurance premium prices include your age, marital status, the type of car you drive and credit report, the type of car you drive and whether you live in an urban or rural area. Premiums vary according to the insurance company and where you live.
Quotation – This is the amount or estimated amount that the insurance will cost based on the information provided to the agent, broker or auto insurance company.
Cancellation.- This is the cancellation of an insurance policy prior to its effective date. This resulted in refund of the full premium which was charged.
Rental Reimbursement – This is the portion of the auto insurance policy that covers the cost of renting a similarly sized automobile if the covered vehicle is in repair from a reported incident.
Replacement Cost – This is the amount of money spent to replace a lost or damaged item, which is the actual replacement value of the new one. This monetary amount will be based on a new similar item in the existing local market.
Salvage – This is the property of the auto insurance policy holders which is turned over to the total insurance agency in the eventual settlement of the loss. Insurance companies will sell the salvage property in hopes of recovering some of their monetary loss due to loss and settlement.
Second Party – This is the actual insurance company in the auto insurance policy.
Surcharge – This is the amount that is added to the premium of your auto insurance policy after a traffic violation or accident in which you were found to be at fault.
Third Party – This is any person other than the policy holder and the auto insurance company who has suffered a loss and may be able to collect and indemnify on behalf of the policy holder’s negligence.
Total Loss – This is the complete destruction of the insured property of the policy holder. It has been determined that it would be a larger amount to repair the item rather than replace the insured piece of property in its state prior to damage.
Towing Coverage – This is the part of the auto insurance policy that covers a specified amount for towing services and related labor costs.
Under Insured Driver – This is part of an auto insurance policy that covers injuries caused to you by a driver without sufficient insurance to pay medical expenses caused by the accident. This is part of the policy that can vary from state to state as damage to the car is covered in this section in some states.
Uninsured Driver or Motorist – This is the part of the auto insurance policy that covers injuries caused to you by the driver at the time of the accident without liability insurance. Uninsured driver or motorist coverage falls into two different sections; Uninsured motorist bodily injury and uninsured motorist property damage. Insured motorist’s bodily injury coverage covers injuries to you or any passenger in your vehicle in case of an accident with an uninsured motorist. Insured motorist property damage coverage covers the cost of property damage to your vehicle when an accident occurs with an uninsured uninsured driver. Uninsured driver or motorist coverage must be offered when you purchase the required liability coverage for your vehicle. If you decline uninsured driver or motorist coverage, you must sign a disclaimer waiver. Most states require drivers to carry some form of uninsured motorist coverage. Some states cover damage to your car in this coverage.
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