Auto Insurance Glossary
Accident: When driving results in a collision that causes damage to your car and requires you to file a car insurance claim.
Agent: Representative of an insurance company who sells insurance policy for which he earns
commission from the company.
Anti-theft Device: The devices installed in cars to dissuade it from being stolen. Installing anti-theft devices may
make you eligible for discounts on your car insurance premiums.
At-fault:The person who is legally responsible for damages incurred in a car crash.
Binder: A legal statement of car insurance coverage that provides immediate protection of a temporary nature until an insurance policy goes into effect.
Bodily Injury: Physical injury to a human being caused by a collision or car accident.
Bodily Injury Liability Coverage: Compensates for the bodily injury or death due to a car accident where you are at-fault. It also safeguards against law. This coverage depends upon the terms, conditions and limits that your policy includes.
Car insurance: A special kind of insurance that guarantees damage or injury to an automobile or the driver and passengers of an automobile in the event of an accident.
Claim: When an insurance policy holder initiates a request for coverage or payment for damages to a car from an insured event.
Collision: When a car hits another car or other object and causes damage to a vehicle and/or the vehicles passengers.
Combined Single Limit: The maximal amount you can claim from your policy provider for both bodily injury and property or automobile damage during a single period.
Comprehensive Coverage: An extended insurance policy that pays for the repair or even the replacement of an automobile in the event of damage or a collision. A deductible is often required with a comprehensive coverage policy.
Coverage:Facilities and security offered in an insurance contract.
Covered Person: The individuals that fall under the insurance policy.
Customized Vehicle: A vehicle equipped with accessories that are unlikely to be found in a personal car.
Declarations: The document of the policy that holds your personal details and the details of the vehicle you tend to insure along with the amount of coverage and the premium that is applicable.
Deductible: A set amount that a policyholder must pay before any coverage of damage to a vehicle begins.
Discount: A rebate in your premiums if you meet some particular criteria set by the policy providers that can
lessen the insurer’s losses or expenses.
Earned Premium: The dollar amount claimed during the term of an insurance policy.
Effective Date: The official start date of insurance coverage.
Endorsement: An add-on to the primary policy contract.
Exclusion: Any item or event that is not included in an insurance policy’s coverage.
Expiration date: The date when your policy expires, mentioned on the declaration page.
Flat Rate Cancellation: When a policy is canceled before it officially begins.
Financed car: A car that has been financed by an auto loan. The financer has the lien on the car until the entire
loan is repaid.
First party: The insured
Garage Location: Your car’s zip code.
Good student discount: Discount that may be offered to students who maintains an average “B” grade or better.
Hit and Run: A collision caused by a driver that then flees the scene of the accident.
Inception Date: The start date of your insurance policy.
Indemnity: The element of an insurance policy that guarantees that the holder of a policy will be able to collect funds to restore the original value of a car before an accident.
Insurance Score: The insurance score is calculated on the basis of a person’s credit history
Lapse: A period of time in which an individual is not covered by any car insurance, usually due to a cancellation or for non-payment of premiums.
Liability insurance: The coverage that compensates for the losses incurred to other people or someone else’s property.
Liability Limits: The maximum financial coverage your policy offers.
Mechanical Breakdown Insurance: Pays for repairing all mechanical parts of your car.
Medical Payments: This is the coverage an auto insurance policy pays for any medical expenses incurred from an accident for you and any other passengers in your car at the time of the accident. May include funeral expenses.
MVR: The “Motor Vehicle Record.” This is the information that the DMV maintains about your traffic violations.
Multi-Car Policy: Any car insurance policy that includes more than one car.
Named Insured: The insured person or thing mentioned in the declaration page.
No-Fault: A specific car insurance policy that releases anyone from fault in the case of an accident, including any drivers involved. Many states only require this type of car insurance coverage as a minimum policy.
Occasional Driver: Any driver of the car that is not the primary driver. Usually a partner, spouse, or teenager.
Per Occurrence Limit: The maximum coverage available per incident available from the insurance policy.
Physical Damage: Non-medical damage to the car from a collision.
Policy: A legal contract between an insurance carrier and the insurance customer.
Policy Holder: Anyone that is under the umbrella of the insurance policy.
Pre-accident Condition: The condition of the car prior to the accident, that may include pre-accidental damages, mileage etc.
Premium: The financial responsibility of the policyholder.
Principal Driver: The main person that drives the vehicle.
Property Damage: Any dents, crumples, or other destruction caused by an accident.
Quote: A premium statement that will cost you for buying coverage. This statement is based on the information like the details of the individual requesting a quote, details of the vehicle, drivers and the record of driving.
Renewal: Signing up for a new policy or a continuation of the current policy before there is a lapse in coverage.
Rental Reimbursement:Coverage for rented vehicles in lieu of an additional payment to compensate for the losses incurred to the rented vehicle in case of a car crash.
SR-22: When a driver has failed to provide proof of insurance, a SR-22 is the legal enforcement of maintaining an insurance policy.
Terms: The length of time the insurance policy is in effect.
Third Party: Individual or a thing not covered under the policy agreement but holds an interest in it.
Third Party Claim: Claim made for the losses incurred to the property of a third party by the insured
Total Loss: A damaged vehicle is considered to be a total-loss when it cannot me repaired or the repairing cost is excessively high that makes it economically unpractical to repair it.
Towing and Labor Coverage: Pays for the towing and labor assistance required for the vehicle.
Unearned Premium: The amount of coverage still available on your policy.
Usage: What a car is used for.
VIN: The Vehicle Identification Number, or a specific code that is assigned to the car when it is manufactured that is used to identify it.
Waiver: In specific instances, such as a hit and run accident, an insurance company may absorb the cost of deductible.
