Learn all the definitions and jargon about the auto insurance industry before you speak with an agent or get a quote. It’ll help understand what you’re listening and what it means to your financial future if there is ever an accident.
- ACCIDENT FORGIVENESS
- In most states, insureds who have not had an at-fault accident in the previous five may be able to avoid being charged a surcharge to their premium after their next at-fault accident.
- ACTUAL CASH VALUE
- The fair market value of property: the cost to replace minus depreciation.
- AGENT
- A representative for an insurance company who sells insurance, generally on a commission basis.
- ARBITRATION
- An alternative to litigation where a dispute is settled through an impartial third party.
- ASSIGNED RISK
- If a vehicle owner does not qualify for insurance in the regular market, the owner may get coverage through a state assigned risk plan which specifies that each company must accept a proportionate share of these insureds.
- BODILY INJURY
- An injury incurred by a person.
- CANCELLATION
- Termination of an insurance contract by either the insured or insurer.
- CLAIM
- A request for payment under an insurance policy.
- CLAIM ADJUSTER
- A person responsible for the investigation and settling of claims.
- CLUE® REPORT
- Comprehensive Loss Underwriting Exchange (CLUE) report; provide information regarding claim history.
- COVERED PERSON
- Refers to the people (named insured, spouse, resident relatives, etc.) that are insured under a policy.
- DAMAGE
- Loss or harm to property or an individual.
- DEDUCTIBLE
- A dollar amount the insured agrees to pay on a claim before the insurance company is responsible for remainder, up to the policy limits.
- DEPRECIATION
- Decrease in value of property due to time, wear or tear.
- DISCOUNT
- A reduction in your insurance rates if you or your car meets certain criteria that are likely to reduce the insurer’s costs.
- EFFECTIVE DATE
- The start date of the insurance policy.
- ELECTRONIC FUNDS TRANSFER (EFT)
- An electronic payment method that allows you to make premium payments with automatic deductions from your checking account.
- EXPIRATION DATE
- The date your insurance coverage ends.
- FINANCIAL RESPONSIBILITy LAW
- Law requiring owners and operators of cars to maintain enough money to compensate anyone they injure.
- FIRST PARTY CLAIM
- A claim made by an insured to his or her own insurance company.
- INSURED
- The person or organization covered by the insurance policy.
- INSURER
- The organization that provides insurance.
- LAPSE IN COVERAGE
- A point in time when a policy becomes void or is cancelled for any reason, such as failure to pay the premium.
- LIABILITY
- A legally enforceable obligation for the injury or damage suffered by someone else.
- LIMIT
- The maximum amount of protection bought by the insured.
- LOSS
- Any measurable damage and/or injury suffered by an individual.
- MINIMUM LIMITS OF LIABILITY
- The least amount of liability coverage that can be purchased as required by state law.
- MOTOR VEHICLE RECORD (MVR)
- A report listing accidents and violations on your driving record.
- NAMED INSURED
- Anyone designated by name as the insured person(s) in a policy.
- NAMED NON-OWNER POLICY
- A policy endorsement for a person who operates any vehicle that is not owned, borrowed, or leased, on a regular basis.
- NEGLIGENCE
- The failure to exercise reasonable care.
- NON-RENEWAL
- When an insurer does not allow for renewal of a policy at the end of the policy period.
- OCCASIONAL DRIVER
- A person who is not the main driver of the vehicle.
- PER OCCURRENCE LIMIT
- Refers to the maximum amount an insurer will pay for all claims arising from a single incident.
- PER PERSON LIMIT
- Refers to the maximum amount an insurer will pay for any one person’s injuries resulting from a single incident.
- PERIL
- A danger or hazard that may result in a loss.
- PERSONAL PROPERTY
- Property that is not land or connected to land (real estate).
- POLICY
- Written documents commemorating a contract for insurance between the insurance company and the insured, including forms, endorsements, riders and attachments.
- POLICYHOLDER
- One who purchases an insurance policy as well as those covered under the policy.
- PRE-ACCIDENT CONDITION
- The state of the vehicle prior to the accident, including damage unrelated to the accident, mileage, and options.
- PREMIUM / RATE
- The price an insured person pays for insurance for a specific risk for a specific period of time.
- PRIMARY USE
- What the main use of your vehicle is.
- PRINCIPAL DRIVER
- The individual who drives the car the most.
- PROOF OF LOSS
- A statement regarding the extent of the claim that may be requested in under the policy.
- QUOTE
- A statement regarding the premium that will be charged for insurance coverages based on information provided.
- REINSTATEMENT
- The restoring of a policy that have been cancelled, to full force and effect.
- RENEWAL DATE
- The date your insurance policy expires and your renewed policy begins.
- RISK
- The likelihood of suffering a loss.
- SALVAGE
- Damaged property that can be retrieved, reconditioned, and sold in order to reduce an insured loss.
- SUBROGATION
- The process that a first party insurer seeks reimbursement from the other party in the accident’s insurance company after paying its insured for damages.
- SURCHARGE
- An extra charge applied by the insurer, generally as a result of accidents, moving violations, or specific risks not accounted for by normal rating factors.
- TERM
- The length of time for which a policy is in effect.
- THIRD PARTY CLAIM
- Claim for loss incurred by a third party that has been caused by the insured.
- THRESHOLD LEVEL
- The degree of injury (either severity or monetary amount) a claimant must show before being allowed to sue the negligent party in no-fault states.
- TOTAL LOSS
- The condition of an automobile where it is beyond repair.
- VEHICLE IDENTIFICATION NUMBER (VIN)
- A 17-digit number, used for identification purposes, that is assigned to each vehicle manufactured in the United States after 1980.