Auto Insurance Glossary
An unintentional happening that usually results in loss, damage, or injury.
A specific dollar amount that must be paid out on a particular claim type before it can become chargeable.
Accidental Death (AD)
A payment given per the limits of the selected coverage should a person insured on the policy die in motor vehicle accident.
Active Driver’s License
A driver’s licence that is in good standing with the DMV.
Actual Cash Value
The monetary value needed to replace an item at the time of loss, subject to depreciation.
The person who calculates premium rates, risks, etc. for the pricing of insurance policies.
A person or company protected under your insurance policy if they are named during the judicial process due to an accident that was judged the policy holder’s fault.
Replacement auto parts that were made by a company that is not the vehicle’s manufacturer.
The maximum amount of money an insurance company will pay during a policy agreement.
A company representative that sells insurance policies.
An insurance policy that covers property loss from all causes except those listed as specific exclusions.
Anti-Lock Braking System
A computer-controlled braking system that prevents a car’s wheels from locking up and skidding when a driver brakes.
A device built to deter thieves from stealing automobiles.
A person or company applying for an insurance policy.
The process where a property’s value and/or degree of damage is calculated, usually determined by an independent party.
The risk vehicles pose when transporting tools and supplies to and from the jobsite and the insured’s home.
A risk that requires liability obtained from the state due to it being too high to be accepted by the insurance market.
The party who is legally responsible for the damages, injuries, or losses caused in a car accident.
A short-term, temporary insurance contract that provides coverage until a permanent policy is given.
Being legally bound to an agreed upon policy.
Physical injury caused by an accident.
Bodily Injury Liability
Provides a legal defense during an accident which you are at fault and pays damages for physical injuries or death resulting from it.
A business representative that represents the insured when negotiating business from an insurance company.
Cancellation Notices Before Renewal
A notice that informs the insured that their policy is subject to cancellation unless they renew their policy by a specific date.
An insurance provider.
Certificate of Satisfaction
A formed signed by a policyholders when they are satisfied with the appearance, operation, and quality of the repairs done to the insured vehicle by the repairer.
A request for payment to be granted according to the insured’s signed policy.
A person, aside from the insured, that makes a claim for payment due to a loss.
A person that determines the cause of a loss, whether the loss is covered by the insurance policy, the value of the loss, and how much of the loss is payable by the insurance policy.
Protection for your vehicle that covers damage caused by a collision with another vehicle or object, regardless of fault.
Collision Damage Waiver
An amendment to collision coverage that waives a deductible in the event that an insured vehicle is damaged by an uninsured vehicle in a collision.
The determination on how the responsibility will be divided between the parties involved in an accident where there is property damage and/or bodily injury.
A term when an insurance provider requests multiple repair estimates for consideration when determining a claim for automobile repair or replacement.
Comprehensive/Other Than Collision Coverage
Payment for repairs or replacement of a vehicle damaged by something other than a collision, usually theft, fire, vandalism, or some other risk.
The expectations, rights, and duties of the insured and the insurance company under the policy.
A legal agreement between two consenting parties.
A summary of your auto insurance coverage, the insurance provider’s information, the start and end dates of the coverage, and the coverages provided within the contract.
The payment threshold that the insured is responsible for before any payment is made from the insurance coverage.
A bill or policy that is overdue in payment or renewal.
A decrease in property value due to wear and tear or becoming obsolete.
A check that requires approval from the insurance company before being cleared at the bank.
Driver Not Rated
A driver status given when the driver is not rated and not insured.
Coverage that is provided throughout the insurance policy period.
An amendment made to an insurance contract in order to alter the original terms.
A person that is specifically stated on an insurance policy as unprotected and is not covered should there be an accident caused by that person driving a vehicle insured under the policy.
An event, peril, or circumstance that is not covered in your insurance policy.
An employee of the insurance company that contacts insurance agents and brokers within a specific territory.
The cancellation of an insurance policy before the insurer has assumed liability, resulting in the insured getting their premium refunded since they were never covered under the policy.
A deliberate misrepresentation for gain.
The cost for the funeral of the insured should they pass away from the result of an auto accident.
An optional addition to an insurance policy that could pay the difference in the balance of a lease or loan on a vehicle covered by the policy should it be considered a total loss in a collision.
Grey Market Vehicle
A vehicle that has been imported to the U.S. outside the manufacturer’s distribution channels and could possibly fail to adhere to U.S. safety regulations.
An act, item, or occurrence that increases the chance of a loss.
A vehicle that has all the necessary running parts, but no established passenger areas.
The act of restoring a party’s loss to the same financial position as it was before the loss occurred.
A state-assigned license number for drivers that don’t have a U.S. driver’s license, typically assigned for accidents, violations, and/or tracking purposes.
A fee charged when making monthly installment payments of an insurance premium rather than paying the full term up front.
One or more payments made by the insured until the entire insurance premium is fully paid.
Coverage by contract wherein one party agrees to replace or reimburse another for loss under the terms of the agreement.
A driver covered under an auto insurance policy.
The company that provides the insurance policy and coverage.
The portion of an insurance policy that spells out what perils or hazards are covered by the insurance company.
A driver’s license issued by a country other than the United States.
Lapse in Coverage
A period of time when an insurance policy’s coverage was not in effect.
An automobile that is rented under a long-term contract. The leasing company is the owner of the leased vehicle and must be listed in your insurance policy as an insured party.
Lemon Law Vehicle
A vehicle that has been deemed defective and cannot be repaired after a number of attempts.
The leasing company that owns the driver’s vehicle.
Lessor Liability Endorsement
A policyholder’s additional coverage that allows them to lower their liability limits for personal protection while the insurance company extends higher limits to the lessor.
Coverage the protects the insured from financial loss from liability claims by transferring the financial burden to the insurance company.
The collection of information to determine the cause of an accident.
The company that provided the loan and holds the title of the insured driver’s vehicle.
The method that insurance companies use to succeed in covering current losses out of a current premium.
The manner used determine the cost of an insurance policy using predetermined rates, usually from a manual.
All property damage related losses that are covered in your insurance policy.
Medical Payments Coverage
Insurance coverage that reimburses medical and funeral costs accrued from the result of an accident.
Written or verbal misstatement of a material fact within a contract.
Motor Vehicle Report (MVR)
A report that lists accidents, citations, and violations that appear on your driving record.
A number issued by the National Association of Insurance Commissioners (NAIC) for each individual underwriting company.
Named Non-Owner Policy
A policy issued to a person or persons that do not own or regularly operate an automobile.
National Insurance Crime Bureau (NICB)
A renowned U.S. non-profit organization dedicated to fight insurance fraud and other insurance-related crimes.
Failure to take reasonable care to protect others from potential harm.
An insurance policy that covers medical expenses, funeral expenses, loss of income, and other coverage regardless of who is at fault in an accident. This policy is only available in certain states.
A notification that states that insurance coverage will no longer continue after the agreement’s expiration date.
A loss that happens during a specific place and time or over a period of time.
Original Equipment Manufacturer (OEM) Parts
A replacement car part that is made by the manufacturer of the original part.
Passive Restraint System
Safety devices that automatically activates upon impact during a collision to protect passengers in a vehicle Examples include special safety belts and air-bags.
A temporary license issued to a driver that is waiting to obtain an official state license.
The cause of a loss such as a collision, fire, or natural disaster.
Personal Injury Protection
A part of a policy that could cover the medical, funeral, and other costs as the result of an accident for the insured and pedestrians struck by the insured, regardless of fault.
The insurance agreement and the expected coverage.
The maximum amount an insurance company will pay for a loss covered by the insurance policy.
Placing an insurance policy back into active status after a lapse in coverage.
The amount of money charged by an insurance company to provide coverage.
A bill that provides the price and date due to continue insurance coverage.
The insurance policy that will respond first in the event that a loss is covered by more than one policy.
A four-wheeled automobile used for private and personal use to transport insured and passengers, usually sedans, station wagons, etc. but could include small trucks when not used for commercial purposes.
Pro Rate Cancellation
Cancelling a policy before its expiration and returning an amount of the premium to the policyholder proportional to the uncovered days of the policy.
Property Damage Coverage
Coverage that pays for the property damage caused by the insured and any legal defense costs if the insured is sued.
The event that kickstarted the the unintended events that lead up to the loss.
The statement of an offer of an insurance premium that will be charged for the requested coverage.
The basic rating units used by insurers to calculate your final premium.
An active driver who is covered while driving an insured vehicle.
The determination of the cost of a premium based on risk characteristics and calculation of the chance of a loss.
The information that is transferred from one state to another.
When a policy is back in force without lapse after a cancellation or expiration.
A legally binding contract signed by a claimant or third party that dismisses the insurer of any liability or further liability of a specific claim.
An offer to continue insurance coverage beyond the policy’s expiration date.
Renewal With Lapse
When a policy is renewed past the expiration date, after a period without coverage.
Optional coverage that helps reimburse the cost of a rental vehicle while the insured vehicle has been incapacitated as a result of a covered accident or loss.
A partial or full refund of a paid premium due to cancellation, rate reduction, or similar reasons.
The chance of loss to the insured that’s related to the insurance policy.
Coverage and services that assist motorists when their vehicle is inoperable and they are left stranded.
Damaged property that an insurance company can be reconditioned or sold for materials or parts after a payment of a claim.
The specific amount of damages the insured is liable to cover before umbrellas insurance is activated to cover a loss.
Special Glass Coverage
Coverage that pays for glass and windshield repair on a vehicle without a deductible, usually only available through comprehensive coverage insurance plans.
A vehicle liability insurance document required by most DMV offices for high-risk insurance policies, usually required for drivers with multiple traffic violations, getting into car accidents while uninsured, or getting a DUI.
SR-22 Safety Responsibility Law
A statute requiring drivers to provide evidence of the ability to pay damages should they get involved in an automobile accident.
Liability limits from one vehicle in a multi-car policy that are applied to another vehicle in the same policy. This service is provided in a limited number of states.
Step Down Endorsement
A policy provision that allows the insurer to automatically reduce the amount of coverage to the minimum levels allowed when the insured vehicle is being driven by someone that’s not listed on the policy. This provision and its availability varies from state to state.
A term used when the insurance company takes over the insured’s right to collect damages from any other person responsible for the loss after the insurance company makes a payment to the insured.
An additional charge to a premium used to offset an increase of exposure that usually isn’t factored within normal rates.
The period of time wherein the insurance policy is issued and active.
The geographic location(s) used to determine insurance ratings.
Calculating a driver’s level based on the insured’s driving record and insurance coverage history.
Towing and Labor
A provision that pays in part the cost of towing a disabled vehicle and any labor done at the site of the vehicle’s disablement. Usually only available through comprehensive car insurance plans.
An insurance policy designed to provide additional coverage against major losses covered under the original policy if existing liability claim payments are exhausted past their limits.
A driver that has less coverage than what is necessary to fully reimburse damages resulting from an accident or a driver that has less liability coverage than required by state law.
Investigating whether a risk meets company guidelines within a policy.
Insurance coverage that compensates the insured for bodily injuries up to preset limits when involved in a collision with an uninsured motorist.
When liability limits of one insured vehicle cannot be transferred to another vehicle that is under the same policy. This is the case in most states.
A policy that has been canceled and cannot be reinstated.
Waiver of Mandatory Arbitration
A possible provision in an insurance policy that allows the policyholder to take action against the car insurance company in civil court without requiring the usual mandatory arbitration in the event of a dispute.
Written assurance of a product’s reliability and the manufacturer’s accountability to replace or repair defective parts.
Written No-Loss Statement
A signed statement by the insured that claims no losses, no accidents, and no damage was done to the insured vehicle during the duration of the vehicle’s insurance policy.
The amount of premium charged for a policy that has already become effective