Auto Insurance

Auto Insurance terms

1. Actual cash value An amount equivalent to the replacement cost of lost or damaged property at the time of the loss, less depreciation.
2. Actual Cash Value (ACV) (ACV) The value of your property, based on the current cost to replace it minus depreciation.
3. Adjuster A person who investigates and settles losses for an insurance carrier.
4. Aftermarket Crash Part A non-original equipment manufacturer (OEM) replacement part, either new or used, for any of the non-mechanical parts that generally constitute the…
5. Agency A firm that solicits insurance for one or more insurance carriers. It also may issue policies and adjust losses.
6. Agent Agent means any individual, other than a broker-dealer, who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales…
7. Application Under the Equal Credit Opportunity Act (ECOA), an oral or written request for an extension of credit that is made in accordance with the procedures…
8. Appraiser The person who evaluates the damage caused by an accident or other covered loss and determines the amount to be paid under the policy terms.
9. Arbitration The process in which a third-party arbiter examines facts presented by both you and the insurance company when you disagree about a settlement offer.
10. Assigned Risk Plan The North Dakota Automobile Insurance Plan is a state-supervised insurance plan available to persons who are unable to obtain such insurance coverage in…
11. Auto Replacement Coverage A supplemental auto insurance coverage that guarantees your car will be completely repaired or replaced, even if the costs exceed its depreciated value.
12. Benchmark rate(s) The rates set annually by the Commissioner of Insurance that rate-regulated insurance companies use to reference their rates.
13. Betterment A condition relating to original equipment, or older parts, on your automobile, when having been damaged in an accident may only be replaced with new…
14. Binder A temporary or preliminary agreement, in effect for less than 60 days, that provides coverage until a policy can be written or delivered.
15. Bodily injury (BI) (BI) Physical injury to a person.
16. Bodily Injury Liability If you injure someone in a car accident, this coverage pays his/her medical and rehabilitation expenses and any damages for which you are found liable.
17. Bodily Injury Liability Coverage Pays for another person's bodily injury or death in an accident that you may be found legally liable to pay.
18. Broker An agent who handles the public's orders to buy and sell securities, commodities or other property. A commission is generally charged for this service.
19. Cancellation Termination of a policy before its normal expiration date.
20. Claim Your request for the insurance company to pay you an amount under the terms of your policy.
21. Claimant A person who makes an insurance claim.
22. Claims Adjuster A person an insurance company hires to settle claims. The adjuster can be a company employee or an independent party under contract with the company.
23. Collision This benefit pays to repair damage to your car as a result of an accident. Most banks or lenders require you to buy this coverage to receive a car loan.
24. Collision Coverage Pays for damage to your vehicle when it collides with another vehicle or object or if it overturns.
25. Commission A portion of the policy premium that is paid to an insurance producer (agent) by the insurance company as compensation for the producer’s work.
26. Comparative fault A method of attributing fault to each party who contributed to causing an accident.
27. Comparative Negligence Law An Illinois law that sets forth how negligence for an accident is determined. Under these rules, you can collect from an at-fault driver only if you are…
28. Comprehensive Coverage Coverage that pays for damage to or the loss of your vehicle from causes other than collision (example: hail, vandalism, flood, fire and theft, etc.
29. Comprehensive physical damage coverage Optional insurance that pays for damage to your auto caused by things other than collision or rolling the car over such as fire, theft, vandalism, flood…
30. Conditions Part of an insurance policy that states your obligations and those of your insurance company.
31. Contract In most cases, the term "contract" refers to an insurance policy. A policy is considered to be a contract between the insurance company and the…
32. Covered Expenses The losses or conditions that the policy will pay for.
33. Credit Score A number, roughly between 300 and 800, that measures an individual's credit worthiness. The most well-known type of credit score is the FICO® score.
34. Custom/Non-factory Equipment Coverage Covers customized features such as those found on conversion vans, as well as non-factory items such as compact disc players, cellular phones or CB radios.
35. Declarations (DEC) Page (DEC) Usually the first page of an insurance policy, it contains the full legal name of your insurance company, your name and address, the policy number…
36. Declarations page The page your company sends as part of the policy which shows the terms, coverage limits, premium and endorsements.
37. Declarations Page ("Dec Page") A page your company sends you to show your premium and coverage. Some insurance companies only send a new declarations page at renewal unless there’s a…
38. Deductible The dollar amount you must pay out-of-pocket for each claim before the insurance company begins paying.
39. Depreciation The act of lowering an item´s value due to use or wear and tear.
40. Earned premium The portion of a policy premium that has been used to actually buy coverage, or that the insurance company has "earned.
41. Endorsement Amendment to the policy used to add, change, or delete coverage. Also referred to as a “rider.”
42. Exclusion A contractual provision in an insurance policy that denies or restricts coverage for certain perils, persons, property or locations.
43. Exclusions Specific situations or circumstances listed in your policy describing when benefits will not be paid.
44. Extraordinary Medical Benefits This coverage pays when medical and rehabilitation expenses exceed $100,000. It provides a maximum of $1 million of coverage.
45. First Party The policyholder (insured) in an insurance contract.
46. Full Tort With a Full Tort selection, you retain unrestricted rights to bring suit against the negligent party.
47. Funeral Benefit This coverage pays, up to a certain dollar amount, money for funeral expenses if you or a family member dies as a result of an auto accident.
48. Gap Insurance Insurance coverage that pays the difference between what you owe on your auto loan and your totaled car’s actual cash value.
49. Good Driver Plan A rating program offered by some insurance companies that reduces your premium if you have had no accidents or traffic violations within a specified time…
50. Grace Period A time period after the due date that you may pay a premium without penalty. The policy remains in force during this time.
51. Illinois Automobile Insurance Plan (assigned risk plan) A plan for people who can't obtain insurance through the voluntary market.
52. Illinois Insurance Guaranty Fund A fund that pays an insurer’s claims when the company is insolvent. All Illinois-licensed insurance companies belong to the Illinois Guaranty Fund.
53. Income Loss Pays a portion of your wages when injuries sustained in an auto accident keep you from working.
54. Insured The policyholder or person(s) protected in case of a loss/claim.
55. Insurer The insurance company.
56. Lapse Termination of a policy due to non-payment of premiums.
57. Lapsed Policy A policy that has terminated for non-payment of premiums.
58. Liability A legally enforceable financial obligation caused by negligence.
59. Liability Coverage Insurance protection that pays for claims or judgments brought against the insured.
60. Liability insurance Insurance that pays when you are liable for injuries to other persons or damage to their property.
61. Liability limits The maximum amount your liability policy will pay. Your policy must pay at least $25,000 for each injured person, up to a total of $50,000 per accident…
62. Limited Tort Limited Tort offers you a savings on your premiums. You are still able to recover all out-of-pocket medical and other expenses; however, you are not able…
63. Limits The maximum amount of benefits the insurance company agrees to pay under an insurance policy in the event of a loss.
64. Loss The amount an insurance company pays on a claim.
65. Medical Benefits This pays medical bills for you and others covered on your policy regardless of fault. The minimum limit is $5,000 of coverage.
66. Medical Payment Coverage that pays for limited medical expenses if you, a member of your family, or a passenger in your car is hurt in a car accident.
67. Medical payments and personal injury protection (PIP) Both pay limited medical and funeral expenses if you, a family member, or a passenger in your car is injured or killed in a motor vehicle accident.
68. Named driver exclusion An endorsement that provides that a policy does not cover accidents when a specifically named person is the driver.
69. Named driver policy An automobile insurance policy that doesn't provide coverage for an individual residing in a named insured ’s household specifically unless the…
70. Negligence Failure to exercise a generally acceptable level of care and caution resulting in injury or damage to a third party.
71. Negligence/Negligent A determination of fault in an accident caused by your inattention or carelessness.
72. No-fault insurance A form of insurance available in many states under which each driver in an accident files claims for losses, such as medical expenses, with their own…
73. Non-Bound Application There is no coverage involved and you pay no money. The insurance agent submits the application to the company to find out whether or not you will be…
74. Non-owners policy Insurance coverage that offers liability, uninsured motorist, and medical payments to a named insured who does not own a vehicle.
75. Non-renewal A notice of the insurance company’s refusal to renew your policy prior to the end of the policy term.
76. North Dakota Insurance Guaranty Fund A fund that pays an insurer's claims when the company is insolvent. All North Dakota licensed automobile insurance companies belong to the North Dakota…
77. Occurrence An event that results in an insured loss.
78. Personal Injury Protection (PIP) (PIP) This is a mandatory no fault coverage for automobile insurance providing benefits including, but not limited to, medical expenses, loss of income…
79. Policy The contract form issued by the company to explain the coverage provided. It is a legal document.
80. Policy period The amount of time an insurance contract or policy provides coverage.
81. Premium The price charged for insurance.
82. Premium Finance Company A lending institution that finances automobile insurance premium for a fee.
83. Pro rata cancellation Revocation of a policy by an insurance company that returns to the policyholder the unearned premium.
84. Producer (agent) A licensed individual or organization authorized to sell, solicit, negotiate and service insurance policies for an insurance company.
85. Proof of loss Documents that you give the insurer to support your request for payment of losses.
86. Property damage (PD) (PD) Physical damage to property.
87. Property Damage Liability Pays for damage to another person’s car or property such as fences, buildings, utility poles, signs, and trees.
88. Quotation or Quote An estimate of the cost of insurance based on the information supplied to the insurance producer (agent) or company.
89. Quote An estimate of the premium charge, based upon the information provided for the coverage(s) requested.
90. Reinstatement The process by which a life insurance company puts a policy back in force after it lapsed because of nonpayment of renewal premiums.
91. Rental Reimbursement Coverage This coverage pays - up to a defined amount - your expenses to rent a vehicle if you have a loss covered under comprehensive or collision benefits.
92. Rental Reimbursement/Transportation Expenses An optional policy benefit that pays the rental fee (usually $15 to $20 per day) if you must rent a vehicle for a reasonable time while your vehicle is…
93. Rider A written agreement attached to the policy expanding or limiting the benefits otherwise payable under the policy. Same as an "endorsement."
94. Settlement After negotiating, the amount you agree to accept from the insurance company as full payment for your loss.
95. Short rate cancellation Cancellation by the insured of an insurance policy for which the returned unearned premium is diminished by administration costs incurred when the…
96. Stacking of UM or UIM This coverage allows you to either multiply the amount of uninsured or underinsured motorist coverage by the number of vehicles on your policy, or to…
97. Subrogation The process of recovering the amount of claims damages paid out to a policyholder from the legally liable party.
98. Surcharge An extra charge applied to the premium by an insurance company, usually applied as a result of at-fault accidents or moving violations.
99. Surplus lines Coverage from out-of-state companies not licensed in Texas but legally eligible to sell insurance on a "surplus lines" basis.
100. Third Party An individual other than the policyholder or the insurance company who has suffered a loss and may be able to collect compensation under the policy, due…