Glossary

Accident:

A collision or unforeseen event that is uncontrollable by the insured.

Accident Forgiveness:

When an insured has not had an at-fault accident for a specific time span (3-5yrs.), most major insurance companies will not add a surcharge for a first accident. When comparing cheap auto insurance be sure to ask before purchasing.

Act of God:

A natural occurrence not influenced or controlled by humans. (Floods, wind damage, etc.)

Additional Insured:

A person, group, or organization other than the insured named in the policy that will be covered under that policy.

Aftermarket Parts:

Any part or accessory that is not installed in the factory.

Agent:

A representative for insurance company that sells policies and is usually paid based on commission.

Agreed Price:

The cost of repairs agreed upon by the auto damage adjuster and the body shop authority.

Agreed Value:

Insured and insurance company agrees on an insured value at the inception of a policy for a collect-able or antique car that does not depreciate.

Amendment:

Any change made to a policy.

Anti-lock Braking System (ABS): A computerized braking system that allows all four wheels to slow at same rate and thereby minimizing loss of control.

Anti-theft Device:

Computerized or otherwise, these devices will eliminate or deter theft or damage of a vehicle. (Alarms, starter disablers, gps recovery systems, VIN.)

Appraisal:

The act of determining the value of a property or cost of damages.

Arbitration:

The act of settling a dispute through a third and impartial party.

Assigned Risk:

State laws require insurance companies to cover a percentage of people who cannot purchase regular insurance because of their profiled risk factors or driving record.

Assured:

A person covered by an insurance policy.

At-Fault:

The person who can legally be held responsible for damages caused by an accident.

Auto-Damage Adjuster:

Person accountable for making the damages repair estimate.

Automobile Insurance:

A type of insurance that protects a policyholder against losses involving automobiles.

Binder:

A temporary declaration saying a policy is in effect that is used to cover policyholder when it is not possible to issue or endorse a policy right away.

Bodily Injury:

Injury to a person.

Car Insurance Quotes

A platform to compare auto insurance quotes with various insurance companies to find the best deal without losing coverage.

Cancellation:

A policy is terminated earlier than originally stated in policy terms.

Certificate of Financial Responsibility:

SR-22, Fr-44, SR-50, or other governmental form that certifies the coverage purchased does meet State requirements.

Certificate of Satisfaction:

A form that certifies the insured is satisfied with repairs to their vehicle.

Claim:

A request for payment as per terms of policy agreement.

Claim Adjuster:

A person employed by the insurance company, sometimes an impartial party, who investigates and settles claims made by a policyholder.

Claimant:

A policyholder who turns in a claim to their insurance company.

Clue Report:

Comprehensive Loss Underwriting Exchange (Clue) Report – This report shows a 7-year history of an individual’s automobile losses.

Comparative Negligence:

Some states allow the insured to recover a percentage of repair costs even if they are partly at fault. The negligence of each party involved is compared, and the insured’s recovery is reduced by their percentage negligence.

Competitive Auto Repair Parts:

Parts made by company other than the automobile manufacturer. These parts meet or exceed the manufacturer parts but are usually less expensive.

Competitive Estimates:

Most insurance companies require multiple estimates from competitive repair shops for comparison.

Conditions:

The section of the contract that explains the specific responsibilities of both the policyholder and the insurance company.

Continuous Coverage:

This means the length of time insurance coverage has been maintained without any lapses.

Contributory Negligence:

In some states, this doctrine enables an insurance company to deny any portion of cost recovery,

even if the policyholder is only partially negligent.

Coverage:

The protection and benefits that an insurance contract provides to the policyholder.

Covered Person:

A policy contract’s named insured as well as those included as additional insured (spouse, licensed resident or relative).

Customized Equipment:

Equipment or accessories not manufactured and installed at the factory and not covered by the standard insurance options available.

Customized Vehicle:

A vehicle that has added or altered parts or accessories.

Declarations Page:

The page of the policy contract that explains in detail the coverage, including the start and end date and specific amounts for the different types of coverage of the policy.

Deductible:

The dollar amount of the repair costs the insured is responsible to pay. Once the deductible is met, the insurance company pays up to the specified limit for each type of loss.

Depreciation:

The decline of value for any property/automobile due to time, use, and wear.

Discount:

A lower cost based on car age and performance, as well as a policyholders driving record, age, location, and more.

Drive-Other-Car Endorsement:

An optional coverage to protect policyholder when driving a non-owned vehicle. (Rental, etc.)

Economic Loss:

Complete financial loss caused by death, dismemberment, or property damage. Besides lost wages, legal and medical expenses and cost of restoring property are included in this term definition.

Effective Date:

The date the insurance policy coverage begins.

Endorsement:

An amendment or document added to an existing policy that changes it in some manner.

Estimate:

An assessment of value or cost of repairing damage to property.

Exclusion:

This is what is not covered under an insurance policy and can be a person, property, peril, or situation that is excluded from a policy.

Expiration Date:

The date your policy coverage ends.

Field Adjuster:

An adjuster that works outside of the office, often meeting with the claimant to investigate, estimate damages, and negotiate.

Financial Responsibility Law:

State laws that require a vehicle owner and operator to maintain enough money to compensate an injured party. The amount required differs from state to state, and liability insurance is one way to meet the requirements.

First Party:

The insured.

First Party Benefits:

Paid to the policyholder and anyone else covered by the policy, regardless of who was at fault.

Flat Rate Cancellation:

Cancelled before policy was put into effect.

Forced Placed Insurance:

Insurance placed on a vehicle by the bank or other creditor when the owner fails to do so. This covers the bank in case of loss.

Gap Insurance:

Optional coverage that pays the difference between market value and what is actually owed on the vehicle.

Guarantee Funds:

State required for insurance companies. These funds are for the protection of the policyholders in the event a company fails.

Inception Date:

The starting date a policy’s coverage begins.

Indemnification:

Providing compensation to a party with the purpose of returning them to their financial state prior to the occurrence.

Independent adjuster:

An individual who makes assessments for an insurance company, but is not their employee.

Insurable Interest:

When an individual could suffer economic loss due to damaged property or injury.

Insurance Fraud:

The act of falsifying the facts of an accident or event in order to receive compensation where the insurance company would not pay otherwise.

Insurance Score:

In some states, underwriters use this to rate and calculate a premium price. It can include an individual’s record of payment history, any lapses in insurance, and bankruptcy.

Joint Underwriting Association (JUA):

Insurance companies group together to cover particular types of risks such as medical malpractice.

Lapse in Coverage:

A period where a vehicle is not protected due to a policy cancellation caused by failure to pay premium or other situations that make the policy contract invalid.

Legal Liability:

A law imposed responsibility.

Liability:

A legal responsibility for the injured person or damaged property.

Liability Insurance:

Bodily injury liability (BIL) does not cover the policyholder’s injury, however it will pay (up to the policy limits) for medical or death expenses of those for which you are liable. This could be a passenger in your car or an injured party in another car involved in an accident that is your fault.

Property liability coverage does not protect a policyholder’s car or property, but instead will pay for damages that you have caused to another’s car, structures, or objects like mailboxes.

Limits of Liability:

The specified dollar amount an insurance company will pay for a particular loss or for losses over a certain period of time.

Line of Insurance:

Type of insurance, i.e. car, life, home, or health coverage.

Loss:

The dollar value of assessed cost of damages caused by bodily injuries or property damages.

Loss of Use:

Compensates third-party claims when they are unable to use their property because of damages caused by an accident.

Material Misrepresentation:

Any time a policyholder/applicant makes a false statement or purposely omits information.

Medical Payments Coverage:

Pays medical expenses according to terms and conditions stated in a policy.

Minimum Limits of Liability:

The lowest amount of liability insurance that an individual can carry according to state laws.

Named Insured:

The person, or entity, that is designated by name in a policy as the insured.

Negligence:

Failure to use an expected and reasonable amount of care in a given situation.

No-Fault Insurance:

Required by some states. May pay benefits regardless of who was at fault of an accident depending on terms and conditions of an individual’s policy.

Non-Owned Auto:

A vehicle that is used primarily for business but not owned, leased, or borrowed by the insured.

Non-Renewal:

When an insurance company does not renew at the end of a policy period.

Occasional Driver:

Not the primary driver under a policy.

Occurrence:

An event that causes injury or damage.

Original Equipment Manufacturer Parts:

Car parts that came from original car manufacturer or parts supplier.

Per Occurrence Limit:

The maximum amount an insurer will pay in connection with a single event.

Per Person Limit:

The maximum amount an insurer will pay to an individual in connection with a single incident.

Personal Auto Policy:

Provides coverage for liability, medical payments, uninsured/underinsured and physical damages coverage.

Personal Injury Protection:

May cover expenses from injuries to you, insured household members, and passengers (if not covered by their own PIP) regardless of who is at fault.

Personal Property:

Objects such as appliances or furniture (land and real estate are excluded).

Policy:

A written contractual agreement between an insurance company and the insured.

Policy Lapse:

See Lapse in coverage.

Policy Term:

The length in time of a policy’s coverage (i.e. annual, semi-annual).

Policy Holder:

The person named as the insured in the insurance documentation.

Pre-Accident Condition:

The state of a vehicle prior to an accident, including any damages or accessories.

Premium:

The price of an insurance policy for a specified period.

Primary Use:

The main purpose of your vehicle (work, pleasure, farming).

Principal Driver:

The individual that drives the vehicle the most.

Pro Rata Cancellation:

When a policy is terminated prior to its expiration the insurance company adjusts the returned monies in accordance to the amount of time the policy was in effect.

Proximate Cause:

An act or omission that creates a series of events where an injury to someone or property damage is caused.

Reinstatement:

The restoration of a cancelled policy.

Renewal:

The act of keeping a policy active.

Rental Reimbursement:

A popular optional coverage that helps a policyholder to recover the costs of a rental when the insured primary vehicle is disabled.

Replacement Cost:

The actual cost of repairing or replacing an insured object.

Subrogation:

The action taken by a policyholder’s insurance company to gain payment recovery for damages caused by the other driver’s negligence.

Surcharge:

The additional fee an insurer adds to a premium when there has been an accident or other traffic fine added to the policyholders driving record.

Third Party:

A person or entity that is not party to but has an interest in the agreement.

Third Party Claim:

When a third party alleges personal injury or property damage caused by the insured.

Tort:

Legal liability resulting from either an accidental or an intended wrong or harm done to another individual.

Total Loss:

This is when the costs to repair damage to a vehicle or property exceed the market value of the insured vehicle or property.

Towing and Labor Costs:

Optional coverage to reimburse a policyholder for towing and roadside service.

Umbrella Insurance:

Added to a policy’s liability, it provides higher limits of cost recovery.

Underinsured:

Caused by failure on the policyholder’s part to purchase enough insurance coverage.

Underwriting:

The step an insurer takes to decide whether or not to provide coverage for an insurance applicant.

Unsatisfied Judgment Fund:

Some states have laws to assist reimbursement for those injured in car accidents but are unable to collect from the responsible party.

Vehicle Identification Number (VIN):

The unique 17-dit number assigned to each vehicle manufactured for sale in the United States. It is an identification number on the dashboard and visible from outside the vehicle.

Waiver of Collision Deductible:

An option that pays the deductible when a car, covered by collision insurance, is damaged by an (at-fault) uninsured driver or hit-and-run. The at-fault vehicle must make physical contact, and the injured party must be able to identify the other driver or vehicle.