No auto insurance resource is complete without a comprehensive list of auto insurance requirements. We’ve compiled a glossary of terms and their definitions to better help you navigate the sometimes confusing world of insurance
Accident – This is a sudden unexpected event that causes property damage to a car or bodily injury to a person. The event may be false or innocent and may or may not be reported. An accident involving two vehicles is called a collision.
Accident report form – This is a report filed by the police, often called a police report, that contains important information regarding a vehicle collision. The report will include the names of all the individuals involved, the vehicles involved, the property damaged and the citations issued.
Adjuster – This is the person who will evaluate the actual loss reported to the policy after an accident or other incident. They will determine how much will be paid on the car insurance policy by the Insurer.
Agents – These are licensed and trained individuals authorized to sell and service insurance policies for auto insurance companies.
At Fault – This is the amount that you, the policyholder, contributed to or caused an automatic collision. It determines which insurance agent pays which part of the loss.
Car Insurance Score – This is a score similar to a credit score that evaluates the information on your consumer credit report. This score is used when pricing your car insurance policy. A negative mark on your credit report can increase your auto insurance premium. The use of this information to determine policy pricing varies from state to state.
Car Insurance – This is a type of insurance policy that covers and protects against losses involving the car. Car Insurance policies cover a variety of coverages depending on the needs of the policyholder. Liability for property damage and bodily injury, uninsured motorist, medical, comprehensive and collision payments are some of the common coverages offered under an auto insurance policy.
Binding – This is a temporary short term policy agreement that is enforced while a formal permanent policy is enacted or delivered.
Body Injury Liability – This is the part of the insurance policy that covers the costs to anyone you may injure. This could include lost salaries and medical expenses.
Brokers – These are licensed individuals who on your behalf sell and service various insurance policies.
Claim – This is a formal notification made to your insurance company that there has been a loss that can be covered by the terms of the car insurance policy.
Claims Adjuster – The person employed by this insurance agency will investigate and settle all claims and losses. Representatives of insurance agents to verify and ensure all parties involved with the loss, get fair and correct compensation.
Collision – The part of an insurance policy that covers damage to your vehicle from hitting another object. Objects may include but are not limited to; other vehicles, buildings, sidewalks, guardrails, trees, telephone poles or fences. The reduction will apply. Your insurance company will pursue the other party’s insurance policy for these costs if they are at fault.
Commission – This is the portion of the auto insurance policy that is paid to the insurance agent for selling and servicing the policy on behalf of the company.
Comprehensive – This is the part of the insurance policy that covers the loss caused by anything other than a collision or crashing into something else. The reduction will apply. This includes but is not limited to vandalism, storm damage, fire, theft, etc.
Covered loss – This is damage to yourself, others or your property or vehicle that is covered under the car insurance policy.
Declaration page – This is part of the insurance policy which includes your entire legal name of your insurance company, your full legal name, complete car information including vehicle identification number or VIN, policy information, policy number, deductible amount. This page is usually the front page of the insurance policy.
Deductible Amount – This is the part of the auto insurance policy which is the amount that the policyholder has to pay in advance before the Insurance Company makes a contribution and is required to pay any benefits. This amount can be in a wide price range and varies from around $100 – $1000. The larger the amount you pay in discount, the lower your normal monthly/annual policy fee will be. This is part of a car insurance policy that only applies to coverage
cy Road Service – This is the part of the car insurance policy that covers the costs of emergency services such as flat tires, locked keys in the car and tow service.
Endorsement – This is any written change made to an auto insurance policy that adds or removes coverage to the policy.
Exceptions – This is the part of the car Insurance policy that covers all terms including people, places or things that are not covered by the insurance policy.
First Party – This is the policyholder, the insured in the insurance policy.
Gap Insurance – This is a type of car insurance that is given to people who rent or own a vehicle whose value is less than the loan amount. Gap Auto Insurance will cover the amount between the actual cash value of the vehicle and the remaining loan amount if maintenance is stolen or destroyed.
High Risk Driver – If you have various negative signs on your insurance record including driving under the influence, multiple traffic violations, etc. You may be labeled as a risk to the insurance company. This will increase your insurance policy or may make you ineligible for coverage.
Insured – Policy holder who is covered by policy benefits in case of loss or accident.
Insurer – Is a Motor Vehicle Insurance company that promises to pay the policyholder in the event of a loss or accident.
Liability insurance – The part of an auto insurance policy that legally covers the damage and injury you cause to other drivers and their vehicles when you are at fault in an accident. If you are sued and brought to justice, liability coverage will apply to the legal fees you incur. Most states will require drivers to carry some variation of liability coverage insurance and this amount will vary by state.
Limits – This is the part of the auto insurance policy that describes and lists the monetary limits the insurance company will pay. In the event that you reach this limit, the policyholder will be responsible for all other expenses.
Medical Payment Coverage – This is the part of an auto insurance policy that pays for medical expenses and lost wages to you and the passengers in your vehicle after an accident. This is also known as personal injury protection or PIP.
Motor Vehicle Report – A motor vehicle report or MVR is a record issued by the country where the policyholder resides which will list licensing status, traffic violations, various suspensions and/or biases on your record. This is one of the tools used in determining the premium price offered by insurance agents. It is also used to determine the likelihood that you will have a claim during the period of your policy.
Faultless Insurance – If you live in a state with no fault insurance laws and regulations, your auto insurance policy pays for your injury, no matter who caused the accident. State of fault-free insurance includes; Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, Utah and Washington, DC..
Non-Renewal – This is the termination of the car insurance policy on the given expiration date. All coverage will cease on this date and the insurer will be released from the promised coverage.
Personal Property Liability – This is the part of an auto insurance policy that covers any damage or loss you cause to someone else’s personal property.
Personal Injury Protection or PIP – This part of the auto insurance policy pays for wages or medical expenses lost to you and the passengers in your vehicle after an accident. PIP is also known as medical payment coverage.
Premium – This is the amount charged to you on a monthly, annual or other term agreed upon by the insurance company and the policyholder and paid directly to the car insurance company. Premiums are based on the type and amount of coverage you choose for your vehicle and yourself. Other factors that will affect the price of your insurance premium include your age, marital status, your driving and credit report, the type of car you drive and whether you live in an urban or rural area. Premiums vary by insurance company and where you live.
Quotation – This is the amount or estimated amount of the insurance cost based on the information provided to the agent, broker or car insurance company.
Resission.- This is the cancellation of the insurance policy from its effective date. This will result in the full premium charged being refunded.
Rent Reimbursement – This is part of the asura policy
operations that are left to the insurance agent in the final settlement of the loss. The insurance company will sell the residual property in the hope of recovering some of its monetary losses due to loss and settlement.
Second Party – this is the actual insurance company in the car insurance policy.
Surcharge – This is the amount added to your auto insurance policy premium after a traffic violation or accident in which you are found guilty.
Third Parties – These are people other than the policyholder and the vehicle insurance company who have faced a loss and may be able to collect and indemnify on behalf of the policyholder’s negligence.
Total Loss – This is the total destruction of the insured property of the policyholder. It has been determined that it will be a large sum of money to repair the item rather than replacing the insured part of the property to its pre-lost state.
Towing Coverage – This is the part of an auto insurance policy that covers a certain amount for towing services and related labor costs.
Under Insured drivers – This is the part of the auto insurance policy that covers injury to you caused by a driver without sufficient insurance to cover the medical expenses you incur from the accident. This is part of a policy that may vary by state as some states include damage to cars in this section.
Uninsured Driver or Driver – This is the part of an auto insurance policy that covers injury to you caused by a driver who did not have liability insurance at the time of the accident. Driver’s or uninsured driver’s coverage comes in two distinct sections; bodily injury of uninsured motorists and damage to property of uninsured motorists.
Uninsured motorist bodily injury coverage covers injury to you or any passenger in your vehicle in the event of an accident with an uninsured driver. Uninsured motorist property damage coverage covers costs for property damage to your vehicle in the event of an accident with an uninsured driver.
Driver’s or uninsured driver’s coverage must be offered when you purchase the necessary liability coverage for your vehicle. You must sign a refusal letter if you refuse cover for an uninsured driver or driver. The majority of states require drivers to carry some form of uninsured motorist coverage. Some states include damage to your car in this coverage.
Vehicle Identification Number or VIN – A VIN is a combination of 17 letters and numbers that identifies a particular vehicle. This will identify the make, modem and year of the car. This number is usually located on the driver’s side window on the dashboard. It can also be found on the vehicle registration and vehicle title.