We understand that you may get a little confused with all of the Insurance Terms… We’ve been doing this for years, and we still learn something new every day!
It’s good to keep learning, so here are some of the important topics for you to consider.
A person responsible for investigating and settling a claim. The Adjuster is responsible for writing the repair estimate for your vehicle or home. The Adjuster will also answer your questions about the repair process, your rental vehicle, or your total loss settlement.
Parts made by a company other than the manufacturer of the auto. Most times these parts meet or exceed the quality of the manufacturer’s parts, but cost less.
An individual who acts as a representative for the company and sells insurance, usually on a commission basis. This individual could be an ‘Exclusive’ or ‘Non-Exclusive’ Agent.
The price or cost of repairs agreed to by the adjuster or independent appraiser and the body shop representative.
A change to the basic policy contract. An amendment alters the policy; an endorsement adds to it.
A device that deters auto theft. Autos equipped with these devices may entitle you to a discount on your insurance premiums.
Process that determines the value of property, or the extent of damage, usually performed by an impartial expert.
A process of settling a dispute through an impartial party. It is used as an alternative to litigation.
Assigned Risk Pool
A driver or vehicle owner who cannot qualify for insurance in the regular Insurance marketplace must buy their policy through the Assigned Risk Pool. This is a state assigned risk plan which specifies that every Insurance Company must accept a proportionate share of these drivers/owners.
The party that is legally liable for the damages in an accident.
Auto Insurance – SEE THE VIDEO!
Auto Insurance provides protection from losses resulting from owning and operating an auto. The insurance covers losses to the insured’s property and losses for which the insured is liable as a result of owning or operating an auto.
The theft of an auto is a type of loss that is covered under comprehensive coverage.
A temporary agreement declaring that the policy is in effect. Used in certain cases to protect a policyholder when it is not possible to issue or endorse the policy immediately.
An injury sustained by a person.
Bodily Injury Liability Coverage
Pays damages for bodily injury or death resulting from an accident for which you are at fault and in most cases provides you with a legal defense. This coverage is subject to the terms, limits and conditions of your policy contract.
Termination of an insurance contract before the end of the policy period, by the insured or insurer.
The insurance company or insurer.
A disaster affecting a specific geographic area. Catastrophes often cause injury or even death; most result in extensive property damage. Hurricanes, floods, tornadoes, and even large hailstorms are typical examples of catastrophes.
Any request or demand for payment under the terms of the insurance policy.
Individual or entity presenting a claim.
Comprehensive Loss Underwriting Exchange (CLUE) report; provides claim history information.
Collision Coverage – SEE THE VIDEO!
Pays for damage to an insured vehicle when it hits or is hit by another car or object, or if the car overturns. This coverage is subject to the terms, limits and conditions of your policy contract.
A doctrine of law that, in some states, may enable claimants to recover a portion of their damages even when they are partially at fault, or negligent. Each party’s negligence is compared to the other’s and a claimant’s recovery can be reduced by the percentage of his or her own negligence.
A term used when an insurance company requests that you submit multiple repair estimates for consideration.
Comprehensive Coverage – SEE THE VIDEO!
Pays for damage to your car from theft, vandalism, flood, fire or other covered perils. This coverage is subject to the terms, limits and conditions of your policy contract.
The portion of the insurance contract which outlines the duties and responsibilities of both the insured and the insurance company.
A type of homeowners insurance that meets the special needs of condominium owners.
A doctrine of law that, in some states, may prevent claimants from recovering any portion of their damages if they are even partially at fault, or negligent.
Protection and benefits provided in an insurance contract.
A vehicle that has been altered or has equipment or accessories not typically found in a personal vehicle.
Loss or harm to a person or property.
Money that one party becomes legally obligated to pay to another party.
The part of your policy that includes your name and address; the property that is being insured, its location and description; the policy period; the amount of insurance coverage and the applicable premiums.
The portion of a claim you pay out of pocket. Choosing a higher deductible will lower your insurance premiums.
Defensive Driver Discount
Certain drivers (usually over age 50) who have voluntarily taken a defensive driving course may qualify for this discount on their auto insurance premiums.
The decrease in value of any property due to wear, tear, and/or time. Generally, depreciation is not an insurable loss.
A reduction in your premium if you or your car meet certain conditions that are likely to reduce the insurer’s losses or expenses. For example, auto insurance discounts are given for cars with auto theft devices and for young drivers with good grades in school.
EFT is an electronic payment method that lets you pay your premiums with automatic deductions from your checking account.
An addition to the basic policy contract. An endorsement adds to the policy contract; an amendment alters it.
An assessment of the cost to repair your damaged property.
Restriction in your insurance policy that limits and may exclude coverage for certain perils, persons, property, or locations.
This date, found on your declarations page, indicates when your policy coverage runs out. Your renewal policy will start on this date.
A vehicle financed by a loan. The lender retains a lien on the auto until it has been paid off.
Term used to refer to an insured.
First Party Claims
A claim for damage, loss or injury made by an insured.
Two types of forms are important in insurance: 1. pre-printed contracts that comprise your insurance policy, 2. questionnaires or coverage selection forms that a policyholder is required to fill out.
An automobile insurance option that comes into play when your vehicle is stolen or totaled. Gap insurance covers the “gap” or difference, if any, between your car’s actual cash value and what you still owe on it.
Good Student Discount
May be awarded to full-time students who maintain a grade average of “B” or better.
Anything that increases the chance of an accident occurring.
Homeowners Insurance – SEE THE VIDEO!
Protects homeowners from losses to their homes, personal property, and some types of damage or injury to others for which the homeowner is liable. Homeowners insurance is subject to the terms, limits and conditions of your policy contract.
The act of providing compensation for a loss with the intent to restore an individual or entity to the approximate financial position prior to the loss.
Compensation for a loss intended to restore an individual or entity to the approximate financial position prior to the loss.
An individual who estimates losses on behalf of an insurance company, but is not an employee of that company.
Verification of a vehicle’s physical condition.
Exists when an individual would suffer an economic loss as the result of damage to property or bodily injury.
Insurance is a system in which groups of people who have similar chances of suffering a loss transfer their risk of loss to an insurer who pools the risk of many people together. In exchange for payment of premium, the insurer promises to reimburse the person for their covered losses.
The act of falsifying or exaggerating the facts of an accident to an insurance company to obtain payment that would not otherwise be made. Common types of insurance fraud are staged accidents, exaggerated injuries, and inflated medical bills.
Insurance ID Card
Also known as an Insurance Card, this card is issued by your insurer and contains basic information about your insurance policy. Some states require you to keep an insurance ID card in your vehicle.
Used in the underwriting process in some states. An individual’s insurance score is frequently based, in part, on a person’s credit history.
A person or organization covered by an insurance policy.
An organization that provides insurance.
A vehicle rented under a long-term contract (lease). The leasing company retains ownership of the vehicle and must be shown on your insurance policy as an insured.
Liability imposed by law, as opposed to liability arising from an agreement or contract.
Any legally enforceable obligation or responsibility for the injury or damage suffered by another person.
Insurance that provides protection from claims arising from injuries or damage to other people or property.
The process of gathering information to determine the cause of an accident.
A claim, charge, or encumbrance on property as a security for the payment of a debt.
A person or organization with a financial interest in property up to the amount of money borrowed or still owed on the property.
The maximum amount of protection purchased by the insured for a specific coverage.
Limits of Liability
The amount specified in your policy up to which the insurance company will protect you.
Any measurable dollar cost of damage and/or injury suffered by a person.
Loss of Use
Compensation to a third-party claimant for financial consequences resulting from the inability to use property as the result of accident-related damage.
Intentional damage of personal property with malice of forethought.
All property-related damage losses covered by the policy. This includes the following: property damage (PD), comprehensive damage (COMP), collision damage (COLL), or uninsured motorist property damage (UMPD).
Mechanical Breakdown Insurance
Covers repairs to all mechanical parts of the car, protecting you from expensive repair bills.
Medical Claim Examiner
The medical claim examiner is responsible for reviewing all medical bills, replacement/essential services, and lost wages submitted to the company for injuries sustained by you and/or the passengers in your vehicle (depending upon the state in which you live and the coverage on your policy).
Medical Payments Coverage
Pays medical expenses related to an automobile accident. This coverage is subject to the terms, limits and conditions of your policy contract.
To make written or verbal statements that are untrue or misleading.
Motor Vehicle Report (MVR)
A report from the agency that issues your driver’s license, listing accidents and violations that appear on your driving record. This report is used to verify information provided by insurance applicants and policyholders.
Available to policyholders who insure more than one vehicle at the same location.
The person or entity listed on the policy declarations page.
National Insurance Crime Bureau (NICB)
A not-for-profit organization that partners with insurers and law enforcement agencies to facilitate the identification, detection, and prosecution of insurance criminals. The NICB receives support from over 1,000 property/casualty insurance companies.
The failure to exercise the care that is expected of a reasonable person in similar circumstances.
When an insurer decides not to renew a policy at the end of its policy period.
An event, or repeated exposure to conditions, which unexpectedly causes injury or damage during the policy period.
Original Equipment Manufacturer Parts
Auto parts obtained from the original manufacturer of the car or the supplier of the original part.
A passenger safety system, such as an air-bag, that activates automatically in the event of an accident.
Your auto insurance premium can be paid using one of our installment payment plans; you make several smaller payments but incur a service fee.
A danger or hazard that can cause a loss, for example, a car collision with an object, or a fire.
Property that is not land or connected to land (real estate), such as furniture or jewelry.
Damage to property.
A contract between you and the insurance company.
Any change made to your insurance policy during the period that the policy is in force.
The person or entity listed on the policy declarations page.
The state of the vehicle before the accident, including damage not related to the accident, mileage, options, and other factors.
The price of the insurance policy that the insured pays in exchange for insurance coverage.
Proof of Loss
A statement made regarding the extent of the claim; it may be requested in accordance with the conditions of the policy.
Property Damage Liability Coverage – SEE THE VIDEO!
Pays for damage to someone else’s property resulting from an accident for which you are at fault and in most cases provides you with a legal defense. This coverage is subject to the terms, limits and conditions of your policy contract.
An act or omission initiating an unbroken sequence of events resulting in injury to a person or damage to property.
A statement of the premium that will be charged for insurance coverages based on specific information provided by the person requesting the quote including drivers, vehicles, and driving record.
Often used as a synonym for premium but actually refers to the base rating units that are used to determine the final premium.
The rules that determine the cost of your insurance premium. These rules modify the base rates by applying discounts and surcharges based on your personal characteristics, for example, using your seat belt, insuring more than one car.
A review of an estimate or appraisal done by an adjuster during or after repairs to a vehicle. This is done to guarantee the accuracy of staff or independent auto damage personnel, and to guarantee that the work required in an estimate or appraisal is being completed by the body shop.
Legally binding contract stating that all obligations past, present or future arising from a particular accident or occurrence have been fulfilled.
The date that your insurance policy expires and the date that your renewed policy will begin.
Optional coverage that helps pay rental vehicle costs when your insured vehicle is disabled as the result of a covered accident or loss. Available to most policyholders for an additional premium.
Property Insurance providing coverage to an individual living in an apartment, condominium or single family home owned by someone else.
Several types of parts may be used when your vehicle is repaired: new parts, both original equipment manufacturer and after-market; and recycled parts. New or after-market parts will be used if we can’t find like-kind and quality recycled parts. A 5-year-old car, for instance, would be repaired with parts at least as good as the parts that had been in the car.
In motorcycle insurance, a rider is someone who will operate the insured motorcycle. In life and health insurance, the term ‘rider’ is often used to refer to an endorsement to an insurance policy.
The chance of suffering a loss.
Damaged property which is taken over by the insurance company after payment of a claim.
In umbrella insurance, self-insured retention is similar to a deductible in other types of insurance. The self-insured retention is the amount of damages for which the policyholder is responsible before the umbrella coverage begins to cover a loss.
Special Investigation Units
Insurance Companies help fight fraud through their special investigation units, staffed with experts in fraud detection and investigation.
SR-22, Certificate of Financial Responsibility
An SR-22 is a certificate mandated by the state to verify that an individual is maintaining auto insurance liability coverage. If a person needs an SR-22, they will usually be notified by their state’s Motor Vehicle Department.
If your car is damaged because of another driver’s negligence and you ask the Insurance Company to settle the claim for damage to your car, they will seek payment recovery (including your deductible) from the other party. This process of payment recovery is called subrogation.
The unlawful taking of another’s property with the intent to permanently deprive the owner of its use or possession.
Person or entity not party to an agreement but with an interest in the agreement.
Third Party Claim
Claims for injury or damage to property of a third party alleged to have been caused by the insured.
A private or civil wrong or injury, other than breach of contract, which violates a person’s legally protected right(s), and for which the law may permit a remedy in the form of money damages.
Property that has sustained damage so extensive that repairing it is not reasonable. A vehicle is considered a total loss if it cannot be repaired safely, if repairing the vehicle is not economically practical, or if state regulations require us to consider it a total loss.
Towing and Labor Coverage
Provides insurance if your auto needs to be towed or requires roadside assistance.
Provides high limits of additional liability coverage above the limits of your homeowners and auto policy. In addition, it provides coverage that may be excluded by other liability policies.
The process an insurer goes through to determine whether or not it will provide coverage for an applicant.
Uninsured Motorist Coverage – SEE THE VIDEO!
In some circumstances, may pay for your injuries or property damage caused by an uninsured motorist or, in some states, an unidentified driver. In some cases it also includes coverage for underinsured motorists and at-fault drivers with insufficient insurance to pay your claim. This coverage is subject to the terms, limits and conditions of your policy contract.
Destruction or defacement of property.
Vehicle Identification Number (VIN)
A 17-digit number assigned to each vehicle manufactured in the United States after 1980. This number is used for identification purposes and is visible on the dashboard when viewed from the outside of the vehicle.
A written guarantee of the integrity of a product and of the manufacturer’s responsibility for the repair or replacement of defective parts.