There are a wide range of auto insurance terms, some more commonly known than others. Here, we’ve compiled all of the most important auto insurance terms and broke them down.
We at Insurance Navy know that many of these terms can be very confusing, especially just after an accident. Hopefully, we’ve broken them down in a way that will educate you so that you may use these to your advantage in the future.
$25/50/20 – These numbers represent the policy limits in thousands for per-person bodily injury. As well as, bodily injury for all persons injured in any one accident and property damage liability.
Actual cash value (ACV) – The value of your property, based on the current cost to replace it minus depreciation.
Adjuster – A person who investigates and settles insurance claims.
Agent – A person who sells insurance policies.
Application – A form you fill out with details about you. An insurance company will use this to decide whether to issue you a policy and how much to charge.
Appraisal– The act of estimating or judging the nature or value of damages.
Bodily injury (BI) – Physical injury to a person.
Cancellation – Termination of an insurance policy by the company or insured before the renewal date.
Claimant – A person who makes an insurance claim.
Collision coverage – Pays for damage to your car no matter who caused an accident. Also, the company must pay for the repair or pay actual cash value of your car.
Comprehensive coverage – Pays for damage to or loss of your automobile from perils other than accidents.
Contract – In most cases, the term “contract” refers to an insurance policy. A policy is a contract between the insurance company and the policyholder.
Declarations page – Shows the name and address of the policyholder and the period of time the insurance is valid. It also shows vehicle information, premiums costs, and the type of coverage provided.
Deductible – The amount the insured must pay in a loss before any payment is due from the company.
Depreciation – The decrease an item´s value due to regular use.
Endorsement – A written contract in a policy that increases or decreases the benefits payable under the policy.
Financial responsibility (SR22)- Vehicle liability insurance filing required by the Department of Motor Vehicles office for high risk drivers.
Gap Insurance – Insurance that pays the difference between the actual cash value of a vehicle and the amount still to be paid on the loan. Some gap policies may also cover the amount of the deductible.
Insured– The person, group, or organization whose life or property is covered by an insurance policy.
Insurer– A person or company that contracts to protect another in the event of loss or damage; underwriter.
Lapse – Termination of a policy due to non-payment of premiums.
Lease – A contract renting land, buildings, etc. To another; a contract or instrument conveying property to another for a specified period. Or, for a period determinable at the will of either lessor or lessee in consideration of rent or other compensation.
Liability insurance – Pays for injuries to the other party and damages to the other vehicle from an accident you were found at fault for.
Liability limits – The maximum amount your liability policy will pay.
Loss – The amount an insurance company pays on a claim.
Medical payments – Pays limited medical expenses if you, a family member, or passenger in your car is injured in an accident. Similarly, will pay for limited funeral expenses in the case of a death.
Named driver exclusion – An endorsement that says a policy does not cover accidents when a specifically named person is the driver.
Named driver policy – The insurance policy only provides coverage for drivers named on the policy.
Non-owners policy – Insurance policy that offers liability, uninsured motorist, and medical payments for someone who does not own a vehicle.
Occupancy– The act, state, or condition of being or becoming a tenant. Or, of living in or taking up quarters or space in or on something.
Policy period – The period a policy is valid, from the start date to the expiration date.
Premium – The amount paid by an insured to an insurance company to obtain or maintain an insurance policy.
Primary driver– The person who will be doing the primary driving under the insurance policy.
Property damage (PD) – Physical damage to property.
Rate– The amount of a charge or payment with reference to some basis of calculation.
Reinstatement – To put a policy valid after it lapsed due to nonpayment.
Rental reimbursement coverage – Pays for a rental car if your car is being repaired.
Surcharge – An extra charge added to your premium.
Towing – Pays for towing charges when your car is not operable.
Underwriter – Reviews an application for insurance and determines if the applicant will be insured and what premium rate he or she will pay.
Underwriting – Process insurance companies use to decide whether to insure someone.
Uninsured/underinsured motorist (UM/UIM) coverage – Pays for your injuries and property damage caused by a driver with not enough insurance coverage. Or, if they have no insurance coverage at all.
Vehicle identification number– The identifying code for a car. The VIN is the car’s fingerprint, no two cars have the same VIN number.
Have more questions about your life insurance contract, covered losses or legal defense costs? Our agents and customer service team are here to help with your insured vehicle needs. Call us today at 1-888-949-6289 or visit your nearest Insurance Navy location. For your convenience, Insurance Navy is open from 8 a.m. to 9 p.m. CST, 7 days a week.
Additionally, we can help you find an insurance quote right on our website. Because we want to help you save money wherever possible, we offer our auto insurance coverage quotes completely free of charge. By navigating our website, you can also inform yourself about many useful topics, such as the time limit required for you to notify the insurance company about a crash, how to file a police report, and situations in which your coverage will pay for repair costs for you vehicle.
We also have a strong presence on social media, so like or follow us on Twitter, Facebook, Instagram, or Pinterest. After that, we can keep you updated on helpful tips on medical payments coverage, total loss, fault accidents and much more.
Lastly, we also have blogs that may help you with any questions you have. For instance, our blogs cover many different topics. From how often you should shop for car insurance, to information on the Uber rewards program.