There are lots of different auto insurance terms that you should know about. So, that’s why we’ve put together this car insurance glossary to inform you.
Actual Cash Value (ACV) – The value of your property. It’s based on the current cost to replace it, minus depreciation.
Agent – A person who sells insurance policies.
Application – A form you fill out with information about you for an insurance company. This is to see if they will insure you and how much to charge.
Bodily Injury (BI) – Physical injury to a person.
Cancellation – The closing of an insurance policy before the renewal date.
Collision Coverage – Pays for damage to your car, up to policy limits, no matter who caused an accident.
Comprehensive Coverage – Pays for damage to, or loss of, your car from perils other than accidents. These include hail, vandalism, flood, fire, and theft.
Contract – Refers to an insurance policy, which is a contract between the insurance company and the policyholder.
Declarations Page – The page in your policy that shows the name and address of the insurer. It also shows the period of time a policy is in force, and a description of the automobile. Additionally, it shows the premium amount and the amount of coverage.
Deductible – The amount the insured pays when they file a claim. Specifically, when it’s done before any payment is due from the company.
Depreciation – The act of lowering an item´s value due to use or wear and tear.
Endorsement – A written agreement on a policy expanding or limiting the benefits otherwise payable under the policy.
Full Coverage – A term that people use to describe how much auto insurance coverage they have. For instance, the term usually means a policyholder has both comprehensive and collision insurance.
Lapse – Termination of a policy due to non-payment of premiums.
Liability Insurance– Pays for injuries to the other party and damages to the other vehicle resulting from an accident you caused. It also pays if the cause of the accident was someone covered by your policy. This includes a driver operating your car with your permission.
Loss – The amount an insurance company pays on a claim.
Medical Payments– Pays limited medical costs if you get an injury in a crash. Moreover, this covers a family member or a passenger in your car who also receives an injury. Similarly, this will pay limited funeral costs 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.
Non-Owners Policy – Offers liability, uninsured motorist, and medical payments to a named insured who does not own a vehicle.
Non-Renewal – A decision by an insurance provider not to renew a policy.
Policy Period – The period a policy is in force, from the beginning or effective date to the expiration date.
Premium – The amount paid to an insurance company to obtain or maintain an insurance policy.
Property Damage (PD) – Physical damage to property.
Rebuilt Title– A car with this title was declared a total loss by an insurance company. But, was safely restored to driving conditions and may be insured by an insurance company. A car with a rebuilt title may have limited insurance coverage options.
Rental Reimbursement Coverage – This will pay a set daily amount for a rental car. But, only if your car is getting repairs for damages that your policy covers.
Roadside Assistance Coverage– Provides services such as towing, flat tire change, locksmith service and battery jump-start to customers.
Reinstatement – When a life insurance company puts a policy back in force after it lapsed because of nonpayment of renewal premiums.
Salvage Titles– This means a car has been declared a total loss by an insurance company. Also, it’s not allowed on the road and may not insured by an insurance provider.
Towing And Labor Coverage – Pays for towing charges when you can’t drive your car. Also pays labor charges, such as changing a flat tire, at the place where your car broke down.
Underwriter – The person who looks over an application for insurance. After that, they decide if the applicant is acceptable and at what premium rate.
Uninsured/Underinsured Motorist (UM/UIM) Coverage – Pays for your injuries and property damage caused by a hit-and-run driver. Or, injuries caused by a motorist without liability insurance. It will also pay when your medical and car repair bills are higher than the other driver´s liability coverage.
Vehicle Identification Number (VIN)– Your vehicle’s serial number assigned by the manufacturer. This identifies year, make, model, options and other information that, by definition, is unique to your specific vehicle.
Need more information that can’t be found in this car insurance glossary? Our team is here to help. Call us today at 1-888-949-6289 or visit one of our many Illinois offices. Our offices are open from 8 a.m. to 9 p.m. CST, 7 days a week.
Lastly, we also have blogs that may help you with any questions you have. For instance, our blogs cover many different topics. From how to keep your car cool in the summer, to proper steps to take after Godzilla damages your car.