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Center: Glossary of Terms
Insurance related terms defined.
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B : C : D
: E : F : G
: I : J : L
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Actual Cash Value
You'll see this term a lot in auto insurance policies or
if you ever have to file an auto insurance claim. That's
because most auto insurance coverage reimburses you only
for the actual cash value of your car. Your car's actual
cash value is calculated by determining its original value,
minus the amount your car has depreciated since you bought
it.
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Adjuster
An adjuster is the person who investigates and settles
auto insurance claims.
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Agent/Broker
Agents and brokers both sell and manage insurance for their
customers. Agents are the authorized representatives of
an insurance company or companies, while brokers are the
authorized representatives of people looking for insurance.
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Anti-Theft Recovery System
These systems consist of an electronic device that's installed
in a concealed area of your car. If your car gets stolen, you can activate
the device and it will emit a signal that can be used to locate your
car.
Such systems can be effective over a radius of several miles, depending
on local geography. Ask your car dealer or nearby police department
which brand of recovery systems are supported in your area.
By installing an anti-theft recovery system, you may be eligible for
an auto insurance discount.
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Benefit
A benefit is the amount paid by an auto insurance company to you or
your beneficiary when you file an auto insurance claim.
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Bodily Injury Liability Coverage
Bodily injury liability coverage protects you if you are held responsible
for injuring someone in a car accident.
This coverage helps pay for the injured party's medical expenses and
lost wages. Bodily injury liability may also help pay your expenses
in a related lawsuit.
The amount covered is capped at the limits you select when you buy
your auto insurance policy.
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Business/Commercial Use
This classification means that you mainly use your car for business
purposes (such as sales, service, and delivery calls) or work-related
errands (like trips to the bank or post office), and other work-related
driving. Commuting to and from work is not considered business use.
Esurance doesn't currently provide auto insurance coverage for
vehicles driven primarily for business/commercial use. (Not sure if
this applies to you? We show you a checklist to help you figure out
if business/commercial use applies to you when you get your car insurance
quote.)
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Claim
An auto insurance claim is a policyholder's request to be
reimbursed for a loss that's covered by car insurance.
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Collision Coverage
Collision coverage helps pay for auto repair or replacement costs if
your car hits another vehicle/object or if your car rolls over.
The maximum amount paid for repair or replacement is the
car's actual cash value, minus the amount of the deductible
you choose when you buy your auto insurance policy.
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Collision Deductible Waiver
This auto insurance coverage pays the deductible for your
collision coverage if you're involved in an accident in
which an uninsured motorist is held legally responsible. This particular auto insurance coverage isn't available in
all states. If it is available, you have to buy this coverage
with collision coverage when you buy your auto insurance
policy.
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Commuting
If you primarily use your car for commuting, this means that
you mainly use the car to drive it to and from work or school.
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Comprehensive Coverage
Comprehensive coverage helps pay for damage to your car resulting from
fire, certain natural disasters, falling objects, and vandalism. Theft's
also covered.
The maximum amount paid for repair or replacement is the
car's actual cash value, minus the amount of the deductible
you choose when you buy your auto insurance policy.
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Continuously Insured
The length of time you've been continuously insured is the
number of years you have been covered by one or more insurance
companies without a lapse in your auto insurance coverage.
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Deductible
For some types of auto insurance coverage, you're asked to choose
a deductible. A deductible is the amount of damages you agree to pay
for if you file an auto insurance claim.
Though choosing a higher deductible can substantially lower your auto
insurance premium, if you file an auto insurance claim, you'll
have to pay the full, pre-established amount of the deductible out of
your own pocket in order to receive payment from your auto insurance
company.
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Declarations
The declarations page of your insurance policy summarizes
the factual information essential to your insurance coverage:
the policyholder's name and address, a description of the
insured vehicles/property, the insurance premium, as well
as the coverages, limits, and deductibles.
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Defensive Driver and Driver Improvement Courses
These courses consist of defensive driving training for drivers of
all ages as well as "mature driver safety courses" intended
for drivers age 55 and over.
In certain states, you may qualify for an auto insurance discount if
you're in the eligible age range and if you've taken one
of these safety courses.
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Depreciation
Depreciation is the decline in an object's value due to age, wear and
tear, or obsolescence.
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Effective Date
The effective date is the date your auto insurance coverage
begins. You are not covered by insurance prior to an insurance
policy's effective date.
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Emergency Road Service
This optional auto insurance coverage pays a fixed amount toward vehicle
towing if your car breaks down or if your car gets disabled in an accident.
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Endorsements
Also known as riders, endorsements are changes to the original insurance
contract. In auto insurance coverage, endorsements may include changing
your deductibles or adding a new car to your auto insurance policy.
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Exclusions
Exclusions are situations that are not covered by a given
insurance policy. Specific exclusions are listed in the
insurance policy.
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Full Coverage Auto Insurance
Full coverage auto insurance denotes an insurance policy containing all auto insurance coverage legally required in a given state. The term “full coverage” does not imply the policyholder will always be fully covered.
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Garaging Location
The garaging location is where your insured car is parked
most of the time. This location is usually indicated by
the ZIP Code of the policyholder's primary residence. Your
garaging location will affect your auto insurance rates.
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Indemnity
An indemnity is a pre-determined sum paid for a covered loss.
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Insurance Claim Report
Insurance claim reports provide details about auto insurance claims
you or other insured drivers have filed with insurance companies. These
reports are provided by independent consumer reporting agencies that
collect auto insurance claim information from a variety of insurance
companies. One of the most common agencies issuing such reports is C.L.U.E.,
the Comprehensive Loss Underwriting Exchange.
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Insurance Score
Insurance scores are based on analytical models that objectively measure
the relative likelihood of future insurance losses based on your credit
history. These scores and analyses of their significance are provided
by independent consumer reporting agencies.
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Insured
The insured is an individual covered by a given auto insurance policy.
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Judgment
A judgment is a final decision rendered by a court of law. For example,
in a lawsuit related to an auto accident, where Kate hit Eric’s fence,
the court determined that Kate was wholly responsible for the accident.
The judgment determined that Kate should pay for the costs of repairing Eric’s fence.
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Liability
Liability is a term that broadly means legal responsibility. If you
run a stop sign and hit another car, you may be found liable for the
damages to the other driver's car.
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Liability Coverage
Liability coverage protects you from having to deplete your assets
to pay for damages if you're held responsible for injuries or
damages arising from a car accident.
The two main types of liability coverages in an auto insurance policy
are bodily injury and property damage.
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Limits
Limits are the maximum amount an insurance company will pay for a covered
loss. Though you can choose your limits for certain coverages, some
states require you to buy certain levels of auto insurance coverage.
In such states, you'll have to choose limits that at least meet
your state's auto insurance requirements.
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Medical Benefits
Medical Benefits coverage is sometimes a part of your auto
insurance policy's Personal Injury Protection.
Medical expenses that are the direct result of accident-related injuries
are covered. Covered medical expenses are capped at the limits you choose
when you buy your auto insurance policy.
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Medical Payments Coverage
This auto insurance coverage pays medical bills if a covered
driver and/or accompanying passengers are injured or killed
while in an insured vehicle, regardless of fault in an accident.
This may also cover policyholders and their family members when in
others' vehicles, or when policyholders and their family members are
on foot and hit by a car.
The amount paid by medical payments coverage is capped at the limit
you choose when your buy your auto insurance policy.
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Motor Vehicle Report
A Motor Vehicle Report (MVR) provides information on your driving record.
This report includes accidents and moving violations. Auto insurance
companies obtain MVRs from states where you or other insured drivers
have been licensed to drive.
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National Credit File
The National Credit File provides objective consumer information regarding
the financial history of an individual. Information contained in this
report is often used to calculate insurance scores.
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No-Fault Insurance
If a type of auto insurance coverage is described as no-fault, this
generally refers to the way the insurance company settles a covered
auto insurance claim.
Generally, if a certain coverage is no-fault, responsibility doesn't
have to be assigned before an auto insurance claim gets settled.
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No-Fault States
In some states, called no-fault states, insurance companies are legally
required to pay a policyholder's covered losses, regardless of who's
held responsible for an accident.
Some no-fault states also restrict the right to sue for damages. In
states without no-fault regulations, the insurance company covering
the person who caused an accident is forced to pay for covered losses.
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Non-Passive Alarm
A non-passive alarm has to be manually activated every time you leave
the car. If someone attempts to open your car, the alarm sounds, and
the system disables the automobile's starter, ignition system, and/or
fuel circuit.
You may qualify for an auto insurance discount if your car is equipped
with such an alarm.
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Passive Alarm
Passive alarms are automatically activated and emit warning sounds
when someone tries to get into your car. Once the passive alarm has
been triggered, the system disables the automobile's starter, ignition
system, and/or fuel circuit.
You may receive an auto insurance discount if your car is fitted with
such an alarm.
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Pleasure Use
If you use your car for pleasure, this means that you typically drive
it for fun, with no regular commuting or business use.
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Policy Expiration Date
Your auto insurance policy's expiration date is the date when
auto insurance coverage ends if your auto insurance policy isn't
renewed. The expiration date can be found on the declarations page of
your auto insurance policy, on a proof of insurance card, or on a recent
auto insurance renewal notice.
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Policy Term
A policy term is the length of time an auto insurance policy
is valid.
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Primary Driver
The primary driver is the person who drives a car most frequently.
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Primary Use
A vehicle's primary use is how the car is typically used. Auto insurance
companies usually classify primary use as commuting, business/commercial,
or pleasure use.
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Primary Policyholder
The primary policyholder is the person who serves as the
main point of contact with your insurance agent. Since he/she
is the main point of contact, your agent needs the primary
policyholder's valid email address so that we can send account
updates, auto insurance renewal notices, and other policy-related
communication.
Typically, the primary policyholder is also the person
billed for your insurance policy.
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Property Damage Liability Coverage
Property damage liability coverage protects you if you are held responsible
for damaging someone else's property in a car accident.
Property damage coverage helps you reimburse another person for their
damaged property (such as a car, a fence, or a home). This type of auto
insurance coverage also helps pay your expenses in a related lawsuit.
The amount covered by property damage liability is capped at the limit
you choose when you buy your auto insurance policy.
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Rental Car Reimbursement
Rental car reimbursement is an optional kind of auto insurance coverage
that helps pay for your rental car expenses if an insured car is damaged
or stolen and you need a rental car.
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SR-22
An SR-22 is an official document that shows proof of financial responsibility.
Courts may require an SR-22 or a similar form for people convicted of
certain traffic violations.
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Secondary Driver
A secondary driver is one of the drivers listed on your auto insurance
policy who's insured for driving an insured vehicle. However,
this driver is not a car's primary driver.
A secondary driver is also sometimes known as an occasional driver
in auto insurance terminology.
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Tort
Tort is a legal term used to describe instances when someone is deemed
legally responsible for injuring another person or damaging his/her
property.
Some states ask you to select a tort provision. In these states, you
can limit your right to sue for non-monetary damages (like pain and
suffering) in exchange for a reduced auto insurance premium.
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Towing Coverage
This type of auto insurance coverage is optional, and pays a fixed
amount toward towing if your car breaks down or if it's disabled
in an accident.
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Uninsured Motorist Bodily
Injury Coverage
Uninsured motorist bodily injury coverage is available in some states,
where it's often mandatory.
This kind of auto insurance coverage pays for your medical expenses,
lost wages, and other general damages when you or your passengers are
injured in an accident caused by a driver who has no car insurance.
Uninsured motorist coverage also pays for injuries sustained in hit-and-run
accidents.
The amount covered by uninsured motorist bodily injury is capped at
the limit you choose when you buy your auto insurance policy.
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Uninsured Motorist Property Damage Coverage
Uninsured motorist property damage coverage is available in some states,
where it's often mandatory.
This kind of auto insurance coverage protects you if your vehicle is
damaged in an accident caused by a driver who has no car insurance.
Other protection afforded by this type of auto insurance coverage varies
from state to state.
The amount covered by uninsured motorist bodily injury is capped at
the limit you choose when you buy your auto insurance policy. In some
states, you'll need to pay a deductible
each time you file an auto insurance claim.
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Uninsured/Underinsured Motorist Bodily Injury Coverage
In some states, both uninsured and underinsured motorist bodily injury
are bundled into a single coverage. In the states where this type of
auto insurance coverage offered, it may be mandatory.
This kind of auto insurance coverage pays for your medical expenses,
lost wages, and other damages when you or your passengers are injured
in an accident caused by a driver who doesn't have enough car
insurance, or who completely lacks auto insurance coverage. This type
of auto insurance coverage also pays for injuries sustained in hit-and-run
accidents.
The amount covered by uninsured/underinsured motorist bodily injury
is capped at the limit you choose when you buy your auto insurance policy.
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VIN (Vehicle Identification
Number)
The VIN, short for Vehicle Identification Number, is the unique 17-digit
number found on every car. The VIN contains the vehicle's serial number,
as well as abbreviations for the make, model, and year.
The VIN appears on your vehicle registration card. It's also
engraved in your car, near the base of the windshield on the driver's
side dashboard and/or on the edge of the driver's side door. Back to top
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