Before taking any auto insurance for the first time, t is a good idea to get familiarized with the common insurance terms and definitions. The insurance agents are supposed to explain these terms to you and they will do that as well. But at the same time they may have their vested interest and hence might tweak the definitions in order to buy you into his services.
The car insurance terms listed below can be good reference guide for all that you want to know about auto insurance. It can also form a very good single read for the patient reader.
(Please note that for the sake of readability, we have split this into four pages. Use the navigation below in order to Quick Jump to the respective pages)
- Terms: A to D
- Terms: E to L
- Terms: M to P
- Terms: R to Z
Auto Insurance Terms (A – D)
Accident Forgiveness: This optional coverage helps you avoid a surcharge in the event of the first accident where you are at fault. Inexperienced drivers may opt for this coverage at the time of taking your auto insurance policy.
Accident report form: This is the police report that is prepared during an accident. It contains important information about an automobile accident such as circumstances leading to the accident, parties involved and citations given.
Additional Interest Insured:
Additional interest insured is a company, employer or person who has been named in the policy for liability in the case of an accident that involves an insured person or vehicle. Usually lien holders or a company leasing out vehicles for their employers are additional interest insured.
Anti-Theft Device: A device that can prevent vehicle theft. Some anti-theft devices can track and recover a vehicle and automatically contact a response center to initiate the vehicle recovery process. These devices are known as Active Anti-Theft devices. Passive devices attempt to prevent theft by triggering electronic car alarms, steering wheel locks etc.
At fault: This is a straight-forward definition which simply means to what degree the insured has contributed to the accident where he is involved. This is used to determine what portion of the damages will be borne by the respective insurance companies involved. The method of calculation of fault depends on the the particular state rules.
Auto insurance score: This score is based on information found in a consumer’s credit file and history of incidents. Auto insurance scores help the insurance companies to arrive at the policy prices. Basically, your insurance premium goes up when you have black marks in your credit report.
Binder: A temporary insurance contract or proof of coverage until you receive the permanent policy certificate or paper. It’s also known as a cover note, at times.
Bodily injury coverage: Bodily injury coverage on an auto insurance policy pays you the medical expenses incurred by you and other individuals injured the accident.
Claim: It is the request that you submit to your insurance company in the event of an automobile accident of your insured vehicle. The claim has details on the expenses incurred, damages caused and other financial obligations resulted by the accident.
Claims adjuster: A staff member or representative of an auto insurance company who investigates and settles claims for you in order to ensure that all parties involved receives the applicable compensation
Collision or collision coverage: The part of an auto insurance policy that pays to get your car repaired after a collision with another vehicle or an object is known as collision. It is this part of the coverage that will get your insurance company to seek out another driver’s insurance company to pay for repairs if they were at fault. There is always a deductible amount which means you don’t get paid for the entire damage. However, more collision coverage may mean majority of the damages paid.
Comprehensive coverage: Coverage that pays for damages to your vehicle resulting from a covered loss other than a collision. Losses incurred by fire accidents, vehicle theft, violence or contact with animals, birds or falling objects etc can be covered by comprehensive coverage.
Continuously Insured: This means that your insurance coverage from an insurance company (or more than one insurance company) is always in effect without a break or lapse in coverage for any reason. Continuously insured assures you peaceful driving even when you are switching policies or insurers.
Covered loss: Any damage to yourself, your vehicle or other people or property that is covered under your insurance policy.
Coverage Summary (Also known as Declarations Page or Dec Page): This page is provided by your insurance company and lists the information such as types of coverage elected, limits for each coverage, premium contribution (cost) under each coverage, vehicles covered and any other useful information applicable to your policy.