Car Insurance Terms & Definitions for Dummies

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)

  1. Terms: A to D
  2. Terms: E to L
  3. Terms: M to P
  4. 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.

Car Accident Insurance Claim Process & Tips

Accidents can often leave you in an immediate shock state that you can’t think how to proceed with filing a police case and car accident insurance claim.

Here is exactly what you have to do with respect to your accident claim:

Note: Though we are primarily talking about the US and Canada here, the steps explained below is pretty much the same in most countries.

  1. First of all, if injuries or casualties are involved, immediately use your mobile phone to call the emergency number and get the ambulance and police. You may give first aid to the injured in the meantime
  2. If there are no injuries but serious body damage to the car, you may still need to file a police case in order to push your claim
  3. While awaiting the emergency or police vehicle, gather as much information as possible about the people and vehicle involved in the incident. You may want to take down the names, license plate numbers, place details of the accident and capture a few photographs using your mobile phone camera. In the case of serious accidents, try to get some witness information as well
  4. Next call up your insurance company agent and narrate the incident. He will usually guide you on the next steps which at times towing the vehicle to the nearest associate body shop, if the damage is heavy
  5. While your car is getting assessed for damages by the appointed person from the company, you may already file the insurance claim form. Provide all the details regarding the accident in your claim form and email or fax it to the agent as soon as possible. Some insurance companies may have online filing as well. By the way, if it is a minor damage, the car at this point is still with you in which case the company appointed insurance adjuster will visit you and assess the damage caused
  6. In the next few days, you may get a couple of calls from your insurance company’s lawyer and other staff as well as possibly a call from the other insurance company. Be prepared with your facts
  7. Finally, you will get a positive call that your claim has been approved and you may send the car to the nearest insurance company pre-approved body shop. You then get it fixed and back on wheels again
  8. Please note that in case of accident deaths or drunken driving related accidents there may be further steps with the law enforcement and legal departments

Other Accident claim tips

Always understand your insurance coverage well, before calling up the claim department.

Decide whether a claim is required at all. For example, if more of plastic and glass parts are involved in the damage, the coverage may be limited and the fixing cost high at the insurance company picked body shop. You may be able to fix it cheap elsewhere.

Keep copies of all records of the incident, claim form and details of your conversation (date, content, agent name) with the claim department.

Talk truth when you are narrating the incident to your agent.

Do keep receipts related to your lodging, work commuting cost, car rental etc until the claim is settled. Some of these expenses may be covered in your package.

Make sure that the insurer settles with you the coverage that was promised. In case of any doubt, take legal advice.

Happy motoring (again)!