Car Insurance Glossary A | B | C | D | E | F | G | H | I | J | L | M | N | O | P | Q | R | S | T | U | V | W A – Auto Insurance Terms with A Accident An unpredictable, unforseen event resulting in a loss to automobiles. Accident Forgiveness A benefit that some companies provide their policyholders so if they have an accident, the usual surcharges will not be applied to their premium as long as all other requirements are met. Accident Frequency A statistical measurement in which the number of times a policyholder might be involved in an accident. The higher the predicted frequency, the higher the premium might be. Accidental Death Benefit (ADB) This can be included in first party Medical Payments or PIP on an auto policy. It can also be a rider on a life insurance policy. There are also stand alone policies that provide this benefit. They all pay a beneficiary a set amount when there has been an accident that resulted in death. Accidental Death Coverage Same as Accidental Death Benefit (ADB) Act of God Typically refers to natural and/or weather-related phenomenoms such as storms, earthquakes, volcanic eruptions, hail, and flood. Actual Cash Value (ACV) Fair market cash value of property which is usually value minus depreciation. Actuary A person trained to take statistics and make calculations to assess the rate that should be charged for an auto or home policy premium. Additional Insured A co-titled owner of a vehicle who has contributed financially in some way to the vehicle or the operation of the vehicle. It could also be the legal spouse of the titled owner.It must be someone who has financial interest in the vehicle. Someone who simply drives the vehicle occasionally would not have financial interest in the vehicle and would not have his or her name listed on the title, registration, or insurance policy. Additional Interest An entity that has financial interest in the vehicle that might not be necessarily a driver. This typically refers to the institution who provided the loan for the person who is paying to own the vehicle. Once the loan amount is satisfied, the institution would no longer have interest in the car. Adjustable Rate An interest rate that is calculated based on the market rate index and changes based on inflation and the prime interest rate. Adjuster Insurance company representative trained to calculate the cost of the policyholder’s loss. Admitted Assets An insurance company’s value including real estate, bonds, stocks, and mortgages to determine the company’s solvency and are required to be a part of the annual assets statement. Admitted Company An insurance company that has been permitted to sell insurance in that particular state. Adverse Carrier The insurance company that will pay out for damages due to their policyholder’s negligence or violation. Adverse Selection Higher risk individuals often seek higher limits of coverage, making the policy a ‘double jeopardy” for an insurer. Aftermarket Parts Car parts that are made and designed to be similar to ones originally made by the car manufacturing plant but are much cheaper as replacement parts. It could reduce the value of a vehicle to use aftermarket parts. Agent A person licensed to do insurance business in the states in which they sell their products. Aggregate Limit Total amount of coverage the insured has according to the insurance contract for liability coverage. Agreed Price Custom, classic, antique vehicles and custom motorcycles are all examples of vehicles that should be placed on a special “agreed value” policy. The agreed price is the amount the insurance company agrees to pay in the event of a loss based on a professional appraisal or receipts of labor and parts for the vehicle. Alien Insurance Company A foreign insurance company. Amendment An addition or endorsement customizing a policy to add or remove coverage. For example, an OEM amendment expands the physical damage coverage amount to allow for original factory manufactured parts whenever available as opposed to aftermarket parts. An exclusion is an amendment to a policy that excludes coverage if a named person is operating the vehicle. Annuitization The process of taking a lump sum of funds and spreading them out over a defined time and determining a payment mode and amount. Anti-Lock Braking system (ABS) Computerized braking system that uses air pressure to even the braking pressure so there is a lessened chance for the car to go out of control. Anti-Theft Device A factory installed or professionally installed device that deters theft and vandalism to a vehicle. Anti-Theft Recovery System A GPS tracking system that is installed in or on the vehicle to locate it through a cental computer system if the vehicle is stolen for retrieval. Application The form a person fills out to request insurance coverage. Appraisal Professional assessment done by someone certified to evaluate the value of an item. For auto or bike insurance it would be for an auto or bike. For a homeowner policy it would be for select high-value items in the home like jewelry or fine arts. Arbitration Used in place of, or before a case escalates to, a court litigation in which an uninvolved and impartial party Assets The cash value of all property including real, financial, and personal property. Assigned Risk An insurance pool in which a high-risk individual is placed by the state for lack of being qualified for any regular auto insurance companies. Assured The policyholder. Another term for “insured”. At-Fault Driver The person/driver who commits a moving violation that results in an accident. Auto Damage Adjuster The person in the claims process that assesses the cost of repairing auto damage from an accident. Auto Damage Division The claim department within the auto insurance company that is responsible for auto damages from an accident. Auto Repair/Claim Repairs Centers provided by an insurance company that is a one-stop shop for claims adjusting, assessment, payout, and repairs. Drive in with a damaged car and drive out with a repaired car with guarantees on the work. Auto Theft A loss that is covered under Comprehensive (or Other Than Collision) when a policyholder’s vehicle is stolen and not recovered within the specified period of time in the policy terms; typically 30 days. Automobile Insurance Transferring some of risk from owner(s) to auto insurance company for liability and physical damage (if chosen). Automobile Insurance Plans Assigned Risk policies that provide state required coverage to individuals who can’t qualify for insurance on their own. Automobile Insurance Premium Discounts Reduction of premium for allowable situations such as Good Student, Affiliations, Accident-Free, etc. Automobile Liability Insurance The portion of the insurance policy that provides financial protection if the policyholder is at fault for a loss to another person’s property or injuries. Each state has their own defined minimum allowable coverage and each insurance company has their own defined maximum coverage. The policyholder may choose any level to which he or she is qualified. B – Car Insurance Terms with B Basic Auto Policy Typically refers to an auto policy that just has the state requirements for being legal on the road. For example, in Florida, it would be a PIP/PDL only policy. Benefit The total payout made for a claim. Benefit Period The time that the policy is in force, from the effective date until the expiration date. Binder A promise of coverage, such as an auto binder that the agent faxes a dealership that shows a promise to cover the vehicle for the time period specified. Blue Book Refers to Kelley Blue Book–A company that assesses value to a vehicle Bodily Injury The part of liability coverage that will pay out to injured persons other than the driver who is at fault Broker –> Agent A licensed agent that is independent and can sell products from multiple companies. C – Auto Insurance Terms with C Cancellation Can be initiated by the insurance company according to regulations and with plenty of notice; policyholder can initiate it any time to stop policy coverage. Capital Shareholder Equity=Assets minus liability. Measures the worth of a company is calculated. Car Insurance See “Automobile Insurance” Carrier A company that “carries” the risk for the insured and is licensed to issue insurance products. Casualty An accident that causes injury or property loss. Casualty Insurance A policy that assumes the risk of casualty and will pay up to the limit minus any applicable deductibles for a covered loss. Catastrophe An event that affects a widespread area, region, or a multitude of people in a particular area. Certificate of Financial Responsibility Also referred to as an SR-22 or FR-44. It is a form that the insurance company files with the state to guarantee the named person is insured and recinds that form if the policyholder should cancel for any reason. It is usually required when caught driving without insurance, DUI, or other major violations. Certificate of Satisfaction The form a policyholder signs when repairs are complete on a vehicle from a claim and they are happy with the results. Claim A request for payment due to a covered loss as described on the insurance policy. Claim Adjuster A person who had been trained and certified to assess the damage and evaluate an amount needed to indemnify the policyholder for their loss. Claimant The person placing a claim. Clause Clairification, definition, and/or explanation of coverage conditions that is in a particular section of the insurance policy. CLUE® Report A public record report that agencies, underwriters, and insurance companies can access to learn about any prior claims that is on record for the person seeking insurance coverage based on insured information and VIN of vehicles. CLUE is an acronym for Comprehensive Loss Underwriting Exchange. Any claim reports are submitted to this database. Co-payment Money that an insured is responsible to pay for a medical visit as defined by their health insurance terms. Coinsurance For Property or Home insurance, it is the clause that requires the policyholder to maintain a set minimum dwelling coverage limit in order to be eligible for full loss coverage. For health insurance, it is the percentage that the policyholder is responsible to pay for medical and heath expenses. Collision Insurance Part of the physical damage coverage that will pay to fix or replace a vehicle when there is damage from colliding with another object. Combined Single Limit (CSL) Auto insurance liability amount that covers both the bodily injury and the property damage in one aggregate limit rather than breaking it down in the three ways that is common on auto insurance. For example, 25/50/25 limits provide a maximum payout per person for injury of $25,000, no more than $50,000 in total injury payout, and a maximum of $25,000 for damage to property. A CSL of $300,000 means that regardless of how many people are hurt or how much damage occurs, the $300,000 is the max and can pay out to any of the liable losses. Commercial Lines Insurance policies that are issued to businesses such as general liability, property coverage, commercial auto, workers comp, directors and officers liability, and business interruption coverage to name a few. Commission A percentage of the income from a sale of a polcy that goes to the agent who sold it. Comparative Negligence In some states there is an assigned fault percentage to accidents. If both parties have contributed to the accident, each policyholder involved can have some of their damages recovered if they are not 100% at fault. Competitive Auto Repair Parts Same as “Aftermarket Parts”: These are car parts manufactured by a company that is not the original car manufacturer but the part is as good if not better than the original part. Competitive Estimate Many insurance companies still have the collision claim system where a policyholder obtains three or more damage estimates to submit to the insurance company. These amounts help the insurance company settle on a fair cost amount for repairs. Comprehensive Insurance Part of the physical damage coverage that will pay to fix or replace a vehicle from damage or loss to covered incidents other than collision, such as theft, fire, vandalism, hail, flood, and animal impact. Conditions Responsibilities of both the insurance company and the insured are spelled out in the conditions section of the auto insurance policy. Condo Insurance An HO-6 homeowner’s form in which the policy only covers the interior building materials that the owner is responsible for, and contents. The condo association typically covers the exterior and roof. Continuous Coverage or Continuous Liability Insurance Having no prior lapse of auto liability insurance coverage for any reason provides policyholders with substantial discounts. Contract Legal agreement. In auto insurance, it is the policy agreement in which the insurer spells out the terms and conditions of the coverage and the responsibilities both they have and the policyholder has for legal protection. Contributory Negligence Some states have provisions that if a person has any fault in an accident they cannot claim any compensation. Cost–of–Living Adjustment (COLA) Refers to an adjustment made to a payout or a credit that reflects the current rise in the cost of living index. Coverage The benefits and protection afforded by the insurer to the insured. Coverage Area The geographical area in which the policy provides coverage. For US auto insurance policies, it typically protects in all 50 states and the additional territories like Guam and Puerto Rico. It will not cover in any other country, including Mexico. However, some provisions may be given to drive in Canada and have coverage with a US policy, but the certificate of coverage must be issued to the policyholder to keep in the car while driving in Canada from the insurer. Covered Person People specifically named in an insurance policy. For auto insurance it would be all titled owners and drivers. Customized Equipment/Special Equipment An additional endorsement that can be added as a rider to an auto insurance policy that provides an increase in the coverage limit allowed for customization or special equipment. This could be anything from a custom paint job to a wheelchair lift. Customized Vehicle A vehicle in which the owner has added features and parts such as special rims, window tinting, custom paint, chrome, audio/visual equipment, lift or lower kits, etc. D – Car Insurance Terms with D Damage Loss resulting from an accident to property. Death Benefit A payout to a beneficiary for an accidental death due to an accident. Declaration Page The official policy document that shows who is covered, the address, what vehicles or property is covered, drivers, deductibles, coverage limits, discounts, and endorsements. Declarations Short for “Declarations Page”. Deductible The amount the policyholder has agreed to self-insure in the event of a claim. This part must either be paid before the insurance company pays out or it will have to be deducted from the amount the company pays depending on their terms and the type of loss. Defensive Driver Course A course that is typically offered through a state department of motor vehicles office that provides a refresher course in safety and regulations regarding driving. Defensive Driver Discount The discount applied for successfully completing a defensive driver course. Depreciation Wear and tear or damage on property that makes it worth less than the estimated cash value. Discount A program that will deduct a certain amount or percentage off a premium cost if specific conditions are met by the insured such as good grades, driving education, affiliate member, anti-theft, etc. Domestic Insurance Company An insurance company that is licensed to do business in the state in which it sells insurance policies. Drive-In Claims Office – Concierge Claims Service A one-stop claims shop for damage repair. Get estimates, work, and payout all done at the same place. It reduces the time and inconvenience of old-style claims in which the policyholder had to run around to get quotes, chase down the claims adjuster, and wait for the insurance check to get the car fixed. Drive-Other-Car Endorsement An amendment that broadens protection of the insured to any vehicle in which he or she happens to drive. This is more common in commercial auto insurance than in personal auto insurance. Driver Education A class offered through a school or private instructor that teaches a person how to drive and the rules of driving for that state. Driver Improvement Course A class required by a state due to a specific violaiton or a number of violations by a driver. Driver Training This could refer to a school class or a private instruction school where one is trained in the motor vehicle laws of the state and taught how to operate a vehicle. Driver Training Discount The discount offered through a number of insurance companies for successfully completing driver training. E – Auto Insurance Terms with E E-Bill Electronic bill. This is something that allows the insurance company to create an electronic version of the bill and email it to the policyholder or have it available on the policyholder’s website account. E-Commerce/Electronic Commerce A way to do business solely online. Earned Premium The amount of premium that is collected from the insured before the term of coverage has occurred. It could be partially or totally reimbursed to the policyholder if they should cancel the policy before coverage occurs that has already been paid for. Economic Loss The amount of money that was lost as a result of an accident that can be accounted for: Lost wages, medical expenses, property damage, etc. It does not include intangible amounts like pain and suffering. Effective Date The date on which the policy becomes effective, typically a minute after midnight on that date. For example, a policy effective date of 3/15/2015 will be in effect at 12:01 AM on 3/15/2015. Electronic Funds Transfer (EFT) A payment method that electronically transfers money from the policyholder’s checking or savings account to pay a bill, such as auto insurance. Elimination Period The length of time, or waiting period, measured between the payment of benefits to an insured and the actual date of loss or injury in which the insured is responsible to pay out of pocket. Emergency Road Service Coverage Each company that offers this service has their own coverage rules, but it generally will provide a stranded motorist who has purchased the coverage towing, a battery jump, tire change, or a couple gallons of gas. Employers Liability Insurance Business insurance coverage that financially protects the company from employee accidents. Endorsement An amendment that changes the coverage language of the policy. For example, an excluded driver endorsement means that the named excluded driver will not have access to the coverage on the policy if they are responsible for a loss. Another example is an endorsement that provides an additional $5000 in customized parts that is covered under physical damage above the actual cash value of the vehicle. Estimate An assessment for loss or repair to property. Exclusion Aspects of the policy that denies coverage for specific reasons or due to specific persons. For example, a homeowner living on the Texas coast will probably have a homeowner policy that excludes wind and hail damage. A named person on an auto policy exclusion means that if that person happens to cause a loss while driving the specific car on the policy, the coverage will not apply and the driver and owner will have to pay for any and all losses out of pocket. Expense Ratio (Commissions+Underwriting expenses)/net premium=expense ratio Experience Driving experience is the number of years driving in the US. Claims experience refers to the record of claims by an individual who is applying or renewing auto insurance. Experience Rating Driving and claims experience that is calculated into surcharges or discounts for premium estimates. Expiration Date The date in which the policy ceases to cover, typically ending at 12:01 AM. For example, a policy that ends on 9/15/2015 will stop a minute after midnight when it first turns to 9/15/2015. If the policyholder waits until later that day to buy a new policy, they will have no insurance coverage until the new policy is in force. That is why it is best to have a policy set up ahead of time to be effective for that same date so coverage can end and begin at the same moment so there will be no gaps in coverage. Exposure How much probability exists for a particular loss. For example, a homeowner who has old wiring has a bigger exposure to fire from faulty wiring than a homeowner who has newer wiring. Extended Non-Owner Liability Can refer to non-owner insurance in which an individual does not own a car but needs liabiltiy protection for driving someone else’s car. It is also common for employer-owned vehicles for the employees to have non-owner coverage to have better liability protection. F – Car Insurance Terms with F Family Automobile Policy FAP is largely replaced by a PAP (Personal Auto Policy). FAP’s were a package deal that included all family members and vehicles for liability and physical damage coverage. Field Adjuster A claims adjuster who travels to the site of the loss for property losses and to where the damaged auto has been set to assess damage and provide an estimate for indemnity. Financed Car A vehicle that has a lien or loan. Financial Ratings Companies like Moody’s, Standard & Poor, and AM Best assess the financial health and strength of a company and publish the findings so that the public can be more informed about the company they buy their insurance products from. Financial Responsibility Law Each state’s department of insurance sets the standards for the financial responsibility laws in which an auto owner is required to maintain these minimum standards to be legally able to either drive and/or own a vehicle in the state. First Party The party who is determined to be at fault in an accident and whose insurance will cover the loss. First Party Benefits Benefits that will pay out to the policyholder like medical payments, personal injury protection, UM, and physical damage coverage are examples of first party benefits. First Party Claims Claims made by the insured on their own insurance policy coverage. Flat Rate Cancellation Cancellation that calculates the unearned premium against the earned premium and provides an equitable refund to a policyholder when a flat-rate cancellation is issued. Opposite of a “Short Rate Cancellation”. Floater Sometimes called a rider, it is a special policy that is written for a specific item or property of higher value than what is offered through the regular personal property allowances on a standard home or renter’s insurance. Items like jewelry and fine arts are examples of items that should be individually listed, appraised, and covered under a floater. Forced Placed Insurance When a driver is high risk but must need an insurance policy, many states have a forced placed insurance plan that assigns them to an insurer and then provides partial reimbursement to the company for the risk. Foreign Insurance Company An insurance company that is originated in a different country but licensed to do business in a particular state in the US. Forms There are many forms that are used in property and casualty insurance. They are mostly dependent on state regulations, insurance company requirements, and other factors that can determine rate and explanation of coverage. For example, an exclusion form must be signed by a household member who does not want to pay a premium for a household driver with a bad record. States like Pennsylvania, Maryland, and West Virginia all have state-required forms that the insured’s must fill out and send back for the policy to be compliant. Fraud There are many forms of insurance fraud. One is to place false or exaggerated claims. Another is to lie on applications to get a lower rate. The SIU investigates all suspicions of fraud since it costs insurance companies (and therefore, insurers) millions of dollars. G – Car Insurance Terms with G Gap Insurance A policy coverage or form that makes up the difference between the book value of a vehicle and the loan balance if the loan is more than the value of the car. Garage Location The location that an insured’s vehicle is parked. It doesn’t necessarily mean a garage building is there, it’s just where the vehicle is primarily parked. General Account The account in which all insurance premiums are deposited for P&C product lines. The initial account that funds are put into while index or investment choices are decided. Can also be used as the fixed account. General Liability Insurance This is an insurance product that is for businesses and commercial companies. It is also available to those who sponsor public events. Good Student Discount A discount applied to a full-time student under the age of 25 who has maintained a cumulative GPA of 3.0 or better. Grace Period The amount of time given between the due date of an insurance payment and the date of cancellation if the payment is not received. Most standard auto insurers will provide a grace period, but many non-standard and high-risk insurance policies do not have grace periods. Guarantee Funds Funds that are guaranteed by an insurer based on a particular product and contract specifications Guaranteed Renewable An insurance policy that is guaranteed to be renewed after the intial period of coverage has ended. H – Auto Insurance Terms with H Hazard A risk to exposure. For example, a hazard would be a large tank of oil or gas next to a building that has sparks and fire inside. Hit and Run An unidentified driver who causes an accident and is able to get away from the scene without being identified. Homeowners Insurance An insurance policy that assumes risk for the loss or damage to a house, property, and liability. I – Car Insurance Terms with I ID Card A document small enough for a policyholder to carry in the wallet that has the claims phone number, policy number, and the policy holder’s name, address, and vehicles covered to show proof if law enforcement requests proof of insurance. Inception Date The date the policy first went into effect. Indemnification The process by which an insurance company pays for a loss. It is not for the insured to make a profit, but to put them back to the same level of value and comfort as before the loss. Indemnity An insurance mode of operandi in which they will not allow an insured to suffer a loss or to gain from a claim except for what is defined in the declarations. Independent Adjuster A non-employee who is responsible for assessing damage and estimating the cost to indemnify. Inflation Protection An endorsement that can be added to homeowners that will increase the amount of dwelling coverage automatically every year to adjust for inflation so that the policyholder will not find themselves severely underinsured after having a policy for a long period of time. Inspection What must be done to assess damage and assign a price to indemnify. Also can be an auto inspection by the agent or insurance company to be sure there is no prior loss or damage before allowing physical damage coverage. Many states and counties require this due to the high incidents of fraud. Insurable Interest Those who have a stake in the product being insured. For example, two people who have ownership of a house must both be listed on the policy since they both have insurable interest. Likewise, someone cannot buy an insurance policy for something they do not have ownership or interest in, like a next door neighbor cannot buy a home insurance policy for their neighbor’s house. Insurance A risk pool in which a customer can throw their hat into the ring and know that their risk is spread out across millions of people and the les likely there will be a loss, the less a customer has to pay into that risk. Insurance Fraud See “Fraud” Insurance Score A score that is based on credit history that affects insurance premiums. Insured The person(s) named as owner of the property and policy to protect the property. Insurer The company who is issuing the insurance policy. Investment Income Income derived from investment profit. J – Car Insurance Terms with J Joint Underwriting Association/JUA A group of insurance companies who join forces to provide specific insurance to the general public. L – Auto Insurance Terms with L Lapse in Coverage Any gaps of coverage: Payment neglect, selling a car and canceling a policy, canceling a policy for any reason. These will contribute to higher risk insurance premiums when insurance is sought out the next time. It is adviseable to not have lapses in coverage if you want a good insurance preimum cost. Leased Vehicle A vehicle that is provdided through the factory dealer with it’s own terms, agreements, conditions, and costs. A leased vehicle typically requires 100/300/100 split limits at minimum on the auto insurance policy. Legal Liability What one is responsible for legally. If a person’s dog bites another person, he or she will be legally liable for all medical costs associated with treatment and care. Lender A banking institution that gives money for a car loan or mortgage. Lessor The company providing the lease for a leased vehicle. Liability Responsibility or obligation for one’s self. Liability Adjuster A claims adjuster who is trained to assess the legal, medical, and care costs associated with a loss from their insured. Liability Insurance An insurance product that provides financial protection for an insured who wants to share the risk of a potential lawsuit or loss resulting from their accidental negligence. Liability Investigation An assessment that is done to determine who is responsible (or liable) for the loss that has been claimed. Licensed Certification issued when requirements are satisfied to show compliance. Lien A loan–usually a car loan Lien holder The company who provides the loan. A lienholder is typically listed on an auto insurance policy as a loss payee. Limit The maximum coverage the policy provides. For example, a limit of $50,000 in property damage means that if an insured does more than $50,000 worth of damage in an at-fault auto accident, he or she will be responsible for the remaining balance over $50,000. Limits of Liability The maximum coverage the policy provides for all the liability protection. Line of insurance The line of insurance is determined by the type of protection sought. For example, a person buying a home and wanting coverage for the house is a personal lines homeowner product. A business owner seeking insurance for the company van would need a commercial lines business auto policy product. Loss Damage or Injury that is claimed on an insurance policy. Loss of Use The amount specified in an “per day” or aggregate limit that an auto policy holder can be reimbursed for a rental car while their own vehicle is in the shop for a covered loss. In a homeowner’s policy, it is the amount covered for a policyholder to use towards temporary living quarters while damage is repaired on the home. Loss Payee The company providing the loan on a vehicle and is listed on the auto policy to be paid the claim loss for physical damage to help pay for the car loan if it is totaled. Loss Ratio The ratio of total losses incurred (paid and reserved) in claims plus adjustment expenses divided by the total earned premiums Losses Incurred (Pure Losses) The percentage of a premium that pays for actual losses. M – Car Insurance Terms with M Malicious Mischief The act of knowingly causing damage to an insured object. Material Damage Damage to an insured object. Material Misrepresentation Claiming inaccurate losses for an event. Mechanical Breakdown Insurance Coverage for a machine or vehicle that stops operating correctly. Medical Adjuster An individual who assesses medical claims. Medical Payments Coverage Insurance that will cover medical expenses in the event of a loss. Minimum Limits of Liability The lowest amount that an insurance carrier can legally cover and still be considered legally insured. Misrepresentation Claiming losses that did not happen. Motor Vehicle Record (MVR) The records kept by the states motor vehicle division to show driving habits and infractions. Motorcycle Safety Foundation (MSF) A group designed to ensure motorcycle safety on the road. Multi-car discount A discount given by insurers for insuring more than one vehicle. N – Auto Insurance Terms with N Named Insured Principal of the insurance coverage. Named Non-Owner Policy Provides liability and Uninsured/Underinsured motorist coverage for those that do not own a personal vehicle of their own. Named Perils A home insurance policy that only provides coverage on losses incurred to your property from hazards or events named on the policy. National Insurance Crime Bureau (NICB) An entity that keeps track of insurance crime. Negligence The act of not acting in a fully responsible manner. No-Fault Insurance Any type of insurance contract under which insureds are indemnified for losses by their own insurance company. No-Fault State A state that allows no fault insurance sales. No-Loss Form A form that releives the insurance company in the event of a lapse and reinstatement of coverage. Non-Owned Auto An auto policy that covers the liability of a person no matter what personal auto vehicle they drive. Non-Renewal An insurance company decision that will cancel a policy at the expiration date and will not be eligible for renewal with that company. Sometimes it is due to too many accidents or tickets and there might be another insurance product with the same company that it can be rewritten into, but it will be up to the insured to pursue this. Noncancellable A policy that cannot be cancelled under any circumstances except fraud. Nonstandard Auto (High Risk Auto or Substandard Auto) Insurance that is provided to a higher-risk set of people. It could be due to one or a combination of many things: Tickets, claims, poor credit, new driver, international driver, lapsed insurance coverage, etc. O – Car Insurance Terms with O Occasional Driver A driver that has potential to drive a specific car but will do so on a very limited basis, such as a college student who goes to school more than 100 miles from home would be an occasional driver on the parent(s) policy. Occurrence An event on a claims history or it could be a peril like fire, theft, or vandalism. Original Equipment Manufacturer Parts (OEM) OEM parts are made by the orignial manufacturer of a particular vehicle model. They are more costly than aftermarket parts and often require an endorsement if the insured wants it specified that any physical damage should be fixed by using OEM. Out–of–Pocket Limit Typically called a deductible, it is the amount that the insured is required to pay before the insurance claim kicks in. P – Auto Insurance Terms with P Passive Restraint System An automatic seatbelt. Payment Plans An agreement between the insurance company and the insured as to how they will pay for their insurance product. Payment Recovery A process that an insurance company will initiate when a customer is non-responsive to payment requests, the policy has canceled, and there is still an amount due. Per Occurrence Limit The second part of the split limit coverage that specifies the maximum payout for injuries to the entire third party. Per Person Limit The first part of the split limit coverage that specifies the maximum payout for injuries to one person. Peril A defined covered loss. For example, fire is a peril that is covered in both Comprehensive auto insurance and homeowners insurance. Personal Auto Policy (PAP) The main type of auto insurance issued by insurance companies. It provides specific coverage to named owners and drivers for liability, medical payments, uninsured protection, physical damage, and other options. Personal Injury Protection (PIP) No fault states use this coverage for insured’s to make first party claims on medical benefits on their policy regardless of who was at fault. Personal Lines The lines of insurance that are specifically for personal protection rather than commercial or business. Personal Property An insured’s belongings. Physical Damage Damage that can be seen and assessed to a vehicle. Physical Damage Coverage The damage to a vehicle that is covered by two or three parts of insurance: Collision, Comprehensive (Other than collision), and sometimes Uninsured Motorists Property Damage. Pleasure Use A vehicle that is not used daily. It could be a weekend use vehicle, a vehicle that is used by retired persons, or a classic/antique car that is only taken out for shows. Policy The set terms and definitions of what is covered for an insurance product. Policy Change Any changes to a policy that must be processed through the insurance company’s database. It could result in changes in rates. Policy Lapse Any time a policy cancels, the lapse will be counted from the date of cancelation until the effective date it is reinstated or another policy replaces it. Policy Limit The maximum dollar amount of coverage provided by an insurance company for a certain policy. Policy Period The coverage period for a policy defined by the effective and expiration dates. Policy Term The coverage period for a policy defined in time increments: Six months, annual, etc. Policyholder The individual(s) owners who are covered under the insurance policy. Policyholder Service The customer service representatives that service a particular insurance product. Pre-accident Condition The physical condition of a covered object prior to claim event. Preferred Auto The most “preferred” risks to a standard company: Those with nothing on their record. Preferred Risk A risk classification that shows low risk . Premium Dollar amount paid at a defined time for a defined period to contract insurance coverage. Premium Financing The dividing of a premium over a certain payment period. Primary Driver The driver that either drives the most among all drivers, or the driver assigned to the particular vehicle on the insurance policy. Primary Insurance The insurance that is expected to pay first in a coordination of benefits claim. Primary Use What is the main use of the object being insured? If it is a vehicle that is used daily for work, school, or business, it will be considered primary as compared to a weekend vehicle that sits in the garage half the year. Principal Driver The driver that the insurance risk is determined by for a specific vehicle. Private Passenger Automobile The classification of a vehicle that shows it is not used for business, but for pleasure and personal passenger travel. Pro Rata Cancellation The amount of funds for actual time of coverage. Profit The amount of funds that excede the cost of administering the insurance. Proof of Loss The ability to show definitive loss due to an event. Property Damage Liability Coverage Insurance used to cover property and other losses due to an accident. Proximate Cause Is an event sufficiently related to a legally recognizable injury to be held to be the cause of that injury. Q – Car Insurance Terms with Q Qualifying Event An event that occurs within a family that will qualify the addition or deletion of an insured interest. Quote An estimate prepared by an insurance company based on preliminary information to determine coverages and cost. R – Auto Insurance Terms with R Rate The amount of return offered to a customer for a specific product. Rating Plan . Rebate An amount paid by way of reduction, return, or refund on what has already been paid or contributed. Red Book The Red Book serves as a general reference source about the employment-related provisions of Social Security Disability Insurance and the Supplemental Security Income Programs for educators, advocates, rehabilitation professionals, and counselors who serve people with disabilities. Reinspection The act of inspecting a car after claims repairs have been made. Reinstatement The act of giving a previously declined or cancelled account active status. Reinsurance Where an insurance shares the risk my purchasing additional insurance through another carrier. Release A document forgiving any responsibility. Renewal Agreeing to insure after the contract period has ended. Renewal Date The date which the new contract for coverage begins. Rental Car Reimbursement Returning of funds to a customer who has had to rent a car due to a previously agreed upon condition. Rental Reimbursement Returning of funds to a customer who has had to rent a car due to a previously agreed upon condition. Renter’s Insurance A contract by which a customer will specify contents and worth within a rented property for reimbursement in the case of a covered event. Replacement Cost The provision within a renter’s insurance claim that allows for items to be replaced. Replacement Parts Parts that are insured object that can be replaced individually without compromising the integrity of the object itself. Replacement Value The value of an item lost in an insurable event. Resident Adjuster See “Staff Adjuster” Rider An endorsement or an amendment to an insurance policy. For example, it would be wise for all homeowners to include the water/sewer backup rider on their homeowner’s insurance for protection if there is water or sewer that backs up and goes into the home through pipes and sewage lines. Risk The possibility and probability of potential damage, loss, or liability. the statistical determination of loss frequency and severity. S – Car Insurance Terms with S Safe Driver Plan Information shared between the state’s public motor vehicle and driver information and auto insurance companies will assist the insurer in assigning a premium based on how safe the driver appears to be. Safe drivers with clean records will present a lower risk and lower premiums. Driver’s with any type of violation on their record will calculate at a higher premium per incident. Salvage When an auto has been deemed as totaled but the owner or another person who buys the title can fix it to get back on the road. However, the insurance company will have already notified the DMV that it is a totaled vehicle, so the DMV can only retitle the car as “salvaged”. For those who buy or own a “salvage” vehicle, many insurance companies will consider the vehicle a high-risk and not insure them. Select Repair Shop While auto owners reserve the right to choose any auto repair shop they want to fix damages to their auto, the insurance company will pre-determine those shops that are reputable and produce satisfactory results and provide those as an option for policyholders to choose from. Self-Insured Retention Similar to a deductilble for umbrella liability insurance, an insured will agree to pay the first specified portion of a liable loss before the umbrella coverage kicks in. Short Rate Cancellation If a policy is cancelled at the request of the policyholder before the expiration date, the insurance company reserves the right to short rate cancel and assign a cost per day to the policy rather than the full six-month premium rate provided at the time of inception. Solvency Corporations meeting financial obligations and bringing in more income than it pays out. Special Investigation Units (SIU) The SIU investigates potential fraudulent claims or insurance violations. Split Limit The liability limits of most auto insurance policies are split up into three separate limits. For example, the state minimum liability limits in North Carolina are 30/60/25: $30,000 each person for Bodily Injury, $60,000 Total aggregate limit for Bodily Injury, and $25,000 for property damage. It is the opposite of a combined single limit or CSL policy. SR-22 Proof of financial responsibility in which a policyholder has. Stacking of Limits Stacking limits is taking the limits for Uninsured or Underinsured Motorists Coverage on every vehicle on the policy and using it towards an uninsured or underinsured loss on a single auto involved in a claim. For example, each of the four vehicles on Joe’s auto policy has UM/UIM limits of $100,000 each person, up to $300,000 in total. Joe was in vehicle #1 when a driver hit him at high speed and then took off. Joe needed more than $100,000 for his injuries and because he had previously chosen to “stack” his UM/UIM limits, he now has up to $400,000 for his injuries. Staff Adjuster A claims adjuster who is employed by the insurance company. Standard Auto Named for an auto insurance company or policy that is for a preferred risk customer meeting more stringent eligibility requirements. State of Domicile The state in which an insurance company is established. Stop Loss Usually a term for health insurance or employer sponsored health insurance plans for employees, a stop loss is one that will either cap a loss option so that the insurance company is protected from any high-dollar claims or is an insurance policy that will kick in after a certain threshhold has been passed. Subrogation The reimbursement of an insurance company’s payout by the at-fault party or their insurance company. For example, Joe received $5000 which is the book value of his vehicle on a collision claim, but because Sam hit him and was charged with being at-fault, Joe’s insurance company sought to be subrogated by either Sam or his insurance company if he was insured. Supplement/Supplemental Estimate After an auto insurance company has issued an amount they intend to pay for estimated damages and additional damages have been discovered after the fact, there will be a supplement that is paid to cover the additional damage. Surcharge Any risks of the person who has (or is seeking) insurance will be surcharged a premium for each “ding”. For example, if a driver has a speeding ticket and an at-fault accident, there will be two separate surcharges on the premiums quoted by the insurance company. T – Auto Insurance Terms with T Term The time of coverage. For many auto insurance terms, it is six months, occasionally a year. For home insurance policies, it is typically an annual term. For life insurance it is sold in increments of five or ten years up to 30 years. Theft Loss covered by Comprehensive on an auto physical damage policy. The insurer will pay the policyholder the current book value of the vehicle minus the deductible. Third Party The third partyare those who are not-at-fault for an accident but have been injured or affected and must place a claim to the at-fault driver’s insurance company. Third Party Claim In a Tort Insurance state, the injured party will make a third party claim to the at-fault driver’s insurance company. Threshold Level A verbal or economic level that a no-fault auto insurance state chooses in which the injured party is allowed to sue the negligent party for additional medical or economic loss. For example, a Floridian can sue the at-fault party if their injuries cause disfigurment, paralysis, loss of limb, or death. Hawaii allows the injured party to sue if the medical and economic loss exceeds $6000. Tort A wrongdoing that is committed which causes harm or loss. In auto insurance, unintentional tort is covered under the liability portion of the insurance policy. Also, there are “tort” states and “no-fault” states. Tort states assign fault and the person deemed at fault the most will be responsible for damages and injuries. In the no-fault states, each driver relies on their own auto insurance for medical bills from an accident no matter who was technically at fault. Some stateseven have a combination or a choice for the policyholder to choose between tort or no-fault or how much tort to carry. Tort Feasor The person responsible for wrongdoing that has resulted in a liable loss. Total Loss When the damage to repair an auto is close to or greater than the current book value, the insurance company will consider it a total loss and give the policyholder the book value minus depreciation and minus the deductible if it was at-fault to use to buy another car. Towing and Labor Costs Most towing coverage endorsements will pay or reimburse for towing and labor, but not parts. So if a policyholder had a flat tire, the insurance company would pay for the labor costs Towing Coverage Reimburses or pays for towing through a towing coverage endorsement if the right conditions are met. For some insurers, it’s a reimbursement up to a certain limit, and for others it is a full “sign-and-drive” benefit. Transportation Expenses Also called rental car coverage, it is the per day limit of the cost of a rental car when an insured’s vehicle is in the shop for a covered loss through physical damage like Collision or Comprehensive. It is an additional endorsement that must be added prior to the loss. U – Car Insurance Terms with U Umbrella Insurance See “Umbrella Liability” Umbrella Policy An additional liability product that extends liability protection over all the property and casualty products the policyholder has with the umbrella liability company. For example, Joe has two auto policies, a motorcycle policy, home insurance, and boat insurance plus a $1 million umbrella liability. Joe will have up to the individual limits on each policy for bodily injury liability, and if the injuries or lawsuit exceeds those limits, the $1 million umbrella policy kicks in for any and all policies. Underinsured A dangerous situation for a policyholder: Getting the lowest possible coverage limits and then be at fault for a bad accident and the coverage limits are not enough to completely pay out for injuries and damages. In this case, the driver who is at fault will be responsible to pay out of pocket. Underinsured Motorist Coverage (UIM) Provides additional coverage for a policyholder when someone else is responsible for injuries but their own policy paid out up to the limit and was not enough to pay for the entire amount of injury loss. Some states will also offer Underinsured Motorist Property Damage coverage for a vehicle that was totaled or damaged and there wasn’t enough coverage on the at-fault driver’s insurance to cover it. Underwriter Person that works in the underwriting department and is responsible for checking the terms and eligibility of the policyholder. Underwriting The division of an insurance company that ensures compliance and eligibility of an insured for their product. Unearned Premium The unpaid portion of an insurance policy. For example, on a month-by-month payment plan, typically the first two months are collected to start the policy so the earned premium is approximately two months and unearned premium is four months. Uninsured Motorist Coverage (UM) Coverage for a policyholder’s injuries and sometimes damage if a driver who is uninsured hits him or ner. Unsatisfied Judgment Fund Some states have a fund that will help pay the medical bills of someone who sustained injuries in an auto accident that wasn’t their fault and the other party could not or would not pay the judgment. Usage How an auto is used will often bear importance on the premium calculation. A daily commute vehicle that has a 20 mile commute each way will be more to insure than a weekend or occasional use vehicle. Usage also determines the type of polcy: Personal use for a personal auto policy and business use for a commercial auto policy. V – Car Insurance Terms with V Valuation Determines how much the insurance company will be responsible for to pay out a claim. Rather than a dollar amount, it is an evaluation amount. For example, a basic car policy with physical damage will pay for the book cash value of the car on the date of loss. For “agreed value” the insurance company agrees to pay out the full price of what the car is worth from the point of view of a professional appraiser or from an inventory of receipts that the policyholder kept during restoration. There are also replacement cost, functional replacement cost, market value, and stated value for property and casualty products. Vandalism An auto loss that is covered under Comprehensive or Other Than Collision. Vehicle Identification Number (VIN) A number assigned to each and every car that is manufactured by the factory. It is an exclusive number and each placement has a meaning for the digits. Void A clause in a policy that releases the insurance company from responsibility for paying out any claims. One example would be if a driver who had been specifically excluded from coverage were to drive the car and cause a loss. W – Auto Insurance Terms with W Waiting Period Certain types of insurance policies have waiting periods before they pay out. For example, a flood policy must be paid in full and in force for 30 days before it will be activated for coverage. Many life insurance policies have a suicide clause in which suicide deaths are ineligible for payment until the policy has been in force for a number of years. Short-term disability insurance does not paid out until the policyholder has been out of work for a week. The length of time between an injury, and when the insurer begins payments. Waiver of Collision Deductible Some states like California have this option in which a collision deductible is waived when the person responsible has been positively identified and has proven to have no insurance. Waiver of Premium This is only initiated by an insurance company in a situation that is like a catestrophic weather event and it is pretty well-known that anyone living in the surrounding area will be unable to always get to a payment location, access banking information, or otherwise have difficulty making a payment. It often doesn’t mean that the premium won’t be due at some point, but cancelations won’t be initiated during the defined period of time. Whole Dollar Premium A process by which an insurance company will round the total premium up or down to the nearest dollar.