Glossary

GLOSSARY

Actual cash value (ACV) – The value of your property, 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 to determine if they will insure you and how much to charge.

 

Bodily injury (BI) – Physical injury to a person.

 

Cancellation – Termination of an insurance policy by the company or a policyholder 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. A policy is considered 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, the period of time a policy is in force, a description of the automobile, the premium amount, and the amount of coverage.

 

Deductible – The amount the insured must pay when he or she files a claim 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 attached to a policy expanding or limiting the benefits otherwise payable under the policy.

Full Coverage– A common term that people use to describe how much auto insurance coverage they have. Full coverage 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 accident was caused by someone covered by your policy, including a driver operating your car with your permission.

 

Loss – The amount an insurance company pays on a claim.

 

Medical payments – pays limited medical and funeral expenses if you, a family member, or a passenger in your car is injured or killed in a motor vehicle accident.

 

Named driver exclusion – An endorsement that provides that a policy does not cover accidents when a specifically named person is the driver.

 

Non-owners policy – Insurance coverage that 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 by an insured to an insurance company to obtain or maintain an insurance policy.

 

Property damage (PD) – Physical damage to property.

 

Rebuilt title– A car with a rebuilt 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 – Pays a set daily amount for a rental car if your car is being repaired because of damage covered by your auto policy.

 

Roadside Assistance Coverage– Provides services such as towing, flat tire change, locksmith service and battery jump-start to customers.

 

Reinstatement – The process by which a life insurance company puts a policy back in force after it lapsed because of nonpayment of renewal premiums.

 

Salvage titles– A car with a salvage title has been declared a total loss by an insurance company and is not allowed on the road and may not insured by an insurance provider.

 

Towing and labor coverage – Pays for towing charges when your car can´t be driven. Also pays labor charges, such as changing a flat tire, at the place where your car broke down.

 

Underwriter – The person who reviews an application for insurance and decides 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 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. The VIN identifies year, make, model, options and other information that, by definition, is unique to your specific vehicle.