A
Auto Accident: an undesirable or unfortunate happening that occurs unintentionally and usually results in harm, injury, damage, or loss.
Accident Forgiveness: Customers who have not had an at-fault accident in the previous five years qualify for this program. Accident forgiveness means that some insurance carriers won’t add a surcharge to your premium after your next at-fault accident.
Actual Cash Value (ACV): Unless otherwise defined in the policy, actual cash value in California means fair market value. The fair market value of an item is the dollar amount that a knowledgeable buyer (under no unusual pressure) is willing to pay, and a knowledgeable seller (under no unusual pressure) is willing to accept.
Additional Equipment Endorsement: Provides coverage for certain parts and equipment that are not installed by the manufacturer. Coverage is subject to a maximum limit listed on the endorsement.
Adjuster: The person who evaluates the damage caused by an accident or other covered loss and determines the amount to be paid under the policy terms.
Agent: A licensed individual or organization authorized to sell and service insurance policies for an insurance company.
Assigned Risk: A driver who is not acceptable to a standard lines insurance company due to a poor driving record and is assigned to an insurance company participating in the assigned risk pool.
At-Fault Accident: If you get into an auto accident and are considered to be 51% or more responsible for the accident then you are considered the cause of the accident. When at fault you or your insurance company is responsible for the damages.
Anti-Theft Device: A device that can stop auto theft. Auto insurance providers can provide discounts on your insurance premium if this is equipped on your car.
Automobile Insurance: A type of insurance that protects against losses involving automobiles. Auto policies contain a variety of coverages that can be purchased depending upon the needs and wants of the policyholder. Liability for bodily injury and property damage, medical payments, uninsured motorist, comprehensive, and collision are some of the common coverages offered under an auto insurance policy.
B
Binder: A short-term agreement that provides temporary insurance coverage until the policy can be issued or delivered.
Broker: A licensed individual or organization who, on your behalf, sells and services insurance policies.
Bodily Injury: A injury to the person that occurred during the accident.
Bodily Injury Liability Coverage: Pays for the damages that occured to the body during the accident. This coverage is subject to terms, limits and conditions of your policy.
Blue Book: A publication used for the determination of values for used automobiles and trucks.
Broker-Agent: A licensed individual who can act as an agent representing one or more insurance companies and also as a broker dealing with one or more insurance companies representing your interests.
Broker Fee Agreement: The contract between the policyholder and the broker which also specifies the charges for the services rendered by the broker.
C
Carrier: Insurance company that issues the insurance policy. The term refers to the fact that the company carries certain risks for the policyholder
Cancel: To terminate a contract or a policy.
California Automobile Assigned Risk Plan (CAARP) – This plan is available when a driver is unable to purchase private passenger or commercial liability auto coverage because of a poor driving record.
Commission: A portion of the policy premium that is paid to an agent by the insurance company as compensation for the agent’s work.
Claim: Notice to an insurance company that a loss has occurred which may be covered under the terms and conditions of the policy.
Comprehensive Coverage: Pays for damage to your car caused by reason other than collision, such as fire, theft, vandalism, windstorm, or flood.
Comparative Negligence: The percentage of fault shared by each driver in an accident in which both contribute to causing the collision.
Collision: Pays for damage to your car caused by physical contact with another vehicle or with another object, such as a tree, boulder, guardrail, structure, or person.
Credit-Based Insurance Score: A credit-based insurance score provides an assessment of your insurance risk at a particular point in time. Only credit-related information is used in determining a credit-based insurance score.
D
Damage: Loss or harm to a person or property.
Deductible: The amount of the loss that the policyholder is responsible to pay up-front before covered benefits from the insurance company are payable. This is applicable to comprehensive or collision coverage only.
Disability: When a person cannot continue his or her normal occupation due to bodily injury.
Declarations: The part of your policy that includes your name and address; the property that is being insured, its location and description; the policy period; the amount of insurance coverage and the applicable premiums.
Depreciation: In auto insurance, depreciation is used to determine the actual cash value of a vehicle, in the event it is determined to be a total loss. the factors that are looked at are wear and tear.
Defensive Driver Discount: Certain drivers (usually over age 50) who have voluntarily taken a defensive driving course may qualify for this discount on their auto insurance premiums.
Dismemberment: Loss of certain body parts, such as an arm or leg, resulting from accidental bodily injury.
Discount: A reduction in your premium if you or your car meets certain conditions that are likely to reduce the insurer’s losses or expenses. For example, auto insurance discounts are given for cars with auto theft devices and for drivers and passengers who use seat belts.
E
Effective Date: The starting date of the insurance policy.
Endorsement: A written agreement that changes the terms of an insurance policy by adding or subtracting coverage.
Estimate: As assessment of the cost to repair your damaged property.
Exclusion: A contractual provision in an insurance policy that denies or restricts coverage for certain perils, persons, property, or locations.
Expiration Date: The date your coverage ends.
Extended Coverage: An endorsement added to an insurance policy, or a clause included in the policy, to provide additional coverage for risks other than those covered under the basic policy provisions.
Emergency Road Service Coverage: Coverage that gives you benefits such as being locked out of your car, towing it to a certain location, Recharging a dead battery, inflating a flat tire, or getting you some gas when you run out.
F
Family Car Policy: Anyone living with you can receive the same discounts and benefits you’re entitled to.
Field Adjuster: An insurance adjuster who works primarily outside of an office and often meets personally with the public. Field adjusters can conduct face-to-face meetings, negotiations with claimants, scene investigations, and damage inspections.
Financed Car: A vehicle that is being financed by a loan. The lender has a Lien on the car until it has been payed off.
Full Coverage: A policy that implies that the vehicle has more then just liability coverage.
First Party: The policyholder in an insurance contract.
Financial Responsibility Law: Financial responsibility laws require owners and operators of autos to maintain enough money to compensate those they injure. Liability insurance is the most common way to satisfy these requirements.
Flat Rate Cancellation: Termination of an insurance contract at inception. This policy is never in effect.
Forms: This can be any part of your insurance policy. This may be an SR-22 form or a policy form like your application, declaration page or policy jacket. Typically, all are available in Adobe’s PDF format.
Fraud: A false statement intended to deceive the insurer and induce it to part with something of value or surrender a legal right. May void a policy.
G
Good Student Discount: A reduced automobile insurance premium for students who can prove good grades. The typical requirement is having a GPA of 3.0 or higher. This discount is given because studies have shown a relationship between good grades and safe driving.
Garage Location: The zip code where your vehicle is parked.
Gap Insurance: If you are making lease or loan payments and you experience a total loss, there may be a difference (gap) between the market value of your vehicle and what you still owe on it. This optional coverage pays the difference.
Grace Period: Some auto insurance policies have a grace period that allows customers to make a payment after the due date. But, many companies will not accept a payment after the date shown on a cancellation notice. Online payments and EFT can prevent policy lapses.
H
Hazard: Anything that increases the chance of an accident occurring.
Hit and Run: An accident caused by someone who does not stop to assist or provide information.
Homeowners Insurance: Protects homeowner’s from losses to their homes, personal property, and some types of damage or injury to others for which the homeowner is liable. Homeowner’s insurance is subject to the terms, limits and conditions of your policy contract.
I
Insured: The policyholder(s) entitled to covered benefits in case of an accident or loss.
Insurer: The insurance company who issues the insurance and agrees to pay for losses and provide covered benefits.
Independent Agent: An insurance Agent or agency not directly employed by an insurance company. By definition, independent Agents may represent multiple insurance companies and can help you find the best fit for your personal auto insurance needs.
Inspection: Verification of a vehicles physical condition.
Insurance: a system in which groups of people who have similar chances of suffering a loss transfer their risk of loss to an insurer who pools the risk of many people together. In exchange for payment of premium, the insurer promises to reimburse the person for their covered losses.
Insurance Card: A card issued by the insurer that contains the basic information on the insurance policy.
Insurance Fraud: The act of falsifying or exaggerating the facts of an accident to an insurance company to obtain payment that would not otherwise be made. Common types of insurance fraud are staged accidents, exaggerated injuries, and inflated medical bills.
Insurance Score: A score that is based on the persons credit history.
L
Liability Coverage: Coverage for damages your auto causes to others and their property.
Lapse: A policy that expires or cancels because the insured did not pay the premium amount
Leased Vehicle: A vehicle that is being rented under a long term contract. The company owns the vehicle and it must show on your insurance policy as insured.
Legal Liability: A form of liability that is imposed by the law.
Lien: A claim, or charge on property as a security for the payment of a debt.
Limit: the maximum amount of protection purchased by the insured.
Loss: Dollar amount that has been measured in damages or injuries.
License: A certificate of authority issued by the Department of Insurance to an insurer, agent, broker, or broker-agent to transact insurance business.
Low Cost Auto: A pilot program for the residents of Los Angeles and San Francisco Counties only, who meet specific lower income requirements.
M
Multi-car discount: A discount offered by some insurance companies for those with more than one vehicle insured on the same policy. In some cases, if you drive a company car insured by your company, your own insurance company may give you the multi-car discount.
Mandatory Insurance: When state law requires that auto owners/operators have auto insurance. Requirements vary from state to state.
Medical Expense Coverage: This pays medical expenses of the policyholder and any passengers injured while in the insured auto. This coverage also pays the medical expenses of the policyholder and members of his or her family who are injured while riding in any other auto or struck by any auto.
Misrepresentation: To make written or verbal statements that is untrue or misleading.
Motorcycle Insurance: Motorcycle Insurance provides protection from losses resulting from owning and operating motorcycles.
N
Name Insured: The First person on the insurance policy
Non-Renewal: The termination of an insurance policy at its normal expiration date.
No-Fault Automobile Insurance: Coverage to compensate victims of automobile accidents without having to prove who was at fault in causing the accident.
Non-Ownership Automobile Liability: Insurance against the liability incurred while driving an auto not owned or hired by the policyholder.
Negligence: The failure to exercise the care that is expected of a reasonable person in similar circumstances.
Non-Owned Auto: Any vehicle that is not owned, borrowed, or leased by the insured, and which is used primarily for a business purpose.
O
Occasional Driver: The person who is not the primary or principal driver of the vehicle.
Occurrence: An event, or repeated exposure to conditions, which unexpectedly causes injury or damage during the policy period.
Original Equipment Manufacturer Parts: Auto parts obtained from the original manufacturer of the car or the supplier of the original part.
Occasional Driver: A person who is not the primary or principal driver of the insured vehicle is an occasional drive.
P
Policy: A contract that states the rights and duties of the insurance company and the insured.
Premium: The price of insurance paid to the insurance company for a policy.
Premium Finance Company: A lending institution that finances automobile insurance premium for a fee.
Producer: A term used by the insurance industry to refer to agents and brokers.
Property Damage Liability Coverage: Part of a standard auto insurance policy that covers you, up to the policy limit, for losses that result when you damage or destroy someone else’s personal property. This is required coverage in most states.
Payment Plan: Your auto insurance premium can be paid using one or more installments. You make several smaller payments but pay a service fee.
Personal Property: Property that is not land or connected to the land, such as jewelry or, furniture.
Policy Change: any change that has been made to the insurance policy at the time that is was active.
Pre-Accident Condition: The state of the vehicle before the accident, including damages not related to accident.
Primary Insurance: Primary insurance acts as the first layer of coverage on common types of losses.
Peril: a danger or hazard that can cause a loss.
Q
Quote: A statement of the premium that will be charged for insurance coverages based on specific information provided by the person requesting the quote including drivers, vehicles, and driving record.
R
Recision: The cancellation of a policy back to its effective date resulting in a return of all premium charged.
Rental Reimbursement Coverage: This coverage pays your expenses to rent an auto if you have a loss covered under Comprehensive or Collision benefits. Coverage is sold based on a daily amount of expense subject to a maximum limit.
Replacement Cost: The amount that it costs to replace lost or damaged property with new property of like kind or quality in the local market.
Road Service: If purchased, this auto insurance coverage will reimburse you for reasonable towing costs and labor costs at the site of breakdown when a covered vehicle is disabled.
Rate: The base rating units that are used to determine the final premium.
Re-inspection: A review of an estimate or appraisal done by an adjuster during or after repairs to a car.
Renewal Date: The date your insurance policy expires and the date the renewed policy will begin again.
Replacement Parts: Several types of parts may be used when your vehicle is repaired: new parts, both original equipment manufacturer and after-market.
Risk: the chance of suffering a loss.
S
Salvaged Title: Damaged policyholder property that is legally signed over to an insurer in a loss settlement. Insurance companies sell salvaged property in order to reduce their overall monetary loss.
Second Party: The insurance company in an insurance contract.
Subrogation: The process of recovering the amount of claims damages paid out to a policyholder from the legally liable party. When a company pursues the legally liable third party, they are required to include the policyholder’s deductible in the recovery process.
Surcharge: An extra charge applied to the premium by an insurance company, usually applied to an at-fault accident or moving violation.
SR-22: A certificate mandated by the state to verify that an individual is maintaining auto insurance liability coverage. If a person needs an SR-22, they will usually be notified by their state’s Motor Vehicle Department.
T
Term: The length of time covered by a policy.
Third Party Claim: Claims for injury or damage to property of a third party alleged to have been caused by the insured.
Threshold Level: Under some no-fault insurance laws, the threshold level represents the degree of injury a claimant must establish before being allowed to sue the negligent party.
Theft: The unlawful taking of another’s property with the intent to permanently deprive the owner of its use or possession.
Tort: A wrongful act resulting in damage or injury, on which a civil action can be based. This does not include breach of contract.
U
Underinsurance: Less than enough insurance to cover the amount of loss that the policyholder may suffer.
Umbrella Insurance: Provides high limits of additional liability coverage above the limits of your homeowner’s and auto policy. In addition, it provides coverage that may be excluded by other liability policies.
Underwriting: The process an insurer goes through to determine whether or not it will provide coverage for an applicant.
Underinsured Motorist Endorsement – Addition to a Personal Automobile Policy that covers an insured who is involved in a collision with a driver who does not have sufficient liability insurance to pay for the damages.
Uninsured Motorist Coverage (UMC): Provides coverage for a policyholder involved in a collision with a driver who does not have liability insurance or who does not have sufficient liability limits to pay for damages. UMC comes in two parts: uninsured motorist bodily injury (UMBI) and uninsured motorist property damage (UMPD). UMBI coverage pays for injuries to you or any person in your car when there is a collision with an uninsured driver. UMPD coverage pays for the property damage to your car when there is a collision with an identified uninsured driver. UMC must be offered when you purchase liability coverage for your auto. If you decline UMC, you must sign a declination waiver.
Usage: This refers to the primary function or purpose in which you intend to operate your vehicle.
V
VIN: Vehicle Identification Number. This is a unique 17-character sequence containing both letters and numbers that identifies a vehicle.
Vandalism: Destruction or defacement of property.
Void: A policy contract that for some reason specified in the policy becomes free of all legal effect. One example under which a policy could be voided is when information a policyholder provided is proven untrue.
W
Warranty: A written guarantee of the integrity of a product and of the manufacturer’s responsibility for the repair or replacement of defective parts.
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