Insurance Terms and Definitions
Actual Cash Value - The fair market value of property; technically, replacement cost less depreciation.
Adverse Carrier - Term used to refer to the other party’s insurance company.
Agent - An individual who acts as a representative for the company and sells insurance, usually on a commission basis. This individual could be an "exclusive" or "non-exclusive agent."
Agreed Price - The price or cost of repairs agreed to by the AD (auto damage) adjuster or independent appraiser and the body shop representative.
Amendment - A change to the basic policy contract. An amendment alters the policy; an endorsement adds to it.
Anti-lock Braking System (ABS) - A computer-controlled high pressure system that assists the vehicle’s normal braking system. ABS allows all wheels to slow at the same rate, thereby preventing loss of control.
Anti-Theft Device - A device that deters auto theft. Autos equipped with these devices may entitle you to a discount on your insurance premiums.
Appraisal - Process that determines the value of property, or the extent of damage, usually performed by an impartial expert.
Arbitration - A process of settling a dispute through an impartial party. It is used as an alternative to litigation.
At-Fault - The party that is legally liable for the damages in an accident.
Auto Damage Adjuster - The auto damage adjuster is responsible for writing the repair estimate for your vehicle. This adjuster will also answer your questions about the repair process, your rental vehicle, or your total loss assessment.
Auto Insurance - Auto Insurance provides protection from losses resulting from owning and operating an auto. The insurance covers losses to the insured’s property and losses for which the insured is liable as a result of owning or operating an auto.
Binder - A temporary agreement declaring that the policy is in effect.
Bodily Injury - An injury sustained by a person.
Bodily Injury Liability Coverage - Pays damages for bodily injury or death resulting from an accident for which you are at fault and provides you with a legal defense. This coverage is subject to the terms, limits and conditions of your policy contract.
Cancellation - Termination of an insurance contract before the end of the policy period, by the insured or insurer.
Carrier - The insurance company or insurer.
Catastrophe - A disaster affecting a specific geographic area. often cause injury or even death; most result in extensive property damage.
Claim - Any request or demand for payment under the terms of the insurance policy.
Claimant - Individual or entity presenting a claim.
Claim Adjuster - A person responsible for settling a claim.
CLUE® Report - Comprehensive Loss Underwriting Exchange (CLUE) report; provides claim history information.
Collision Coverage - Pays for damage to an insured vehicle when it hits or is hit by another car or object, or if the car overturns. This coverage is subject to the terms of your policy contract.
Comparative Negligence - A doctrine of law that, in some states, may enable claimants to recover a portion of their damages even when they are partially at fault, or negligent.
Comprehensive Physical Damage Coverage - Pays for damage to your car from theft, vandalism, flood, fire or other covered perils.
Condition - The portion of the insurance contract which outlines the duties and responsibilities of both the insured and the insurance company.
Contributory Negligence - A doctrine of law that, in some states, may prevent claimants from recovering any portion of their damages if they are even partially at fault, or negligent.
Customized Vehicle - A vehicle that has been altered or has equipment or accessories not typically found in a personal vehicle.
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.
Deductible - The portion of a claim you pay out of pocket. Choosing a higher deductible will lower your insurance premiums.
Defensive Driver Discount - Drivers who have voluntarily taken a defensive driving course may qualify for this discount on their auto insurance.
Depreciation - The decrease in value of any property due to wear, tear, and/or time. Generally, depreciation is not an insurable loss.
Driver Training Discount - A discount for people who have taken an approved driver training course.
Emergency Road Service Coverage - Service coverage such as: being locked out of your car; towing not related to an accident; having a dead battery re-charged; inflating a flat tire; filling an empty gas tank.
Endorsement - An addition to the basic policy contract. An endorsement adds to the policy contract; an amendment alters it.
Estimate - An assessment of the cost to repair your damaged property.
Exclusion - Restriction in your insurance policy that limits and may exclude coverage for certain perils, persons, property, or locations.
Expiration Date - This date, found on your declaration page, indicates when your policy coverage runs out.
Indemnity - Compensation for a loss intended to restore an individual or entity to the approximate financial position prior to the loss.
Indemnification - The act of providing compensation for a loss with the intent to restore an individual or entity.
Independent Adjuster - An individual who estimates losses on behalf of an insurance company, but is not an employee of that company.
Insurable Interest - Exists when an individual would suffer an economic loss as the result of damage to property or bodily injury.
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.
Insurance Score - Used in the underwriting process in some states. An individual's insurance score is frequently based, in part, on a person's credit history.
Insured - A person or organization covered by an insurance policy.
Insurer - An organization that provides insurance.
Legal Liability - Liability imposed by law, as opposed to liability arising from an agreement or contract.
Leased Vehicle -A vehicle rented under a long-term contract (lease).
Liability - Any legally enforceable obligation or responsibility for the injury or damage suffered by another person.
Lien - A charge or encumbrance on property as a security for the payment of a debt.
Lien holder - A person or organization with a financial interest in property up to the amount of money borrowed or still owed on the property.
Limit - The maximum amount of protection purchased by the insured for a specific coverage.
Limits of Liability - The amount specified in your policy up to which the insurance company will protect you.
Loss - Any measurable dollar cost of damage and/or injury suffered by a person.
Loss of Use - Compensation to a third party claimant for financial consequences resulting from the inability to use property as the result of accident-related damage.
Malicious Mischief - Intentional damage of personal property.
Medical Payments Coverage - Pays medical expenses related to an automobile accident. This coverage is subject to the terms, limits and conditions of your policy contract.
Motor Vehicle Report (MVR) - A report from the agency that issues your driver’s license, listing accidents and violations that appear on your driving record.
Multi-Car Discount - Available to policyholders who insure more than one vehicle at the same location or on the same policy.
Named Insured - The person or entity listed on the policy declarations page.
Negligence - The failure to exercise the care that is expected of a reasonable person in similar circumstances.
No-fault Insurance - May pay for your medical treatment, lost wages, or other accident-related expenses regardless of who caused the accident.
Non-Renewal - When an insurer decides not to renew a policy at the end of its policy period.
Occurrence - An event, or repeated exposure to conditions, which unexpectedly causes injury or damage during the policy period.
Passive Restraint System - A passenger safety system, such as an air-bag, that activates automatically in the event of an accident.
Peril - A danger or hazard that can cause a loss, for example, a car collision with an object, or a fire.
Personal Injury Protection - May pay for your medical treatment, lost wages, or other accident-related expenses regardless of who caused the accident.
Personal Property - Property that is not land or connected to land (real estate), such as furniture or jewelry.
Physical Damage - Damage to property.
Policy - A contract between you and the insurance company.
Policy Change - Any change made to your insurance policy during the period that the policy is in force.
Policyholder - The person or entity listed on the policy declarations page.
Property Damage Liability Coverage - Pays for damage to someone else's property resulting from an accident for which you are at fault and provides you with a legal defense.
Proximate Cause - An act or omission initiating an unbroken sequence of events resulting in injury to a person or damage to property.
Rental Reimbursement - Optional coverage that helps pay rental vehicle costs when your insured vehicle is disabled as the result of a covered accident or loss.
Renewal Date - The date that your insurance policy expires and the date that your renewed policy will begin.
Risk - The chance of suffering a loss.
Salvage - Damaged property which is taken over by the insurance company.
Subrogation - If your car is damaged because of another driver’s negligence and you ask your insurance company to settle the claim for damage to your car, the insurance company will seek payment recovery (including your deductible) from the other party.
Theft - The unlawful taking of another’s property with the intent to permanently deprive the owner of its use or possession.
Third Party - Person or entity not party to an agreement but with an interest in the agreement.
Third Party Claim - Claims for injury or damage to property of a third party alleged to have been caused by the policyholder.
Tort - A private or civil wrong or injury, other than breach of contract, which violates a person's legally protected right(s), and for which the law may permit a remedy in the form of money damages.
Total Loss - Property that has sustained damage so extensive that repairing it is not reasonable.
Towing Coverage - Provides insurance if your auto needs to be towed.
Umbrella Insurance - Provides additional liability above the limits of your homeowners and auto policy.
Underwriting - The process an insurer goes through to determine whether or not the insurance company will provide coverage for the applicant.
Uninsured Motorist Coverage - May pay for your injuries or property damage caused by an uninsured motorist or, in some states, an unidentified driver.
Vandalism - Destruction or defacement of property.
Vehicle Identification Number (VIN) - A 17-digit number assigned to each vehicle manufactured for identification purposes.
Warranty - A written guarantee of the integrity of a product and of the manufacturer's responsibility for the repair or replacement of defective parts.