Auto Insurance Terms

 

Whether you are setting up homeowners, health, auto, RV, boat, or small business coverage, Insurance is a business sector that definitely comes with its own language.

As life progresses and thus requires various types of insurance, you will learn the terms by calling customer service, reading your plan documents, accessing the online carrier portals to check your policy details, and applying for and quoting new plans.

While in the process of learning your coverage and how to keep it affordable and active, a shortcut to the top terms used in the insurance world will certainly be of use.

We have listed some of the most common auto insurance terms and explained them so that you don’t have to wait on hold for your carrier’s service department to help you out.

Be self reliant! Be your own agent! Bookmark this page as a reference, become more familiar with insurance terms, and check back for more terms as we add them in.

This will be a great guide while you’re quoting and binding your own auto policy on FLINSCO.com, or talking with one of our licensed agents to be sure you’re on the same page and not being scammed.

Full transparency is our goal when you shop with FLINSCO.com. Read on and feel free to contact us for tips, clarification, or suggestions for any terms your stumble across.

 

 

 

Actual Cash Value

The value of your property, based on the current cost to replace it, minus depreciation.

 

Adjuster

A person who investigates and settles insurance claims.

 

Agent

An individual who has been trained to sell insurance policies.

 

Application

A form you fill out with information about yourself that an insurer will use to determine your eligibility for coverage.

 

Benchmark Rate

The dollar amounts established by the Commissioner of Insurance that rate-regulated insurance companies use to reference their rates. Rate regulated insurance companies filing rates within a range of 30 percent above or below the benchmarks may use them immediately upon filing without prior approval.

 

Binder

A temporary insurance contract that provides proof of coverage until you receive a permanent policy.

 

Bodily Injury

Causing injury to a person physically.

 

Cancellation

Termination of an insurance policy by the issuing insurance carrier or by the policyholder before the renewal date.

 

Claimant

A person who opens an insurance claim.

 

Collision Coverage

Insurance that covers the costs of damage to your vehicle when it is involved in a crash. This can be when your vehicle collides with another car or object.

 

Comprehensive Coverage

Insurance that covers damages or losses not related to an accident. This includes damage from hail, fire, vandalism, theft, flooding, and other issues.

 

Contract

In most instances, the term “contract” means an insurance policy, referencing the agreement between the insurer and the insured.

 

Declarations Page

The page in your auto insurance policy that shows the name and address of the insurance company, the duration of policy being active, description of the vehicle, the cost of the premium, and the amount of coverage issued.

 

Deductible

The dollar amount that must be paid by the insured before the insurance company picks up any of the costs of a claim.

 

Depreciation

An item’s value being reduced due to wear and tear.

 

Earned Premium

The portion of a policy premium that has been used to purchase coverage, or that the insurance company has “earned”. For example, if you have a six month policy that you paid for in advance, two months into the policy, there would be two months of earned premium.

 

Endorsement

A written agreement attached to a policy expanding or limiting the benefits otherwise payable under the policy. This is also known as a “rider”.

 

Gap Insurance

Insurance that pays the difference between the actual cash value of the vehicle and the amount to be paid on the loan. Some gap policies may pay for the deductible cost as well.

 

Lapse

Termination of a policy due to nonpayment of premiums.

 

Liability Insurance

Coverage that pays for injuries to the other party  and damages to the other vehicle resulting from an accident for which you are at fault.

 

Liability Limits

The most that your liability policy will pay up to a certain amount, as established by your insurance policy.

 

Loss

The amount that an insurance company will pay on a claim.

 

Medical Payments & Personal Injury Protection Coverage

Medical payments and PIP (Personal Injury Protection) insurance covers the cost of funeral expenses if death or injury results from an accident in your covered vehicle. The policy will cover you, a family member listed on your policy, or a passenger in your vehicle.

 

Named Driver Exclusion

An endorsement that provides that a car insurance plan does not cover accidents when a specifically names insured is driving.

 

Named Driver Policy

A car insurance policy that does not provide coverage for an individual living in a Named Insured’s household specifically, unless the individual is named on the policy. So, very literally, coverage is only available to those drivers whose names are listed on the policy.

 

Non Owners Coverage

A non owners policy is insurance that includes liability, medical payments, and uninsured motorist coverage to a named insured who does not own a car. With this coverage, you can drive a rental, work for a ride sharing service, or drive a friend’s car legally.

 

Non Renewal

Insurance companies can deny a policyholder the option to renew coverage.

 

Policy Period

The period during which an insurance plan is active or in force, from the start date until the date it expires.

 

Premium

The amount paid by a driver to an insurance company to keep their vehicle, self, and passengers safe and actively insured.

 

Property Damage Coverage

Physical damage to property when your car runs into items such as fences, bushes, driveways, lamp posts, and causes harm to the object(s) in question.

 

Rental Reimbursement Coverage

Optional Insurance that pays a set amount if your car is being repaired due to damages covered by your car insurance plan.

 

Rider

A written agreement attached to the insurance policy that somehow modifies the original policy limits. A rider may restrict or expand the benefits of your plan. It may also be called an “endorsement”, as mentioned above.

 

Reinstatement

Placing a policy back in force after it has been terminated due to nonpayment of premiums. In other words, the second coming of your auto insurance plan, after it was canceled because you didn’t pay on time.

 

Surcharge

An additional charge incurred after an at-fault accident. Your auto insurer will increase your premium rate to cover the heightened risk of covering your mistakes.

 

Surplus Lines

Coverage from out-of-state companies not licensed in Florida, yet legally eligible to sell insurance on a “surplus lines” basis. Surplus lines companies typically charge more than licensed companies and provide less substantial coverage.

 

Towing and Labor Coverage

Covers towing expenses and labor for repairs to your vehicle.

 

Underwriter

A person from the insurance company of your choice who evaluates your coverage history, credit, age, location, and other details necessary to issue coverage and decides how much you will pay for it.

 

Underwriting

The process of gathering and reviewing information to determine if coverage can be issued to an individual, and how much to charge for their policy.