Glossary: (Insurance Terms & Definitions)

Accident: An unexpected, unforeseen event not under the control of an insured and resulting in a loss.

Actual Cash Value: The fair market value of property; technically, replacement cost less depreciation.

Additional Insured or Additional Interest: A person or an organization, other than the named insured or covered person, who is protected under the named insured's auto policy. If an auto is leased, the leasing company may want to be listed as an Additional Insured as well as a lien holder or loss payee. This protects the leasing company if it's named in a lawsuit for an accident caused by a policyholder.

Admitted Company: An insurance company authorized to do business in the state.

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.

At-Fault: The party that is legally liable for the damages in an accident.

Bodily Injury: An injury sustained by a person.

Certificate of Financial Responsibility: Depending on the state and Motor Vehicle requirement, this is a form certifying that specific coverage has been purchased to meet the state's Financial Responsibility laws. This could be an SR-22, FR-44, SR-50, or any other State Requirement certification form.

CLUE® Report: Comprehensive Loss Underwriting Exchange (CLUE) report; provides claim history information.

Declaration Page: That page of the insurance policy which lists the insurance company, its address, name of the policyholder, starting and ending dates of coverage, and the actual coverages given in the contract, including the covered locations and amounts.

Deductible: Usually, a dollar amount the insured must pay on each loss to which the deductible applies. The insurance company pays the remainder of each covered loss up to the policy limits.

Depreciation: The decrease in value of any property due to wear, tear, and/or time. Generally, depreciation is not an insurable loss.

Earned Premiums: The portion of premium that applies to the expired part of the policy period. Insurance premiums are payable in advance but the insurance company does not fully earn them until the policy period expires. Effective Date: The date that coverage begins on an insurance policy.

Electronic Funds Transfer (EFT): EFT is an electronic payment method that lets you pay your premiums with automatic deductions from your checking account.

Endorsement: A document, which is attached to the policy and modifies or changes the original policy in some way.

Exclusion: Section of the insurance policy, which list property, perils, person, or situations which are not covered under the policy.

Expiration Date: The date your coverage ends. There is usually a time of day associated with this date, for example, an expiration date of 5/1/2002 at 12:01am. This means your coverage ends one minute after midnight on the date listed. 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. Read our questions and answers section for more information.

Good Student Discount: May be awarded to full-time students who maintain a grade average of "B" or better. Each carrier has specific rules that may apply. When purchasing a CarInsurance.com policy, simply review the help next to our discount questions to see if you can get additional discounts.

Hit and Run: An accident caused by someone who does not stop to assist or provide information.

ID Card: A card issued by your insurer containing basic information about your insurance policy. Some states require you to keep an ID card in your vehicle.

Insured: A person or organization covered by an insurance policy

Insurer: An organization that provides insurance.

Lapse in Coverage: A point in time when a policy has been canceled or terminated for failure to pay the premium, or when the policy contract is void for other reasons.

Legal Liability: Liability imposed by law, as opposed to liability arising from an agreement or contract. Liability Insurance: Insurance providing money on behalf of the policyholder to pay because of bodily injury or property damage caused to another person and covered in the policy.

Limits of Liability: The maximum amount of insurance the insurance company will pay for a particular loss, or for a loss during a period of time.

Loss: Any measurable dollar cost of damage and/or injury suffered by a person.
Material Misrepresentation: The policyholder / applicant makes a false statement of any material (important) fact on his/her application. For instance, the policyholder provides false information regarding the location where the vehicle is garaged or fails to disclose all the residents in a household.

Named Non-Owner Policy: A policy endorsement for one who operates any non-owned automobile on a regular basis, such as driving a car provided by one's employer.

No-Loss Form: A statement that is a signed form telling the insurance company there have not been any losses since a certain date. The document usually includes a cancellation date, expiration date, and reinstatement date. etc.

Physical Damage: Damage to your covered vehicle from perils including (but not limited to) collision or upset with another vehicle object, fire, vandalism and theft. See our coverage definitions page for more information.

Physical Damage Coverage: Pays for damage to your car this could be through Collision Coverage or Comprehensive Coverage (Also referred to as Other Than Collision)

Premium: The price of insurance an insured person pays for a specified risk for a specified period of time.

Principal Driver: The person who drives the car most often.

Proof of Loss: A statement made regarding the extent of the claim; it may be requested in accordance with the conditions of the policy.

Reinstatement: The restoring of a cancelled policy to full force and effect. The reinstatement may be effective after the cancellation date, creating a lapse of coverage. Some companies require evidence of insurability and payment of past due premiums plus interest. They may also require a signed no-loss form.

Renewal Date: The date that your insurance policy expires and the date that your renewed policy will begin.

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. Available to most policyholders for an additional premium.

SR-22: An SR-22 (CFR) is a certificate mandated by the state to verify that an individual is maintaining auto insurance liability coverage. If a person needs an SR-22 (CFR), they will usually be notified by their state's Motor Vehicle Department.

Total Loss: The condition of an automobile or other property when damage is so extensive that repair costs would exceed the value of the vehicle or property.

Towing and Labor Costs: This endorsement, which is added to the physical damage coverage, provides reimbursement up to a specified limit to tow your vehicle or pay for on-site labor costs.

Unearned Premium: The portion of your premium remaining on your policy term. For example, with a six-month premium, at the end of the first month of the premium period, five-sixths of the premium is unearned by the insurance company.

Uninsured Motorist: At fault party who damages your vehicle or causes bodily injury to insured and or passengers in insured’s vehicle and they do not have insurance.

Uninsured Motorist Deductible Waiver: Coverage to waive deductible when hit by someone who has no insurance.

Waiver of Collision Deductible: This option pays your collision deductible when you carry collision coverage on a vehicle that is damaged by an uninsured or hit-and-run motorist who is at fault. Coverage applies only when there is actual physical contact and when you can identify the uninsured driver or vehicle.