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Actual Cash Value

The cost to replace the vehicle with one of similar quality and materials minus depreciation based on the age of the vehicle.

Adjuster

An individual who assesses the validity of an insurance claim on behalf of an insurance company. The adjuster authorizes appropriate claim payment, repairs, or other action.

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.

Assigned Risk Plan

This is a type of auto insurance plan that gives the ability to obtain insurance from a pool of insurers to individuals that have previously been denied insurance coverage based on risk factors. All licensed insurers must participate in this type of plan and are allowed to determine their own rates. Individuals cannot be denied for this type of plan and the fees are usually much higher than regular auto insurance plans.

Assured

Means the same as an insured, policyholder, or someone who has an insurance policy.


At-Fault

The party that is legally liable for the damages in an accident.

 

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BI/PD

BI/PD refers to Bodily Injury Coverage (BI) and Property Damage (PD). For example, 25/50/10 means $25,000 per person per accident for bodily injury/$50,000 total per accident for bodily injury/$10,000 in property damage per accident.

Binder

Formal notification from an agent that the insurance policy has been paid for and is in full force. A temporary agreement declaring that the policy is in effect. Used in certain cases to protect a policyholder when it is not possible to issue or endorse the policy immediately

Bodily Injury Liability

Insurance coverage that protects the insured against financial loss when a person is held liable (legally) for injuring other individuals in an auto accident. Bodily Injury Liability also protects the insured against the cost of legal defense.

Broker

An insurance representative who typically represents the insured, not the insurance company.


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Cancellation

Cancellation refers to the termination of an insurance policy before the end of the stated policy period.

Claim

A formal request by the policyholder/insured to be reimbursed for losses covered by the insurance policy.

 

Certificate of Financial Responsibility (CFR)

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.

Certificate of Satisfaction

A form signed by the insured when he or she takes delivery of the car from the repairer. It certifies that he or she is satisfied with the vehicle operations, appearance, and visible quality of the repairs.

Collision Coverage

The portion of an auto insurance policy that pays for collision damage to the insured vehicle resulting from another vehicle or object. Collision Coverage Insurance pays for damage to the insured’s car regardless of who is at-fault in the accident.

Combined Single Limit (CSL)

Amount of liability coverage that combines property damage and bodily injury coverages into one single limit of coverage.

Comprehensive Coverage

Helps cover damages to an automobile resulting from accidents or incidents outside of those outlined under collision coverage. This may include damage resulting from hail, flood, fire, vandalism, or theft.
Competitive Estimate
A term used when an insurance company requests that you submit multiple repair estimates for consideration.

Continuously Insured

Insurance coverage was in effect from an insurer or multiple insurers at all times. In order to be continuously insured, there are to be no breaks or lapses in coverage for any reason.

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.

Coverage

The amount and type of protection an insurance policy provides to the insured.

Covered Person

Individuals named in the insurance policy.


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Depreciation

Insurance companies use a formula to calculate the value of a vehicle based on it age. The loss of value due to the age of the vehicle is called depreciation.

Deductible

The portion of a claim you pay out of pocket. Choosing a higher deductible will lower your insurance premiums.

Driver Education

Certain drivers (usually over age 50) who have voluntarily taken a defensive driving course may qualify for this discount on their auto insurance premiums

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Earned Premium

Refers to that portion of the premium representing coverage already provided. A day of earned premium consists of each day an insurance policy is in full force.

Effective Date

The starting date of an insurance policy; the date actual insurance protection begins.

Emergency Road Service Coverage

Protection for problems that are not typically handled by your auto insurance, 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.

Exclusions

A section of the insurance policy listing the types of losses not protected by the policy.

Expiration Date

The exact date and time that a policyholder’s insurance coverage ends.

Extended Non-Owner Liability

Endorsement to a personal auto policy that provides broader liability coverage only for specifically named individuals. The endorsement provides protection for non-owned vehicles provided for the regular use of an insured, use of vehicles to carry property or passengers for a fee, and broader coverage for autos used for business purposes.


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Fob or Key Fob

Refers to a small decorative or identifying object that connects to a key ring. It can be a logo or other type of ornamental design and is useful item to help identify a set of keys. A key fob may also refer to the small electronic device that is used to lock or unlock the car doors or to start the ignition.

Financial Responsibility

Refers to the ability of individuals to reimburse others for damage caused by the individual.

Financial Responsibility Filing (SR22)

Each state requires individuals to provide proof of future financial responsibility. This if commonly called SR22. The SR22 shows that an individual is financially able to pay any judgment against the insured individual if the individual is found to have caused injury to another individual.


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GAP coverage

GAP insurance covers the gap between what you paid or owe on the car and the book value of the car. Once the car is driven off the showroom floor it is considered a used vehicle and the worth drops significantly. GAP insurance reimburses the insured for this difference in value. If a driver is involved in an accident and the car is totaled, an insurer will only cover up to the actual cash value of the car, unless GAP coverage is in place. This means that without GAP you may end up paying the difference between the insured value and the amount you still owe on the car for a vehicle that is not repairable.

Garage Location

Zip code where a vehicle is parked or garaged when not in use, typically the vehicle owner’s primary residence.

Good Driver

A licensed driver who has only one DMV point (minor traffic violation) during the last 3 years, has only one at-fault accident during the last 3 years (property damage only) and has never been convicted of specific vehicle-related crimes during the last 7 years.

Good Student Discount

Discount on automobile insurance granted to students with high scholastic ratings.

Grace Period

A period of time following the date the premium is due, during which a policy remains in force even though the premium has not been paid.


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Hit & Run

A "hit and run" occurs when a person driving a motor vehicle is involved in an accident and flees the scene.

Hazard

Anything that increases the chance of an accident occurring.


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Key Fob

See Fob

 

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Independent Agent

An individual who is licensed to sell insurance and represents several different insurance agencies.


Insured

Individual or object covered by insurance, also referred to as "policyholder."


Insurer

A company, organization, or individual providing insurance. Also referred to as "insurance carrier."


Indemnification

The act of providing compensation for a loss with the intent to restore an individual or entity to the approximate financial position prior to the loss.


Indemnity

Compensation for a loss intended to restore an individual or entity to the approximate financial position prior to the loss.


Independent Adjuster

An individual who estimates losses on behalf of an insurance company, but is not an employee of that company.

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Lapse in Coverage

When a policyholder neglects to pay his/her premium, this results in a break in continuous insurance coverage. During the time of nonpayment the vehicle is not covered. This time period is called a lapse in coverage.

Liability

Any legally enforceable obligation or responsibility for someone’s negligent acts that have resulted in costs and damages.
Liability Coverage
Refers to coverage for bodily injury and property damage.
Lien
A claim, charge, or encumbrance on property as a security for the payment of a debt.
Lienholder
A person or organization with a financial interest in property up to the amount of money borrowed or still owed on the property.

Limits

The maximum amount the insurance carrier will pay for a specific insurance coverage. The limit amount is usually stated on the declarations page.

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Material Damage

All property-related damage losses covered by the policy. This includes the following: property damage (PD), comprehensive damage (COMP), collision damage (COLL), Fire/Theft Combined Additional Coverage (FTCA), rental reimbursement (RR), or uninsured motorist property damage (UMPD).


Mechanical Breakdown Insurance

Covers repairs to all mechanical parts of the car, protecting you from expensive repair bills.


Medical Payments Coverage

A coverage provided in the auto policy that pays certain medical and funeral expenses, resulting from an automobile accident, regardless of fault. This coverage protects all passengers in the insured vehicle. This coverage also protects the policyholder and relatives residing in the household while in other vehicles or if struck as a pedestrian. For individuals residing in states that require personal injury protection benefits, this coverage may not be available.


Misrepresentation

To make written or verbal statements that are untrue or misleading.

Motor Vehicle Record

A report from the agency that issues your driver's license, listing accidents and violations that appear on your driving record. This report is used to verify information provided by insurance applicants and policyholders.

Multi-Car Discount

Available to policyholders who insure more than one vehicle at the same location.


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Named Insured

The person designated by name in the insurance policy as the individual who is protected. This may also include the spouse of the named insured.

Named Non-Owner Policy

If an individual does not own a vehicle, but rather drives borrowed vehicles or rented automobiles, he/she may obtain a named non-owner automobile insurance policy.

Negligence

The failure to exercise the care that is expected of a reasonable person in similar circumstances.

No-fault Insurance

If your state has a "no-fault" auto insurance law, your policy must pay medical bills for you and your passengers regardless of who caused the accident. No-fault laws are intended to keep insurance fraud down.


Non-Renewal

When an insurer decides not to renew a policy at the end of its policy period.

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Occurrence

An event or repeated exposure to conditions, which unexpectedly causes injury or damage during the policy period.

Occasional Driver

An individual who is not the primary or principal driver of the vehicle.


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Payment Recovery

If your car is damaged because of another driver's negligence and your insurance company seeks to recover your deductible and our payments from the other party. This process of payment recovery is also called subrogation.


Peril

A danger or hazard that can cause a loss, for example, a car collision with an object, or a fire.


PD

Abbreviation for "property damage."

Per Occurrence Limit

Maximum amount an insurance carrier will pay for claims resulting from a single accident.

Per Person Limit

Maximum amount an insurance carrier will pay for one individual’s injuries resulting from a single accident.


Personal Injury Protection (PIP)

Unique form of insurance that pays for loss of income and medical expenses resulting from an automobile accident. PIP may also cover accidental death and funeral expenses. This coverage may vary greatly from state to state.

Physical damage

Refers to damage from risks such as collision, comprehensive, fire, theft, or any damage to the vehicle itself.

Policy Term

Length of time a policy is in effect.


Premium

The amount of money paid to an insurance company for automobile insurance protection.


Proof of Loss

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


Property Damage Liability (PD-Liability)

A type of insurance coverage that pays for the policyholder’s monetary loss if they are found liable for damages to a third party.


Proposal

A document containing a list of coverages with prices the customer would have to pay for those particular coverages on his/her property. Also called a quote.

Protection

Refers to the financial protection an insured individual has when purchasing an insurance policy.

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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.


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Rate

The cost of a given unit of insurance

Replacement Cost

This refers to the cost to replace am vehicle that has been damaged beyond repair with a new vehicle of similar quality and materials.

Rental Reimbursement

Pays expenses to rent a car in case of an accident or loss covered under either comprehensive coverage or collision coverage.


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Second Named Insured

A second designated driver listed on the policy that will have the same coverage under the policy as the named insured.

Statutory Limits

Minimum limit of liability required by law to be carried.

Subrogation

If your car is damaged because of another driver's negligence and your insurance company seeks to settle the claim for damage to your car including your deductible from the other party. This process of payment recovery is called subrogation.


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Threshold Level

The point at which the insured individual may bring wrongful action under a modified No-Fault Automobile Insurance plan.


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 insured.


Tort State

Under a state with a Tort system, if you are involved in an accident, someone must be held liable for the cause of the accident. The person at fault is generally responsible for all damages. Compensation for claims is the responsibility of the person found to be at fault. Being that Maryland is a Tort state, it is usually recommend that driver’s consider carrying greater limits than just the state minimums requirements.

Total Loss

Damages that are so severe, restoration is not possible, such as a totaled car.

Towing Costs

This is optional coverage to tow a vehicle that is broken down or damage in an accident and is not drivable; it is covered up to the provided limits and differs from policy to policy.

Transportation Expenses

This is also called rental reimbursement and is optional coverage to provide the policy owner with transportation based on a daily limit...


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Umbrella Policy

Umbrella insurance is insurance to protect assets and future income, above and beyond the standard limits on your existing policy. It is called an umbrella policy because it covers liabilities to both your home and auto policies and is sold in increments of one million dollars. These policies are offered through you auto policy and generally require a set minimum of liability coverage exist before an umbrella policy can be issued. For instance if you carry $300,000 on your auto insurance liability and $500,000 on your home liability policy with a $1,000,000 umbrella, you limits become $1,300,000 and $1,500,000 respectively.

Uninsured or Under insured Motorist Bodily Injury Coverage (UIM)

A form of auto insurance that protects the insured if hit by a legally liable individual who does not carry enough insurance to cover damages.


Underwriter

A person employed by an insurance company who assesses risks, fixes premiums, and accepts or rejects applications for insurance.


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Vandalism

Destruction or defacement of property.


Vehicle Identification Number (VIN)

A unique combination of letters and numbers used to identify the make, model, and year of a vehicle. The VIN is usually located on the dashboard of the vehicle on the driver’s side and is listed on the title and vehicle registration.

Vehicle Use

Refers to what the insured vehicle will be used for. Choices include: business (other than driving to and from primary place of employment), pleasure or occasional use, work or driving to work daily, farm (vehicle is not used for anything other than farming or ranching), and artisan (skilled craftsman uses his/her vehicle to transport tools for work). Vehicle use is also referred to as "usage" or "primary use."

Violation

Refers to a traffic moving violation, involving an illegal operation of a motor vehicle. Some violations include:

  • Driving under the influence of alcohol
  • Driving without lights
  • Evading police
  • Failure to obey a safety zone
  • Failure to stop at a stop sign or light
  • Following too closely
  • Illegal lane change
  • Improper turning
  • Leaving the scene of an accident
  • Obstructing traffic
  • Speeding.

 

Vehicle Identification Number (VIN)

A 17-digit number assigned to each vehicle manufactured in the United States after 1980. This number is used for identification purposes and is visible on the dashboard when viewed from the outside of the vehicle.

 

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Waiver

An official form stating the relinquishment of right or privilege signed by an individual, voluntarily.


Warranty

A written guarantee of the integrity of a product and of the manufacturer's responsibility for the repair or replacement of defective parts.