Common Auto Insurance Terms You Should Know

·      Actual Cash Value (ACV): Your asset’s value, calculated by subtracting any depreciation from the current cost.

·      Adjuster: The person responsible for settling insurance claims.

·      Agent: The person selling the insurance policy.

·      Benchmark Rate(s): Rate that is set yearly by the Commissioner of Insurance. Insurance companies (rate-regulated) use benchmark rates for referencing their own rates.

·      Binder: A temporary insurance contract that is used for proof of coverage till a permanent policy is received by the policy holder.

·      Cancellation: An event where the insurance policy is terminated by the insured or the company before the renewal date.

·      Claimant: The person making the insurance claim.

·      Collision Coverage: Coverage that pays for your vehicle’s damage regardless of who caused the accident.

·      Comprehensive Coverage (physical damage besides collision): Coverage that pays for your vehicle’s damage or loss caused by something other than an accident; like a flood, theft or fire.

·      Declarations Page: The policy page that contains the insurer’s name and address, the premium amount, the time period for which the policy is effective, the insured vehicle’s description, and the coverage amount.

·      Deductible: The amount payable by the insured in a loss before any payment can be considered due from the company.

·      Depreciation: The decrease in an asset’s value due to use or wear & tear.

·      Endorsement: Also known as a “rider”, an endorsement is a written attachment to the policy that either expands or limits the benefits of the policy.

·      Lapse: When a policy is terminated due to non-payment of premium.

·      Liability Insurance: Payable for any damage and/or injury to the other party and their vehicle caused by the accident that you are responsible for.

·      Loss: The amount paid by the insurance company on a claim.

·      Medical Payments and Personal Injury Protection (PIP): Both are used to pay for medical/funeral expenses (limited) if you, your family member or a passenger in your vehicle is injured or killed in the auto accident.

·      Named Driver Exclusion: An endorsement that specifies an individual who will not be covered by the policy if that individual is the driver.

·      Non-owners Policy: Coverage that provides liability and medical payments to a named insured who doesn’t own a vehicle.

·      Non-renewal: When an insurance company decides not to renew a policy.

·      Policy Period: The time period during which the policy is in force, usually from an effective/beginning date to expiration date.

·      Premium: The amount an insured pays to the insurance company for obtaining/maintaining an insurance policy.

·      Rental Reimbursement Coverage: Coverage that pays for car rent in case your car is being repaired due to the damage covered by your policy.

·      Rider: Also known as an “endorsement”, the rider is a written attachment to the policy that wither expands of limits the benefits of the policy.

·      Underwriter: The person who reviews an insurance application and decides whether it should be approved and at what premium rate.

·      Underwriting: The process through which an insurance company decides to accept or reject a policy application.

If you come across any term that you don’t know, feel free to talk to one of our reliable insurance agents.