Auto insurance definitions glossary
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Auto insurance terms and what they mean

Become familiar with terms and concepts about the topic of auto insurance

Every industry has its own unique and quirky jargon. Auto insurance is no exception. Here are some good terms to know about insuring your car or truck.

Actual cash value (ACV)

The value of a car considering the age, mileage, make, model, and overall condition of the vehicle.

Appraisal

Determines the value of a vehicle or property, or the extent of damage from an accident. Usually conducted by an impartial expert.

Bodily injury liability coverage

Pays damages for injury or death resulting from a covered accident for which you are at fault. May also provide you with funds for a legal defense.

Carrier

The company providing insurance coverage.

Certificate of satisfaction

A form you sign when taking delivery of an insured car from the repair shop. It indicates your satisfaction with the repairs.

Claim

A request for payment under the terms of an insurance policy. Learn more about claims.

Declarations page

A page in your policy – usually the front page – with basic information such as your name and address, description of the vehicle(s) insured, effective dates of the policy, amount of coverage and the premiums.

Deductible

The portion of a claim that you pay. A higher deductible amount will lower your insurance premiums but increase your costs if there’s an accident.

Endorsement

A change to your policy by amending specific coverage. It can add coverage, modify it, reduce or even remove coverage.

Exclusion

A restriction to your insurance policy that reduces or removes coverage for certain potential events, persons, property or locations.

Expiration date

The date when your coverage ends. A new or renewal policy typically starts on this date.

Field adjuster

An insurance liaison who works outside the office and conducts accident scene investigations, damage inspections and face-to-face meetings with policyholders.

Financial responsibility law

A law that requires owners and drivers of vehicles to have enough money on hand to compensate anyone they might injure in accident. Liability insurance is the most common way to satisfy this requirement.

Indemnification

Financial compensation for a loss with the intent to restore a person or entity to the financial position enjoyed before the loss.

Insurable interest

Interest paid when an individual would suffer an economic loss as the result of damage to property or bodily injury.

Insurance ID card

A card issued by your insurance company with basic information about your policy.

Insurance score

A rating you are given by the insurance company, influenced by your credit history and other factors, used in some states to determine whether they can write you a policy.

Leased vehicle

A car or truck rented under a long-term contract or lease. The company leasing the vehicle still owns it, and is listed on the insurance policy as an insured party.

Liability

The legal obligation or responsibility for any injury or damage suffered by another person.

Limit

The maximum amount of coverage under an insurance policy.

Loss

The amount of damage to a vehicle or other property, or injury suffered by a person. In the insurance world, the term “loss” is used interchangeably with “claim.”

Medical payments coverage

Pays to reimburse a driver or passenger for medical or funeral expenses incurred in a covered accident, up to the limits of your policy. It also covers the medical costs of pedestrians you may have injured.

Motor vehicle report (MVR)

A report from the department of motor vehicles listing accidents and violations on your driving record.

No-fault insurance

Pays your own medical expenses, lost wages or other accident-related expenses regardless of who is responsible for an accident. Only applies in states with no-fault laws in place.

Non-renewal

When an insurance company decides to not renew a policy at its expiration date.

Personal injury protection

Pays for medical treatment, lost wages or other medical expenses related to an accident regardless of who caused the accident. Learn more.

Premium

The cost of an insurance policy. It can be paid in monthly, quarterly, semi-annual or annual installments.

Re-inspection

The review of an estimate or appraisal done by an adjuster to guarantee that the work required in the estimate or appraisal is being completed by a body shop.

Release

A legal document stating that all financial obligations from the past, present and future resulting from an accident or occurrence have been fulfilled.

Replacement cost (RC)

In contrast to ACV, the amount it would cost to actually replace a damaged or destroyed vehicle.

Risk

Refers to the probability of a particular loss occurring.

Total loss

The condition of a vehicle or other property so heavily damaged that repair costs would surpass its value.

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