Auto Insurance Glossary

Accident - An unforeseen, unintended event; something unexpected; fortuitous.

Actual Cash Value (ACV) - The value of your property, based on the current cost to replace it minus depreciation.

Agent - A person who sells insurance policies.

Bodily Injury (BI) - Physical injury to a person.

Cancellation - Termination of an insurance policy by the company or insured before the renewal date.

Claimant - A person who makes an insurance claim.

Comprehensive Coverage (Physical Damage Other than Collision) - Pays for damage to or loss of your automobile from causes other than accidents. These include hail, vandalism, flood, fire, and theft.

Declarations Page - - The page in your policy that shows the name and address of the insurer, the period of time a policy is in force, a description of the vehicle, the amount of the premium, and the amount of coverage.

Depreciation - The act of lowering an item´s value due to use or wear and tear.

Effective Date - The date on which an insurance policy becomes effective.

First Party Loss - A situation involving only the insurer and insured i.e. single collision loss (hitting a dear or animal)

Gap Insurance - Insurance that pays the difference between the actual cash value of a vehicle and the amount still to be paid on the loan, Some gap policies may also cover the amount of the deductible.

Independent Adjuster - A person who charges a fee to the insurance company to adjust the company´s claim
Insurer - The insurance company.

Lapse - Termination of a policy due to non-payment of premiums.

Liability - Responsibility to another for insured’s negligence.

Liability Insurance - Pays for injuries to the other party and damages to the other vehicle resulting from an accident you caused. It also pays if the accident was caused by someone covered by your policy, including a driver operating your car with your permission.

Liability Limits - The maximum amount your liability policy will pay.  

Medical Payments & Personal Injury Protection (PIP) - Both pay limited medical and funeral expenses if you, a family member, or a passenger in your car is injured or killed in a motor vehicle accident. PIP also pays lost-income benefits. This usually a non-fault coverage.

Rental Reimbursement Coverage - Pays a set daily amount for a rental car if your car is being repaired because of damage covered by your auto policy

Surcharge - An extra charge added to your premium by an insurance company. For automobile insurance, a surcharge is usually added if you have at-fault accidents.

Third Party Loss - A situation involving a person other than the insurer and insured; i.e., a person making a liability claim against the insured.

Towing and Labor Coverage - Pays for towing charges when your car can´t be driven. Also pays labor charges, such as changing a flat tire, at the place where your car broke down.