An unforeseen and unplanned event or circumstance, often with lack of intention or necessity. It results in either damage to property or bodily injury.
Accidental Death Coverage
If an insured dies from accident-related injuries, this type of auto insurance coverageprovides a payment to the insured’s beneficiary.
Act Of God
An unpreventable natural occurrence or catastrophe. Examples include natural disasters like: earthquakes,tsunamis, hurricanes and tornados.
Actual cash value. This is determined by taking into effect the original value of your car minus depreciation for things like age, mileage, paint quality, general wear and tear etc.
The science of assessing the risk of events occurring and creating insurance policies. Actuarial science includes a number of interrelating subjects, including probability, mathematics, statistics, finance, economics, financial economics, and computer programming.
An insurance professional practicing Actuarial Science. They mathematically evaluate the probability of events and quantify the contingent outcomes in order to minimize the impacts of financial losses associated with uncertain undesirable events.
This person settles claims that are made by policyholders and determines the monetary compensation the insurance company will pay for damage and loss.
Aftermarket parts (also known as replacement parts, generic parts, or aftermarket auto parts) are vehicle components produced by independent companies rather than the original manufacturer or dealership. For example, NAPA car parts and accessories are considered aftermarket parts, while Honda car parts (installed on a Honda) are not.
An agent (also known as an insurance agent) sells insurance coverage and helps manage customers’ policies. Insurance agents are the authorized representatives of an insurance company or multiple companies.
Antique cars are defined by the Antique Automobile Club of America as any vehicle that’s more than 45 years old. Many collectors, however, only view cars built by or before the end of World War I (1918) as antiques.
Antitheft recovery system
An antitheft recovery system consists of an electronic device installed in a concealed area of your car. If your car is stolen, you can activate the device and it’ll emit a signal that can be used to locate your car. Such systems can be effective over a radius of several miles, depending on local geography.
An at-fault driver is a driver who’s deemed legally responsible for damage caused in a car accident. When an insured driver is declared at fault in an accident, his or her insurance company pays for all covered damages incurred by the other party (or parties) up to the policyholder’s coverage limits. If limits have been exceeded, the at-fault driver is financially responsible for any excess amount.
As a temporary authorization of insurance, a binder shows that coverage is in place (bound) for a specific amount of time, usually between 30 to 60 days. It will be replaced by a declarations page when the policy is issued.
Bodily injury liability coverage
Bodily injury liability coverage protects you if you’re held responsible for injuring someone in a car accident.
This coverage can help pay for the injured party’s medical expenses and lost wages, and may also help pay your expenses in a related lawsuit. The amount covered is capped at the limits you select when you buy your car insurance policy.
A body shop (also known as a repair shop or auto body shop) is an establishment dedicated to repairing vehicles. Body shops often employ mechanics and other types of automotive experts to offer a range of vehicle repair services.
A citation (also known as a ticket) is a legal summons generally issued as the result of a moving or non-moving driving violation. Moving violations are driving-related infractions, such as speeding or failure to yield, whereas non-moving violations are legality-related issues, such as improper registration or parking violations.
A car insurance claim is a policyholder’s request to be reimbursed for a loss that’s covered by car insurance.
Classic cars are defined by the Classic Car Club of America as any vehicle between 20 and 45 years old. Vehicles more than 45 years old are classified as antiques.
Collision coverage can help pay for repairs or replacement costs to your own vehicle if your car hits another vehicle/object or if your car rolls over.
The maximum amount paid for repair or replacement is the car’s actual cash value minus the deductible you choose when you buy your policy.
Collision deductible waiver
This coverage option pays the deductible for your collision coverage if you’re involved in an accident in which an uninsured motorist is held legally responsible. This particular car insurance coverage option isn’t available in all states. If it is available, you must add this to your auto insurance policy if you choose to buy collision coverage.
Commercial use classification (also known as business use) means that you mainly use your car for business purposes (such as sales, service, and delivery calls) or work-related errands (like trips to the bank or post office), and other work-related driving. Commuting to and from work is not considered commercial use.
A commercial vehicle (also known as a work vehicle) is any automobile used for business purposes other than commuting.
Commuting, in the context of car insurance, means that you primarily use your car to drive to and from work or school.
Comprehensive coverage (also known as other-than-collision coverage) can kick in when your car is damaged by fire, certain natural disasters, falling objects, or vandalism. Theft and accidents with animals are also covered under this coverage. Comprehensive coverage is legally optional but may be required by a loan or leasing agent if you finance your car.
The length of time you’ve been continuously insured is the number of years you’ve been covered by one or more insurance companies without a lapse in your car insurance coverage.
A credit score is a numerical value that represents how likely it is an individual will repay a loan or other debt on time. The higher your credit score, the better chance you have of being approved for loans, credit cards, vehicle financing, etc. Factors such as bill payment history, credit history, debt-to-credit ratio, and many other financial details can positively or negatively affect your credit score.
A deductible is the amount you agree to pay out of pocket before a certain coverage kicks in after you file a car insurance claim. Generally, higher deductibles translate to lower premiums because you’re assuming more of the financial risk in the event of an accident.
The declarations page of your car insurance policy summarizes the information essential to your car insurance coverage: your name and address, descriptions of the insured vehicle(s), and the car insurance premium, as well as the policy’s coverages, limits, and deductibles.
Depreciation is the decline in an object’s value due to age, wear and tear, or obsolescence.
The effective date is the date your auto insurance coverage begins. You are not covered by a car insurance policy until the effective date, which you can select when you buy your policy.
Emergency road service
Emergency road service (also known as towing and labor, emergency repair service, motor club, or roadside assistance) provides on-the-spot assistance for various types of roadside emergencies. Typical emergency road services include flat tire repair/replacement, lock-out services, and gas delivery.
An endorsement (also known as a rider) refers to any change made to your original insurance contract. Endorsements include changing your deductibles or limits or adding other people or cars to your policy.
An excluded driver (also known as a named driver exclusion) is an individual who’s specifically listed as someone not covered on a car insurance policy. For instance, if you and your spouse (who has a less-than-stellar driving record) have separate car insurance policies, you might name him or her as an excluded driver. This means that he or she will not be covered under your policy if he or she gets behind the wheel of your car.
Exclusions are situations that are not covered by a given insurance policy. Any specific exclusion will be stated in your auto insurance policy.
Extraordinary medical coverage
Extraordinary medical coverage protects you in the event you suffer accident-related injuries that require serious and/or long-term medical care. Extraordinary medical coverage begins once you have exhausted the limit on your standard medical benefits coverage.
For car insurance purposes, a family member is someone who lives in the same home as the policyholder and is related by blood, marriage, or other recognized ties (like adoption, foster care, or wardship). Students living away from home may still be considered family members.
Financial responsibility, in the context of car insurance, means you have the financial backing needed to pay for damages you cause during an accident. Buying car insurance with the necessary liability coverage is the most common way you can demonstrate your financial responsibility to your state.
Gap insurance (also known as loan/lease gap coverage) is a type of insurance coverage that financing car buyers may purchase from their insurance company, the dealership, or the loan provider.
If the vehicle has been financed or leased, gap insurance covers the difference (if any) between what is owed on the car and the car’s actual cash value in case there is a total loss. This protects policyholders from having to make payments on totaled vehicles they can no longer drive.
The garaging location is where an insured car is parked most of the time. The ZIP Code of your primary residence usually indicates your specific garaging location. Your garaging location may affect your car insurance rates, so notify your insurance company if you normally keep your car somewhere other than your home address.
Income loss coverage
Income loss coverage is sometimes a part of your auto insurance policy’s personal injury protection coverage.
Income loss coverage offers financial protection if you’re unable to work due to accident-related injuries. It helps you recover portions of your lost salary and other expenses you may incur as you try to return to work.
An indemnity is the sum that your insurer will pay to you or others after an accident that results in damage to property or people. The idea is that it’ll restore you — or rather your finances — to their pre-loss condition.
An inspection (also known as a vehicle inspection, safety inspection, or annual inspection) is a practice governed by state and national regulations in which trained professionals determine a vehicle’s insurability and road-use legality.
The 2 main factors checked during inspections are vehicle safety and emissions. State laws dictate the required frequency of vehicle inspection, but the most common reasons for the procedure include insurance applications, car accidents, and vehicle registrations.
An insurance card (also known as an ID card) contains a car insurance policy’s pertinent information — including name(s) and address(es) of policyholder(s); policy number; year, make, model, and VIN of each insured vehicle; the effective date of the policy; and the name and contact information of the insurance company.
In most states, you’ll typically need to show a police officer your insurance card, along with your license and registration, if you’re stopped.
Insurance fraud (also known as an insurance scam) is any act that knowingly defrauds an insurance company to obtain payment. Fraud can take on many forms, ranging from overinflated towing bills to windshield repair fraud, and from staged accidents to exaggerated claims of stolen property or damages.
Insurance fraud is a leading cause of today’s rising insurance costs, and all states enforce strict laws against this form of crime. Convicted offenders can face major penalties, hefty fines, and imprisonment.
The insured is an individual covered by a car insurance policy.
A judgment is a final decision rendered by a court of law.
Liability coverage protects you from having to deplete your personal assets to pay for damages if you’re held responsible for injuries or damages arising from a car accident.
The 2 main types of liability coverages in a car insurance policy are bodily injury and property damage. These coverages are required in most states.
Lapsed coverage occurs when an individual is without an active car insurance policy. A lapse in your coverage could indicate a higher level of risk for insurers and can often result in higher premiums in the future.
Driving without at least the basic liability coverage is illegal in many states and can saddle you with steep fines and penalties.
A lender is any individual or organization that provides monetary loans. When someone obtains a loan, he or she must pay the lender back in full, with interest, within an agreed-upon period.
A lessee is anyone who is leasing a property — typically a house or vehicle. A lease is a contract that grants the lessee exclusive use of a property for a specified period provided he or she makes the agreed-upon payments.
Letter of experience
A letter of experience is documentation provided by an insurer verifying the length of time a policyholder had or has had insurance with the company. It can also show the length of time a customer was insured before switching companies or canceling a policy.
Because most insurance companies offer discounts that depend on how long applicants have kept continuous coverage without interruption, letters of experience are generally required to obtain a better insurance rate.
Liability is a term that broadly means legal responsibility. If you run a stop sign and hit another car, you may be found liable for the damages to the other driver’s car.
Liability coverage protects you from having to deplete your personal assets to pay for damages if you’re held responsible for injuries or damages arising from a car accident.
A limit is the maximum amount an insurance company will pay, per coverage, for a covered loss. Though you can choose your limits for certain coverages, some states require you to buy certain minimum levels of car insurance coverage.
A mature driver (also known as a senior driver) is considered mature upon reaching a certain age, as determined by his or her state of residence. The minimum age for mature drivers in many states is 55 years old.
Many insurance companies offer discounts to mature drivers who complete state-certified defensive driving courses.
Medical payments coverage
Medical payments coverage (also known as medpay or med pay) is an optional coverage that can help pay medical bills and/or funeral expenses if you and/or accompanying passengers are injured or killed while in an insured vehicle, regardless of fault in an accident.
Medical payments coverage may also cover you and your family members when riding in others’ vehicles, or a pedestrian on the street.
The amount paid by medical payments coverage is capped at the limit you choose when you buy your auto insurance policy.
In no-fault states like Michigan, a monetary threshold precludes policyholders from suing for bodily injuries sustained in a car accident unless the expenses exceed a certain agreed-upon figure as defined by the state.
Once the threshold is crossed, an accident victim can sue an at-fault driver for medical-related post-accident expenses.
Motor Vehicle Report
A Motor Vehicle Report (also known as an MVR, driving record, or license points) is an individual’s documented history regarding motor vehicle operation.
The DMV receives a record of any moving violations, at-fault car accidents, not-at-fault car accidents, and tickets. This information is added to the driver’s record. Depending on the severity of an infraction, a driver may receive points on his or her driving record, which can result in higher car insurance premiums, insurance coverage restrictions, or even a suspended or revoked drivers license.
A moving violation is any unlawful driving-related act committed while a vehicle is in motion. Common examples of moving violations include speeding, improper signaling, following too closely, and running a stop sign or red light.
No-fault insurance often includes or requires personal injury protection coverage, which can help pay for a policyholder’s medical-related expenses after a car accident, regardless of fault. In a typical no-fault claim, each insured party files a claim with their own insurer without waiting for the assignation of fault.
No-fault insurance aims to help injured drivers and passengers get medical care as swiftly as possible and does not apply to property damage.
Each no-fault state has a monetary or verbal threshold that specifies a certain level of damage that, when surpassed, can allow an injured party to sue an at-fault driver.
A non-passive alarm is a type of car alarm that has to be manually activated each time you leave your car. If someone attempts to open your car, the alarm sounds, and the system disables the automobile’s starter, ignition system, and/or fuel circuit.
You may qualify for a car insurance discount if your car is equipped with such an alarm.
Original equipment manufacturer
Original equipment manufacturer (also known as OEM) refers to replacement vehicle parts made by the same manufacturer that produced the car’s original part. For instance, if your brake pads need to be replaced, and you want to use OEM parts, then your repair shop will need to find brake pads made by the same manufacturer that produced your car’s original pads.
Out-of-pocket expenses are what you pay in addition to what your car insurer pays when you file a claim.
These are typically the result of the deductibles and coverage limits you choose. For example, if you carry a property damage liability limit of $25,000 and you get into an at-fault accident that causes $30,000 worth of damage to someone else’s property, you may incur out-of-pocket expenses of $5,000, in addition to the deductible.
A passenger (also known as a rider or guest) is any person in the vehicle other than the driver. This includes individuals traveling via car, truck, motorcycle, or any other type of motor vehicle.
A passive alarm is a type of car alarm that is automatically activated and emits warning sounds when someone tries to get into your car. Once the passive alarm has been triggered, the system disables the automobile’s starter, ignition system, and/or fuel circuit.
Permissive use means you grant someone permission to drive your vehicle. Generally, if someone gets into an accident while driving your car with your permission, your insurance provides the same coverage as when you’re behind the wheel. In some states, however, permissive drivers have reduced coverage.
Personal injury protection
Personal injury protection (also know as PIP) is a kind of car insurance coverage in certain states that can help cover medical-related expenses after a car accident, regardless of fault. In some states, PIP can also pay for lost wages and other similar losses.
PIP is often mandatory in no-fault states, although it can be declined in some. Select states that follow the traditional (fault) insurance system still require PIP unless it’s declined in writing. Specific protections afforded by this type of car insurance coverage and limits on personal injury protection payments vary widely from state to state.
Personal liability (also known as personal obligation or personal responsibility) refers to a situation in which an individual is legally responsible for damages caused to another party or someone’s property.
When someone is deemed personally liable, he or she is financially obligated to compensate the other party for damages in accordance with national and state liability laws.
Policyholders may carry personal liability coverage on their home insurance, car insurance, and virtually any other type of property and casualty insurance policy they own. Individuals may also purchase personal umbrella insurance in order to insure against liability situations not covered by their other insurance policies.
Physical damage coverage
Physical damage coverage (also known as property damage coverage) is a form of car insurance that covers the policyholder’s vehicle. If a policyholder is found at fault in an accident, the insured will file an insurance claim under the car insurance policy’s physical damage coverage.
Your policy is the contract that states what your car insurance coverage includes (coverages, limits, and deductibles), as well as your official annual premium.
It’s a document or group of documents that typically includes a declarations page, a list of exclusions, and other terms and conditions of your coverage.
Policy expiration date
The policy expiration date is the date your insurance coverage ends if your policy isn’t renewed.
The expiration date can be found on the declarations page of your car insurance policy, on your insurance card, or on a recent car insurance renewal notice.
A policy term is the length of time an auto insurance policy is valid. Auto insurance policies from Esurance have a policy term of 6 months or 12 months, depending on your state of residence.
The cost of your insurance policy.
Primary coverage (also known as primary insurance) is the first coverage to help pay damages or expenses after a claim is filed whether or not there’s other coverage in place. For example, if you’re found at fault in a car accident and you have a car insurance policy as well as an umbrella policy, your car insurance policy will act as your primary coverage.
The primary driver is the person named on a car insurance policy who drives a specific car most frequently.
The primary policyholder is the person who is billed for the auto insurance policy and who serves as the main point of contact with the insurance company.
Your primary residence is the home address and ZIP Code you list on your policy as your place of residence for the duration of your policy term. Your primary residence is usually the same as your garaging location, unless you keep your car elsewhere.
A vehicle’s primary use is how the car is typically used. Auto insurance companies usually classify primary use as commuting, commercial, or pleasure use.
Proof of insurance
Proof of insurance (also known as POI) is any legal, signed document provided by your insurance company that shows the effective date of your active insurance policy.
A quote is an insurance premium estimate provided by an insurance agent, licensed insurance sales representative, or online engine. To receive the most accurate quote, provide honest, accurate information regarding your car, driving record, years of driving experience, claims history, insurance history, and annual mileage.
Registration (also known as vehicle registration) is a mandatory practice in which vehicle owners officially document their vehicles with a governing agency. Typically, a vehicle must be registered through the state’s Department of Motor Vehicles.
A car owner may not legally drive his or her vehicle without proper registration.
A renewal letter (also known as a policy renewal or renewal slip) is a form that an insurer sends, by mail or electronically, to a policyholder just before the current policy term expires and the next one begins.
A renewal letter also states the premium for the upcoming term.
Rental car coverage
Rental car coverage is a form of optional car insurance designed to provide coverage for a replacement vehicle while your car is being repaired or is no longer drivable as the result of an accident.
Rental car coverage does not provide extra protection on the rental car itself.
A salvage title is typically assigned to a vehicle that has been deemed a total loss at some point in its history because it suffered extensive damages, like water damage. Due to the added risk, coverage can be difficult to obtain for salvage-title cars, and the value of salvage-title vehicles can be significantly lower than clean-title vehicles.
A secondary driver is an insured driver who isn’t a car’s primary driver. A secondary driver is sometimes known as an occasional driver in auto insurance terminology.
An SR-22 is an official document that shows proof of financial responsibility. Departments of motor vehicles may require an SR-22 or a similar form for people convicted of certain traffic violations, like a DUI. An SR-22 can be filed only in the state your policy is issued in.
An SR-26 insurance form is documentation filed by an insurance company when a policyholder no longer requires an SR-22 form or the form expires. The form is sent to the state DMV.
See also: SR-22, uninsured motorist bodily injury coverage, uninsured motorist property damage coverage, underinsured motorist property damage coverage, underinsured motorist bodily injury coverage, uninsured/underinsured bodily injury liability coverage.
Third party refers to anyone with whom you are involved in an accident. For example, if you get into an accident with another driver, the other driver would be legally considered the third party and his or her insurance would be called third-party insurance.
Total loss (also known as totaled or complete loss) refers to a situation in which an insured item suffers irreparable damage.
Tow coverage (also known as towing reimbursement coverage) is a benefit of roadside assistance coverage that pays the towing expenses for any covered vehicle, up to the defined limit. In most instances, the insured pays for the tow up front and provides his or her insurance company with the receipt. The insurance company then reimburses the policyholder for the towing cost.
Underinsured motorist bodily injury coverage
Underinsured motorist bodily injury coverage (also known as UMBI) can help pay for your medical expenses, lost wages, and other damages when you or your passengers are injured in an accident caused by a driver who has insufficient car insurance coverage. It typically pays the difference between the coverage limit you select and the other driver’s bodily injury coverage limit.
The amount covered by underinsured motorist bodily injury is capped at the limit you choose when you buy your auto insurance policy. Underinsured motorist bodily injury coverage is available only in certain states, where it’s often mandatory.
Underinsured motorist property damage
Underinsured motorist property damage (also known as UMPD) coverage is mandatory in some states and optional in others. It can help pay for your own property’s repairs when the at-fault driver’s liability limit is exceeded.
In other words, if an underinsured driver causes major damage to your car but doesn’t have enough insurance to cover the cost of repairs, UMPD can kick in to help cover the cost. UMPD does not apply in hit-and-run situations since the identity of the other driver is unknown.
Uninsured motorist property damage coverage
Uninsured motorist property damage coverage (also known as UMPD) is often mandatory in states where it’s available.
This kind of car insurance coverage protects you if your vehicle is damaged in an accident caused by a driver who has no car insurance. Other protection afforded by this type of auto insurance coverage varies from state to state.
The amount covered by uninsured motorist property damage is capped at the limit you choose when you buy your auto insurance policy.
An underwriter assesses submitted insurance applications and determines whether to provide coverage and, if so, at what price and under what terms.
Usage-based insurance is a form of car insurance that uses data on your driving habits collected by a telematics device (similar to OnStar®) to calculate your premium. The type of data gathered may vary based on the insurer’s standards, but can include time spent driving, miles driven, braking habits, and more.
By basing your premium on how you drive, rather than on the habits of drivers like you, usage-based insurance may offer you a more accurately personalized premium.
Vehicle Identification Number
The Vehicle Identification Number (also know as the VIN) is the unique 17-digit number found on each car. The VIN contains the vehicle’s serial number, as well as abbreviations for the make, model, and year.
Your VIN appears on your vehicle registration card. It’s also engraved on your car, near the base of the windshield on the driver’s side dashboard and/or on the edge of the driver’s side door.
A young driver, sometimes referred to as a teen driver, is typically a licensed driver under the age of 25. Because of their inexperience, young drivers may pay more for car insurance than more experienced drivers.