Auto Insurance Glossary—a

Supplement to the Automobile

Insurance Guide
These definitions are offered to give you a
general understanding of the terms you may hear
that are associated with automobile insurance. Please
note that your individual company may define Claim
similar terms differently. The definitions page in Notice to an insurance
your policy is the final authority regarding company that a loss has occurred
your coverage. which may be covered under the terms and
conditions of the policy.
Adjuster
The person who manages the various aspects of Collision
a claim and determines what will be paid out in Pays to repair damage to your car as a result of an
accordance with the policy and the facts. accident. Most banks or lenders require you to buy
this coverage to receive a car loan.
Aftermarket Crash Part
A non-original equipment manufacturer (OEM) Commission
replacement part, either new or used, for any of the A portion of the policy premium that is paid to
non-mechanical parts that generally constitute the an insurance producer (agent) by the insurance
exterior of the motor vehicle, including inner and company as compensation for the producer’s work.
outer panels.
Comprehensive Coverage
Appraiser Pays for theft or damage to your car from hazards
The person who evaluates the damage caused by an such as fire, flood, vandalism, and striking an
accident or other covered loss and determines the animal. Most banks or lenders require you to buy
amount to be paid under the policy terms. this coverage to receive a car loan.

Assigned Risk Plan Declarations (DEC) Page

A program where drivers can get coverage when Usually the first page of an insurance policy, it
insurance companies are unwilling to sell them a contains the full legal name of your insurance
policy. company, your name and address, the policy
number, effective and expiration dates, premium
Binder payable, the amount and types of coverage,
A short-term agreement that provides temporary deductibles, the vehicle(s) that are covered on the
insurance coverage until the policy can be issued or insurance policy, and the vehicle identification
delivered. numbers (VIN).

Bodily Injury Liability Deductible

If you injure someone in a car accident, this The amount a policyholder is responsible to pay
coverage pays damages for which you are liable, up front before covered benefits from the insurance
such as medical and rehabilitation expenses. company are payable. This is applicable to
comprehensive or collision coverage only.
Cancellation
The termination of a policy at a date other than its
annual anniversary date.

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Endorsement Limited Tort
A written agreement that changes the terms of an Limited Tort offers you significant savings on your
insurance policy by adding or subtracting coverage. premiums. You are still able to recover out-of-
pocket medical and certain other expenses; however,
Exclusion you are not able to recover certain damages—such
A provision in the policy that explains what is not as payments for pain and suffering—unless the
covered. injuries meet one of the exceptions in the law.
Extraordinary Medical Benefits Limits
Pays for medical and rehabilitation expenses that The maximum amount of benefits the insurance
exceed $100,000, up to a maximum limit of $1.1 company agrees to pay under an insurance policy
million. in the event of a loss.
First Party Minimum Limit
The named policyholder (insured) in an insurance The state-mandated minimum mandatory amount
contract and any relatives residing in the named of benefits.
policyholder’s household.
Medical Benefits
Full Tort Pays medical bills for you and others who are
You retain unrestricted rights to bring suit against covered by your policy, regardless of fault.
the negligent party.
Non-Renewal
Funeral Benefits The termination of an insurance policy at its annual
Pays, up to the limit specified in the policy, for anniversary date.
funeral expenses if you or a family member dies as
a result of an auto accident, regardless of who was Policy
at fault in the accident. A contract that states the rights and duties of the
insurance company and the insured.
Income Loss
Pays a portion of your wages when injuries Premium
sustained in an auto accident keep you from The price paid to the insurance company for a
working. policy.

Insured Premium Finance Company

The person(s) entitled to covered benefits in case of A lending institution that finances automobile
an accident or loss. insurance premiums for a fee.

Insurer Producer (agent)

The insurance company who issues the insurance An individual or organization authorized to sell,
and agrees to pay for losses and provide covered solicit, negotiate, and service insurance policies for
benefits. an insurance company.

Lienholder Property Damage Liability

A person or business, usually a bank or financial Covers damage to someone’s property (such as his
firm, that retains the title of a vehicle while the or her car) resulting from an accident in which you
purchaser pays off the loan. are at fault.

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Quotation or Quote Surcharge
An estimate of the cost of insurance based on the An extra charge applied to the premium by an
information supplied to the insurance producer insurance company, usually applied as a result of
(agent) or company. This amount may change at-fault accidents or moving violations.
depending upon findings during the underwriting
process. Third Party
An individual other than the policyholder or the
Rental Reimbursement Coverage insurance company who has suffered a loss and
Pays—up to a defined amount—your expenses may be able to collect compensation under the
to rent a vehicle if you have a loss covered under policy, due to the negligent acts or omissions of the
comprehensive or collision benefits. Coverage is sold policyholder.
based on a daily amount of expense, subject to a
maximum limit. Total Loss
Damage or destruction to real or personal property
Single Limit Liability to such extent that it cannot be rebuilt or repaired
Some companies offer single limit liability coverage, to its condition prior to the loss or when it
which pays—up to the specified limit—damages would be cost-prohibitive to repair or rebuild in
for which you are liable under bodily injury and comparison to the value of the property prior to the
property damage coverages. loss.

Stacking of UM or UIM Towing Coverage

When you stack your UM and/or UIM coverages, An optional coverage of an automobile policy that
your limit of coverage for each covered vehicle on pays a specified amount for towing and related
your policy is multiplied by the number of vehicles labor costs.
on the policy. You can also stack your UM and/or
UIM coverages to receive uninsured or underinsured Underinsured Motorist (UIM)
This coverage applies to you, relatives residing in
motorist coverage from more than one policy under
your household, and your passengers if injured by
which you are insured. Stacked coverage applies
an at-fault motorist who does not have enough
unless you reject it.
insurance to pay your claim. This does not cover
Subrogation damage to property.
The process of recovering the amount of claims
damages paid out to a policyholder from the legally Underwriting
The initial 60-day time frame wherein the company
liable party. When a company pursues the legally
processes and investigates the information provided
liable third party, they are required to include the
on the application. The results of this process
policyholder’s deductible in the recovery process if
determine acceptability and the premium.
requested by the policyholder. The company must
then share any subrogation recoveries with the Uninsured Motorist (UM)
policyholder on a proportionate basis. This coverage applies to you, relatives residing in
your household, and your passengers if injured
by an at-fault uninsured motorist or hit and run
driver. This does not cover damage to property.

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