Car Insurance glossary and terms needed to understand your policy
Accident: When driving results in a collision that causes damage to your car and requires you to file a car insurance claim.
Binder: A legal statement of car insurance coverage that provides immediate protection of a temporary nature until an insurance policy goes into effect.
Bodily Injury: Physical injury to a human being caused by a collision or car accident.
Car insurance: A special kind of insurance that guarantees damage or injury to an automobile or the driver and passengers of an automobile in the event of an accident.
Claim: When an insurance policy holder initiates a request for coverage or payment for damages to a car from an insured event.
Collision: When a car hits another car or other object and causes damage to a vehicle and/or the vehicles passengers.
Combined Single Limit: The maximal amount you can claim from your policy provider for both bodily injury and property or automobile damage during a single period.
Comprehensive Coverage: An extended insurance policy that pays for the repair or even the replacement of an automobile in the event of damage or a collision. A deductible is often required with a comprehensive coverage policy.
Covered Person: The individuals that fall under the insurance policy.
Deductible: A set amount that a policyholder must pay before any coverage of damage to a vehicle begins.
Earned Premium: The dollar amount claimed during the term of an insurance policy.
Effective Date: The official start date of insurance coverage.
Exclusion: Any item or event that is not included in an insurance policy’s coverage.
Flat Rate Cancellation: When a policy is cancelled before it officially begins.
Garage Location: Your car’s zip code.
Hit and Run: A collision caused by a driver that then flees the scene of the accident.
Inception Date: The start date of your insurance policy.
Indemnity: The element of an insurance policy that guarantees that the holder of a policy will be able to collect funds to restore the original value of a car before an accident.
Lapse: A period of time in which an individual is not covered by any car insurance, usually due to a cancellation or for non-payment of premiums.
Liability Limits: The maximum financial coverage your policy offers.
Medical Payments: This is the coverage an auto insurance policy pays for any medical expenses incurred from an accident for you and any other passengers in your car at the time of the accident. May include funeral expenses.
MVR: The “Motor Vehicle Record.” This is the information that the DMV maintains about your traffic violations.
Multi-Car Policy: Any car insurance policy that includes more than one car.
No-Fault: A specific car insurance policy that releases anyone from fault in the case of an accident, including any drivers involved. Many states only require this type of car insurance coverage as a minimum policy.
Occasional Driver: Any driver of the car that is not the primary driver. Usually a partner, spouse, or teenager.
Per Occurrence Limit: The maximum coverage available per incident available from the insurance policy.
Physical Damage: Non-medical damage to the car from a collision.
Policy: A legal contract between an insurance carrier and the insurance customer.
Policy Holder: Anyone that is under the umbrella of the insurance policy.
Premium: The financial responsibility of the policyholder.
Principal Driver: The main person that drives the vehicle.
Property Damage: Any dents, crumples, or other destruction caused by an accident.
Renewal: Signing up for a new policy or a continuation of the current policy before there is a lapse in coverage.
SR-22: When a driver has failed to provide proof of insurance, a SR-22 is the legal enforcement of maintaining an insurance policy.
Terms: The length of time the insurance policy is in effect.
Unearned Premium: The amount of coverage still available on your policy.
Usage: What a car is used for.
VIN: The Vehicle Identification Number, or a specific code that is assigned to the car when it is manufactured that is used to identify it.
Waiver: In specific instances, such as a hit and run accident, an insurance company may absorb the cost of deductible.
Car Insurance Glossary with the most important terms