In
order to help you better
understand your auto policy,
we’ve put together a glossary
of basic auto insurance terms.
Aftermarket
Part - After-market parts are made by a company other than the
manufacturer of the vehicle.
Actual
Cash Value- An amount equivalent to the fair
market value of the stolen or damaged property
immediately preceding the loss. For real property,
this amount can be based on a determination of
the fair market value of the property before and
after the loss. For vehicles, this amount can be
determined by local area private party sales and
dealer quotations for comparable vehicles.
Admitted
Company - An insurance company authorized to
do business in California.
Agent
- A licensed person or organization authorized
to sell insurance by or on behalf of an insurance
company.
Auto
Insurance - Coverage on the risks associated
with driving or owning an automobile. It can include
collision, liability, comprehensive, medical, and
uninsured motorist coverages.
Binder
- A temporary or preliminary agreement which
provides coverage until a policy can be written
or delivered.
Bodily
Injury - Bodily harm, sickness or disease,
including death. This does not include communicable
diseases such as HIV/AIDS.
Broker
- A licensed person or organization paid by
you to look for insurance on your behalf.
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Cancellation - The termination of insurance coverage
during the policy period. Flat cancellation is the
cancellation of a policy as of its effective date,
without any premium charge.
Claim
- Notice to an insurer that under the terms
of a policy, a loss maybe covered.
Claimant
- The first or third party. That is any person
who asserts right of recovery.
Collision
Coverage - Coverage that insures against damage
to your vehicle as a result of hitting another
vehicle or object (i.e. a tree).
Comprehensive
Coverage - Coverage that
insures against damage to
your vehicle as a result
of a loss caused by
something other than collision.
Some examples are theft,
fire, vandalism or falling
objects. This
coverage is sometimes referred
to as "Other-than-Collision".
Coverage -
The scope of the protection provided in your insurance
contract, as well as any of several risks covered
by a policy.
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Declaration - The part of your written policy (contract)
that includes your name and address, the property
that is being insured, its location and description,
the policy period, the amount of insurance coverage
and the applicable premiums.
Decline
- The company refuses to accept the request
for insurance coverage.
Deductible - The portion of a claim you pay out of
pocket before the insurance company pays. A higher
deductible will lower your premium and you do not
have to carry the same deductible for comprehensive
and collision coverages.
Depreciation - A decrease in value due to age, wear
and tear, etc.
Endorsement - Any change made to a policy.
Exclusion -
A restriction in your insurance policy that denies
coverage for certain perils, persons, property or
locations.
Expiration
Date - The date on which the policy ends.
Grace
Period - A period (usually 31 days) after the
premium due date, during which an overdue premium
may be paid without penalty. The policy remains
in force throughout this period.
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Insured - The person or organization covered by an
insurance policy.
Insurer
- The insurance company.
Liability
Coverage - Coverage that insures against
damages (to other party) for bodily injury or property
damage when you are legally responsible for an
auto accident.
Limits
of Liability - The specified amount up to which
the insurance company will protect you as set forth
in the policy.
Loss
experience - The types and amounts of claims
that you have previously had.
Material
Misrepresentation - The policyholder / applicant
makes a false statement of any material (important)
fact on his/her application. For instance, the
policyholder provides false information regarding
the location where the vehicle is garaged.
Medical
Payment Coverage - Coverage that pays for minor
medical expenses (to you or your passengers) resulting
from an accident, regardless of fault.
No-fault
Insurance - An insurance system where your
insurance coverage pays for your injuries regardless
of who caused the accident.
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Policy - A contract between you and the insurance
company.
Premium -
The price of the insurance policy.
Premium
Financing - A policyholder contracts with a
lender to pay the insurance premium on his/her
behalf. The policyholder agrees to repay the lender
for the cost of the premium, plus interest and
fees.
Property
Damage - Physical injury to, destruction of
or loss of use of tangible property (of other party).
Quote -
A cost estimate for insurance coverages based on
specific information, including drivers, vehicles
and driving record.
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Rate - The amount you pay as premium.
Replacement
Cost - The cost to repair or replace an insured
item. Some insurance only pays the actual cash
or market value of the item at the time of the
loss, not what it would cost to fix or replace
it. If you have personal property replacement cost
coverage, your insurance will pay the full cost
to repair an item or buy a new one once the repairs
or purchases have been made.
Replacement
Value - The full cost to repair or replace
the damaged property with no deduction for depreciation,
subject to policy limits and contract provisions.
Rider
- Usually known as an endorsement, a rider
is an amendment to the policy used to add or delete
coverage.
Risk -
The chance of loss.
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Subrogation - The process of payment recovery
whereby your insurance company settles the claim
for damage to your car and seeks payment recovery
(including your deductible) from the other party
if your car is damaged because of that party's negligence.
Surcharge
- An extra charge applied by the insurer. For
automobile insurance, a surcharge is usually for
accidents or moving violations.
Underwriting - The process of determining risk and
in what amounts and on what terms the insurance company
will accept the risk.
Uninsured/Underinsured Motorist Coverage - Coverage
that insures against damages (to you or your passengers)
for bodily injury when the responsible party has
no insurance or insufficient insurance to pay for
damages. This coverage includes hit-and-run accidents.
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