Common Auto Insurance Terms
Actual Cash Value (ACV)
Cost to repair or replace damaged property with materials of like kind and quality, less depreciation.
Additional Insured
A person or organization for whom insured status is arranged by endorsement.
Aggregate
The maximum amount an insurance company will pay during the policy.
Application
A form with the information needed for an insurance company to underwrite and rate a specific policy.
Automobile
A land motor vehicle, trailer, or semi-trailer designed for travel on public roads, not including "mobile equipment."
Basic Limits
The minimum limits of liability that can be carried by an insured.
Binder
A legal agreement issued on behalf of insurance companies to provide temporary evidence of insurance until a policy can be issued.
Bodily Injury Liability
Coverage designed to pay claims against the insured if found at fault in an accident causing injury or death.
The minimum California state Bodily Injury Liability requirement is currently $15,000/$30,000.
Business Auto Policy
Auto policy for businesses that includes auto liability and auto physical damage coverages.
Cancellation
The termination of an insurance policy usually before its expiration.
Carrier
The insurance company which provides coverage.
Casualty Insurance
Insurance that covers loss caused by injuries to persons and the legal liability imposed on the insured for injury or for damage to property of others.
Certificate of Insurance
A document providing evidence that insurance has been purchased.
Claim
A request by a policyholder or a claimant for payment under a policy of insurance.
Claimant
The person presenting a claim
Collision Insurance
Provides for payment to a covered automobile resulting from the striking of another object by a moving vehicle.
Commercial General Liability Policy (CGL)
A coverage which protects business organizations against liability claims for bodily injury and property damage.
Those claims may be the result of events at your place of business, from your business operations, the products or services you make or do, to communications or advertisements your business broadcasts.
Comprehensive Auto Coverage
Covers an automobile for loss or damage for all causes except for those specifically excluded.
Conditions
Things agreed upon in an insurance policy that state the rights and the requirements of the insured and the insurer.
Contract
An agreement between two or more parties with characteristics of mutual assent, competent parties, a valid consideration, and legal subject.
Countersignature
The signature of a licensed agent or representative on a policy that is required to validate the policy.
Deductible
The amount of loss which is paid or absorbed by the insured prior to determining the insurance company's liability.
Deposit Premium
The amount of premium required at the beginning of a policy prior to the actual premium being determined.
Depreciation
The reduction in value of property over a period of time, usually as a result of age, wear and tear, or economic obsolescence.
Earned Premium
The amount of premium that has been used for certain periods of time.
Effective Date
The date on which an insurance binder or policy goes into effect.
Endorsement
A document attached to an insurance policy that changes the original policy provisions.
Equipment Floater
A property insurance coverage for equipment that is often moved from place to place.
Estimated Premium
A preliminary premium amount that could be adjusted based on a variance in exposures.
Excess Liability Policy
A policy that provides additional limits in excess of an underlying liability policy.
Exclusion
A circumstance or peril that is not covered by the policy.
Expiration
The ending date of an insurance policy.
Flat Cancellation
The full cancellation of a policy as of the effective date of coverage which requires the return of paid premium in full.
Full Coverage
Any form of insurance that provides payment in full of all losses caused by the perils against without applying a deductible or depreciation.
General Liability Insurance
Insurance protecting businesses from most liability exposures other than automobile and professional liability.
Insured
A person or organization, covered by an insurance policy, including the "named insured" and any other parties for whom protection is provided under the policy. Also referred to as a policyholder.
Insurer
An insurance company that provides insurance coverage and other insurance-related services.
Lapse
The termination of an insurance policy due to the failure to pay the premium.
Lessee
The person to whom a lease is granted.
Lessor
The person/institution granting the lease.
Liability
The legal obligation to pay a monetary award for injury or damage caused by one's negligent or statutorily prohibited action.
Lien
An obligation that can be held by an individual who has an interest in a particular matter or property.
Limit of Liability
The most an insurance company agrees to pay in the case of loss.
Loss
The amount an insurance company pays for damages under the terms of a policy.
Loss Payable Clause
An insurance clause that authorizes loss payments to a person or entity having an insurable interest in the covered property.
Loss Ratio
Percentage of losses incurred against earned premiums.
Loss Report
A form showing reported claims which provides information such as the date of occurrence, type of claim, amount paid, and amount reserved for each loss.
Mexico Coverage
Coverage which is sometimes provided under automobile policies for the operation of an insured motor vehicle within Mexico, usually limited to a stated number of miles from the U.S. border.
Minimum Premium
The lowest amount of premium to be charged for providing a particular insurance coverage.
Mobile Equipment
Equipment such as earthmovers, tractors, diggers, farm machinery, forklifts, etc., that even when self-propelled, are not considered as automobiles for insurance purposes.
Package Policy
A policy providing several different coverages combined into one policy.
Refers to a policy providing both general liability insurance and property insurance.
Personal Auto Policy (PAP)
A policy insuring private-passenger autos owned by individuals.
Personal Injury
A general Liability coverage for insurable offenses that cause harm other than bodily injury, such as false arrest, detention or imprisonment, malicious prosecution, wrongful eviction, slander, libel, and invasion of privacy.
Personal Injury Protection (PIP)
An automobile insurance coverage mandated by law in some states. The statutes typically require insurers to provide or offer to provide first-party benefits for medical expenses, loss of income, funeral expenses, and similar expenses without regard to fault.
Personal Property
All tangible property not classified as real property such as contents.
Policy Fee
A one-time charge per policy that does not change with the size of the premium.
Policy Period
The term or duration of a policy including the effective and expiration dates.
Premium
The amount of money an insurance company charges to provide coverage in a policy.
Pro Rata Cancellation
The cancellation of an insurance policy with the return premium being the full proportion of premium for the unexpired term of the policy, without penalty for early cancellation.
Property Damage
In the general liability policy, a physical injury to property, resulting in the loss of use.
Property Insurance
First-party insurance for real and personal property against physical loss or damage.
Renewal Policy
A policy issued to replace an expiring policy.
Replacement Cost Coverage Endorsement
A property insurance provision that pays to restore or replace the damaged property without deduction for depreciation.
Return Premium
The amount of premium due the insured should the actual cost of a policy be less than the insured previously paid.
Short-Term Cancellation
Cancellation of an insurance policy prior to the expiration date in which a penalty in the form of a less than full pro rata premium refund is allowed.
Underinsured Motorists Coverage
Provides coverage for bodily injury, and in some states, property damage, for losses incurred by an insured when an accident is caused by a motorist who does not have sufficient insurance limits.
Unearned Premium
That portion of the policy premium that represents the unexpired policy term.
Uninsured Motorists Coverage
Provides coverage for bodily injury, and in some states, property damage, for losses incurred by an insured when an accident is caused by a motorist who is not insured.
Actual Cash Value (ACV)
Cost to repair or replace damaged property with materials of like kind and quality, less depreciation.
Additional Insured
A person or organization for whom insured status is arranged by endorsement.
Aggregate
The maximum amount an insurance company will pay during the policy.
Application
A form with the information needed for an insurance company to underwrite and rate a specific policy.
Automobile
A land motor vehicle, trailer, or semi-trailer designed for travel on public roads, not including "mobile equipment."
Basic Limits
The minimum limits of liability that can be carried by an insured.
Binder
A legal agreement issued on behalf of insurance companies to provide temporary evidence of insurance until a policy can be issued.
Bodily Injury Liability
Coverage designed to pay claims against the insured if found at fault in an accident causing injury or death.
The minimum California state Bodily Injury Liability requirement is currently $15,000/$30,000.
Business Auto Policy
Auto policy for businesses that includes auto liability and auto physical damage coverages.
Cancellation
The termination of an insurance policy usually before its expiration.
Carrier
The insurance company which provides coverage.
Casualty Insurance
Insurance that covers loss caused by injuries to persons and the legal liability imposed on the insured for injury or for damage to property of others.
Certificate of Insurance
A document providing evidence that insurance has been purchased.
Claim
A request by a policyholder or a claimant for payment under a policy of insurance.
Claimant
The person presenting a claim
Collision Insurance
Provides for payment to a covered automobile resulting from the striking of another object by a moving vehicle.
Commercial General Liability Policy (CGL)
A coverage which protects business organizations against liability claims for bodily injury and property damage.
Those claims may be the result of events at your place of business, from your business operations, the products or services you make or do, to communications or advertisements your business broadcasts.
Comprehensive Auto Coverage
Covers an automobile for loss or damage for all causes except for those specifically excluded.
Conditions
Things agreed upon in an insurance policy that state the rights and the requirements of the insured and the insurer.
Contract
An agreement between two or more parties with characteristics of mutual assent, competent parties, a valid consideration, and legal subject.
Countersignature
The signature of a licensed agent or representative on a policy that is required to validate the policy.
Deductible
The amount of loss which is paid or absorbed by the insured prior to determining the insurance company's liability.
Deposit Premium
The amount of premium required at the beginning of a policy prior to the actual premium being determined.
Depreciation
The reduction in value of property over a period of time, usually as a result of age, wear and tear, or economic obsolescence.
Earned Premium
The amount of premium that has been used for certain periods of time.
Effective Date
The date on which an insurance binder or policy goes into effect.
Endorsement
A document attached to an insurance policy that changes the original policy provisions.
Equipment Floater
A property insurance coverage for equipment that is often moved from place to place.
Estimated Premium
A preliminary premium amount that could be adjusted based on a variance in exposures.
Excess Liability Policy
A policy that provides additional limits in excess of an underlying liability policy.
Exclusion
A circumstance or peril that is not covered by the policy.
Expiration
The ending date of an insurance policy.
Flat Cancellation
The full cancellation of a policy as of the effective date of coverage which requires the return of paid premium in full.
Full Coverage
Any form of insurance that provides payment in full of all losses caused by the perils against without applying a deductible or depreciation.
General Liability Insurance
Insurance protecting businesses from most liability exposures other than automobile and professional liability.
Insured
A person or organization, covered by an insurance policy, including the "named insured" and any other parties for whom protection is provided under the policy. Also referred to as a policyholder.
Insurer
An insurance company that provides insurance coverage and other insurance-related services.
Lapse
The termination of an insurance policy due to the failure to pay the premium.
Lessee
The person to whom a lease is granted.
Lessor
The person/institution granting the lease.
Liability
The legal obligation to pay a monetary award for injury or damage caused by one's negligent or statutorily prohibited action.
Lien
An obligation that can be held by an individual who has an interest in a particular matter or property.
Limit of Liability
The most an insurance company agrees to pay in the case of loss.
Loss
The amount an insurance company pays for damages under the terms of a policy.
Loss Payable Clause
An insurance clause that authorizes loss payments to a person or entity having an insurable interest in the covered property.
Loss Ratio
Percentage of losses incurred against earned premiums.
Loss Report
A form showing reported claims which provides information such as the date of occurrence, type of claim, amount paid, and amount reserved for each loss.
Mexico Coverage
Coverage which is sometimes provided under automobile policies for the operation of an insured motor vehicle within Mexico, usually limited to a stated number of miles from the U.S. border.
Minimum Premium
The lowest amount of premium to be charged for providing a particular insurance coverage.
Mobile Equipment
Equipment such as earthmovers, tractors, diggers, farm machinery, forklifts, etc., that even when self-propelled, are not considered as automobiles for insurance purposes.
Package Policy
A policy providing several different coverages combined into one policy.
Refers to a policy providing both general liability insurance and property insurance.
Personal Auto Policy (PAP)
A policy insuring private-passenger autos owned by individuals.
Personal Injury
A general Liability coverage for insurable offenses that cause harm other than bodily injury, such as false arrest, detention or imprisonment, malicious prosecution, wrongful eviction, slander, libel, and invasion of privacy.
Personal Injury Protection (PIP)
An automobile insurance coverage mandated by law in some states. The statutes typically require insurers to provide or offer to provide first-party benefits for medical expenses, loss of income, funeral expenses, and similar expenses without regard to fault.
Personal Property
All tangible property not classified as real property such as contents.
Policy Fee
A one-time charge per policy that does not change with the size of the premium.
Policy Period
The term or duration of a policy including the effective and expiration dates.
Premium
The amount of money an insurance company charges to provide coverage in a policy.
Pro Rata Cancellation
The cancellation of an insurance policy with the return premium being the full proportion of premium for the unexpired term of the policy, without penalty for early cancellation.
Property Damage
In the general liability policy, a physical injury to property, resulting in the loss of use.
Property Insurance
First-party insurance for real and personal property against physical loss or damage.
Renewal Policy
A policy issued to replace an expiring policy.
Replacement Cost Coverage Endorsement
A property insurance provision that pays to restore or replace the damaged property without deduction for depreciation.
Return Premium
The amount of premium due the insured should the actual cost of a policy be less than the insured previously paid.
Short-Term Cancellation
Cancellation of an insurance policy prior to the expiration date in which a penalty in the form of a less than full pro rata premium refund is allowed.
Underinsured Motorists Coverage
Provides coverage for bodily injury, and in some states, property damage, for losses incurred by an insured when an accident is caused by a motorist who does not have sufficient insurance limits.
Unearned Premium
That portion of the policy premium that represents the unexpired policy term.
Uninsured Motorists Coverage
Provides coverage for bodily injury, and in some states, property damage, for losses incurred by an insured when an accident is caused by a motorist who is not insured.