Auto Insurance Terms

AUTOMOBILE INSURANCE
Coverage on the risks associated with driving or owning an automobile. It can include collision, liability, comprehensive, medical, and uninsured motorist coverage's.

POLICY
The written contract of insurance.

INSURER
The insurance company.

INSURED
The policyholder - the person(s) protected in case of a loss or claim.

AGENT
A licensed person or organization authorized to sell insurance by or on behalf of an insurance company.

BROKER
A licensed person or organization paid by you to look for insurance on your behalf.

POLICY LIMIT
The maximum amount a policy will pay, either overall or under a particular coverage.

PREMIUM
The amount of money an insurance company charges for insurance coverage.

PRO-RATA CANCELLATION
When the policy is terminated midterm by the insurance company, the earned premium is calculated only for the period coverage was provided. For example: an annual policy with premium of $1,000 is cancelled after 40 days of coverage at the company's election. The earned premium would be calculated as follows: 40/365 days X $1,000=.110 X $1,000=$110.

SHORT-RATE CANCELLATION
When the policy is terminated prior to the expiration date at the policyholder's request. Earned premium charged would be more than the pro-rata earned premium. Generally, the return premium would be approximately 90 percent of the pro-rata return premium. However, the company may also establish its own short-rate schedule.

DEDUCTIBLE
The amount of the loss which the insured is responsible to pay before benefits from the insurance company are payable. You may choose a higher deductible to lower your premium.

COLLISION (AUTO)
Reimburses you for damage to YOUR automobile sustained in a collision with another car or with any other object, movable or fixed, (for example, you accidentally backed into another object while pulling out from a parking stall and causing damage to the bumper and fender of your covered automobile).

BODILY INJURY
Any physical injury to a person.  The purpose of liability insurance is to cover bodily injury to a third party resulting from the negligent or unintentional acts of an insured.

COLLISION DEDUCTIVE WAIVER
This coverage waves your collision deductible if you are hit by an negligent uninsured motorist. COMMON CARRIER LIABILITY Coverage for transportation firms that must carry any customer's goods so long as the customer is willing to pay.  Examples include trucking companies, bus lines, and airlines.

PROPERTY DAMAGE
Damage to another person's property.  The purpose of liability insurance is to cover property damage to a third party resulting from the negligent or intentional acts of an insured

COMPREHENSIVE (AUTO)
Provides coverage for any direct and accidental loss of, or damage to, YOUR covered automobile and its normal equipment, to include but not limited to fire, theft or malicious mischief.

COMPREHENSIVE GLASS INSURANCE
Coverage on an "all risks" basis for glass breakage, subject to exclusions of war and fire.

LIABILITY (AUTO)
This coverage will pay for BODILY INJURY and/or PROPERTY DAMAGE to the OTHER party for which you become legally responsible of an                   automobile accident.

LIABILITY INSURANCE
Coverage for all sums that the insured becomes legally obligated to pay because of bodily injury or proprty damage, and sometimes other wrongs, to which an insurance policy applies.

MEDICAL PAYMENTS
Will pay reasonable expenses incurred for necessary medical and /or funeral services because of bodily injury caused by accident and sustained by YOU OR ANY OTHER PERSON WHILE OCCUPYING A COVERED AUTOMOBILE

DECLINE
The company refuses to accept the request for insurance coverage.

DEPRECIATION
A decrease in value due to age, wear and tear, etc.

ENDORSEMENT
Amendment to the policy used to add or delete coverage. Also referred to as a "rider."

EXCLUSION
Certain causes and conditions, listed in the policy, which are not covered.

EXPIRATION DATE
The date on which the policy ends.

GOOD DRIVER DISCOUNT
To be eligible for the Good Drivers Discount all operators of the insured vehicles must have been licensed for three or more year, have no more than a one (1) point charge on their driving record and has not been determined "at fault" in an accident resulting in bodily injury or death to any person.

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.

REINSTATEMENT
The restoring of a lapsed policy to full force and effect. The reinstatement may be effective after the cancellation date, creating a lapse of coverage. Some companies require evidence of insurability and payment of past due premiums plus interest.

RIDER
Usually known as an endorsement, a rider is an amendment to the policy used to add or delete coverage

UNDERWRITING
The process of selecting applicants for insurance and classifying them according to their degrees of insurability so that the appropriate premium rates may be charged. The process includes rejection of unacceptable risks.

UNINSURED MOTORIST BODILY INJURY
Will pay you and your passengers for BODILY INJURY cause by a negligent uninsured motorist, a hit-and-run driver, or by a driver whose insurer is insolvent.

UNINSURED MOTORIST PROPERTY DAMAGE
Will pay for damages to your automobile, set up to a limit, when caused by a negligent unisured motorist.

WAITING PERIOD
A period of time set forth in a policy which must pass before some or all coverages begin.