If you’re looking for the best car insurance you’ll want to understand the verbiage or terms of car insurance. This glossary will help you to understand most of them and it will help make your car insurance shopping much easier.
USA Car Insurance Glossary:
Accident or Wreck: Your car insurance covers your vehicle and the people inside of your vehicle. There are a variety of coverages that are available for your vehicle including liability, medical payments, bodily injury, property and of course if you have the additional coverages you’ll have comprehensive (comp) and collision coverages.
Binder: This is a statement that shows you have insurance even if you don’t yet have your proof of insurance cards. It gives you proof if you’re in an accident so that you ‘ll be able to provide the information to the officer and other vehicle.
Claim: If you’re in an accident you’ll file a claim with your insurance company. This is your request for the insurance company to pay for your repairs and or medical coverage.
Combined Single Limit: This portion of the wording on your insurance policy combines the bodily injury and the property damage into one single amount of money that is awarded for an accident.
Covered: This refers to the insured and everyone else that is covered under said insurance policy.
Deductible: Every insurance policy has a portion of the money that you as the insured must pay for repairs. In most cases this is anywhere from $50 to several hundred or even one thousand dollars.
Earned Premium: This is the cost of the policy utilized during your coverage term.
Effective Date: This is the time that the policy begins to provide you with coverage for your vehicle.
Exclusion: These are the items or things that aren’t included in your insurance policy.
Flat Rate Cancellation: If you end your policy before it is in effect you’ll be charged a flat rate for canceling your policy.
Garage: This is your location where you store your car such as your home. It is determined by using your zip code.
Hit & Run: This is an accident wherein the party that is at fault did not stop or give their insurance information.
Inception Date: The date that the policy takes effect or is activated.
Indemnity: This is the principal upon which the insured is returned to the state in which their vehicle was prior to an accident.
Lapse: If you fail to pay your premium for a short period of time there is said to be a ‘lapse’ in coverage or a break. If this break is too long you’ll be canceled and have to have your insurance re instated.
Liability Limits: This is the most amount of money that your policy will pay out if you have an accident or incident in which you need to use your insurance.
Motor Vehicle Record: If you’ve been in an accident or received a traffic violation (speeding, parking etc.), you’ll have an MVR on record.
Multi Car Discounts: If you insure more than one vehicle, you’ll be given a multi car discount.
No Fault Insurance: No matter who was at fault, your insurance company will still provide you with a payment.
Occasional Driver: Insurance companies want to know who the main driver of a vehicle will be. If someone occasionally drives your car they will be considered the occasional driver.
Per Occurrence Limit: This is the most amount of money that can be paid out by the insurance company per accident or injury.
Physical Damage: If your car sustains damage via a shopping cart, fire, vandalism, collision, or theft this is the physical damage to your vehicle.
Policy: This is the insurance coverage and a document that shows you’re covered for damages. It will show all of your coverages as well as any limits that are set on your policy.
Policyholder: This is the person or persons that are covered under the insurance policy.
Premium: When you pay your insurance policy, that is the premium.
Principal Driver: The main driver of a vehicle is the principal driver.
Renewal: At the end of your policy period you can either renew your insurance or go with another insurance company or policy.
SR 22: If you have a court order for insurance you have an SR 22. This happens when there has been a conviction for a traffic offense and had no proof of insurance.
Term: This is the length of time that your policy is in effect.
Unearned Premium: Your policy charges you for a specific length of time. If you cancel your policy prior to that length of time you’ll have an unearned premium.
Usage: Usage refers to the use of your vehicle. Is is used for work or pleasure?
VIN or Vehicle Identification Number: Every vehicle has a specific identifying number that is comprised of letters and numbers. It denotes the make, year, model and any other options that are on that vehicle.
Waiver of Collision Deductible: If you are in a collision and must pay a deductible, this portion of your policy will charge the at fault in the accident party. It’s great to have a newer vehicle.