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Auto Insurance Glossary of TermsActual Cash Value (ACV) Unless otherwise defined in the policy, Actual Cash Value is defined in California as fair market value. The fair market value of an item is the amount at which a knowledgeable buyer (under no unusual pressure) would be willing to buy, and a knowledgeable seller (under no unusual pressure) would be willing to sell. Adjuster A person who evaluates the damage caused by an accident or other covered loss and determines the amount to be paid. Agent A person authorized, by and on behalf of an insurer, to sell and service insurance policies. Assigned Risk A risk which is not ordinarily acceptable to insurers and is, according to state law, assigned to an insurer participating in an assigned risk pool or plan. Each participating company agrees to accept its share of these risks. Automobile Insurance A type of insurance which protects the insured against losses involving automobiles. Different coverages can be purchased depending on the needs and wants of the insured, e.g., the liability coverages of Bodily Injury Liability, Property Damage Liability, and Medical Payments; and the physical damage coverages of Comprehensive and Collision. Binder A temporary or preliminary agreement which provides coverage until a policy can be issued/delivered. Bodily Injury Coverage Pays for an injured person's medical expenses and lost wages if you're at fault in a car accident, subject to the limits you choose when you buy your policy (State laws mandate certain minimum limits). Also provides you with a legal defense if there is a law suit against you resulting from the accident. Broker A person who for payment of a fee (paid by you) procures insurance on your behalf. Cancellation The termination of an insurance policy before its normal expiration date. Claim A demand made by an insured, or an insured's beneficiary, for payment of benefits provided by an insurance policy. Commission That portion of the premium paid to the agent as compensation for his or her services. Collision Coverage Pays for damage to your car caused by a collision with another vehicle or with any other object, regardless who was at fault. Commissioner of Insurance The title of the head of most state insurance departments. In some states, the Director or Superintendent of Insurance is used instead. Comparative Negligence The percentage of fault shared by each driver in an accident in which both contribute to causing the collision. Comprehensive Coverage Pays for damage to your car caused by reason other than collision, such as fire, theft, windstorm, flood, etc. Credit Insurance Optional insurance that pays the scheduled unpaid balance if you die or scheduled monthly payments if you become disabled. As with most contract terms, the cost of optional credit insurance must be disclosed in writing and, if you want it, you must agree to it and sign for it. Credit Protection Optional protection available with your Provident auto loan which will cancel your required monthly payments and waive finance charges for a fixed period and/or cancel outstanding debt in the event of certain predefined occurrences (such as death, disability, or unemployment). Coverage The scope of protection provided under an insurance contract. Declarations (Dec) Page The front page of your policy is called the Declarations page. It contains useful information such as:
Deductible The amount of the loss which the insured is responsible to pay before benefits from the insurance policy are payable. You may choose a higher deductible to lower your premium. Exclusion A contractual provision in an insurance policy that denies coverage for certain perils, persons, property, or locations. Extended Service Contract Optional protection on specified mechanical and electrical components of the vehicle available for purchase to supplement the warranty coverage provided with the new or used vehicle. GAP (Guaranteed Auto Protection) Optional protection that pays the difference between the amount you owe on your vehicle and the amount you receive from your insurance company if the vehicle is stolen or destroyed before you have satisfied your credit obligation. Insured The person(s) entitled to coverage in case of an accident or loss. Insurer The insurance company providing the insurance. Liability Insurance Coverage for a policyholder’s legal liability resulting from injuries to other persons or damage to their property. Limits The maximum amount of benefits the insurance company agrees to pay in the event of a loss. Medical Payments Coverage Covers the medical costs (up to the specified limit you choose) resulting from an auto accident for you, your family, and others in your car. It pays regardless of fault. Non-renewal The termination of an insurance policy at its normal expiration date. Policy Written contract of insurance. Premium The money paid for an insurance policy based upon the coverage provided. Premium Finance Company A lending institution that finances insurance premiums for a fee. Private Passenger Automobile Four-wheeled motor vehicles of the private passenger, station wagon, or van type. Private passenger automobiles are designed for use on public highways and subject to motor vehicle registration. Producer A term applied to an agent, solicitor or other person who sells insurance. Property Damage Liability Coverage Pays for damages to another person's property (such as a fence, car, or home) if you're at fault in a car accident, subject to the limits you choose when you buy your policy (state laws mandate certain minimum limits). Also provides you with a legal defense if there is a law suit against you resulting from the accident. Auto Insurance Quote An estimate of the cost of auto insurance based on information supplied to the auto insurance company. Replacement Cost Replacement cost is the cost of replacing lost or damaged property with new property of like kind and quality, at current market prices. Salvage Property taken over by an insurer to reduce its loss. Subrogation The process in which an insurance company, after paying a loss to its insured, recovers the amount of the loss for damages (plus the insured's deductible) from the legally liable party. Surcharge An extra charge applied to the premium by the insurer, usually for at fault accidents or moving violations. Underinsured Motorist Coverage Pays for bodily injury or wrongful death caused by an underinsured motor vehicle (that is, a vehicle which is insured, but at an amount that is less than your uninsured motorist bodily injury (UMBI) limits). Uninsured Motorist Coverage (UMC) Provides coverage for a policyholder involved in a collision with a driver who does not have liability insurance. UMC comes in two parts:
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