Actual Cash Value: The cost of replacing an item of property, minus any allowances for depreciation.
Additional Insured: Any individual or organization, other than the policyholder, protected by an automobile insurance policy.
Basic Limits of Liability: This refers to the minimum amount of coverage you can purchase. It is generally equal to the lowest amount of insurance coverage you’re required to carry by state law.
Binder: This gives you temporary insurance coverage until your policy can either be issued or denied.
Bodily Injury Liability: This policy provision covers the bodily injuries or deaths that you can legally be held responsible for. It will also provide for your legal defense if you’re sued because of an accident.
Collision Insurance: This coverage will offer you protection if your vehicle collides with another object or vehicle.
Comprehensive Coverage: This provision offers coverage for any damage to your vehicle that is the result of something other than a collision — meaning theft, fire, flood, vandalism, and falling objects.
Continuous Coverage: Refers to how long you’ve maintained your vehicle insurance coverage.
Declarations: The portion of your insurance contract that lays out who and what is insured, when and where your coverage will be in effect, and the dollar amount you’re covered for.
Deductible: The cash amount you’ll be required to pay out-of-pocket before your insurer will pay for the remainder.
Effective Date: The exact date that your vehicle insurance coverage will begin.
Expiration Date: The exact date your vehicle insurance coverage will end.
Exclusion: Your policy’s list of properties, persons, and situations that won’t be covered by your insurance.
Extended Non-Owner Liability: This is an endorsement that will provide you with broader liability protection for specific individuals who will be operating any automobile or trailer they don’t own.
First Party Benefits: A policy clause that allows you to be reimbursed in the event of an accident related injury, regardless of who caused the accident. Benefits can include loss of income, medical expenses, or funeral and death costs.
Good Student Discount: The monthly premium discounts offered by many insurance companies to students who receive higher-than-average grades.
Loss Payee: Anyone who holds a legally secured and insurable interest in your vehicle — usually your lender or lease holder. If your vehicle is damaged, payments will be made to both you and your loss payee.
Limit of Liability: The maximum dollar amount your insurance carrier will pay for any particular loss.
Multi-Car Discount: A discount offer to people who insure more than one car with the same company.
MVR: This is a common abbreviation for a motor vehicle record. The record details your driving history listing accidents, infractions, etc.
Named Insured: The person in whose name an insurance policy has been issued.
No-Fault Insurance: Many states have accident compensation laws that permit accident victims to collect reimbursement directly from their insurance carriers, regardless of who was at fault in their accident.
Occasional Driver: Any covered driver of a vehicle other than the Named Insured.
Personal Injury Protection: This usually applies to the no-fault benefits in states where optional or mandatory no-fault insurance laws have been enacted. Personal Injury Protection can include benefits for loss of income, essential services, medical expenses, survivorship, and accidental death.
Principal Driver: The individual who most often drives a particular car.
Property Damage Liability: This benefit simply provides coverage for your liability if your vehicle damages someone’s property.
Rental Reimbursement: Optional vehicle insurance coverage that will pay for the cost of a rental car if your vehicle has been disabled in an accident.
Safe Driver Plan: This is a rating system that will assign points for certain accidents and traffic citations. Similar to merit-rating plans, each point will increase the surcharge percentage charged to your base premium.
Short Rate Cancellation: Refers to the termination of a policy in which your premium refund is not proportionate to the length of time remaining on your policy because of preset expenses incurred by your carrier.
SR-22: This is a form your insurance company may need to file stating that a vehicle insurance policy has been issued on a particular individual. An SR-22 is required whenever anyone is insured who has been in an accident or has been convicted of a traffic offense but was unable to demonstrate financial responsibility.
Threshold Level: Under certain no-fault insurance laws, the threshold-level represents the level of injury you’ll need to establish prior to being allowed to sue for damages. For example, if the threshold level is $3,500, you would only be able to sue if your injuries and economic damages exceed $3,500.
VIN: The abbreviation of vehicle identification number. Usually found on the driver’s side dashboard, the VIN number will be used to positively identify the make, model, and year of your vehicle.
Waiver of Collision Deductible: This option will pay for your collision deductible if your vehicle suffers damage by an uninsured motorist or hit-and-run accident. The coverage will only apply if you can identify the uninsured vehicle or hit-and-run driver.
