Insurance Terms

J

K

V

W

X

Y

Z

A

Actual Cash Value
Replacement Cost minus depreciation. The cost of a new item of similar make and model, less depreciation.

Additional Insured
In auto insurance, a person (other than the Named Insured) or organization is protected by the policy through endorsement. This is typically an auto leasing company.

Agent
A licensed transactor of insurance who represents the Insurance Company and helps insurance customers obtain coverage. (See Independent Agent)

B

Bodily Injury

Physical injury to the person of a third party. (See Third Party)

C

California Good Driver

A California Good Driver is a driver who meets the following criteria:

The driver must have been continuously licensed to drive a motor vehicle for the preceding 3 years. If licensed less than 18 months in U.S. or Canada, proof of verifiable, credible driving history, issued by the appropriate governmental authority is required. A driver’s license suspended or revoked for driving-related activity within the past 3 years or an expired license over 1 year will disqualify a driver as a California Good Driver.
The driver must have no more than 1 DMV violation point in the last 3 years and has not had any convictions in the last 10 years for specific drug or alcohol related driving offenses or specific felony convictions.

Collision

Pays for damage to the insured's vehicle in the event of a covered loss usually subject to a deductible. (See Deductible)

Collision Deductible Waiver (CDW)

Coverage which eliminates the need for an insured to pay a collision deductible in the event the insured’s vehicle is damaged in an accident with an uninsured driver. (See Collision; Deductible)

Comprehensive

Coverage that pays for an insured’s vehicle when damaged due to events like theft, fire, accidents with animals, etc. Coverage is typically subject to a deductible (see Deductible)

Contract

A promise or series of contracts that are enforceable under the law.

D

Declarations

Also known as "Dec Page", summarizes an insured’s policy information such as covered drivers, excluded drivers, covered vehicles, applicable coverages, and any endorsements to the policy contract.

Deductible

An amount of money which, in the event of a covered loss, the insured is required to pay before the insurer is liable for any damages.

Defense

Most liability auto insurance policies pay for the cost of defending the insured in the event of a lawsuit regarding a covered loss.

E

Effective Date

The date and time (usually at 12:01 a.m.) in which the policy contract begins.

Exclusion

Language in a policy or policy endorsement that indicates when coverage does not apply. For example, most insurance policies exclude intentional acts of the insured. Therefore, if an insured were to damage property or cause bodily injury on purpose, the policy would not provide coverage due to the exclusion of the deliberate act.

F

First Party

The insured. A first-party loss is a loss that involves injury and/or damage to the property of the insured. (See Third Party)

I

Independent Agent

A licensed insurance agent that sells a variety of insurance and financial products from more than one insurance company.

Insurance

The contractual transfer of the financial consequences of loss.

Insured

Anyone named on the declarations page or driving the insured vehicle with the permission of an insured. (See Permissive User)

Insuring Agreement

A promise made by the insurance company, which outlines its duties. Exclusions, Conditions, and definitions that appear later in the policy modify this promise.

L

Limits

Maximum amounts payable under a given coverage. It may be per person, per accident, per occurrence, per day, or per year.

Loss Payee

Typically, the finance company holding title to the owned auto.

M

Medical Payments

An optional auto coverage which pays for the medical expenses of the Named Insured, members of their family, and passengers of their car if injured in a collision accident.

N

Named Insured

That person so listed on the Declarations and spouse/domestic partner if a resident of the same household.

O

Operator

In auto insurance, the vehicle operator is the person seated immediately behind the steering controls of the automobile and no other person.

P

Permissive User

An entity not listed on the policy, using the insured's vehicle with permission. Depending on the policy, certain individuals may not be covered, even if given permission by the insured (See Exclusion).

Policy

A legal contract that contains the agreement between the Insurer and the Named Insured.

Policy Jacket

A preprinted contract that contains all policy language except that contained in the Declarations Page and Endorsements. In the Policy Jacket, you will find the Insuring Agreement(s), Exclusions, Conditions and Definitions.

Premium

The cost of the policy.

Property Damage

Damage or destruction including loss of use of a Third Party's property.

Q

Quote

An estimate of the cost of insurance given to a prospective client. This estimate does not constitute an offer and therefore is not enforceable. It is literally an invitation to the prospective client to make an offer. The offer, which may be accepted or rejected, is the policy application.

R

Rental

Optional coverage will reimburse the insured for the expense of renting a vehicle while his/her vehicle is in the shop due to a covered loss. Coverage is usually written with a per-day Limit and a maximum number of days (See Limits).

S

Subrogation

The transfer of the insured's legal right against an injuring Third Party to the insurance company. (See Third-Party)

T

Third-Party

Someone not protected by the Insurance Policy. Typically, the other party in an auto accident. (See First Party)

U

Uninsured Motorist Bodily Injury (UMBI)

That coverage, in the event the insured is injured in an accident which is the fault of an Uninsured Motorist, covers the Bodily Injury expense of the Named Insured, Relatives and passengers in his/her auto. The coverage is generally written with a per person and per Occurrence limit. (See Limit; Named Insured)

Uninsured Motorist Property Damage (UMPD)

That coverage which, in the event the insured's car is damaged in an accident which is the fault of an Uninsured Motorist, pays the cost of repairing the auto. This coverage is only written when the policy does not cover collision.