We get it, insurance talk can be confusing and sometimes scary for people. You are on the phone with your insurance company and listening to an insurance agent talk but have no idea what any of the words mean. You feel like they are speaking another language. Metromile is revolutionizing the insurance industry and we want to put an end to the crazy insurance jargon speak. We have provided a list of the most common insurance terms used to help you feel confident next to time you speak about car insurance.
Glossary of Car Insurance Terms
- Actual Cash Value – the current market value of lost or damaged property at the time of a covered loss. It is calculated by the value of your property minus the depreciation of your property.
- Adjustor – the person responsible for investigating and settling a claim
- Annual Mileage – the amount of miles driven in a year
- Bodily Injury – if an insured person is legally liable for an accident, BI coverage pays for injuries/deaths to people involved in the accident, but not limited to, emotional or mental anguish result from the bodily injury.
- Cancellation – termination of an insurance policy by the company or per the request of the insured
- Claim- a demand made by insured to provide coverage and compensation from the insurance company in the event of a loss, subject to the terms of the insurance policy contract.
Claimant – a person making a claim against the insurance company. If the insured hits or causes damages to another person or vehicle they are the claimant. - Collision Coverage – optional coverage for when your car is damaged as a result of colliding with another object.
- Comprehensive Coverage – optional coverage for when your car is stolen or damaged in ways that don’t involve a collision. For example: hail damage, fire, vandalism, damage from an animal, flood, earthquakes, fallings objects, and theft.
- Contract – refers to the insurance policy, which is between the insurance company and the policyholder
- Deductible – out-of-pocket expense that you agree to pay for losses up to set amount, such as $250 or $1000
- Declarations Page – a document that shows the insured’s information, the period of time a policy is in force, vehicle information, the coverages insured has chosen, and the amount of premium
- Depreciation – factoring in the wear and tear of an item’s value
Earned Premium – the portion of the premium that actually has been used to buy coverage or what the insurance company has earned so far on the policy. - Endorsement – an addition or change to the policy contract
- Excluded Drivers – formally excluded person that will not be covered if driving the car
- Fault Claim – a claim where the insured will assume responsibility for the accident or the insurance company cannot recover the cost from the individual responsible.
- Gap Insurance – pays the difference between what you owe on your vehicle and what your insurance pays if your vehicle is declared a total loss or stolen and not recovered, less your comprehensive or collision deductible.
- Garaging Address – where you park the vehicle majority of the time
- Indemnity – aims to provide the same financial position as an insured were before the loss occurred if the vehicle has been lost or damaged.
- Insuring Agreement – describes the covered perils, or risks assumed, or nature of coverage, or makes some reference to the contractual agreement between insures and insured. It summarizes the major promises of the insurance company, as well as stating what is covered.
- Insurance Score – Used in the underwriting process in some states. An individual’s score is frequently based on a person’s credit history.
- Lapse in coverage – the termination of a policy due to non-payment of insurance premiums
- Lienholder – Person or organization with a financial interest in a property up the amount of money borrowed or still owed on the insured’s vehicle.
- Liability Insurance – insurance that provides protection from claims arising from injuries or damages to other people or property.
- Liability Limits – the amount specified in your policy up to which the insurance company will protect you
- License Types – various statuses of a driver’s licenses, such as active, permit, foreign, suspended, or expired driver’s license
- Loss – the amount of money an insurance company pays out on a claim
- Medical Payments – (usually optional) pays the doctor, hospital bills, and funeral expenses for injuries to you and the passengers in your car regardless of who causes the accident, up to the policy limits.
- Named Insured / Primary Driver – the person or entity listed on the policy declaration page who has more right than the secondary driver.
- Non Fault Claim – a claim where the insured is not responsible for the accident and the insurance company can recover the costs from the individual who is at-fault for the accident.
- Personal Injury Protection – this is a package of first-party medical benefits that provides for medical costs, lost wages, loss of essential services normally provided by the injured person, and funeral costs.
- Policy – Insurance contract
- Policy Term – the length of time the policy is active and valid
- Premium – price of insurance policy that an insured pays in exchange for insurance coverage
- Proof of Insurance – a type of documentation that an insured can provide to an individual proving that the insured has valid active insurance.
- Property Damage – coverage for when you damage someone else’s property with your vehicle.
- Pulse Device – a device created by Metromile that plugs into the vehicle’s OBD-II port to record mileage and also provide diagnostic codes, street sweeping alerts, and can help you to find your missing car
- Quote – a non-binding estimate of the premium for the level of coverages chosen and based on the information by the individual seeking insurance.
- Rate – the cost of insurance per risk to cover claim payments and expenses.
- Renewal – after the policy period is up the policy will automatically renew for another term
- Renewal Notice – a formal notice that an insured’s policy will renew which will include what the rates will be upon renewal.
- Rental Reimbursement Coverage – optional coverage that helps pay rental vehicle costs when your vehicle is disabled as the result of a covered accident or loss. Covered under comprehensive or collision coverage.
- Risk – the likelihood that an insured will make a claim
- Secondary Driver – a listed driver on the policy that is insured to drive the vehicle.
- Subrogation – the process of which a claim is made by a third party and you file through your insurance company. Your insurance company will seek payment recovery from the other party.
- Telematics – technology of sending and receiving and storing information relating to remote objects like your car through telecommunication devices.
- Theft Tracker – a device that plugs into your vehicle to let you it’s location in case your vehicle is stolen
- Total Loss Vehicle – in an auto claim, a vehicle is considered a total loss when the extent of the damage renders the vehicle unsafe to repair or the cost to repair exceeds a certain threshold percentage, as may be determined by state regulation, or the vehicle’s actual cash value prior to the accident.
- Underinsured Motorist – pays (up to coverage limit) the insured person and other passengers in the vehicle when they’re injured as the result of an accident where the at-fault driver has insurance but it is below the limit of underinsured/uninsured coverage on the declaration page.
- Uninsured Motorist – pays (up to the coverage limit) the insured person and other passengers in the vehicle when they’re injured as the result of an accident where the at-fault driver is uninsured, underinsured or a hit-and-run (must be reported within 24-hours to policy and statement taken within 30 days)
- Uninsured/Underinsured Motorist Property Damage – covers damage to your vehicle if hit by an uninsured or underinsured driver.
- Underwriting – the process an insurer goes through to determine whether or not it will provide coverage for an applicant
- Use Types – different use cases for a specific vehicle; range from commercial, bussiness to personal.
- Personal – when using your vehicle you drive it for personal everyday life reasons
- Business – when using your vehicle you drive it for a profit like food delivery or a ridesharing company
- VIN (Vehicle Identification Number) – 17- digit number assigned to each vehicle manufactured after 1980
We hope this glossary can help you navigate the car insurance world. If you have any questions, let us know in the comments. If you are interested in seeing how much money you could save by switching to Metromile, get a free quote here.