FAQ | Glossary of Insurance Terms
A
Accidental Death Coverage
Accidental death coverage is sometimes a part of your auto insurance policy's Personal Injury Protection or First Party Benefits plans. If someone who's covered dies from accident-related injuries, this type of auto insurance coverage may provide a payment to the insured's designated beneficiary.
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Actual Cash Value
You'll see this term a lot in auto insurance policies or if you ever have to file an auto insurance claim. That's because most auto insurance coverage reimburses you only for the actual cash value of your car. Your car's actual cash value is calculated by determining its original value, minus the amount your car has depreciated since you bought it.
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Additional Interest Insured
Another person or company who may be liable for an accident involving an insured or an insured vehicle and who has been named as an Additional Interest Insured under the policy.
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Adjuster
An adjuster is the person who investigates and settles auto insurance claims.
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Agent/Broker
Agents and brokers both sell and manage insurance for their customers. Agents are the authorized representatives of an insurance company or companies, while brokers are the authorized representatives of people looking for insurance.
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Antitheft Device
Select Recovery Device if the system has a device that is capable of tracking (homing) and recovering the vehicle. These systems must automatically contact a response center where the process of vehicle recovery begins. This does not include alarms that do not have contact with a center or vehicle tracking. To receive an anti-theft discount, comprehensive and collision coverage must be present on your policy. Anti-Theft Recovery System These systems consist of an electronic device that's installed in a concealed area of your car. If your car gets stolen, you can activate the device and it will emit a signal that can be used to locate your car. Such systems can be effective over a radius of several miles, depending on local geography. Ask your car dealer or nearby police department which brand of recovery systems are supported in your area. By installing an anti-theft recovery system, you may be eligible for an auto insurance discount.
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Benefit
A benefit is the amount paid by an auto insurance company to you or your beneficiary when you file an auto insurance claim.
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Bodily Injury Liability Coverage
Pays when an insured person is legally liable for bodily injury or death caused by your vehicle or your operation of most non-owned vehicles. This coverage helps pay for the injured party's medical expenses and lost wages. It also pays for your legal defense if you are sued. The amount covered is capped at the limits you select when you buy your auto insurance policy. Common Exclusions: No coverage for 1 bodily injury/death when you are using your vehicle to carry persons or property (including magazines, newspapers, food) for compensation or a fee; 2 liability assumed under a contract; 3 bodily injury/death to an employee; 4 bodily injury/death caused by an intentional act; 5 property owned by, rented to, or in the charge of an insured person; 6 bodily injury/death to you or relative; 7 bodily injury/death or property damage resulting from a relative's use of a vehicle, other than a covered vehicle, owned by a person who resides with you; or 8 bodily injury or property damage resulting from your operation or use of a vehicle owned by you, other than a covered vehicle.
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Broad form Collision Coverage
Broad form works like standard collision coverage, but also pays for collision damage to your insured car regardless of who's at fault. Although this auto insurance coverage will pay up to your car's actual cash value regardless of fault in an accident, you'll be responsible for the deductible amount you select if you're found to be more than 50 percent responsible for the accident. If you're less than 50 percent responsible, you won't have to pay this deductible.
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Business/Commercial Use
This classification means that you mainly use your car for business purposes (such as sales, service, and delivery calls) or work-related errands (like trips to the bank or post office), and other work-related driving. Commuting to and from work is not considered business use.
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C
Claim
An auto insurance claim is a policyholder's request to be reimbursed for a loss that's covered by car insurance.
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Collision Coverage
Pays for loss to your covered vehicle when it collides with another object or overturns. We will also pay for a collision loss to any non-owned vehicle, or to a vehicle you have rented other than a vehicle rented for use in connection with your business or employment, while that vehicle is in your custody, or while you are operating it. Common Exclusions: No coverage for damages or loss 1 to a vehicle while being used to carry persons or property for compensation or a fee; 2 resulting from intention acts, racing, or preparing for a race or stunting activity; 3 customs parts or equipment, including electronic equipment, in excess of the value declared in the application; or 4 to tapes, compact discs, other media or their carrying cases. The maximum amount paid for repair or replacement is the car's actual cash value, minus the amount of the deductible you choose when you buy your auto insurance policy.
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Collision Deductible Waiver
This auto insurance coverage pays the deductible for your collision coverage if you're involved in an accident in which an uninsured motorist is held legally responsible. This particular auto insurance coverage isn't available in all states. If it is available, you have to buy this coverage with collision coverage when you buy your auto insurance policy.
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Commuting
If you primarily use your car for commuting, this means that you mainly use the car to drive it to and from work or school.
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Comprehensive Coverage
Pays for loss or damage to your covered vehicle caused by any event other than collision. This includes damages due to events such as fire, theft, windstorm, flood, certain natural disasters, falling objects, and vandalism. We will also pay transportation and loss of use expenses under this coverage if your motor vehicle is stolen.
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Continuously Insured
The length of time you've been continuously insured is the number of years you have been covered by one or more insurance companies without a lapse in your auto insurance coverage for any reason.
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D
Declarations Page
The report from your insurance company listing:
the types of coverage you have elected;
the limit for each coverage;
the cost for each coverage;
the specified vehicles covered by the policy;
the types of coverage for each vehicle covered by the policy; and
other information applicable to the policy.
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Deductible
The amount of each loss you agree to pay. Generally, choosing a higher deductible will lower your premium. Deductible For some types of auto insurance coverage, you're asked to choose a deductible. A deductible is the amount of damages you agree to pay for if you file an auto insurance claim. Though choosing a higher deductible can substantially lower your auto insurance premium, if you file an auto insurance claim, you'll have to pay the full, pre-established amount of the deductible out of your own pocket in order to receive payment from your auto insurance company.
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Depreciation
Depreciation is the decline in an object's value due to age, wear and tear, or obsolescence.
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Driver Improvement Course
A voluntary refresher course available for drivers age fifty-five (55) and older to enhance their driving skills. Participants are eligible for a discount if they can provide a certificate to Progressive as proof of completion. The course must have been completed within three (3) years of the date the policy is to begin. Defensive Driver and Driver Improvement Courses These courses consist of defensive driving training for drivers of all ages as well as "mature driver safety courses" intended for drivers age 55 and over. In certain states, you may qualify for an auto insurance discount if you're in the eligible age range and if you've taken one of these safety courses.
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Driver Status
Provides information concerning whether the driver has been rated or listed on the policy.
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E
Effective Date
The effective date is the date your auto insurance coverage begins. You are not covered by car insurance prior to an auto insurance policy's effective date.
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Emergency Road Service
This optional auto insurance coverage pays a fixed amount toward vehicle towing if your car breaks down or if your car gets disabled in an accident.
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Endorsements
Also known as riders, endorsements are changes to the original insurance contract. In auto insurance coverage, endorsements may include changing your deductibles or adding a new car to your auto insurance policy.
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Exclusions
Exclusions are situations that are not covered by a given auto insurance policy. Specific exclusions are listed in your auto insurance policy.
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Extraordinary Medical
Extraordinary medical coverage is sometimes a part of Personal Injury Protection or First Party Benefits plans. Extraordinary medical coverage protects you in the event you suffer accident-related injuries that require serious and/or long-term medical care. Extraordinary medical coverage begins once you have exhausted the limit on your standard medical benefits coverage.
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F
First Party Benefits
First Party Benefits, or FPB, is a kind of optional auto insurance coverage available in Pennsylvania. Depending on the specific FPB coverages you select, if you're injured in an accident, FPB covers you and relatives residing in the same household for medical expenses, lost income, accidental death, and/or funeral costs. The amounts covered are capped at limits you select when you buy your auto insurance policy.
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Full Coverage
Full coverage denotes an insurance policy containing all coverage legally required in a given state. It does not imply the policyholder will always be fully covered.
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Funeral Benefits
Funeral benefits coverage is sometimes a part of your auto insurance policy's Personal Injury Protection or First Party Benefits plans. If a covered individual dies from accident-related injuries, this auto insurance coverage pays for a portion of funeral expenses.
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G
Garaging Location
The ZIP code where your vehicle is parked when not in use and usually corresponds to your primary residence.
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I
Income Loss
Income Loss coverage is sometimes a part of your auto insurance policy's Personal Injury Protection or First Party Benefits plans. Income loss coverage protects you if you're unable to work due to accident-related injuries. This auto insurance coverage helps you recover portions of your lost salary and other expenses you may incur as you try to return to work.
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Indemnity
An indemnity is a pre-determined sum paid for a covered loss.
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Insurance Claim Report
Insurance claim reports provide details about auto insurance claims you or other insured drivers have filed with insurance companies. These reports are provided by independent consumer reporting agencies that collect auto insurance claim information from a variety of insurance companies. One of the most common agencies issuing such reports is C.L.U.E., the Comprehensive Loss Underwriting Exchange.
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Insurance Score
Insurance scores are based on analytical models that objectively measure the relative likelihood of future insurance losses based on your credit history. Independent consumer reporting agencies provides these scores and analyses of their significance.
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Insured
The insured is an individual covered by a given auto insurance policy.
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J
Judgment
A judgment is a final decision rendered by a court of law. For example, in a lawsuit related to an auto accident, where Kate hit Eric's fence, the court determined that Kate was wholly responsible for the accident. The judgment determined that Kate should pay for the costs of repairing Eric's fence.
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L
Liability
Liability is a term that broadly means legal responsibility. If you run a stop sign and hit another car, you may be found liable for the damages to the other driver's car.
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Liability Coverage
Liability coverage protects you from having to deplete your assets to pay for damages if you're held responsible for injuries or damages arising from a car accident. The two main types of liability coverages in an auto insurance policy are bodily injury and property damage.
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Limits
Limits are the maximum amount an insurance company will pay for a covered loss. Though you can choose your limits for certain coverages, some states require you to buy certain levels of auto insurance coverage. In such states, you'll have to choose limits that at least meet your state's auto insurance requirements.
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Loan/Lease Payoff Coverage
Loan/lease payoff coverage, sometimes called "gap" coverage, pays the difference between what you owe on your vehicle and what your insurance pays if your vehicle is damaged beyond repair (totaled) or stolen and not recovered.
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M
Medical Benefits
Medical Benefits coverage is sometimes a part of your auto insurance policy's Personal Injury Protection or First Party Benefits plans. Medical expenses that are the direct result of accident-related injuries are covered. Covered medical expenses are capped at the limits you choose when you buy your auto insurance policy.
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Medical Payments Coverage
This auto insurance coverage pays medical bills and/or funeral expenses if a covered driver and/or accompanying passengers are injured or killed while in an insured vehicle, regardless of fault in an accident. This may also cover policyholders and their family members when in others' vehicles, or when policyholders and their family members are on foot and hit by a car. The amount paid by medical payments coverage is capped at the limit you choose when your buy your auto insurance policy.
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Motor Vehicle Report
A Motor Vehicle Report (MVR) provides information on your driving record. This report includes accidents and moving violations. Auto insurance companies obtain MVRs from states where you or other insured drivers have been licensed to drive.
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N
Named Insured
The first person in whose name the insurance policy is issued.
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National Credit File
The National Credit File provides objective consumer information regarding the financial history of an individual. Information contained in this report is often used to calculate insurance scores.
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No-Fault Insurance
If a type of auto insurance coverage is described as no-fault, this generally refers to the way the insurance company settles a covered auto insurance claim. Generally, if coverage is no-fault, responsibility doesn't have to be assigned before an auto insurance claim gets settled.
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No-Fault States
In some states, called no-fault states, insurance companies are legally required to pay a policyholder's covered losses, regardless of who's held responsible for an accident. Some no-fault states also restrict the right to sue for damages. In states without no-fault regulations, the insurance company covering the person who caused an accident is forced to pay for covered losses.
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Non-Passive Alarm
A non-passive alarm has to be manually activated every time you leave the car. If someone attempts to open your car, the alarm sounds, and the system disables the automobile's starter, ignition system, and/or fuel circuit. You may qualify for an auto insurance discount if your car is equipped with such an alarm.
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O
Occasional Driver
The person who is not the primary or principal driver of the vehicle.
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P
Passive Alarm
Passive alarms are automatically activated and emit warning sounds when someone tries to get into your car. Once the passive alarm has been triggered, the system disables the automobile's starter, ignition system, and/or fuel circuit. You may receive an auto insurance discount if your car is fitted with such an alarm.
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Personal Injury Protection
Personal Injury Protection, or PIP, is a kind of auto insurance coverage available only in certain states, where it's often mandatory. PIP generally includes expanded coverage of accident-related medical costs. In some states, PIP also pays for lost wages and similar losses. Specific protections afforded by this type of auto insurance coverage and limits on PIP payments vary widely from state to state.
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Pleasure Use
If you use your car for pleasure, this means that you typically drive it for fun, with no regular commuting or business use.
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Policy Expiration Date
The date when your current insurance policy expires. This date can be found on your current policy, Declaration (or "DEC") page, insurance identification card, and a recent cancellation notice or on a recent auto insurance renewal notice. This date is not to be confused with the date of your next payment or when your renewal payment is due. Policy Term A policy term is the length of time an auto insurance policy is valid. In most states, ABIA offers annual and semi-annual policies.
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Primary Policyholder
The primary policyholder is the person who serves as the main point of contact with ABIA. Since he/she is the main point of contact, we need the primary policyholder's valid email address so that we can send account updates, auto insurance renewal notices, and other policy-related communication. Typically, the primary policyholder is also the person billed for your auto insurance policy from ABIA. If you prefer, any other person listed on your auto insurance policy can also be billed for your auto insurance premium.
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Primary Residence
The place where you will reside for the majority of your policy term. If you are a homeowner who does not reside in the home you own, please choose the "rent" or "other" option.
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Primary Use
What your vehicle is mainly used for:
To/From Work If you use your vehicle to commute to and from your work and/or school.
Business If your vehicle is used for one or all of the following:
used to make sales calls
used as vehicle for business trips to bank or post office, picking up supplies, going to different locations
owned or leased by a partnership or corporation that have a business listed as and additional interest on the car
Farm If your vehicle is used primarily on a farm, ranch or orchard
Artisan If your vehicle is operated by you in a trade or business where the vehicle is:
owned or leased by an individual
operated solely by the named insured or other resident relatives
used to transport tools or other materials where such transport is incidental to the insured's trade or business
at no more than 2 job sites per day
not used to transport explosives or flammable materials
not carrying equipment weighing more than 500 lb. Artisan occupations may include but are not limited to: appliance repair landscapers, blacksmith, painters, cabinet makers, photographers, carpenters, plasterers, carpet installers, pool cleaners, construction workers, pool maintenance, drapery installers, radio/TV repairman, electrician repairmen, exterminators, roofers, fence installers, tree trimmers, furniture repair, upholsterers, heating/ac repairmen, surveyors, interior decorator, welders, janitorial services
Pleasure No others apply
Primary Use A vehicle's primary use is how the car is typically used. Auto insurance companies usually classify primary use as commuting, business/commercial, or pleasure use.
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Principal Driver
The primary driver is the person who drives a car most frequently.
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Prior Address
We ask for your prior address only if you moved within the last 60 days. ABIA orders consumer reports to determine the correct rate for you. Your prior address provides an additional piece of information to match the consumer report correctly with the customer. If we don't collect this information, our chance of error increases and we might not calculate your rate correctly.
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Property Damage Liability Coverage
Pays when an insured person is legally liable for damage to the property of others caused by your vehicle your operation of most non-owned vehicles. This coverage also pays for your legal defense costs if you are sued. Common Exclusions: Same as Bodily Injury Liability Coverage exclusions, but the exclusions apply to damage to property. Property Damage Liability Coverage Property damage liability coverage protects you if you are held responsible for damaging someone else's property in a car accident. Property damage coverage helps you reimburse another person for their damaged property (such as a car, a fence, or a home). This type of auto insurance coverage also helps pay your expenses in a related lawsuit. The amount covered by property damage liability is capped at the limit you choose when you buy your auto insurance policy.
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R
Rental Car Reimbursement
Rental car reimbursement is an optional kind of auto insurance coverage that helps pay for your rental car expenses if an insured car is damaged or stolen and you need a rental car.
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S
Second Named Insured
The named insured or listed agent on a policy may request to designate any other person listed on the policy as a "second named insured". The second named insured has the same coverage under the policy as the named insured.
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Secondary Driver
A secondary driver is one of the drivers listed on your auto insurance policy who's insured for driving an insured vehicle. However, this driver is not a car's primary driver. A secondary driver is also sometimes known as an occasional driver in auto insurance terminology.
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Social Security Number
Progressive requests detailed information about you to provide you with the most accurate rate. Progressive orders consumer reports to determine the correct rate for you. We need several pieces of information to match the report to the customer appropriately. If we don't collect this information, our chance of error increases and we might not calculate your rate correctly.
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SR-22
A document required by the court for persons convicted of certain traffic violations that demonstrate proof of financial responsibility.
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Steering Restraint
A steering restraint is a durable collar or shield fitted to the upper and lower casing of your car's steering column. The collar makes it harder for potential thieves to access, or "hotwire," your car's ignition system. You may qualify for an auto insurance discount if your car is fitted with a steering restraint.
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T
Tort
Tort is a legal term used to describe instances when someone is deemed legally responsible for injuring another person or damaging his/her property. Some states ask you to select a tort provision. In these states, you can limit your right to sue for non-monetary damages (like pain and suffering) in exchange for a reduced auto insurance premium.
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Towing Coverage
This type of auto insurance coverage is optional, and pays a fixed amount toward towing if your car breaks down or if it's disabled in an accident.
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U
Underinsured Motorist Bodily Injury Coverage
Underinsured motorist bodily injury coverage is available in some states, where it's often mandatory. This type of auto insurance coverage pays for your medical expenses, lost wages, and other damages when you or your passengers are injured in an accident caused by a driver who has insufficient auto insurance coverage. This kind of auto insurance coverage typically pays the difference between the coverage limit you select and the other driver's bodily injury coverage limit. The amount covered by underinsured motorist bodily injury is capped at the limit you choose when you buy your auto insurance policy. Uninsured/Underinsured Motorist Bodily Injury Coverage In some states, both uninsured and underinsured motorist bodily injury are bundled into a single coverage. In the states where this type of auto insurance coverage offered, it may be mandatory. This kind of auto insurance coverage pays for your medical expenses, lost wages, and other damages when you or your passengers are injured in an accident caused by a driver who doesn't have enough car insurance, or who completely lacks auto insurance coverage. This type of auto insurance coverage also pays for injuries sustained in hit-and-run accidents. The amount covered by uninsured/underinsured motorist bodily injury is capped at the limit you choose when you buy your auto insurance policy.
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Uninsured Motorist Coverage
Protects you, your resident relatives, and occupants of a covered vehicle if any of these insured sustain bodily injury, including any resulting death, in an accident in which the owner or operator of a motor vehicle who is legally liable does not have insurance. Common Exclusions: No coverage for bodily injury/death sustained by any person while using or occupying a 1) covered vehicle while being used to carry persons or property for compensation or a fee; 2) covered vehicle without the permission of you or a relative; or 3) non-owned vehicle without the permission of the owner.
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Uninsured Motorist Property Damage Coverage
Available in some states as an alternative to Collision Coverage. This coverage pays you for damage to the covered vehicle that has been sustained in an accident in which the owner or operator of a motor vehicle who is legally liable does not have insurance. Common Exclusions: No coverage for property damage sustained by a covered vehicle while 1) being used to carry persons or property for compensation or a fee; or 2) a covered vehicle without the permission of you or a relative. Underinsured Motorist Property Damage Coverage Underinsured motorist property damage coverage is available in some states, where it's often mandatory. This type of auto insurance coverage protects you if your car is damaged in an accident caused by a driver who has insufficient auto insurance coverage. Other specific protection afforded by this type of auto insurance coverage varies from state to state. This kind of auto insurance coverage pays the difference between the coverage limit you select and the other driver's property damage coverage limit. The amount covered by underinsured motorist property damage is capped at the limit you choose when you buy your auto insurance policy.
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V
VIN
The VIN, short for Vehicle Identification Number, is the unique 17-digit number found on every car. The VIN contains the vehicle's serial number, as well as abbreviations for the make, model, and year. The VIN appears on your vehicle registration card. It's also engraved in your car, near the base of the windshield on the driver's side dashboard and/or on the edge of the driver's side door. Though you don't need to enter your VIN when you get a car insurance quote, you will need to provide your car's VIN when you buy your auto insurance policy.
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