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Definitions

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A

Accident: An event that was not predicted and not expected to happen.

Accidental Death and Dismemberment Coverage: This coverage pays a specified amount, described in the endorsement, for accidental death and specific injuries, When the insured or insured family members are injured or killed when riding in, or struck by, a vehicle.

Application: A form used by an insurer that provides information necessary to appropriately underwrite a policy for a person who wants insurance.

At-Fault Accident: A motor vehicle accident in which the insured is determined to be legally responsible. How this determination is made may vary by state.

Automobile Physical Damage Coverage: Insurance that covers loss or damage to the insured's auto caused by a covered accident.

B

Benefits: The amount payable or the services that would be rendered under a policy.

Bodily Injury: Injury to or sickness, disease or death of any person.

The definition of bodily injury for AZ, CO GA, IA NV and WA is the following:1
Bodily Injury means bodily harm, sickness, disease or death for any person. It does not include:

• any communicable disease, bacteria, fungi, parasite, virus or other organism, which are transmitted by any insured to any other person;
• the exposure to communicable disease, bacteria, fungi, parasite, virus or other organism; or
• emotional or mental distress, mental anguish, mental injury or any similar injury unless it arises out of actual bodily harm to a person.

1Applies to AZ, CO, GA, IA, NV and WA only.

C

Cancel: To terminate a policy contract before the policy term ends.

Casualty Insurance: Insurance concerned with legal liability for personal injuries or damage to the property of others.

Chargeable Accident: An automobile accident for which an insurance company can charge additional premium.

Claim: A demand by a person seeking to recover from an insurer for a loss that may be covered by an insurance policy.

Claimant: A person who presents a claim.

Collision Coverage: Collision coverage pays for accidental loss or damage to your vehicle caused by collision or upset, regardless of who is at fault.

Comprehensive Automobile Coverage: Comprehensive coverage pays for accidental loss or damage to your insured vehicle from most causes except collision or upset, such as fire, hail, theft, vandalism, flood or collision with animals.

Consideration: The mutual exchange of acts or promises needed for a contract to be valid. The insurance company agrees to provide coverage in exchange for payment of the premium.

Coverage: A type of protection against financial loss provided by an insurance policy.

D

Death & Dismemberment Coverage: See "Accidental Death & Dismemberment Coverage".

Dec: See "Declarations Page".

Declarations Page: The part of the policy that contains and summarizes such information as to when, where and to whom the policy applies. It will include the policy number, named insured(s), mailing address, effective dates, agent's name, insured vehicle, lienholders, coverages, endorsements, and premium charges.

Deductible: A portion of a covered loss that is subtracted from the amount the insurer is obligated to pay.

Depreciation: The reduction in value of property due to wear and tear or becoming obsolete.

Direct Loss: A reduction in the value of property that results directly and often immediately from damage to that property.

Disability: The inability to pursue normal activity or occupation because of a physical or mental impairment.

Dismemberment: Loss of, or sometimes the permanent loss of the use of, certain parts of the body. For example, loss of a hand, foot, or eyesight.

E

Effective Date: The date the policy coverage begins for a term.

Endorsement: A form that amends and becomes part of the policy.

Exclusion: A policy provision that eliminates coverage for specified exposures.

F

Family Car Policy: An automobile policy including one or more of the following coverages: Liability, Medical Expense, Physical Damage, and Uninsured Motorist Coverages only for the individually owned private passenger cars and trucks.

G

Good Student Discount: A reduced automobile insurance premium for students who show high scholastic achievement.

I

Incurred: The date and time a loss occurs.

Indemnify: To put the insured back to the same financial position they were in immediately prior to the loss.

Indirect Loss: Damages caused indirectly by a hazard.

Insurance: The transfer of risk or chance of loss from one party (the insured) to another party (the insurer).

Insurance Amount: The amount of coverage purchased by the insured for a specific coverage type.

Insurance Contract or Policy: A contract, between an insured and an insurer, which agrees to indemnify the insured for loss caused by specific events.

Insured: The person(s) protected under an insurance policy and entitled to benefits in case of a covered loss under its terms and conditions.

Insurer: The company or other organization that provides insurance coverage and services.

L

Lapse: A temporary termination and subsequent reissue of the same policy which causes a break in coverage.

Liability Coverage: Insurance concerned with legal liability for bodily injury and/or property damage to others.

Limit: The most the insured or others may collect under the terms and conditions of the policy.

Loss: Loss means direct and accidental loss of or damage to your insured car and its equipment, or the amount the insurer is required to pay due to an occurrence, which has been insured against and is a covered loss under the policy.

M

Mandatory Insurance: Insurance that is required by state statute.

Medical Expense Coverage: An optional coverage under an Insurance policy, which pays for covered reasonable, appropriate and necessary costs because of accident-related bodily injury, up to the limits contained in the policy. This coverage is available to the insured and others in the insured vehicle at the time of the accident, regardless of who is at fault.

Mutual Insurance: Protection written by insurers who are owned and directed by its policyholders.

MVR: Motor vehicle report.

N

Named Insured: The person(s) specifically named in the policy as the insured.

Negligence: A person's failure to exercise the level of care that a reasonably prudent person would have exercised under similar conditions that results in bodily injury or property damage.

No-Fault Automobile Insurance: See Personal Injury Protection.

Non-Ownership Automobile Policy: Insurance to protect against loss incurred while driving an auto not owned or hired by the policyholder.

NonOwned Car:1 Any car or trailer you do not own while you or a relative are in charge of it. It does not include any car or trailer:
• furnished or available for the regular use by you or any resident of your household; or
• if used without the permission of the owner.

1Applies to AZ, CO, GA, IA, NV and WA only.

O

Occurrence: In insurance, it can mean a continual, gradual, or repeated exposure to an adverse condition that is not intended to result in injury or damage. The occurrence basis of liability insurance includes accident as a peril, but "occurrence" may be broader than "accident" where it is so defined.

P

Personal Automobile Insurance: Insurance which provides protection for the ownership and use of a personal vehicle.

Personal Injury Protection: Basic Personal Injury Protection (PIP) "No Fault" coverage pays benefits for appropriate, reasonable and necessary medical costs because of accident-related bodily injury, subject to the amounts specified in the policy, regardless of who is at fault. PIP may also cover loss of wages, essential services, child care expenses and funeral expenses, subject to specified limits.

Policy: A formal written contract of insurance.

Policy Year: A twelve month period beginning with the initial effective date of the policy or with the anniversary date of the policy.

Policyholder: The person (s) who owns the policy, see Named Insured.

Premium: The amount of money required to purchase an insurance policy.

Property and Casualty Insurance: Insurance that provides coverage for personal exposures such as Homeowners, Personal Auto, and Umbrella policies. This does not include Life and Health policies.

Property Damage Liability Insurance: Covers the insured's legal liability for negligent or careless damage to the property of others. A type of "third party" insurance.

R

Renewal: The continuation of an existing policy for another term.

S

Selection: The underwriting process of accepting, rejecting, modifying, and placing risks in order to maintain a balanced book of business.

Subrogation: An insurer's right to recover from a third party for payments made due to a covered loss.

T

Term: The length of time for which a policy is written.

Third Party Interest: A party, other than the policyholder or the company, who has a legal interest in the policy, such as a mortgagee, lienholder, or claimant.

U

UIM: Underinsured Motorist coverage provides payment, up to the limits contained in the policy, for covered legally collectible damages in excess of the at fault driver's coverage, for bodily injury or death if you or any person riding in your vehicle is injured or killed in an accident with a vehicle whose driver has insufficient liability limits.

UIMPD: Underinsured Motorist Property Damage coverage pays legally collectible damages caused by the driver of an underinsured vehicle.

UM: Uninsured Motorist coverage provides payment, up to the limits contained in the policy, for covered legally collectible damages for bodily injury or death if you or any person riding in your vehicle is injured or killed in an accident by an at-fault uninsured vehicle, or if the driver at fault is never identified.

UMPD: Uninsured Motorist-Property Damage coverage pays for legally collectible damages for damage to your vehicle caused by the driver of an uninsured vehicle. This coverage is only available in certain states, and has other rules and restrictions.

Underinsured: Insured for less than enough insurance to cover the amount of a loss.

Underwriter: One who selects risks for an insurance company.

Unrepaired Damage: Pre-existing damage to a vehicle at the time of application, or vehicle damages from a loss that an insured does not have fixed.

V

VIN: A modern day vehicle identification number is 17 characters (letters and numbers) that are used to uniquely identify motor vehicles. Prior to 1980 there was not an accepted standard for these numbers, so the VIN on a vehicle prior to 1980 may be more or less than 17 characters.