There are many important and common auto insurance terms you should know as a driver. An agent from our insurance company in California and Nevada is happy to explain each of these auto insurance terms to you. In any case, it’s good to read up on these yourself, as well. Here's a handful of auto insurance terms you should be aware of.
· Actual Cash Value (ACV): Your asset’s value, calculated by subtracting any depreciation from the current cost.
· Adjuster: The person responsible for settling insurance claims.
· Agent: The person selling the insurance policy.
· Benchmark Rate(s): Rate that is set yearly by the Commissioner of Insurance. Insurance companies (rate-regulated) use benchmark rates for referencing their own rates.
· Binder: A temporary insurance contract that is used for proof of coverage till a permanent policy is received by the policy holder.
· Cancellation: An event where the insurance policy is terminated by the insured or the company before the renewal date.
· Claimant: The person making the insurance claim.
· Collision Coverage: Coverage that pays for your vehicle’s damage regardless of who caused the accident.
· Comprehensive Coverage (physical damage besides collision): Coverage that pays for your vehicle’s damage or loss caused by something other than an accident; like a flood, theft or fire.
· Declarations Page: The policy page that contains the insurer’s name and address, the premium amount, the time period for which the policy is effective, the insured vehicle’s description, and the coverage amount.
· Deductible: The amount payable by the insured in a loss before any payment can be considered due from the company.
· Depreciation: The decrease in an asset’s value due to use or wear & tear.
· Endorsement: Also known as a “rider”, an endorsement is a written attachment to the policy that either expands or limits the benefits of the policy.
· Lapse: When a policy is terminated due to non-payment of premium.
· Liability Insurance: Payable for any damage and/or injury to the other party and their vehicle caused by the accident that you are responsible for.
· Loss: The amount paid by the insurance company on a claim.
· Medical Payments and Personal Injury Protection (PIP): Both are used to pay for medical/funeral expenses (limited) if you, your family member or a passenger in your vehicle is injured or killed in the auto accident.
· Named Driver Exclusion: An endorsement that specifies an individual who will not be covered by the policy if that individual is the driver.
· Non-owners Policy: Coverage that provides liability and medical payments to a named insured who doesn’t own a vehicle.
· Non-renewal: When an insurance company decides not to renew a policy.
· Policy Period: The time period during which the policy is in force, usually from an effective/beginning date to expiration date.
· Premium: The amount an insured pays to the insurance company for obtaining/maintaining an insurance policy.
· Rental Reimbursement Coverage: Coverage that pays for car rent in case your car is being repaired due to the damage covered by your policy.
· Rider: Also known as an “endorsement”, the rider is a written attachment to the policy that wither expands of limits the benefits of the policy.
· Underwriter: The person who reviews an insurance application and decides whether it should be approved and at what premium rate.
· Underwriting: The process through which an insurance company decides to accept or reject a policy application.
If you come across any term that you don’t know, feel free to talk to one of our reliable insurance agents.