51 terms, zero legal fog
Car Insurance Glossary: Every Term Explained
This car insurance glossary gives you plain English definitions for the words you will actually see on a quote, bill, declarations page or claim. Search a term, jump to a letter, or start with the four that explain most of a policy.
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The glossary decodes individual words. Insurance 101 shows how the coverages fit together on one policy.
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1 term- 25/50/25 limits
- Thousands of dollars: $25k injury per person / $50k injuries per crash / $25k property damage.
A
5 terms- Actual cash value (ACV)
- What your car was worth right before the crash, depreciation included.It is not what you paid, what you owe, or the price of a brand new replacement.See how ACV affects a total loss
- Additional interest
- A lender or lienholder listed on your policy so they get notified of changes. They don't get coverage, they just get a heads up.
- Adjuster
- The person who investigates a claim, reviews the damage and calculates what the insurer will pay.The adjuster works for the insurance company unless you hire a public adjuster yourself.
- Assigned risk pool
- Where drivers who can't get coverage anywhere else end up, usually after multiple violations or a lapse. State mandated, and never cheap.
- At-fault (tort) state
- The driver who caused the crash, and their insurer, pays.
B
3 terms- Binding
- The moment your coverage actually starts. A quote is not coverage, a bound policy is.
- Bodily injury liability
- The half of liability coverage that pays for other people's injuries when you cause a crash.It can cover medical bills, lost wages and legal costs, up to your limit.Compare the main coverage types
- Bundling
- Buying more than one policy, like auto plus renters, from the same insurer for a discount on both.
C
6 terms- Claim
- The formal request you file asking the insurer to pay for a loss. Filing one is not free money, it goes on your record.A claim can be covered, partly covered or denied based on the policy and what happened.
- Coverage limit
- The maximum your insurer will pay for a covered loss. Anything above it comes out of your pocket.
- Cancellation vs non-renewal
- Cancellation means your insurer ended the policy mid term. Non-renewal means they just didn't renew it when it expired. Different reasons, different rules.
- CLUE report
- The industry's shared 7-year record of your claims and some inquiries. You can request yours free.
- Collision
- Pays for damage to your car after it hits another car or object, regardless of fault.Your deductible usually applies. It does not pay for weather, theft or animal strikes.See collision beside comprehensive
- Comprehensive
- Pays for the non-crash stuff: theft, hail, fire, flood, a deer, a falling tree.It is sometimes called other than collision coverage, and it normally has its own deductible.See comprehensive beside collision
D
2 terms- Declarations page
- The summary page of your policy showing who's covered, what's covered, and your limits. Read this, not just the renewal email.Check the drivers, vehicles, deductibles, limits, discounts and policy dates every time it renews.Walk through a real insurance bill
- Deductible
- Your share before the insurer pays. Higher deductible = lower premium, bigger surprise later.Liability coverage usually has no deductible. Collision and comprehensive usually do.Learn how deductibles fit into a policy
E
2 terms- Endorsement / rider
- An add-on that changes your policy, like rental reimbursement or new-car replacement.
- Excluded driver
- The person who was removed from a policy by a named driver exclusion. They live in the house, they may even have keys, but the policy will not cover them behind the wheel.
F
3 terms- Filing fee
- The small flat charge, usually $15 to $50, your insurer bills you to file an SR-22 or FR-44. Separate from any rate increase caused by the violation itself.
- FR-44
- SR-22's stricter cousin. Required instead of SR-22 in Florida and Virginia after certain DUI convictions, with higher coverage minimums attached.
- Full coverage
- Not a real product, slang for liability + collision + comprehensive together.It does not mean every possible loss is covered, and it does not tell you how high the limits are.Compare minimum and full coverage
G
3 terms- Gap insurance
- Covers the difference between what you owe on a loan and the car's actual cash value.It usually does not pay your deductible, missed payments or the cost of a replacement car.
- Good student discount
- A rate reduction for keeping a GPA above a set threshold, usually 3.0. Real money for something you're already doing anyway.
- Grace period
- The window after a missed payment before your policy actually cancels. Not a reason to skip paying, just a safety net if you're late.
H
1 term- Hard pull vs soft pull
- A hard pull is a full credit check that can ding your credit score. Insurance quotes use soft pulls, which do not.
I
1 term- Insurance score
- A risk score built from claims history, coverage continuity, and (in most states) credit data.It is not the same number as your consumer credit score, even when credit information is part of it.See where insurance scores are restricted
L
4 terms- Lapse
- Any gap in coverage. Even a short one raises future quotes and can cost you your license in some states.
- Liability coverage
- Pays for the damage and injuries you cause to other people. Legally required almost everywhere.It does not repair your own car or pay your own injuries after a crash you caused.Learn what liability does and does not cover
- Lienholder
- The bank or lender that technically owns your car until the loan is paid off. They get to require full coverage.
- Listed driver
- Someone on your policy who's expected to drive the car sometimes. Different from being excluded, and different from being the named insured.
M
2 terms- Medical payments (MedPay)
- A smaller, simpler version of PIP for medical bills only.
- MVR (Motor Vehicle Record)
- Your official driving history. Insurers pull this to see your violations, points, and license status before they quote you.
N
4 terms- Named driver exclusion
- A signed form removing a specific person from your policy, usually to keep a high risk driver from raising the rate. If they drive and crash, you're on your own.The exclusion is the document. The person named on it is the excluded driver.
- Named insured
- The person or people actually named on the contract, not just anyone who drives the car.
- No-fault state
- Your own policy pays your injury bills first, and your right to sue is limited.
- Non-owner policy
- Liability coverage for someone without a car of their own. Keeps your insurance history unbroken between vehicles.It generally follows the driver, but it does not provide collision or comprehensive coverage for a borrowed car.See when a non owner policy can bridge a gap
P
5 terms- Policyholder
- The person who owns the policy and pays the bill. Not always the same as every driver listed on it.
- Property damage liability
- The half of liability coverage that pays for the stuff you hit: cars, fences, mailboxes, storefronts.
- PIP (Personal Injury Protection)
- Pays your medical bills and sometimes lost wages regardless of fault. Required in no-fault states.
- Points
- Marks added to your driving record after a violation. Not the same as a surcharge, that's the price tag, this is the paper trail.
- Premium
- What you pay to keep the policy alive, monthly, every six months, or yearly.The premium is the price of the policy. It is separate from the deductible you may owe after a claim.See estimated new driver costs
Q
1 term- Quote
- An insurer's estimate of your price before you buy. Not a promise, and it can change once they pull your full driving record.
R
2 terms- Rental reimbursement
- An add-on that pays for a rental car while yours is in the shop after a covered claim. Cheap to add, painful to skip.
- Reinstatement
- Getting a canceled policy or suspended license turned back on, usually after paying fees and proving coverage.
S
2 terms- SR-22
- Not insurance: a form your insurer files proving you carry coverage, usually after a DUI or a lapse.The filing fee is small. The violation or lapse behind the filing is what usually raises the premium.
- Surcharge
- The rate increase applied after an at-fault claim or violation, typically for about three years.
T
2 terms- Telematics / usage-based
- An app or device that scores your braking, speed, and phone use in exchange for a discount.
- Total loss
- When repairs cost more than the car is worth, so they pay you its value instead.The exact decision follows your state's threshold or formula and the insurer's value calculation.Look up your state's total loss rule
U
2 terms- Underwriting
- The behind-the-scenes process where the insurer sizes up your risk and decides your price.
- Uninsured / underinsured motorist (UM/UIM)
- Covers you when the person who hit you has no insurance or not enough.What it covers and whether it includes damage to your car depends on the state and policy.Learn how UM and UIM coverage work
Still staring at a mystery word?
Read your declarations page beside this glossary. That page tells you who is covered, which car is covered, your limits, deductibles, discounts and policy dates.
Walk through the words on an insurance bill