Additional Insurance
Insurance that supplements an already existing policy. It is uncommon that the company or its duly authorized agent allows additional insurance.

Additional Insured
An individual or organization covered by an insurance policy other than the named insured in the policy declarations. In an automobile policy, anyone who drives the car with the owner's consent is an additional insured; although, in most cases, the additional insured must be named in the policy.

Applicant
A person who fills out and signs a written application for insurance.

Application
A written statement by a prospective policyholder that gives the information the company relies upon when evaluating the applicant and issuing the policy.

Appraisal
A survey by a Claims Representative or Claims Appraiser estimating the amount of damage to a vehicle and the cost to repair or the determination of a complete loss.

Auto Loan / Lease Coverage (Gap Coverage)
Provides coverage, in case of a total loss, for the 'gap' between the amount due under the terms of the vehicle's loan / lease and the actual cash value of the vehicle at the time of the loss. Please note that there are vehicle eligibility requirements and the coverage may not be available in your state. Please contact your Agent for more information.

Auto Replacement Cost
This coverage insures that your car will be completely repaired or replaced, even if these costs exceed its depreciated actual cash value.

Basic Limits
The lowest coverage amount, as prescribed by law or the company, for which an insurance policy can be written. Basic Limits primarily prescribe limits of liability.

Bodily Injury Liability (BI)
This covers the medical expenses of persons injured in an accident caused by you, a family member, or a friend given permission to drive your car, as well as legal expenses if you are sued. Most U.S. states require that you maintain a minimum of $15,000 of coverage for injuries to one person and $30,000 per incident.

Claim
A demand for payment under an insurance contract for the estimated or actual amount of loss.

Collision
This covers expenses for repairs to your car after a collision with another car or object. If another driver is at fault, your insurer will act on your behalf and collect payment either from that person's insurance company or directly from the driver. Collision is not required by law, although it is required by most car financing companies, and is often the most expensive part of a policy. The maximum amount of protection afforded by collision is the depreciated value of your car, and the first portion of the protection is the deductible, an agreed-upon preset amount paid by the policyholder. Paying a higher deductible is the easiest way to lessen the cost of this coverage.

Combined Single Limit
A policy's liability limit stated as a single amount rather than three. This limit is the total amount available for a single claim. A combined single limit is advantageous in situations where there are minor injuries but significant property damage; then the total liability limit, not just the sublimit amount, can be used to satisfy the damage claim. Similarly, if one person is badly injured, the entire liability limit can be used to satisfy that claim, rather than just the per-person limit.

Commuting Miles
The number of miles between your home and place of work or business, used by insurance companies as part of the formula for determining your rate.

Comprehensive
Also known as "other than collision" or "OTC" coverage, this covers expenses for damages to your car not caused by collision. Qualifying damages include those from fire, flood, earthquake, hitting wild animals, and other perils of nature, as well as theft or vandalism. This coverage, like collision, is not required by law but is required by most car financiers and also includes a deductible, a first portion of the bill that must be paid by the policyholder. Deductibles here are usually lower than for collision coverage, due to the unavoidable, fault-lacking nature of these accidents.

Compulsory Auto Injury Laws
Laws which make it illegal to operate a vehicle without first having proof of the ability to pay for a judgement that may result from an accident.

Conditions
Policy provisions that explain the duties, rights, and options of the insured and the insurance company. Failure to meet these conditions, such as cooperation with an insurance company investigation, can result in non-payment by your insurance company for losses that otherwise would have been covered.

Covered Persons
Those insured under the policy.

Covered Autos
Any vehicle shown in the declarations, or in some cases, a substitute vehicle used temporarily because of breakdown or repair of the insured's own covered vehicle.

Damages
A sum of money that a party is legally obligated to pay to another as compensation for injury.

Declarations
The part of the policy that provides detailed information about the insured, the insurer, and the coverages.

Deductible
The first portion of a covered loss that is paid by the policyholder instead of the insurance company. Car insurance premiums can be cut significantly by agreeing to pay a higher deductible on certain coverages. Moving a $100 collision deductible up to $500, for example, can nearly halve the total cost of collision coverage.

Depreciation
The decrease of a vehicle's value over time due to age and the wear-and tear of usage. Used in figuring the actual cash value of your car if it is stolen or destroyed by subtracting the depreciation value from the vehicle's replacement cost.

Duplication of Coverage
The act of obtaining insurance you may already have. This can occur when buying insurance from a car rental company as well as an extended warranty from a car dealer or services from an auto club, coverages your insurer may have already included in your policy add-ons or "riders."

Electronic Equipment Endorsement
Provides coverage for your covered autos' permanently installed electronic equipment or electronic equipment designed to be permanently installed but can be removed as an anti-theft measure. This endorsement also covers direct and accidental loss to any accessories used with such equipment. Radar detectors are specifically excluded. Please contact your Agent for more information, as there are eligibility requirements and this coverage may vary in your state.

Emergency Road Assistance
Provides 24-hour roadside assistance for flat tires, empty gas tanks, and breakdowns. It may duplicate coverages already provided to you by an automobile club or a vehicle's manufacturer.

Endorsements
A form attached to your policy identifying changes made to the policy at the time it was issued or at a later date. Changes can be mere spelling corrections or significant alterations, such as coverage for a motorcycle or second car.

Exclusions
Policy provisions which restrict the broad terms of the insurance agreement by stating some exceptions to coverage (certain activities, loss causes, types of property, persons, and places) for which the insurer does not provide coverage. Common exclusions relate to drunk driving; business use of the vehicle (delivery, freight, livery, etc.) by you or your employees; vehicle operation by others without stated permission; intentional acts such as racing; and damage or loss of custom equipment, antennas, compact discs or tapes, or other personal belongings.

Expiration Date
The termination date of an insurance contract (policy).

Financial Responsibility and SR-22
Laws enacted in each U.S. state mandate who must have automobile insurance and what liability limits must be purchased and maintained. If you're caught without insurance, the state requires you to obtain a Financial Responsibility filing or SR-22 as well as a policy from an insurer, who is then bound to inform the state whenever your coverage is dropped or expires.

Gap Coverage
Covers the difference between the sum paid via collision or comprehensive coverage for a total loss of your car and the amount needed to pay off the lease or financing contract. Gap coverage is a requirement of many leases and financing contracts. Without this insurance, the burden of covering the difference is yours.

Garaged
Refers to where the vehicle is kept when not in use, such as a carport, driveway, garage, street or parking lot. Most insurers will charge less to insure your vehicle if it is parked in a safe place, such as a garage.

Glass Breakage
Covers the cost of repair or replacement to cracked windows, regardless of cause. The no-deductible coverage adds to the cost of your comprehensive coverage.

Insurance Department
A state's department that has responsibility for the enforcement of the state's insurance code. It is charged with the supervision and licensing of insurance companies and agents and the general administration of insurance laws of the state.

Insured
A person who is protected by the policy.

Insurer
The company that issues a policy to a policyholder; the party in the insurance contract that promises to pay losses and render services.

Insuring Agreements
Part of an insurance policy that states the coverage of the contract.

Liability Limits
Also known as "limits of insurance," "limits of coverage," "basic limits," or simply "limits," this refers both to the minimum amount of liability your state requires you to maintain in an insurance policy and the maximum amount of money your insurer is obligated to pay for a covered loss, based on the limits you choose in your policy. Limits are usually expressed as three numbers, for example 20/40/10, in this case representing $20,000 in bodily injury coverage per person, $40,000 in bodily injury coverage per accident, and $10,000 in property damage coverage per accident.

Loss
A value reduction in an insured's automobile caused by an insured peril, the amount sought in a claim, or the amount paid on behalf of an insured under an insurance contract.

Loss Payable Clause
A policy condition that enables an insured to direct the company to pay any loss that may be due to a third party.

Loss of Use Insurance
Compensation when the policyholder has lost the use of his or her vehicle; for example, an automobile rented to replace one that is stolen.

Medical Payments (Med Pay) or Personal Injury Protection (PIP)
This covers the medical expenses for injuries to you and family members covered in your policy, regardless of who was at fault in the accident. It also covers you and your family as passengers in other cars and as pedestrians. Most states require you to buy at least $5,000 of this coverage.

Motor Vehicle Record (MVR)
The official record of an automobile driver's accidents and traffic violations, and a major influence on the rate an insurance applicant is quoted. A clean record within the last few years can earn a driver a discount on his or her premium.

Named Insured
The individual or organization with whom an insurance contract is made and who is specifically named as a Named Insured in the policy declarations. Additional individuals or organizations can also be added as named insureds.

No-fault Insurance
A type of bodily injury insurance available in some states that compensates victims without regard to fault and removes the right to sue for pain and suffering in all but the most serious cases. Since claims are largely kept out of the legal system, insurers save money and charge lower premiums.

Non-Renewal
A policy that the insurer does not continue after its expiration date.

Optional Equipment
Covers optional equipment added to the vehicle by someone other than the manufacturer, such as upgraded stereo, car phone, special paint or tires, etc.

Out of State Coverage
A standard provision that automatically adjusts your liability coverage upward if you have an accident in another state where liability limits are higher than your home state's. It also adjusts coverage to comply with statutes such as no-fault law.

Partial Loss
A loss that does not completely destroy the insured automobile that is covered by an insurance policy.

Peril
The cause of a possible accident, loss or claim.

Personal Auto Policy
An insurance industry term for the most common type of auto insurance policy.

Personal Injury Protection (PIP), No-Fault Insurance
May also be referred to as No-Fault insurance. In certain states, this provides insurance that can cover for medical costs, loss of earnings, additional living expenses, and funeral costs for occupants of the insured automobile and pedestrians, other than those insured under other policies.

Policy
A formal written contract of insurance.

Policy Anniversary
Date on which an insurance policy must be reinstated to remain in force.

Policyholder
The party to whom a policy is issued who agrees to pay a premium to an insurer in consideration of the latter's promise to provide insurance protection.

Premium
The amount that a policyholder agrees to pay to the insurance company for an insurance policy.

Primary Use
The purpose your car serves the majority of time it is in use, usually commuting (driving to and from work or school), business (sales calls, trips to a bank or post office, picking up supplies, going to different locations), or pleasure.

Property Damage Liability (PD)
This covers the costs of repairing damage to someone else's property, often their car, in an accident caused by you, a family member, or a friend given permission to drive your car. All U.S. states mandate at least $5,000 of this coverage, although most standard policies include at least $25,000.

Provisions
The statements in an insurance policy that explain the benefits, conditions, and other features of the insurance contract.

Radius of Operation
A measurement usually used to determine insurance rates for automobiles owned by a business. Regular travel beyond a prescribed number of miles (for example, 50) from the home location increases the rate.

Rate
The cost of insurance per unit; used as a base for the determination of premiums.

Recovery
Money or other valuables that the insurance company obtains through subrogation, salvage or reinsurance.

Reinstatement
Returning a lapsed policy to its full value after its termination as if it was never terminated.

Renewal
A policy issued to replace one that has expired.

Rental Reimbursement
Also known as "extended transportation expenses," this covers the cost of renting a vehicle while you wait for your car to be repaired.