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Insurance Terms

by Diminished Value Car Appraiser on October 2, 2012

Additional Interest Insured

Another person or company that needs to carry liability coverage since they can be held legally liable for an accident involving an insured or an insured vehicle. It may be a leasing company, employer, title owner of the vehicle, or living trust.

Add On Equipment Coverage

This is a coverage offered in a limited number of states where we do not provide Custom Parts or Equipment coverages. It assures coverage for listed custom parts or equipment. You must carry both comprehensive and collision coverage. If the total value of your custom parts and equipment exceeds $5,000, please call Customer Service toll free at 1-877-280-8418 in order to get your rate.

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 also pays for your legal defense if you are sued.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 a resident 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.

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.

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, and vandalism. We will also pay transportation and loss of use expenses under this coverage if your motor vehicle is stolen.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.

Custom Parts or Equipment (CPE) Coverage

CPE assures coverage for listed custom parts or equipment. You must carry both comprehensive and collision coverage. If the total value of your custom parts and equipment exceeds $5,000, please call Customer Service toll free at 1-877-280-8418 in order to get your rate.

Declarations Page

The copy of your policy that you receive from your insurance company listing:

  • your name as the first named insured;
  • the effective and expiration dates of your policy;
  • 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.

Deductible

The amount of each loss you agree to pay. Generally, choosing a higher deductible will lower your premium.

Financial Responsibility Filing (Driver Filings (e.g.,SR22))

A document required by the court for persons convicted of certain traffic violations that demonstrates proof of financial responsibility.

Liability Insurance

Insurance for money the policyholder is legally obligated to pay because of bodily injury or property damage caused to another person and covered by the policy.

Lienholder (Loss Payee)

Organization or person, such as a bank, financial institution or lender, that loaned you money to purchase your vehicle. They hold the title to the vehicle until the loan is paid. This gives them an insurable interest in the vehicle.

Loan/Lease Payoff Coverage

Loan/Lease Payoff Coverage pays the difference between what you owe on your loan and what your insurance pays if your vehicle is declared a total loss or is stolen and not recovered. We’ll pay up to 25% of the vehicle’s actual cash value. This coverage has no deductible. Note: This coverage does not pay for certain fees and charges, which may include without limitation, unpaid finance charges or refunds due the owner for such charges; excess mileage charges or charges for wear and tear; extended warranties or refunds due to the owner for extended warranties; charges for credit insurance or refunds due to the owner for credit insurance; past due payments and charges for past due payments; collection or repossession expenses; and by its salvage value if you retain the salvage.

Medical Payment

Medical Payment coverage pays certain medical and funeral expenses resulting from a motor vehicle accident. This coverage protects anyone occupying your vehicle. It also covers you and relatives while in other vehicles or if struck as a pedestrian. These benefits are payable without regard to fault. This coverage may not be available in states that require Personal Injury Protection Benefits. Principal Exclusions are similar to those for Bodily Injury Liability Coverage (see above).

Physical Damage

Coverage for property damage to a vehicle insured under the “Collision Coverage” and “Comprehensive Coverage” sections of your policy.

Personal Injury Protection (PIP) Coverage

Personal Injury Protection pays for your expenses, regardless of who is at fault in an accident. The basic rule of thumb is that the injured party looks to his or her own carrier for coverage. Personal Injury Protection generally pays for medical and hospital bills, funeral expenses, and work loss benefits, but specific limits and coverages vary by state. Some states refer to this type of coverage as First Party Benefits coverage. The coverage is available in Arkansas, Delaware, District of Columbia, Florida, Hawaii, Kansas, Kentucky, Maryland, Michigan, Minnesota, New Jersey, New York, North Dakota, Oregon, Pennsylviania, Texas, Utah and Washington.

Policy Term

The length of time that the policy is in force. In most states, we offer annual and semi-annual policies.

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 (above), but the exclusions apply to damage to property.

Rental Reimbursement

Rental Reimbursement coverage pays expenses to rent a car if you have a loss covered under Comprehensive Coverage or Collision Coverage. Pays up to the limit selected per day for up to 30 days.

Driver Filings (e.g.,SR22) (Financial Responsibility Filing)

A document required by the court for persons convicted of certain traffic violations that demonstrates proof of financial responsibility.

Towing and Labor / Roadside Assistance Coverage

This coverage reimburses you for emergency towing of your car when it is disabled and for emergency roadside service.

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) a covered vehicle without the permission of you or a relative; or (3) a non-owned vehicle without the permission of the owner.

Underinsured 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 enough 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) a covered vehicle without the permission of you or a relative; or (3) a non-owned vehicle without the permission of the owner.

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

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 enough 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. 

Vehicle Identification Number (VIN)

This number is usually found on the dashboard of your vehicle on the driver’s side, and is usually listed on the vehicle registration and title. The VIN number is a combination of letters and numbers 17 characters in length that can be used to identify the make, model, and year of your car.
These definitions provide a brief description of the coverages we offer and some of the terms and phrases used in connection with vehicle insurance. These definitions are not applicable in all states or for all products. This is not an insurance contract. Other terms, conditions, and exclusions apply. Please read your policy for full details about the coverages. These definitions do not alter or modify the terms of any insurance contract. If there is any conflict between these definitions and the provisions of the applicable insurance policy, the terms of the policy control.    

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