Insurance Terms

Motor Insurance Terms

Own or drive a motor vehicle? One of the following might be right for you.

Private Car – required by law to have this type of insurance and is offered Comprehensive, Third Party and Third Party, Fire and Theft.
Commercial Vehicle – cover for vehicles mostly used for business and carriage of goods whether for own use or for hire and reward.
Motor Cycles – can be done for third party and comprehensive this is usually covered on accommodation basis.
Special Types (Limited Road Use) – are vehicles like trailer heads and unspecified trailers which need to be covered.
Agricultural Vehicle – vehicles used for agricultural purposes may be used on the road so they too need insurance. A special rate is generated for such vehicles and done mostly on accommodation basis.

Actual cash value (ACV)

The value of your property, based on the current cost to replace it minus depreciation.

Application

A form you fill out with information about you that an insurance company will use to decide whether to issue you a policy and how much to charge.

Accident report form:

Typically referred to as a police report, this report contains important information about an auto accident, such as circumstances, parties involved and citations given.

At fault:

The degree to which you caused or contributed to an accident, or are “at fault,” and determines whose auto insurance company pays what portion of the damages. The method by which this is determined varies from state to state.

Bodily injury coverage:

If you are at fault for an automobile accident, bodily injury coverage on an auto insurance policy pays the medical expenses and additional damages for which you are liable for other individuals injured in the accident.

Binder

A temporary insurance contract that provides proof of coverage until you receive a permanent policy.

Claim:

When you suffer a loss that’s covered by your insurance, such as an automobile accident, you submit a request to your auto insurance company to pay or reimburse you for expenses, damages and other financial obligations. By definition, that request is called a claim.

Claims adjuster:

A representative of an auto insurance company who investigates and settles claims to ensure that all parties – you, your auto insurance company, and anyone else involved – receive fair compensation.

Collision coverage:

Coverage that pays for physical damage to your vehicle caused by rolling over or a collision with another vehicle or object, such as a building, fence or telephone pole.

Comprehensive coverage:

Coverage that pays for damages to your vehicle resulting from a covered loss other than a collision, such as fire, theft, vandalism or contact with persons, animals, birds or falling objects.

Covered loss:

Any damage to yourself, your vehicle, or other people or property that is covered under your insurance policy.

Cancellation – Termination of an insurance policy by the company or insured before the renewal date.

Claimant – A person who makes an insurance claim.

Contract – In most cases, the term “contract” refers to an insurance policy. A policy is considered to be a contract between the insurance company and the policyholder.

Declarations page – The page in your policy that shows the name and address of the insurer, the period of time a policy is in force, a description of the vehicle, the amount of the premium, and the amount of coverage.

Deductible – The amount the insured must pay in a loss before any payment is due from the company.

Depreciation – The act of lowering an item´s value due to use or wear and tear.

Earned premium – The portion of a policy premium that has been used to actually buy coverage, or that the insurance company has “earned.” For instance, if you have a six-month policy that you paid for in advance, two months into the policy, there would be two months of earned premium. The remaining four months of premium is called unearned premium.

Endorsement:

Any change, addition or optional coverage added to a policy. These include adding a new vehicle or driver, changing your address, adjusting limits and other modifications.

Exclusions:

Specifically identified situations that are not covered by your auto insurance policy.

Lapse – Termination of a policy due to non-payment of premiums.

Liability insurance – Pays for injuries to the other party and damages to the other vehicle resulting from an accident you caused. It also pays if the accident was caused by someone covered by your policy, including a driver operating your car with your permission.

Liability limits – The maximum amount your liability policy will pay. Your policy must pay at least $25,000 for each injured person, up to a total of $50,000 per accident, and $25,000 for property damage per accident. This basic coverage is called “25/50/25” coverage.

Loss – The amount an insurance company pays on a claim.

Independent agent, independent agency:

An insurance agent or agency not directly employed by an insurance company. By definition, independent agents may represent multiple insurance companies and can help you find the best fit for your personal auto insurance needs.

Liability coverage:

Coverage for damages your auto causes to others and their property

Medical payments coverage:

Coverage that pays for reasonable medical expenses or death benefits to anyone covered under your policy in the event of an auto accident, regardless of fault.

Motor vehicle report (MVR):

A state record of licensing status, violations, suspensions, and other infractions you’ve had over the last several years. The MVR is one of many factors used by your auto insurance company to fairly determine your premium, based on the probability that you’ll have a claim in the future.

Named driver exclusion – An endorsement that provides that a policy does not cover accidents when a specifically named person is the driver.

Named driver policy – An automobile insurance policy that doesn’t provide coverage for an individual residing in a named insured ‘s household specifically unless the individual is named on the policy. The term includes an automobile insurance policy that has been endorsed to provide coverage only for drivers specifically named on the policy.

Non-owners policy – Insurance coverage that offers liability, uninsured motorist, and medical payments to a named insured who does not own a vehicle.

Non-renewal – A decision by an insurance company not to renew a policy.

Policy period – The period a policy is in force, from the beginning or effective date to the expiration date.

Property damage (PD) – Physical damage to property.

Premium:

The amount you pay for your insurance coverage; can be paid monthly, quarterly, yearly or according to different payment plans that you select.

Policy:

A written agreement between you and your auto insurance company that details what the company will cover, contract conditions and provisions and the amount you’ll pay for your coverage.

Road service:

If purchased, this auto insurance coverage will reimburse you for reasonable towing costs and labor costs at the site of breakdown when a covered vehicle is disabled.

Underinsured motorist bodily injury coverage:

Coverage that pays for your bodily injury and related medical expenses when you’re injured in an automobile accident and the responsible party (other than yourself) doesn’t have adequate auto insurance.

Uninsured motorist bodily injury coverage:

Vehicle identification number (VIN):

Your vehicle’s serial number assigned by the manufacturer. The VIN identifies year, make, model, options and other information that, by definition, is unique to your specific vehicle.

Accident and Liability

Bid Securities – This is a form of risk insurance used in the construction industry. By submitting a bid bond along with a contractor bid, a contractor is providing a legal guarantee that he will sign a contract if it is awarded to him.

Performance Bond – This is a surety bond issued by an insurance company to guarantee satisfactory completion of a project by a contractor.

Advance Mobilization Bond – This is given out to Contractors when the Project Owners wishes to advance them an amount of money to begin work on the project. This bond is an undertaking to the project owner to refund any monies advanced to the Contractor should he default in the performance of the project.

Contractors All Risk Insurance – This policy specifically designed for builders and a variety of other trades working at a contract site. It offer cover for the value of the materials and property being used on a project.

Public Liability Insurance – This covers a business for the risk of third party injury or property damage caused by the business during the performing the insured occupation.

Employers Liability Insurance – This policy protects employers from liabilities arising from disease, fatality or injury to employees resulting from workplace conditions or practices.

Retention Bond – This type of policy is where the government withheld a part of the contact price to remedy any defects on the works that was done. After a successful completion of the works the contractor can collect the amount that was withheld.

Motor Insurance

This Insurance Provides coverage to owners and/or drivers of motor vehicles for their liabilities to third parties in the event of an accident involving the motor vehicle under their control.

Third Party Insurance – This policy provides indemnity to third parties for the loss suffered as a result of damage to property and/or bodily injuries.

Comprehensive Insurance – This policy provides coverage for the owner and its third parties for the loss suffered as a result of damage to property and/or bodily injuries.

Fire Insurance

This policy makes provision for the loss or damage of your property or stock for both your home and business against fire, lighting, riot, strike, malicious damages and other extended perils needed.

Marine & Aviation Insurance

This policy covers against financial loss resulting from in-transit cargo, loss or damage over water ways, land, air and more depending on the policy needed.