Car Insurance Terms

  1. Research Center
    2. /
  2. Auto Insurance Research Articles
    3. /
  3. Car Insurance Terms

What's Comparative Negligence?

What is Accident Forgiveness? What is Insurable Interest? What does a Field Adjuster do? What the heck is Comparative Negligence? There are a lot of unique terms bantered around in the world of auto insurance.

Wouldn't it be nice to have a glossary of car insurance terms and definitions? Well, you're looking at it. From "A" is for Actuary to "W" is for Warranty, we've got you covered. Find out what car insurance terms mean right here.
Glossary of Car Insurance Terms
This material is intended for general information only. Refer to your auto insurance contract for specific information that applies to your coverage.
Accident Forgiveness
In many states, your car insurance policy may include Accident Forgiveness. This term means that your insurance premium will not go up after being in an accident as a result of your first at-fault accident.
 
Actual Cash Value
The replacement cost less depreciation of your car or other property based on fair market value.
 
Actuary
An insurance statistician who computes insurance premiums based on risk factors. Actuaries assess trends and set prices to keep insurance companies profitable.
 
Adverse Carrier
The other party's insurance company when you are involved in an accident.
 
Aftermarket Parts
Auto parts that are not made by the automaker. These are sometimes less expensive than OEM parts.
 
Agent
A representative of an insurance company who sells insurance policies and maintains your accounts.
 
Agreed Price
The cost of auto repairs agreed to by an Auto Damage Adjuster or Appraiser and the representative of the body shop you are using.
 
Amendment
This is a change to the basic auto policy contract that alters it in some way.
 
Anti-Theft Device
A device that helps to deter automobile theft. Under many auto policies, having an Anti-Theft Device can lower your insurance premiums.
 
Appraisal
The process of determining the value of your car and the extent of the damage done to it. This is carries out by an impartial expert.
 
Arbitration
An alternative to litigation, this is the process by which a dispute is settled by an impartial party.
 
Assigned Risk (AIP)
This is when the law mandates that an insurance company offer certain coverages. In such cases, regulators will require insurance companies to pool together and accept the assigned risk.
 
Assured
This is another word for the person who is insured. A person who is the insurance policyholder.
 
At-Fault
The person who is legally liable for the damages in an auto accident.
 
Auto Damage Adjuster
This is an expert who is responsible for writing the repair estimate for your damaged vehicle or who determines if it is a total loss and arranges the settlement.
 
Auto Insurance
Provides protection for your vehicles due to loss, damage, theft, or accident.
 
Auto Theft
The theft of your vehicle is covered under your comprehensive coverage.
 
Binder
This is a temporary agreement that declares your policy is in effect. This is useful when you purchase a vehicle but have not been issued the complete policy yet.
 
Bodily Injury Liability Coverage
If you cause an accident in which another person is injured, this coverage helps pay for medical expenses and loss of wages. It also pays for legal fees if you are taken to court over the accident.
 
Cancellation
This is when you or the insurance company terminates your contract before the end of the policy period. This can happen if your license gets suspended or revoked, if you fail to pay your premiums, or if you lie on an application.
 
Carrier
Also known as the insurer, this is the insurance company you are using.
 
Certificate of Financial Responsibility
See SR-22
 
Certificate of Satisfaction
This is a form you sign when you take delivery of your repaired vehicle. It certifies that you are happy with the way your car looks and operates and that it has been repaired properly.
 
Claim
A car insurance Claim is a report you submit to your insurance provider after an accident to obtain financial compensation covering the damage. 
 
Claimant
This is the person who is presenting the Claim.
 
Claim Examiner
This is a trained expert who is responsible for investigating and settling a Claim.

Collision Coverage
This coverage pays for damage to your car when it has been involved in an accident. It also pays if you run into a tree or other object.
 
Comparative Negligence
In some states, comparative negligence is a law that allows you to to be reimbursed for some damages even if you are at fault in an accident based on the degree of negligence you contributed to the accident.
 
Competitive Estimate
This is when your insurance company requests that you submit multiple repair estimates from several body shops.
 
Comprehensive Coverage
This pays for damage to your vehicle due to theft, vandalism, or natural disasters such as fire or flood.
 
Damage
The loss or harm caused to a person, vehicle, or other property.
 
Damages
Another word for the money that one party becomes legally obligated to pay to another party for loss or injury.
 
Declarations
This is the part of your insurance policy that includes your name, address, contact info, as well as the property that is being insured, its description and location. It includes your premium amount, details your coverage, and the policy period.
 
Deductible
The amount that you pay out of pocket before an insurance provider pays expenses. Paying a higher deductible can lower your premiums.
 
Defensive Driver Discount
Some auto insurance companies will give you a discount for taking a defensive driving course.
 
Depreciation
The value of a car depreciates over time. Insurance companies calculate your vehicle's worth and value in the event of total loss cases.

Driver Training Discount
In some states, you can get a discount from your insurance provider for taking an approved driver training course.
 
Electronic Funds Transfer (EFT)
This is an electronic payment method that allows you to pay your premiums quick and easy with automatic deductions right from your checking account.
 
Emergency Road Service Coverage
Many car insurance companies have a provision to include Emergency Road Service with your coverage. This service includes roadside assistance for flat tires, dead batteries, and towing in the event of a breakdown.
 
Endorsement
An Endorsement is an addition to a policy contract while an Amendment alters the policy.
 
Estimate
This is the assessment of costs for repairing your damaged vehicle.
 
Exclusion
This is a restriction in your car insurance policy that may limit or exclude coverage. These are risks that are not covered.
 
Field Adjuster
A Field Adjuster evaluates accident claims and damages, including personal and property damage, and creates estimates for the insurance company to pay on those damages.
 
First Party Claims
In an auto insurance claim, you are the "First Party," and a "First Party Claim" is when you file a claim with your insurance provider after an accident.
 
Gap Insurance
Guaranteed Asset Protection (GAP) Insurance helps driver overcome the "gap" between the financed amount owed on your car and its cash value in the event it is declared a total loss.
 
Good Student Discount
Many insurance providers have a discount for full-time students who maintain a grade average of "B" or better.
 
Indemnification
This is when your insurer helps cover the costs of loss or damage to your car from a covered event.

Inspection
This is the verification of your vehicle's condition.
 
Insurable Interest
This is the interest you have in your vehicle in which you would suffer a loss in the event of an accident.
 
Insurance
Car insurance covers damage to your vehicle and protects you financially if you are liable for someone else's injuries or damages. It can pay for medical bills if you or your passengers are injured or are hit by an uninsured motorist.
 
Insurance Fraud
Common forms of insurance fraud include exaggerated injuries from accidents, inflated medical bills, and even staged accidents. Basically, insurance fraud involves falsifying or exaggerating the facts of an automobile accident to your insurance company.

Insurance ID Card
Your insurer issues you an ID Card that includes basic info regarding your policy. This is proof that you are insured, and many states require that you keep your card in your vehicle at all times.
Insurance Score
This score is calculated based on information in your credit report as it is predictive of future accidents or insurance claims.
 
Insured and Insurer
The Insured is the person covered by an insurance policy, and the Insurer is the company that provides the insurance.
 
Legal Liability
A term in which liability is imposed by law rather than a liability devised through a contract or some sort of agreement.
 
Liability
An enforceable obligation for an injury or damage to property that is suffered by another person.
 
Liability Examiner
A Liability Examiner's responsibilities include handling the investigation of an auto accident, payouts for property damage, collisions, and bodily injuries.
 
Liability Insurance
Auto Liability Insurance financially protects you when you are at fault in a car accident. This includes repairing someone else's vehicle and covering the other driver's medical expenses.
 
Liability Limits
The amount specified in your policy up to which the insurance company will financially protect you.
 
Loss
This is the dollar amount that is to be paid for damage or injury to another person in an accident.

Malicious Mischief
This is damage to your car or personal property by a person who intentionally causes damage with malice of forethought.
 
Material Damage
All property-related damage losses that are covered in your insurance policy including comprehensive and collision, fire and theft coverage.
 
Medical Claim Examiner
All medical bills, essential services, and lost wages that are submitted to your insurance company are reviewed by a Medical Claims Examiner.
 
Medical Payments Coverage
This pays for medical expenses that are the result of car accidents.
 
Motor Vehicle Report
This lists any auto accidents or driving violations that appear on your driving record and is used to verify information on your insurance application.
 
Multi-Car Discount
You can get a discount on your car insurance when you insure a number of vehicles with the same carrier. You can also save by "bundling" insurance on your home, motorcycle, RV, boat, ATVs, snowmobiles, etc.
 
Name Insured
This is you, the person listed on the policy declarations page.
 
National Insurance Crime Bureau (NICB)
This organization works with insurers and police to identify, research, and prosecute insurance criminals.
 
No-fault Insurance
This insurance pays for medical treatment, lost wages, and accident-related expenses no matter who caused an accident.
 
Original Equipment Manufacturer (OEM) Parts
These are auto parts from the vehicle's automaker or manufacturer that match the original part being replaced. Such parts are generally more expensive than aftermarket parts.
 
Passive Restraint System
These are devices such as automatic seat belts or air bags that automatically engage to keep you secure in your car seat in the event of a crash.
 
Payment Recovery Examiner
In the event of an accident, the Payment Recovery Examiner recovers your deductible amount from the other driver's insurance company.
 
Personal Injury Protection (PIP)
PIP Insurance pays for your medical expenses and lost wages no matter who caused the accident.
 
Personal Property
In home insurance, this is property in your home such as furniture, jewelry, and other objects of value.
 
Physical Damage
This is damage to your property.
 
Policy
The contract between you and your car insurance company.
 
Policyholder
The person listed on the declarations page of a car insurance contract.
 
Pre-accident Condition
The condition of your car before the accident took place. This includes any damage to the vehicle that was pre-existing such as dents and dings, mileage, and options.
 
Premium
This is the price you pay for your car insurance policy in exchange for coverage.
 
Primary Insurance
The first layer of insurance that covers general losses.
 
Proof of Loss
A legal document that explains what has been damaged that is made regarding the extent of a claim.
 
Property Damage Liability Coverage
This insurance coverage pays for damage to someone else's property as the result of an accident in which you are at fault. It also pays for your legal defense in such an occurrence.
 
Proximate Cause
This is when someone is legally responsible for a person's injuries. Proximate Cause must prove that someone's actions (or inactions) were a factor in an accident.
 
Quote
Car insurance companies provide Quotes for services based on your driving record and the vehicle being covered. Today, drivers typically get Quotes from several insurers to compare costs for similar coverage.
 
Rate
Refers to the base rating units used to determine your car insurance premium (or cost). Basically, your rate is the same as your premium amount.
 
Re-inspection
A review of an appraisal or estimate for service carried out by a claim adjuster that is inspected after repairs have been made to your car. This is done to guarantee the work has been done properly by the body shop.
 
Release
This is a contract stating that all obligations from a particular car accident have been fulfilled and that the matter is concluded.
 
Renewal Date
The date that your car insurance policy expires, and a renewed policy begins.
 
Replacement Parts
Car insurance companies generally guarantee the parts used to replace damaged parts for as long as you own the car. This includes new OEM or aftermarket parts.
 
Risk
In car insurance, this is the chance of suffering a loss. A High Risk driver can present a greater liability to the insurer due to their driving record, type of car, or credit history. If you are considered a High Risk, your premium will cost more.
 
Salvage
Salvage is damaged property that is taken over by an insurance company after the payment of a claim.
 
Select Repair Shop
These are body shops that are authorized by the car insurance company to handle the repair of insured vehicles.
 
SR-22
An SR-22 is a certificate of financial responsibility that is mandated by the state Department of Motor Vehicles to verify that a high risk driver is maintaining auto insurance liability coverage.
 
Subrogation
This is the process of payment recovery that an insurance company performs if your car is damaged due to another driver's negligence in order to settle the claim.
 
Supplemental Estimate
This is an additional estimate to cover damages that were not included in the original estimate.
 
Third Party Claim
Claims for an injury or damage to property to a third party that may have been caused by the insured in an accident.
 
Total Loss
When a vehicle has sustained extreme damage in which the repairs will cost more than the value of the car, or if it cannot be repaired safely, it is considered a Total Loss by the insurance company and state regulators. In such a case, you are paid the pre-loss market value of the vehicle, less depreciation, also known as the Actual Cash Value (ACV).
 
Umbrella Insurance
Provides high limits of additional liability insurance beyond what is covered in standard car insurance.
 
Underwriting
This is the process of accessing your car insurance application to determine if the insurer will provide coverage to you, and at what cost, based on risk factors. The more risk you present, the more you'll pay for car insurance.
 
Uninsured Motorist Coverage
This coverage may pay for injuries or damage to property caused by uninsured or underinsured motorists.
 
Vehicle Identification Number (VIN)
Every motor vehicle in America built after 1980 is required to be assigned a 17-digit Vehicle Identification Number from the manufacturer. This unique code tells you where and when the vehicle was made including the year, make, model, trim level, including features and specifications.
 
Warranty
A written guarantee specifying the manufacturer's responsibility for the repair or replacement of defective parts. New automobiles include a powertrain warranty as well as a bumper-to-bumper comprehensive warranty that covers most vehicle parts.