Car Insurance Glossary
Several car insurance terms and definitions are used that correlate with the motor insurance policies, claims and coverage. As, it is essential to purchase a valid insurance coverage for the car before rolling it down the roads, every individual must have a know-how of these terms. The terminology might not be used frequently, however, the definitions will make it easy for you to apply for car insurance and generate a claim, when required. The following glossary lists several most common car insurance terms that you will read through while setting up a new insurance policy with your insurance provider. This guide of definitions will be applicable in any case, regardless of the type of insurance policy and the insurance company. Refer to these terms to get more friendly with your coverage policies and insurance situations.
A sudden, unplanned and unforeseen mishap not under your control of the authorized driver. The event typically results in damage or injury but can also lead to the loss of property or life. Accidents happen by chance without an apparent or deliberate cause of the driver.
|Actual Cash Value|
The actual cash value of a car is also referred to as the market value of the vehicle. This figure is paid at the time of the accident and is calculated by subtracting the depreciation from the original price of the car. A few other factors are taken into consideration while calculating the ACV, including any prior damage to the vehicle, the condition and age, as well as special equipment and modifications that have been made.
Insurance agent also known as insurance sales agent or producer is an individual who sells, services, or negotiates car insurance policies either on behalf of a company or independently.
|Bodily Injury Liability Coverage|
This coverage under the car insurance covers the insured for motor accidents that result in bodily injury to pedestrians or to another driver when the insured is legally at-fault. The insurer company will cover for the medical expenses, lost income and legal defense costs, if insured is sued because of the accident.
|Certificate of insurance|
A certificate of insurance is a document issued by the insurer that verifies the existence of insurance coverage granted to an individual. The document will list out the effective date of the policy, the type of insurance coverage purchased, and the amount of applicable policy.
Demand by you for indemnity or benefit under the policy. A request made by an insured party for the insurance company to cover losses that have been incurred due to an accident or any other natural catastrophe covered under the policy.
This insurance policy provides a complete coverage for your car. Comprehensive coverage encompasses loss or damage resulting from a collision or crash, fire, theft, explosion, natural calamity such as storm, flood, hail, water or contact with an animal.
It is the amount that the insured has to pay from their end for the covered losses before the insurance company pays a claim.
The decrease in value of the car. A few variables such as the condition of the car, the age of the car, its make and model, and the total number of miles driven are used to accurately determine the value of the vehicle.
The first amount of each claim borne by you. An excess is the initial contribution that you are required to pay when you make a claim against your purchased car insurance policy.
Restoring you to the financial position you were in immediately before the accident. It is the compensation that is paid in order to reinstate the individual’s financial status prior to loss.
The term refers to an individual or organization that is covered under an insurance. They have purchased an insurance policy to provide coverage to their asset.
The term refers to insurance company that provides different coverage plans to protect your asset. Insurer is a party that signs a contract with the insured undertaking to pay compensation as per the preferred policies, terms and conditions etc.
Financial responsibilities attaching to you because of your failure to observe an obligation imposed by law. It is the liability imposed by law, as opposed to the one resulting from an agreement or contract.
The cost of replacing your vehicle with one of similar type and condition. It is the fair value or the price that could be derived from current sale of a car.
|Members of your Household|
Persons you normally live within your residence. Technically, ‘member of household’ is an individual that is considered dependent when filing year-end tax forms
|Period of Insurance|
The period shown in the schedule and any subsequent period for which you will pay and we accept a renewal premium. It is the period of uninterrupted cover starting from the date when the policy became effective to when it is cancelled or not renewed.
The period between inception or renewal and the expiry date of an annual Policy.
Written evidence of the contract between you and the insurance company. A policy holds the legal importance of an insurance agreement. It also details the terms and conditions of a contract of insurance.
The Market Value of your vehicle immediately before the accident. The value is estimated on the basis of pre-accident condition that includes the state of the car before the accident. The pre-accident condition is judged by damage not related to the accident, mileage, options, and other related factors.
Premium is the payment that is made to the car insurance provider by the insured to continue their car insurance policy and ensure that its status as active.
Summary of details specific to this contract.
Geographical limits within which the insured event or loss must occur. Territorial limits are the specific areas or locations set by the insurance company, where coverage is valid or excluded. The insurer will not be liable to pay for compensation in case the location is not included in the specified geographical limit.
Any person other than the insured who has been injured or whose property has been damaged in an accident occurring due to your fault. The person is entitled to receive compensation for the acts or omissions of the insured.
The vehicle or vehicles described in the schedule of this policy and any vehicle:
For which the insurance is still in place.
We have provided a certificate of insurance for; and
You have given us details of.