Auto Coverages

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Auto Coverages

Actual cash value coverage (ACV)

Actual cash value is a repayment value for loss or damage to a vehicle. It is your vehicle’s value at the time of loss minus depreciation. ACV is also known as market value.

If your auto insurance policy includes actual cash value coverage and your car is stolen, your policy could pay an amount that is equal to the depreciated value of the car. If your auto insurance policy carries replacement cost coverage, however, your policy could pay for a brand new, comparable car.

At-fault

An at-fault driver is legally responsible for damage caused in a car accident.

Auto insurance

Auto insurance is a type of property and casualty insurance that provides coverage for the costs associated with a car accident. A typical auto insurance policy includes coverage for liability, collision, comprehensive, medical payments, underinsured/uninsured motorist and may include personal injury.

Bodily injury liability coverage

Bodily injury liability coverage can help protect your assets if you’re responsible for a car accident that results in injury or death to another person. This type of coverage can help pay for the other party’s medical expenses, lost wages and other damages. It can also help pay for your expenses in a related lawsuit.

Bundling

Bundling refers to combining multiple types of insurance from the same insurance carrier. For example, people often bundle their auto insurance with homeowners or renters insurance, which can yield significant savings.

Claim

A claim is a policyholder’s request to be reimbursed for a loss covered by their auto insurance policy.

Collision coverage

Collision coverage can pay to repair physical damage to your vehicle caused by rolling over or colliding with another vehicle or object, such as a fence or telephone pole. This type of coverage does not include collision with animals.

Comprehensive coverage

Comprehensive coverage can pay for damage to your vehicle caused by a covered loss other than a collision, such as vandalism, theft, fire, flood, hail, falling objects or accidents with animals. This coverage is sometimes referred to as other-than-collision coverage.

Covered loss

A covered loss is any damage to your vehicle, yourself, other people or property that is covered under the terms and conditions of your auto insurance policy.

Deductible

A deductible is the portion of a covered loss that the policyholder is responsible for paying before the insurance provider pays after the policyholder files an insurance claim. Higher deductibles typically translate to lower premiums, but that also means the policyholder assumes a greater amount of financial responsibility in the event of a loss.

Depreciation

Depreciation is the loss in value of property due to age, wear and tear, or becoming outdated.

Endorsement

An endorsement is any change made to your original insurance policy. These changes include updating your address, adding a new vehicle or driver, changing your policy limits and making other adjustments.

Gap insurance

Gap insurance can cover the difference between what is still owed on a vehicle and the vehicle’s actual cash value if a loss occurs. It protects policyholders from being required to continue making payments on a totaled vehicle they can no longer use.

If you are financing a vehicle, you can purchase gap insurance from an insurance company, the car dealership or the loan provider.

This type of insurance coverage is sometimes referred to as loan or lease gap coverage.

Insured

An insured is the individual who is protected under an insurance policy. They may also be referred to as the policyholder.

Liability

In broad terms, liability refers to legal responsibility. For example, if you run a red light and hit another car, you may be liable for injuries or damages to the other driver and their vehicle.

Liability coverage

Liability coverage can help pay for damages to other people and property resulting from a car accident. There are two types of liability coverages: bodily injury and property damage.

Life event

A life event is any occurrence that significantly changes a person’s life, such as marriage, divorce, pregnancy, the birth of a child, a serious medical diagnosis, or the death of a spouse or relative.

Limit

An insurance policy’s limit is the maximum dollar amount of protection purchased by the policyholder for a particular type of coverage. It is the maximum amount an insurance company will pay per coverage, per covered loss.

Loss

A loss is direct or indirect damage to a person or property.

Mature driver

A driver is considered mature upon reaching a certain age, which is set by their state of residence. The minimum age for a mature driver is 55 years old in most states.

Medical payments coverage

This optional coverage can pay for medical expenses or death benefits to you or anyone covered under your policy in the event of a car accident, regardless of who is held at fault. It can also cover you and your family members while riding in others’ vehicles or as a pedestrian.

This type of coverage is also known as medical expense coverage.

Minimum limits

Minimum limits on an insurance policy are set and may be required by state laws. Contact your local Personal Express agent for details about your region.

Motor vehicle report (MVR)

An MVR is a state record of licensing status, traffic violations and other infractions you’ve accrued over the last several years that an auto insurance provider uses to determine your premium.

Named insured

Named insured is another term for primary policyholder.

Occasional driver

An occasional driver is any person who is not the primary driver of an insured vehicle and who does not have regular access or use of the insured vehicle.

Out-of-pocket expenses

Out-of-pocket expenses are expenses that you pay in addition to what your auto insurance policy covers when you file a claim.

Peril

A peril is anything that can result in damage or loss to your property. Perils range from everything from theft, to smoke, to falling objects.

Policy

A policy is a contract between you and your auto insurance provider that declares what the provider will cover, the terms and conditions, and how much you’ll pay for coverage.

Premium

A premium is the amount you pay for your insurance policy. It is also referred to as a rate or an insurance premium, and is determined by a number of factors, including but not limited to your driving history, the make and model or your car, and your claims history.

Primary driver

The primary driver is the person named on the auto insurance policy who is the main operator of an insured vehicle.

Primary policyholder

The primary policyholder is the person who pays for and is issued the insurance policy and serves as the primary point of contact with the insurance carrier.

Primary use

A vehicle’s primary use is how the vehicle is most often used. Primary uses are typically classified as commuting, commercial or pleasure uses.

Property and casualty insurance

Property and casualty insurance, or P&C insurance, provides financial protection for vehicles, homes, businesses and other assets in the event of a loss. While property insurance typically protects the physical property, casualty insurance (or liability insurance) protects policyholders from legal liabilities resulting from injury or property damage to another party.

Property damage coverage

This type of coverage protects you if you are at fault for damaging someone else’s property in a car accident. It can reimburse another person for damaged property, such as a car, home or fence, and can also help pay for your expenses in the event of a lawsuit. It is sometimes referred to as property damage liability coverage.

Quote

A quote is an insurance premium estimate that is determined by an insurance agent or insurance company.

Rental car coverage

Rental car coverage, or rental reimbursement, is an optional coverage that provides coverage for a replacement vehicle while your vehicle is being repaired or is no longer usable due to an accident. This type of coverage does not provide extra protection for the rental car itself.

Replacement cost coverage

Replacement cost is the cost of replacing damaged or stolen property without factoring in depreciation. If your auto insurance policy includes replacement cost coverage and your car is stolen, your policy could pay for a brand new, comparable car.

If your auto insurance policy includes actual cash value coverage, however, your policy could pay an amount that is equal to the depreciated value of your car.

Term

The term is the length of time covered by an insurance policy.

Total loss

A total loss is a situation in which an insured vehicle obtains irreparable damage, which is usually determined by state law. For example, if the cost to repair a damaged car is more than 75% of its total value in a state where the total loss threshold is 75%, the car can be deemed a total loss. In this instance, the insurance policy will usually pay the policyholder a sum that equals the total value of the car before the damage occurred, which is determined by a claims adjuster.

Tow coverage

Also known as towing reimbursement coverage, this coverage pays for towing costs for any covered vehicle, up to your policy’s limits.

Underinsured motorist bodily injury coverage

Underinsured motorist bodily injury coverage can help pay for medical expenses, lost wages and other damages when you or your passengers are injured in an accident caused by a driver who has inadequate auto insurance coverage.

Underinsured motorist property damage coverage

This type of protection is available in some states and can pay for repairs to your vehicle or other damaged property caused by a driver whose liability limit is exceeded.

Underwriter

An underwriter reviews insurance policy applications, evaluates which risks are acceptable to the insurance company, and establishes the terms and conditions of coverage if approved.

Uninsured motorist bodily injury coverage

This coverage can pay for medical expenses, lost wages and other damages when you or your passengers are injured in an accident caused by a driver who does not have auto insurance or cannot be located (hit-and-run).

Uninsured motorist property damage coverage

Uninsured motorist property damage coverage can help pay for repairs to your vehicle or other damaged property caused by a driver who does not have auto insurance or cannot be located (hit-and-run).

Vehicle Identification Number (VIN)

A VIN is the unique 12-character code assigned to each vehicle by the manufacturer. It identifies the vehicle’s year, make, model and other information that is unique to your vehicle.

 

*Each state regulates auto insurance differently. As such, some of these terms and definitions may vary from state to state.