Auto insurance comes with its own language. From actuarial tables to underwriting, the jargon can be confusing. Here’s a plain-English guide to the most important terms you’ll encounter.
Coverage and Policy Terms
Premium: The amount you pay for your insurance policy, usually monthly or semi-annually. Deductible: The amount you pay out of pocket before your insurance kicks in on a claim.
Coverage limit: The maximum amount your insurer will pay for a covered loss. Declarations page: The summary document showing your coverage, limits, vehicles, and drivers.
Endorsement: An addition or modification to your standard policy. Exclusion: A specific situation or type of loss your policy does not cover.
Claim-Related Terms
Claim: A formal request to your insurance company for payment after a covered loss. Adjuster: The person who investigates and evaluates your claim.
Actual cash value (ACV): The value of your car factoring in depreciation. Total loss: When the cost to repair your vehicle exceeds its actual cash value.
Subrogation: When your insurer seeks reimbursement from the at-fault party’s insurer after paying your claim.
Driver and Risk Terms
SR-22: A certificate of financial responsibility that high-risk drivers must file with their state. Underwriting: The process insurers use to evaluate your risk and determine your premium.
At-fault: The driver determined to have caused an accident. No-fault: A system where each driver’s own insurer pays for their injuries regardless of who caused the accident.
