Car Insurance Terms and Definitions
We know car insurance can be confusing, so we’ve provided definitions to a number of the most commonly used car insurance terms to help you understand car insurance quote questionnaires and policy language. Car insurance shouldn’t have to be confusing. Compare.com is working hard to see that it isn’t.
To find the definition you’re looking for you can click on the first letter of the first word you’d like to look up and we’ll take you straight to that section. Or, you could always just scroll down.
Any device or vehicle function designed to discourage or prevent the theft of a vehicle. This includes car alarms, ignition shut-off devices, and wheel locks.
This type of coverage pays for expenses related to bodily injury or death to people injured in an accident other than the insured driver. It also covers legal defense costs in the event that the insured driver is sued. Restrictions apply. Check your policy or contact your agent for details regarding the limits of your policy’s Bodily Injury Coverage.
A request for payment from your insurer based on the terms of your insurance policy.
If your insured vehicle impacts another object or overturns, Collision Coverage pays for damage to your own vehicle. Check your policy or ask your insurance agent to determine the limits of your policy’s coverage.
This type of coverage ensures your financial protection should your insured vehicle be damaged by something other than a collision. This typically includes coverage for fire, theft, wind, flood, and vandalism. Check your policy or ask your agent about what is included under your policy’s Comprehensive Coverage.
This means that you have been covered by insurance from one provider or another at all times, without any lapse in coverage (without being uninsured for any period of time).
The total amount and type of insurance. Examples of the various kinds of coverages include Bodily Injury, Property Damage, Collision, and Comprehensive.
How much of a claim you must pay before the insurance company pays the remaining balance.
The person physically operating the vehicle. A policy can have one or multiple drivers.
This outlines whether a person is or is not covered under your policy. See also: Rated Driver, Excluded Driver, and Listed Driver.
A person who is not covered on a personal auto insurance policy for any of the coverages on the policy. Rules and regulations regarding excluded drivers vary by state. Consult your agent for details.
Typically refers to a policy that provides liability coverage (Property Damage, Bodily Injury, Uninsured Motorist) as well as physical damage coverage (ex: Collision, Comprehensive, Rental Reimbursement).
An insurance product that pays for the difference between what you’ve paid and what you owe on your car’s lease or loan in the event that car is stolen or declared a total loss. Some restrictions apply, check your policy for details.
The location where your car is most often parked. This could be your actual garage, a street, an alley, etc. It can also refer to the zip code of the area where your car is kept when you aren’t driving it.
Relates to being held legally responsible, especially in a sense of money being owed. In insurance terms, liability coverage protects you from incidents where you are at fault. Some restrictions apply. Please check your policy for details.
This refers to a maximum amount of coverage. Most policies have limits on the various types of coverages (Liability, Comprehensive, Bodily Injury, etc.) they provide and these limits are expressed in dollar amounts. Please refer to your policy for more details.
Someone in your household (family member, roommate, or children) who is licensed to drive and is listed on your policy but may or may not be directly covered by your policy. Whether or not a listed driver is covered under your policy, they may still affect your policy rate.
An optional, predetermined limit for medical payments incorporated into your policy. These payments typically have a set maximum and are used to pay for medical bills stemming from a claim.
Any violation of the law committed while the vehicle is in motion.
An extention of car insurance available in certain U.S. states designed to cover medical expenses and, in some cases, other damages including lost wages. PIP is typically paid without regard to fault, and is also called “No-Fault Coverage”.
The person whose name is on the policy; the contract holder.
The length of time during which your insurance policy is in effect. Car insurance policies are typically written for 6 month or 12 month terms.
The place where you will live for the majority of the time your policy is in effect.
This typically refers to how you plan to use your vehicle. Examples of primary use include: work, business, pleasure, or farm use.
This insures you in the event that you are in an accident in which you damage someone else’s property. It may also pay for legal fees in the event you are sued as a result of damaging someone’s personal property. Consult your policy to determine if you have this coverage and if so, to what extent.
A driver who is named on and covered by an insurance policy.
In terms of your car insurance policy, this refers to a car provided to you for use while your insured vehicle is unavailable or undriveable. Check your policy for details.
Typically referred to as “Totaled”, this means that the cost to repair a vehicle is more than the current market value of that vehicle. It typically results in the insurer issuing a payment for the value of the car at the time of the accident.
If you are involved in an accident in which the driver at fault does not carry enough insurance to pay for damages to you or your vehicle, this type of coverage will pay whatever is not covered by the at fault driver’s insurance, up to a limit that you select. Consult your agent or your policy for details.
This coverage offers protection from damages related to accidents involving a driver who does not have car insurance. Coverages vary by policy, so consult your agent or your policy to determine what level of coverage you currently have.
Typically found directly next to the windshield on the driver’s side of the dashboard, this number identifies your car the way your social security number identifies you. A combination of 17 letters and numbers, it helps identify the make, model, and year of your car as well as keep track of the vehicle’s history.
Information pertaining to your insured vehicle including Make, Model, Year, Mileage, etc.