Sometimes auto insurance agents, brokers and companies use words we don’t understand – here’s a comprehensive list for you describing all the terms that you may face when you talk to your agent.
Actuary: An expert that appraises, assesses and administers statistical data in order to establish rates and rating methods and determine the risks related with policies.
Adjuster: An expert employed by the insurance companies to evaluate the losses of their policy holders and settle claims.
Agent: A person who sells insurance – you can have an agent that represents only one insurance company or many.
Appraisal: An inspection on your vehicle that determines the insurable value of your vehicle or the amount of damage done to your vehicle.
Arbitration: A decision by a third party for the insurance company and the insured to agree on.
Arson: The purposeful setting of a fire.
Binder: Temporary insurance coverage that is granted before the actual auto insurance policy is written.
Broker: A professional person that is the go between for the customer and the insurance company.
Collision insurance: An auto insurance policy that insures and covers damage to the policy holder’s vehicle that was sustained in a car accident with another vehicle or property.
Comprehensive insurance: An auto insurance policy that covers damage to the policy holder’s vehicle that was not sustained in a motor vehicle collision, such as acts of God, impacts with an animal, fire, theft or other damage.
Compulsory insurance: The law requires that you have a minimum level of insurance. This is true throughout the United States and Canada.
Deductible: The amount the policy holder will pay when they make a claim on their collision or comprehensive insurance policy.
Fraud: Obtaining payment from the insurance company by lying about the cause of the claim.
Liability insurance: The part of your insurance policy that pays for the damages done to other people and their property. This extends to cover medical expenses, death benefits in the event of a fatality and reparation costs on vehicles and buildings as well as other property.
Limits: This is the maximum dollar amount that your insurance company will pay out in a year for your insurance coverage.
Loss of use: Auto insurance that enables you to have a rental car while yours is being repaired or replaced.
No-fault insurance: A policy that pays for each driver's injuries regardless of who is at fault in the collision. This insurance varies from state to state.
Premium: The amount of money that you pay for your auto insurance.
Total loss/Totaled: The absolute destroying of a vehicle so that it is not drivable or fixable. An adjuster will consider your vehicle a total loss if the cost to repair it exceeds 60 per cent of the vehicle’s value. The percentage listed can vary from insurance company to insurance company – some have higher percentages while others use a lower percentage.
Void: This states when your insurance policy is free from being legally binding. You can have your insurance voided or canceled for many reasons, including non-payment or fraud.