Insurance Terms

Actuary – A person who computes insurance risks and premiums.

Adjuster – A person who is responsible for writing the repair estimate for your vehicle. He or she will also answer your questions about vehicle repair, rental vehicles, and loss settlements.

Agent – A person who sells insurance policies.

Application – A form you fill out with information about yourself that an insurance company will use to decide whether to issue you a policy and how much to charge.

Appraisal – A process that determines the value of your car or the extent of damage to it after an accident.

Bodily injury (BI) coverage – Pays damages for bodily injury or death resulting from an accident for which you are at fault and provides you with a legal defense.

Cancellation – Termination of an insurance policy by the company or insured before the renewal date.

Carrier – The insurance company or insurer.

Catastrophe – An event that causes massive devastation, such as a tornado, hurricane, flood or storms.

Claim – Any request or demand for payment under the terms of the insurance policy.

Claimant – A person who makes an insurance claim.

Collision coverage – Pays for damage to your car without regard to who caused an accident. The company must pay for the repair or up to the actual cash value of your vehicle, minus your deductible.

Comprehensive coverage – Physical damage other than collision. Pays for damage to or loss of your automobile from causes other than accidents. These include hail, vandalism, flood, fire, and theft.

Contract – In most cases, the term “contract” refers to an insurance policy. A policy is considered to be a contract between the insurance company and the policyholder.

Coverage – Protection and benefits provided in an insurance contract.

Damage – Loss or harm to a person or property.

Damages – Money that one party becomes legally obligated to pay to another party.

Declarations page (dec page) – The page in your policy that shows the name and address of the insurer, the period of time a policy is in force, a description of the vehicle, the amount of the premium and the amount of coverage.

Deductible – The amount the insured must pay in a loss before any payment is due from the company.

Discount – A reduction in your premium if you or your car meet certain conditions. For example, auto insurance discounts are given for proof of prior coverage, renewing your policy with Superior, selecting an auto-pay option, etc.

DWI and DUI – DWI (driving while intoxicated) and DUI (driving under the influence) are legal violations that appear on your driving record if you were found to be legally intoxicated or under the influence of drugs or alcohol while operating a motor vehicle. Both a DWI or DUI on your driving record will increase the cost of your insurance.

Earned premium – The portion of a policy premium that has been used to actually buy coverage, or that the insurance company has “earned.” For instance, if you have a six-month policy that you paid for in advance, two months into the policy, there would be two months of earned premium. The remaining four months of premium is called unearned premium.

Electronic Funds Transfer (EFT) – EFT is an electronic payment method that lets you pay your premiums with automatic deductions from your credit/debit card or checking account.

Endorsement – A written agreement attached to a policy expanding or limiting the benefits otherwise payable under the policy. Also known as a rider.

Estimate – An assessment of the cost to repair your damaged property.

Exclusion – Restriction in your insurance policy that limits and may exclude coverage for certain perils, persons, property, or locations.

Experience Letter – a document written by an insurance company that has insured you, stating what your record was with them as an insured. The letter of experience is normally recognized by other insurance companies as a letter of reference to establish your claims experience and how long you have maintained insurance for. This letter of experience is your former insurance company's way of "vouching" for you to new insurance companies who do not know you.

Expiration date – This date when your policy coverage runs out.

Flat Cancellation – The cancellation of an insurance policy or bond as of its effective date, before the insurer has assumed liability. This requires the return of paid premium in full since the insured has never been covered under the policy.

Full coverage – A common term that means that a policy has more than just Liability coverage

Garaging location – The place you primarily park your vehicle when you’re not using it. Generally, this is your primary residence.

Inspection – Verification of a vehicle’s physical condition.

Insurance ID Card – This card is issued by your insurer and contains basic information about your insurance policy. Some states require you to keep an insurance ID card in your vehicle. Also known as an Insurance Card.

Insurance Score – Used in the underwriting process in some states. An individual’s insurance score is frequently based, in part, on a person’s credit history.

Insured – A person or organization covered by an insurance policy.

Insurer – An organization that provides insurance.

Lapse – Termination of a policy due to non-payment of premiums.

Liability insurance – Pays for injuries to the other party and damages to the other vehicle resulting from an accident you caused. It also pays if the accident was caused by someone covered by your policy, including a driver operating your car with your permission.

Liability limits – The maximum amount your liability policy will pay. Your policy must pay at least $25,000 for each injured person, up to a total of $50,000 per accident, and $25,000 for property damage per accident. This basic coverage is called “25/50/25” coverage.

Lienholder – The person or institution that holds a security interest of your vehicle or home if you are financing it until it is paid off. You may have special insurance coverage requirements if you are financing your vehicle or home.

Limits – The maximum amount an insurance company will pay for damages or injuries that apply to the coverage. Most states have laws that specify the minimum limit that must be purchased for each required insurance coverage.

Loss – The amount an insurance company pays on a claim.

Loss of Use – Generally refers to the inability to live in your home, condo or apartment due to damage or destruction. Home insurance policies providing Loss of Use coverage pay towards alternate accommodations in a similar dwelling while repairs or construction are taking place following a covered loss.

Medical Payments (MedPay) coverage – Pays limited medical and funeral expenses if you, a family member, or a passenger in your car is injured or killed in a motor vehicle accident. Does not pay lost-income benefits, unlike personal injury protection (PIP).

Motor Vehicle Report (MVR) – A report from the agency that issues your driver’s license, listing accidents and violations that appear on your driving record. This report is used to verify information provided by insurance applicants and policyholders.

Named driver exclusion – An endorsement that provides that a policy does not cover accidents when a specifically named person is the driver.

Named driver policy – A policy that covers only the drivers specifically named in the policy. Generally, all other drivers are excluded from coverage under the policy.

Named insured – The first person in whose name the insurance policy is issued.

Named Perils – Named Perils are specified causes of loss covered by your homeowners, renters or condo insurance policies. Your insurance coverage will itemize the perils (risks) for which you are covered. Named Perils include such things as wind, fire, hail, electrical surges, lightning, explosion, theft, vandalism and other potential causes of damage to property or people.

National Flood Insurance Program (NFIP) – The National Flood Insurance Program (NFIP) through the Federal Emergency Management Agency is the primary provider of flood insurance. Flood insurance through The National General Insurance Homeowners Program is financially backed by the U.S. Government through the National Flood Insurance Program. National General Insurance acts as a "Write-Your-Own" company on behalf of the NFIP. "Write-Your-Own" companies sell and service flood policies and the NFIP pays the claims.

No-fault insurance – Can pay for your medical treatment, lost wages, or other accident-related expenses regardless of who caused the accident. Not available in all states.

Non-owner policy – Insurance coverage that offers liability, uninsured motorist, and medical payments to a named insured who does not own a vehicle.

Non-renewal – A decision by an insurance company not to renew a policy.

Open Perils – This "special" policy protects your home from all perils except those specifically excluded, such as nuclear war, flood, and earthquake.

Payment plans – Your auto insurance premium can be paid using one of our installment payment plans.

Personal injury protection (PIP) – Pays limited medical and funeral expenses if you, a family member, or a passenger in your car is injured or killed in a motor vehicle accident. Also pays lost-income benefits, unlike medical payments coverage.

Policy – A contract between you and the insurance company.

Policyholder – The person or entity listed on the policy declarations page.

Policy term – The period a policy is in force, from the beginning or effective date to the expiration date.

Premium – The amount paid by an insured to an insurance company to obtain or maintain an insurance policy.

Primary residence – The place where you will live for the majority of your policy term.

Primary use – How you typically use your vehicle, such as to/from work, business, pleasure or farm use.

Principal driver – The person who drives the car most often is the principal driver.

Property Damage Liability coverage (PD) – If an insured person is legally liable for an accident, this coverage pays for damage to others’ property resulting from the accident. It also pays for legal defense costs if you are sued.

Quote – A statement of the premium that will be charged for insurance coverages based on specific information provided by the person requesting the quote including drivers, vehicles, and driving record.

Rental reimbursement coverage – Pays a set daily amount for a rental car if your car is being repaired because of damage covered by your auto policy.

Rider – A written agreement attached to the policy expanding or limiting the benefits otherwise payable under the policy. Same as an “endorsement.”

Reinstatement – The process by which an insurance company puts a policy back in force after it lapsed because of nonpayment of renewal premiums.

Renewal date – The date that your insurance policy expires and the date that your renewed policy will begin.

Rental reimbursement – Optional coverage that helps pay rental vehicle costs when your insured vehicle is disabled as the result of a covered accident or loss.

SR-22 – A document required by the court that demonstrates proof of financial responsibility for persons convicted of certain traffic violations.

Third Party Coverage – The “third party” is anyone other than the insured or the insurance company who might potentially be involved as the result of an accident involving your covered vehicle. Third Party Coverage protects you against possible lawsuits that might be filed by a third party.

Total Loss – Automobile or property damage sometimes requires more money to repair than the value of the vehicle or the property involved. Because repair costs would exceed the value of the car or property, the loss is considered “total.”

Towing and rental coverage – Pays for towing charges when your car can’t be driven. Also pays toward the cost of a rental car while the insured vehicle is being repaired.

Underwriting – The process an insurance company uses to decide whether to accept or reject an application for a policy.

Uninsured Motorist Coverage (UM) – If a driver or owner of a vehicle does not have insurance and is legally liable for an accident, UM covers injuries, including death, that you, your resident relatives, and occupants of your insured vehicle sustain, up to the limits you select.

Underinsured Motorist Coverage (UIM) – If a driver or owner of a vehicle is legally liable for an accident but does not have enough insurance, UIM covers injuries, including death, that you, your resident relatives, and occupants of your insured vehicle sustain, up to the limits you select.

Uninsured/Underinsured Motorist Property Damage Coverage (UMPD) – If driver or owner of a vehicle is legally liable for an accident but does not have insurance or does not have enough insurance, UMPD covers damage to your insured vehicle, up to the limits you select. In some states, UMPD is available as an alternative to Collision coverage.

Vehicle Identification Number (VIN) – A combination of 17 letters and numbers that are used to identify the make, model and year of a car. The VIN for a vehicle is usually found on the driver’s side of the dashboard, or on the vehicle registration or title.