Car Insurance Glossary
Accident Forgiveness
An add-on that prevents rate increases after your first at-fault accident.
At-Fault
The driver legally responsible for causing an accident. Affects insurance premiums and claims.
Bodily Injury Liability (BIL)
Covers medical costs for others injured in an accident you cause.
Claim
A request to your insurer for payment after a covered loss (e.g., accident, theft).
Collision Coverage
Pays for repairs to your car after a crash, regardless of fault.
Comprehensive Coverage
Covers non-collision damage (theft, fire, vandalism).
Deductible
The amount you pay out-of-pocket before insurance kicks in.
Declarations Page
A summary of your policy details (coverage, premiums, deductibles).
Endorsement
A policy add-on or modification (e.g., roadside assistance).
Exclusion
Specific risks or scenarios not covered by your policy.
Full Coverage
A common term for policies combining liability, collision, and comprehensive coverage.
Gap Insurance
Covers the difference between your car’s value and loan balance if totaled.
Insurance Agent/Broker
A licensed professional who sells policies (agents work for insurers; brokers are independent).
Liability Insurance
Covers damage or injuries you cause to others.
Liability Limits
The maximum amount your insurer will pay for a claim (e.g., 100/300/50).
Named Perils Coverage
Protects against risks explicitly listed in your policy (e.g., hail, theft).
No-Fault Insurance
A system where each driver’s insurer covers their own injuries, regardless of fault.
Non-Owner Car Insurance
Covers drivers who rent or borrow cars but don’t own one.
Personal Injury Protection (PIP)
Covers medical bills for you and passengers, regardless of fault.
Premium
The amount you pay monthly or annually for coverage.
SR-22
A certificate proving you have insurance, often required after serious violations (e.g., DUI).
Telematics
Technology that tracks driving habits (e.g., speed, braking) to adjust rates.
Total Loss
When repair costs exceed the car’s value; the insurer pays its actual cash value.
Underinsured/Uninsured Motorist Coverage
Pays your costs if the at-fault driver lacks sufficient insurance.
VIN (Vehicle Identification Number)
A unique 17-digit code identifying your car’s make, model, and history.
Waiver of Depreciation
Guarantees full replacement cost (not depreciated value) for a new car if totaled.
Zero-Depreciation Cover
Excludes depreciation deductions for parts during claims. Common in comprehensive plans.
This glossary provides clear definitions of essential car insurance terms to help you navigate policies with confidence. Bookmark or share this page for quick reference!