30 terms defined in plain English. Every term linked inline from the rest of this site.
Liability CoveragePays for bodily injury and property damage you cause to others in an at-fault accident. Expressed as BI-per-person / BI-per-accident / property-damage (e.g. 25/50/25). Does not cover your own vehicle or injuries.Bodily Injury Liability (BI)Covers medical expenses, lost wages, and legal costs for others you injure in an at-fault accident. Expressed as a per-person and per-accident limit (e.g. $50,000 per person / $100,000 per accident).Property Damage Liability (PD)Covers damage you cause to another person's vehicle, fence, building, or other property. The third number in a split-limit policy (e.g. 25/50/25 means $25,000 PD).PIP (Personal Injury Protection)Covers your own medical expenses and sometimes lost wages after an accident, regardless of fault. Required in no-fault states (FL, MI, NY, NJ, PA, KY, MA, ND, MN, HI, UT, CO). Sometimes called 'no-fault insurance'.MedPay (Medical Payments)Similar to PIP but narrower. Covers only medical expenses for you and passengers, not lost wages or non-medical costs. Available in most states; not a no-fault substitute.UM (Uninsured Motorist Coverage)Pays when you are injured by a driver who has no insurance. About 14% of US drivers are uninsured. Required in some states; strongly recommended everywhere.UIM (Underinsured Motorist Coverage)Pays when the at-fault driver's liability limits are too low to cover your damages. Stacks with BI to fill the gap. Often purchased alongside UM.Collision CoverageCovers repairs or replacement of your own vehicle after a collision with another vehicle or object, regardless of fault. Required by lenders. Generally worth keeping while your vehicle is worth more than 10x the annual collision premium.Comprehensive CoverageCovers non-collision damage to your vehicle: theft, vandalism, fire, flood, hail, animal strikes, falling objects, broken windshield. Often called 'other than collision'. Typically paired with collision.DeductibleThe amount you pay out-of-pocket before insurance covers a claim. Common values: $250, $500, $1,000, $2,000. Higher deductible = lower monthly premium. The self-insurance trade-off.PremiumThe monthly (or annual) amount you pay for insurance coverage. What you pay before a claim. Distinct from deductible (what you pay during a claim).Policy TermThe period your insurance policy is active, typically 6 months or 12 months. Rate changes only happen at renewal (end of policy term).Declaration Page (Dec Page)The summary page of your insurance policy listing covered vehicles, named drivers, coverage types, limits, deductibles, and premium. The 'cover sheet' of your policy.Endorsement / RiderAn add-on or modification to a standard policy. Examples: rental car reimbursement, roadside assistance, gap insurance, rideshare endorsement.SR-22A certificate of financial responsibility filed by your insurer with your state DOI, proving you carry the minimum required insurance. Required after DUI, multiple violations, or driving uninsured in most states. Not insurance itself; a filing status.FR-44 (Florida and Virginia)A higher-coverage financial responsibility certificate required in Florida and Virginia after DUI. FR-44 requires higher limits than SR-22 (100/300/100 in Florida, 50/100/40 in Virginia).No-Fault InsuranceSystem where each driver's own insurance pays their own medical bills after an accident, regardless of who caused it. PIP is the no-fault coverage mechanism. States with no-fault: FL, MI, NY, NJ, PA, KY, MA, ND, MN, HI, UT, CO (some are 'choice' no-fault).At-Fault Insurance (Tort)System where the at-fault driver's liability coverage pays for others' injuries. The majority of US states use at-fault. At-fault accidents raise your premium at renewal.Tort Threshold (No-Fault States)In choice no-fault states, drivers can sue the at-fault driver only if injuries exceed a threshold (serious injury, $3,000 medical, or specific injury types depending on state). Below the threshold, PIP handles it.Gap InsuranceCovers the difference between your vehicle's actual cash value (ACV) and the remaining loan balance if your car is totalled. Important in the first 2-3 years of a loan when you owe more than the car is worth.Accident ForgivenessA policy feature (optional or included) where your first at-fault accident does not trigger a rate increase at renewal. Offered by Progressive, GEICO, Allstate, and others. Read terms carefully -- applies to first incident, not subsequent ones.Telematics / UBI (Usage-Based Insurance)Driving behaviour monitoring programs (Root, Progressive Snapshot, Allstate Drivewise, State Farm Drive Safe & Save) that track hard braking, acceleration, speed, and sometimes night driving. Top-quartile safe drivers can save 10-30%. High-risk drivers may see no discount or slight increases.Credit-Based Insurance ScoreA score derived from your credit history (distinct from your FICO credit score) that insurers use to predict claim likelihood. Legal in most states; banned in CA, HI, MA, MI. A poor credit-based score can add 20-100% to your premium where legal.ClaimA formal request to your insurer to pay for a covered loss (accident, theft, hail damage). Filing a claim for a small loss can cost more than the claim payout if it raises your premium at renewal. Consider the break-even before filing.Claim AdjusterThe insurance company employee (or independent contractor) who investigates a claim, determines fault and coverage, and calculates the settlement offer.Total LossWhen the cost to repair a vehicle exceeds a threshold of its actual cash value (typically 70-80%, varies by state) after an accident. The insurer pays ACV minus deductible and takes the vehicle.ACV (Actual Cash Value)The market value of your vehicle at the time of a claim, accounting for depreciation. ACV is what collision and comprehensive pay out in a total loss. Different from replacement cost (what a new equivalent vehicle costs).Stacked vs Unstacked UM/UIMStacked UM/UIM multiplies coverage across all vehicles on a policy (e.g. 2 vehicles x $100K UM = $200K effective coverage). Unstacked limits UM to one vehicle's limit. Stacking is allowed in some states, banned in others.BundlingPurchasing multiple insurance types (auto + home, auto + renters) from the same carrier. Saves 5-25% on each policy at most carriers. One of the most reliable discounts available.Named Driver ExclusionA policy endorsement that explicitly excludes a specific driver from coverage. If the excluded driver has an accident, the policy does not cover it. Used by carriers to exclude a high-risk household member.