Are
you looking for ways to make sense of the "fine print"? Understanding
insurance related terms can be difficult to say the least. You can use
this glossary as you would a dictionary, clicking on the appropriate
letter to find the definition that you are looking for. Or, you can
browse this glossary starting here. Note: The definitions given
with your policy give more specific details about your coverage.
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Accidental Death
Accidental death
coverage is sometimes a part of Personal Injury Protection
or First Party Benefits plans.
If a covered
individual dies from accident-related injuries, this coverage provides a
payment to the insured's designated beneficiary.
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Actual Cash ValueThe
current value of property, which is the cost to replace that property less
the amount it would have depreciated since the original
purchase date.
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Adjuster
An adjuster is the
person who investigates and settles claims on behalf of the insurance
company.
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Agent/Broker
Agents and brokers both sell and
manage insurance for clients. Agents are the authorized representatives of
an insurance company or companies, while brokers are the authorized
representatives of parties seeking insurance.
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Anti-Theft Recovery System
This system consists
of an electronic device that is installed in a concealed area of your car.
If your car is stolen, you can activate the device and it will emit a
signal that police cruisers equipped with appropriate sensing equipment
can use to locate your vehicle.
The system can be
effective over a radius of several miles, depending on local geography.
Ask your car dealer or nearby police department which brand of recovery
systems are supported in your area.
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Benefit
A benefit is the amount paid by
an insurance company to you or your beneficiary when you file a claim.
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Bodily Injury
Liability Coverage
Bodily injury liability coverage
protects you if you are held responsible for injuring someone else in an
auto accident.
This coverage helps pay for the
injured party's medical expenses, pain and suffering and lost wages.
Bodily injury liability may also help pay your expenses in a related
lawsuit.
The amount paid by bodily injury
liability coverage is capped at the limit you purchase.
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Business Use
This means that you
use your car for business purposes such as sales, service, or delivery
calls, work-related errands (such as trips to the bank or post office),
and other work-related driving. Commuting to and from work is not
considered business use.
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Claim
A claim is a policyholder's
request for reimbursement of a loss that is covered by the their
insurance.
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Collision
Coverage
Collision coverage helps pay for
auto repair or replacement costs if your car hits another vehicle/an
object or if your car rolls over.
The maximum amount paid for
repair or replacement is the car's actual cash value,
less the amount of the deductible you select.
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Collision
Deductible Waiver
This coverage pays the
deductible for your collision coverage
if you are involved in an accident in which an uninsured motorist is held
legally responsible for the accident.
The collision deductible waiver
is not available in all states Where available, this coverage must be
purchased in conjunction with collision coverage.
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Commuting
If you primarily use
your car for commuting, this means that you are typically driving it to
and from work or school on a regular basis
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Comprehensive
Coverage
Comprehensive coverage helps pay
for damage to your car resulting from fire, certain natural disasters,
falling objects, and vandalism. Theft is also covered.
The maximum amount paid for
repair or replacement is the car's actual cash value, less the amount of a
deductible you select.
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Continuously
Insured
The length of time you have been
continuously insured is the number of years you have been covered by one
or more insurance companies without any lapse in coverage.
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Declarations
The declarations page shows the
factual information essential to the insurance contract: the
policyholder's name and address, a description of the insured property,
the premiums to be paid, as well as the limits and deductibles for
different coverages.
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Deductible
For some insurance coverages,
you are asked to choose a deductible. The deductible is the portion of
losses that you agree to pay in the event of an accident.
Though choosing a higher
deductible can substantially lower your insurance premium, if an accident
occurs, you must pay the full, pre-established amount of the deductible in
order to receive payment from your insurance provider.
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Defensive Driver and Driver Improvement Courses
These courses
consist of defensive driving training for drivers of all ages as well as
"mature driver safety courses" intended for drivers age 55 and over.
You may qualify for
a discount on your insurance premium if you have completed such courses.
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Depreciation
Depreciation is the decline in
an object's value due to age, wear and tear, or obsolescence.
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Effective Date
The effective date is the date
your insurance coverage begins. You are not covered prior to a policy's
effective date.
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Emergency Road
Service
This optional coverage pays a
fixed amount toward vehicle towing if your car breaks down or if it is
disabled in an accident.
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Endorsements
Also known as riders,
endorsements are changes to the original insurance contract, such as a
different deductible or an additional car or driver.
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Exclusions
Exclusions are situations that
are not covered by a given insurance policy. Specific exclusions are
listed on your insurance policy.
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Extraordinary Medical
Extraordinary
medical coverage is sometimes a part of Personal Injury Protection or
First Party Benefits plans.
Extraordinary
medical coverage protects you in the event you suffer accident-related
injuries that require serious and/or long-term medical care. Extraordinary
medical coverage begins once you have exhausted the limit on your standard
medical benefits coverage.
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Full Coverage
Full coverage denotes an
insurance policy containing all coverage legally required in a given
state. It does not imply the policyholder will always be fully covered.
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Garaging Location
The garaging location is where
an insured vehicle is primarily parked. This location is usually the ZIP
code of the policyholder's primary residence.
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Income Loss
Income Loss coverage
is sometimes a part of Personal Injury Protection or First Party Benefits
plans.
Income loss coverage
protects you if you are unable to work due to accident-related injuries.
It helps you recover portions of your lost salary and other expenses you
may incur as you try to return to work.
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Indemnity
An indemnity is a
pre-determined sum paid for a covered loss. To indemnify is to make
compensation to for damage, loss or injury suffered.
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Insurance Claim
Report
Insurance claim reports provide
details about claims you or other insured drivers have filed with
insurance companies. These reports are provided by independent consumer
reporting agencies that collect claim information from a variety of
insurance companies. One of the most common agencies issuing such reports
is C.L.U.E., the Comprehensive Loss Underwriting Exchange.
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Insurance Score
Insurance scores are based on
analytical models that objectively measure the relative likelihood of
future insurance losses based on your credit history. These scores and
analyses of their significance are provided by independent consumer
reporting agencies.
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Insured
The insured is an individual
covered by a given insurance policy.
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Liability
Liability is a term
that broadly means legal responsibility. If you run a stop sign and hit
another car, you may be found liable for the damages to the other driver's
auto.
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Liability
Coverage
Liability coverage protects you
from having to deplete your assets to pay for damages if you are held
responsible for injuries or damages arising from an auto accident.
The two main types of liability
coverages in an auto insurance policy are bodily injury and property
damage.
Arizona law
currently requires vehicles to carry a liability insurance policy with a
minimum of $15,000 for one person and $30,000 total per accident for
Bodily Injury coverage. This policy also must carry a minimum of
$10,000 for property damage coverage. This is often referred to as
"15/30 10".
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Limits
Limits are the maximum amount an
insurance company will pay for a covered loss. While you can choose the
limits you want to purchase for certain coverages, some states require you
to buy limits no lower than a certain amount.
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Medical Benefits
Medical Benefits
coverage is sometimes a part of Personal Injury Protection or First Party
Benefits plans.
Medical expenses
that are the direct result of accident-related injuries are covered.
Covered medical expenses are limited to the amounts you specify.
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Medical Payments Coverage
This coverage pays
medical bills and/or funeral expenses if a covered driver and/or
accompanying passengers are injured or killed while in an insured vehicle,
regardless of fault in an accident.
This may also cover
policyholders and their family members when in others' vehicles, or when
policyholders and their family members are on foot and hit by a car.
The amount paid by
medical payments coverage is capped at the limit you select.
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Motor
Vehicle Report
A Motor Vehicle
Report (MVR) provides information on your driving record. This report
includes accidents and moving violations. Insurance carriers obtain MVRs
from states where you or other insured drivers have been licensed to
drive.
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National Credit File
The National Credit
File provides objective consumer information regarding the financial
history of an individual. Information contained in this report is often
used to calculate insurance scores.
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Non-Passive Alarm
A non-passive alarm
must be manually activated every time you leave the car. If someone
attempts to open your car, the alarm sounds, and the system disables the
automobile's starter, ignition system, and/or fuel circuit.
You may qualify for
a discount on your insurance premium if your car is equipped with such an
alarm.
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Occasional Driver
An occasional driver is a driver
who is not the most frequent driver of the insured vehicle.
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Passive Alarm
Passive alarms are
automatically activated and will emit a warning sound when someone
attempts to open your car. Once the passive alarm has been triggered, the
system disables the automobile's starter, ignition system, and/or fuel
circuit.
You may receive a
discount on your insurance premium if your car is fitted with such an
alarm.
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Personal Injury
Protection
Personal Injury
Protection, or PIP, is a set of coverages available only in certain
states, where it is often mandatory.
PIP generally
includes expanded coverage of medical costs and, in some states, PIP also
pays for lost wages and similar losses.
Specific protections
afforded by this coverage and limits on PIP payments vary widely from
state to state.
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Pleasure Use
If you use your car
for pleasure, this means that you are typically driving for fun, with no
regular commuting or business use.
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Policy Expiration
Date
The policy expiration date is
the date coverage under a current insurance policy ends if the policy is
not renewed. The expiration date can be found on the declarations page of
a policy, on a proof of insurance card, or on a recent renewal notice.
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Policy Term
A policy term is the length of
time an insurance policy is valid.
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Premium
Money that is related to payment
for insurance coverage.
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Primary Driver
The primary driver
is the person who drives the car most frequently.
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Primary Use
A vehicle's primary use is how
the vehicle is typically used. This use may be characterized as commuting,
business use, or pleasure use.
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Primary Policyholder
The primary
policyholder is the person who serves as the main point of contact with
your Agent.
Typically, the
primary policyholder is also the person billed for the policy,
though any person listed on the policy can make the premium payment.
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Property Damage Liability Coverage
Property damage
liability coverage protects you if you are held responsible for damaging
someone else's property in an auto accident.
Property damage
coverage helps you reimburse another person for their damaged property
(such as a car, a fence, or a home). This coverage also helps pay your
expenses in a related lawsuit.
The amount paid by
property damage liability coverage is capped at the limit you select.
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Rental Car Reimbursement
Rental car reimbursement is an
optional coverage that helps pay your rental car expenses if an insured
vehicle is damaged or stolen and you require a rental car.
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SR-22
An SR-22 is a document that
shows proof of financial responsibility. Courts may require an SR-22 for
people convicted of certain traffic violations.
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Secondary Driver
A secondary driver
is a driver who is insured for driving a covered vehicle, but is not the
primary driver. A secondary driver is also sometimes known as an
occasional driver.
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State
Liability Limits
Arizona law
currently requires vehicles to carry a liability insurance policy with a
minimum of $15,000 per person and $30,000 per accident for Bodily Injury
coverage and a minimum of $10,000 for property damage coverage.
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Steering Restraint
A steering restraint
is a durable collar or shield fitted to the upper and lower casing of your
car's steering column. The collar makes it more difficult for potential
thieves to access, or "hotwire" your car's ignition system.
You may qualify for
a discount on your insurance premium if your car is fitted with a steering
restraint.
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Tort
Tort is a legal term
used to describe instances when someone is deemed legally responsible for
injuring another person or damaging his/her property.
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Towing Coverage
This optional
coverage pays a fixed amount toward vehicle towing if your car breaks down
or if it is disabled in an accident.
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Underinsured Motorist Bodily Injury Coverage
Underinsured
motorist bodily injury coverage is optional in the state of Arizona.
This coverage pays
for your medical expenses, lost wages, and other damages when you or your
passengers are injured in an accident caused by a driver who has
insufficient insurance coverage.
This coverage
typically pays the difference between your coverage and the other driver's
bodily injury coverage. The amount paid by underinsured motorist bodily
injury coverage is capped at the limit you select.
This coverage does
not apply to damage to your vehicle.
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Uninsured Motorist Bodily Injury Coverage
Underinsured
motorist bodily injury coverage is optional in the state of Arizona.
This coverage pays
for your medical expenses, lost wages, and other general damages when you
or your passengers are injured in an accident caused by a driver who has
no insurance coverage. Uninsured motorist coverage also pays for injuries sustained
in hit-and-run accidents.
The amount paid by
uninsured motorist bodily injury coverage is capped at the limit you
select.
This coverage does
not apply to damage to your vehicle.
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VIN
The VIN, short for vehicle
identification number, is the unique 17-digit number found on every car.
It contains the vehicle's serial number, as well as abbreviations for the
make, model, and year.
The number appears on your
vehicle registration card. It is also engraved in your car, near the base
of the windshield on the driver's side dashboard and/or on the edge of the
driver's side door.
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