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Bodily injury liability insurance: Insurance that covers you if you
injure or kill someone in an accident.
Collision Insurance: Coverage that pays for damage to an insured’s
vehicle caused by collision with another auto or object.
Comprehensive Insurance: Coverage that pays for damage to an insured’s
vehicle caused by incidents other than collision, including fire, severe
weather, vandalism and theft.
Deductible: The portion of a claim paid by the insured before payment by
an insurance company; an amount stated in the policy.
Discount: A deduction given to an insured for actions or items that
lower risk.
Gap Insurance: Coverage that pays the difference between what you owe on
a car loan or lease and what your insurer pays if your car is totaled in an
accident.
Indemnity: Compensation to a victim for a loss.
Insurance: A method of transferring the risk of potential loss in
exchange for a premium payment.
Liability Insurance: The insurance that covers damages for which you are
responsible (see bodily injury liability and property damage liability).
Limit of Liability: The maximum amount of damages that the insurer is
responsible for as specified in your policy.
Loss Experience: Claims made by individuals in a particular underwriting
class.
No-Fault Insurance: Coverage that allows claimants to collect from their
own insurance company following an accident, regardless of who was
responsible for damages. Not offered in all states. (Note: Maryland, New Jersey
and Pennsylvania are no-fault states. North Carolina, Tennessee and Virginia
are not.)
Premium: The amount charged for insurance coverage for a set period of
time.
Property Damage Liability Insurance: Insurance that protects you if you
damage another person’s property in an accident.
Rate: The cost of a unit of insurance.
Surcharge: An extra premium charge for increased level of risk, such as
a violation, license suspension, or accident.
Underinsured Motorist Coverage: Coverage that protects you if you are in
an accident in which damages exceed the coverage held by an at-fault motorist.
Underwriting: The process used by insurance companies to identify risks
and classify them so that they can set appropriate rates.
Underwriter: An employee of the insurance company who has training and
experience in identifying classes of risk and determining appropriate rates.
Uninsured motorist coverage: Coverage that protects you if you are an
accident in which an uninsured driver is at fault.
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