Nothing is more overwhelming than receiving a new, huge insurance policy and not understanding the industry jargon contained within it. That is why we have put together this short auto insurance glossary of the most common terms. We are sure you have heard of some of these before, but perhaps you are a little unclear about what they truly mean or are referring to. We would like to help! If there are any insurance terms not on this list which continue to befuddle you, let us know and we can translate them out of insurance gibberish into everyday language.
The person who primarily caused an accident is deemed the “at fault” driver and their insurance company is who is responsible for the damages. In some scenarios it can be easy to identify (ex. a driver who is reversing and hits another vehicle) or it can be difficult to identify (ex. two reversing drivers who hit each other). In some cases, the two responsible insurance companies determine a percentage of fault based on all of the facts obtained about the accident.
Formal notice given to your insurance company that you have been involved in some sort of accident or experienced a loss which you believe to be covered by your insurance policy.
The person from your insurance company who is assigned to investigate and settle your claim. It is important to note that we, your insurance agent, are not your claims adjuster and that we cannot make decisions on fault or applicable coverage. However, if you are having any trouble with your claim, please give us a call and we will try to assist.
CLUE stands for Comprehensive Loss Underwriting Exchange. This report is pulled before issuing a policy and shows a history of claims filed by all drivers on a policy. It shows the date, person involved, and amount paid by the insurance company. You may have forgot about an accident, but this report will be sure to find it.
This covers your vehicle in the case of any sort of physical damage caused by colliding with another object whether it be another vehicle, building, curb, or even a person. This coverage also covers your vehicle in the case of a roll over (collision with the ground) and it is usually purchased with a deductible.
This covers your vehicle for any loss that is not caused by collision, such as vandalism, fire, theft, or falling objects. “Comp” also covers collision with an animal. These losses usually do not affect your premium as many times, the loss was out of your control. This is also usually purchased with a deductible.
Any damage done to yourself, your vehicle, or other people or property within your vehicle that is deemed to be covered under your insurance policy.
This is typically the first page or pages of your insurance policy and gives you all of the most important information about your policy. It summarizes all of the coverages you have, the dates for which they are effective, and any other unique aspects of your policy.
Deductibles are most common for the comprehensive and collision coverage of auto insurance, but they are used for other coverages as well. A deductible is used to reduce the responsibility of the insurance company and thus reduce your insurance premium. If you purchase a $500 deductible, then you are agreeing to pay for the first $500 worth of damages out of your own pocket. The insurance company will cover any amount exceeding that $500 up to the value of the vehicle or the cost of repairs, whichever is lower.
Any sort of change or optional coverage added to your policy. You may endorse your policy at any time during the term by requesting to add a new driver or vehicle, change your address, adjust your limits, or any other such modification.
Any specifically identified situations in which the insurance company refuses to cover your losses. For example, standard auto policies typically exclude coverage if an insured has intentionally caused injury or property damage. Exclusions are listed in your policy provided by the insurance company when you purchase coverage.
Us! We are an independent agency because we are not directly employed by any insurance company, yet represent many. Our interests are in searching for the best coverage, service, and rate for our customers rather than trying to fit each customer into one company’s program.
Liability Bodily Injury Coverage
This coverage, from the at-fault driver’s policy, pays the costs for medical treatment for anyone hurt in the accident (outside the at fault driver’s vehicle) up to the coverage amount purchased. These payments can be made for anything from minor bumps and bruises up to funeral costs in the case of death. Policies usually show two limits for this coverage (example: 100/300). The first number is the maximum coverage per person ($100,000 in our example). The second number is the maximum coverage available per accident ($300,000 in our example).
Liability Property Damage Coverage
Similar to Bodily Injury Coverage, this coverage is for any physical damage caused by your auto to others’ property. When using the common coverage short-hand, this limit is the third number (example: 100/300/50). In this case, the policy provides up to $50,000 of coverage per accident for property damage.
Medical Payments Coverage
This is an optional coverage that is purchased to cover the medical payments of anyone covered under your policy (including yourself, your family, and your passengers) in the event of an accident, regardless of fault. Some people opt not to purchase this coverage because they feel that their health and life insurance suffice.
Motor Vehicle Report (MVR)
For every policy we issue, we pull an MVR to see the driver’s licensing status and history of violations, suspensions, and other infractions. Insurance companies use these reports to determine the likelihood of future accidents and hence determine the premium you must pay.
The amount you pay for your insurance policy. This is typically charged on a monthly, quarterly, semi-annual, or annual basis.
This is the full written agreement between you and your insurance provider. It contains all of the situations in which you are and are not covered by the policy. Although it is a good idea to read this so you know exactly what is covered, it can be quite tedious and may put you to sleep. Be sure to save it for a reference in case you do have a loss.
Roadside Assistance (RSA)
This coverage reimburses you for towing and labor costs associated with a tow, lockout service, battery jumpstart, or flat tire change. Limits vary by company. This is an optional coverage which many choose not to purchase in order to save money on their premium; however, it usually is a minimal cost that more than pays for itself in one use.
Uninsured/Underinsured Motorist Bodily Injury Coverage (UMBI)
If the person that hits you does not have any insurance or has insufficient insurance to cover your medical costs, this coverage will kick in so that you hopefully don’t have to pay the remaining balance out of your own pocket. Coverage can be purchased up to the limits you carry for liability bodily injury. Because 1 in 6 Colorado drivers do not have insurance, we will always recommend you purchase this coverage at the maximum available.