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Auto Insurance Glossary of Terms

We understand that auto insurance can sometimes be filled with unfamiliar terms.  We've created this auto insurance glossary to help you quickly find the terms meant to explain your coverage and only leave you with more questions. Just click on the section of the alphabet that corresponds to the first letters of the words that puzzles you.

A-C | D-F | G-L | M-O | P-R | S-T | U-Z

• Additional Insured or Additional Interest
  A person or an organization, other than the named insured or covered person, who is protected under the named insured's auto policy. If an auto is leased, the leasing company may want to be listed as an Additional Insured as well as a lien holder or loss payee. This protects the leasing company if it's named in a lawsuit for an accident caused by a policyholder.



• Anti-Theft Device
  Devices designed either to reduce the chance an auto will be vandalized or stolen, or assist in its recovery. Examples include car alarms, keyless entry, starter disablers, motion detectors, parts of the vehicle etched with the Vehicle Identification Number, and recovery systems.



• Assigned Risk
  A risk not ordinarily acceptable to insurers which is, according to state law, assigned to insurers participating in a plan in which the insurers agree to accept their share of these risks.



• Automobile Insurance
  A form of insurance that protects against losses involving autos. Different types are available depending on the needs and wants of those buying policies. Examples of coverage types include: bodily injury liability, property damage liability, medical payments, and collision and comprehensive coverage for physical damage to the insured's vehicle.



• Automobile Insurance Plans
  The name for "assigned risk" plans. These are plans set up and monitored by the state to help people who are unable to secure auto insurance through standard insurance carriers. See Assigned Risk.



• Basic Auto Policy
  Although still used today to insure substandard risks, two-wheel motorized vehicles, and commercial autos, the Basic Auto Policy has been primarily replaced by the Personal Auto Policy, which combines both physical damage coverage and liability insurance for claims arising out of the ownership or use of a vehicle.



• Basic Limits of Liability
  The least amount of liability coverage that can be purchased, which is generally equivalent to the minimum amount required by state law. In determining rates, a carrier will use the basic limits to develop the base rates. If an insured person wants higher limits, the carrier applies an increased limits factor to the base rate in calculating the new premium for the increased coverage.



• Bodily Injury Liability
  Legal liability for causing physical injury or death to another.



• Collision Insurance
  This covers loss to the insured person's own auto caused by its collision with another vehicle or object.



• Combined Single Limit
  Bodily Injury and Property Damage coverage expressed as one single amount of coverage.



• Commission
  That portion of the premium paid to the agent as compensation for the agent's services.



• Comprehensive Coverage
  Covers damage to a vehicle caused by an event other than a collision or overturn. Examples include fire, theft, vandalism, and falling objects.



• Continuous Coverage or Continuous Liability Insurance
  Continuous coverage refers to the length of time you have maintained insurance on your vehicle.



• Covered Person
  This refers to the named insured, spouse, resident relatives, etc. that are insured under a policy contract.



• Customized Equipment/Special Equipment
  Items not included in standard insurance options available for cars. These may include extra electronic equipment, special paint or exterior items, or amenities added to the inside of a van or truck.