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
- Deductible
The amount an insured person must pay before the insurance company pays the remainder of each covered loss, up to the policy limits.
- Defensive Driver Course
These are classes either offered through or approved by Departments of Motor Vehicles to enhance driving skills. These courses may make drivers eligible for discounts on their premiums. Courses taken for traffic school because of a moving violation are not eligible.
- Drive-Other-Car Endorsement
Optional coverage that broadens the definition of a covered auto to include non-owned vehicles the insured person operates.
- Driver Education
State accredited educational course that consist of at least 30 hours of professional classroom instruction.
- Driver Training
State accredited training course that consists of at least six hours of behind-the-wheel professional instruction.
- Earned Premium
The portion of a premium that has been "used up" during a policy term. With a one-year policy, half of the total premium has been earned after six months.
- Effective Date/Inception Date
The date that coverage begins on an insurance policy.
- Expiration Date
The date your coverage ends. There is usually a time of day associated with this date, for example, an expiration date of 5/1/2002 at 12:01am. This means your coverage ends one minute after midnight on the date listed.
- Extended Non-Owner Liability
An endorsement that provides broader liability coverage for specifically named people operating any non-owned automobile or trailer. It covers non-owned autos, use of autos to carry people or property for a fee, and individuals driving employer-furnished cars who do not own vehicles themselves.
- Family Automobile Policy
Now replaced by the Personal Auto Policy, the Family Auto Policy was a package policy in which both liability and physical damage protection to an insured's vehicle was offered under one policy.
- Financial Ratings
Financial ratings reflect a rating organization's opinion on the financial strength and ability to meet ongoing obligations to policyholders. The ratings organizations most commonly identified with the insurance industry are AM Best, Standard & Poor's and Moody's.
- Financial Responsibility Laws
Financial responsibility laws require owners and operators of autos to maintain enough money to compensate those they injure. Liability insurance is the most common way to satisfy these requirements.
- First Party Benefits
This pays policyholders and others covered by the policy in the event of injury, no matter who caused the accident. The benefits can include medical expenses, loss of income, funeral and death benefits. This may also be called Personal Injury Protection.
