AAA Insurance

Glossary of insurance terms & definitions

Car keys on automobile insurance document
Every industry has a unique language; insurance is no exception

Below are key insurance definitions and terms you might come across as you consider purchasing an insurance policy.

 

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A

Accidental death and dismemberment

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Coverage which applies to an insured and pays if death, loss of sight, or dismemberment of the foot, hand or whole finger occurs as a result of a covered loss. 

Actual cash value

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The fair market value of property: replacement cost minus depreciation.

Adjuster

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The person(s) responsible for evaluating an insurance claim to determine the insurance company's liability under the terms of an owner's policy.

Aftermarket parts

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Replacement parts made by a company other than the car's original manufacturer.

Agent

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A representative who sells insurance on behalf of the company.

Altered, Modified, or Customized Vehicle

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A change to the policy which alters the contract for instance by adding or replacing types of coverages, modifying limits or changing the polciy address . 

Amendment

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A change to the policy which alters the contract by adding or replacing coverage. 

Anti-theft device

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A device that prevents the vehicle from being driven and deters vehicle theft. 

Appraisal

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An inspection and report completed by a qualified appraiser to determine the value of property or the extent of damage.

Appraiser

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A person who inspects and writes a repair estimate for damaged property. 

Arbitration

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A process of having an impartial third party settle a dispute.  

At-fault party

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A party that is legally  liable for damages in an accident.

Auto theft

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An unauthorized taking of a motor vehicle, which is covered under comprehensive coverage. 

B

Binder

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A temporary insurance contract which provides coverage until a finalized copy of the policy declarations page and policy can be issued to the customer.

Bodily injury liability

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Coverage which protects an insured against claims of physical injuries to another's body arising from a covered accidental event and provides a legal defense if the insured is sued. 

C

Cancellation

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Termination of an insurance contract before the policy period ends.

Rental reimbursement coverage 

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Coverage for transportation expenses, such as a rental car or public transportation, while your vehicle is not drivable or at a shop being repaired.

Catastrophe

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A disaster affecting a specific geographic area such as floods, hurricanes, tornados, and large hailstorms.

Claim

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A request or demand for compensation under the terms of the insurance policy. 

Claimant

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Individual or entity presenting a claim.

Collision coverage

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Optional coverage with a deductible for an insured vehicle that is damaged by contact with another vehicle or object.

Comparative negligence 

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A principle of tort law in certain states where responsibility for the accident is assessed to each party involved based on their actions which contributed to the accident.

Comprehensive coverage

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Optional coverage with a deductible for an insured vehicle that is damaged by events which are not collisions, such as fire, theft, vandalism, and broken glass.

Condominium insurance

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A type of homeowners insurance that protects condominium owners from covered losses to their condominium, personal property, and some types of damage or injury to others for which the insured is legally liable.

Contributory negligence

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A principle of tort law in certain states where any amount of responsibility for an accident on the part of a party prevents them from claiming damages from another party.

Coverage

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Protection and benefits contractually provided by an insurance policy.

D

Declarations page

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The part of your policy that includes your name, address, a description of the property being insured, the policy period, the amount and type of insurance coverage elected, and the applicable premiums.

Deductible

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The portion of a claim paid out of pocket.  The deductible you choose is a factor in determining your insurance rates.

Depreciation

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The decrease in property value due to wear and tear, deterioration, or lack of maintenance.

Discount

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A premium reduction if you or your automobile meet conditions that may reduce the insurer's losses or expenses.

Dwelling

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A house, any attached garage, and their built-in appliances.  A dwelling does not include land or any structures that are not attached to the primary living space.

E

Endorsement

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An addition to the standard policy which modifies coverage.

Estimate

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An appraisal of the cost to repair your damaged property

Excess medical payments coverage

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State specific coverage available under an auto policy for reasonable and necessary medical expenses incurred by an insured, passenger, or household member which covers co-payment, co-insurance, and deductible expenses not covered by your health insurance plan.

Exclusion

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A policy restriction which excludes coverage for certain perils, persons, property, or locations.

Young man in car learning to drive
Auto insurance

Enjoy auto insurance savings, service, and security. Our policyholders have counted on AAA for decades to provide the legendary service we’re known for.

 

F

First party

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A person insured by AAA.

First party claims

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A claim for an insured's own damage, loss, or injury.

G

Guaranteed rebuilding cost coverage

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An endorsement that pays to rebuild your home when it is a total loss without regard to the policy's limit of liability.  Few companies offer this coverage to homeowners.

Guaranteed replacement coverage

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If your home or other covered structures suffer a loss, guaranteed replacement coverage pays the covered losses to repair or replace the damaged structure without regard to the limit of liability.2

H

Homeowners insurance

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Protects homeowners from certain losses to their homes, personal property, and some types of damage or injury to others for which the insured is legally liable.

I

Insurance fraud

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The act of misrepresenting, falsifying or exaggerating a fact or omission of fact as part of an insurance transaction including acts relating to claims, application for insurance and premium to obtain lower premiums or higher claims payments that would not otherwise be made. Common types of insurance fraud  are providing false information on applications, staged accidents, exaggerated injuries, and inflated medical bills.

Insured

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A person or organization covered by an insurance policy.

Insurer

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An organization that provides insurance.

J

Currently no insurance glossary terms

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K

Currently no insurance glossary terms

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L

Liability coverage

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Coverage which protects an insured against claims resulting from certain injuries sustained by a claimant and provides a legal defense if the insured is sued as a result of a covered loss.

Limit

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The maximum amount of protection purchased by the insured for a specific coverage.

Loss of use

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Coverage which pays for additional living expenses and/or fair rental value if you are unable to reside at your insured dwelling as a result of a covered loss. 

M

Medical Payments Coverage (Homeowners Policies)

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Coverage available under a dwelling policy which pays for reasonable and necessary medical expenses incurred by any person, other than an insured or household member, injured at the insured address regardless of fault. 

Medical Payments Coverage (Automobile Policies)

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No-fault coverage that pays for medical and funeral expenses as a result of a covered motor vehicle accident incurred by an insured or their passenger.

N

No-liability waiver

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An industry standard known as reducing or eliminating your policy deductible if the at fault party can be identified and has valid liability insurance. 

Named insured

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The insured shown on the declarations page.

Non-renewal

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A notice of non-renewal of the policy contract at the end of its term. 

Two older people cooking
Home insurance

Whether you're in a house, a condo, or an apartment, get insurance coverage for the place you call home.

 

O

Occurence

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A single accidental event, or exposure to a condition, which causes injury or damage during the policy period.

Original equipment manufacturer (OEM) parts

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Automobile parts from the original vehicle manufacturer or the supplier of the original parts.

Other structures

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Structures separate from your house, such as a fence, detached garage, pool, gazebo, and patio. Land is not included.

P

Paperless policy

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An electric copy of your policy documents online. 

Personal injury protection (PIP) coverage

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No-fault coverage which covers medical expenses, lost wages, and funeral expenses as a result of a covered loss  for an insured, passenger, household member or a pedestrian. 

Personal liability

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Your legal obligation to compensate others for property damage or personal injury caused by an accident.

Personal property

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Movable property or belongings exclusive of land and buildings such as furniture, clothing, stereo equipment, televisions, sports equipment, and kitchenware.

Personal umbrella protection

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Coverage with high limits, which provides additional liability coverage over and above another insurance policy.

Policy

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A contract between an insured and an insurer.

Policy change

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A change made to your insurance policy during the period the policy is in force.

Policyholder

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A person or group who is the Named Insured and in whose name an insurance policy is held.

Policy period

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The term of duration of the policy, encompassing the time between the exact hour and date of policy inception and the hour and date of expiration.

Pre-accident condition

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The state of a vehicle before an accident, including damage not related to the accident, mileage, options, and other factors.

Premium

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The price an insured pays for an insurance policy.

Proof of insurance

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Documentation provided to prove valid insurance with an insurance company. 

Property damage liability

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Coverage which protects an insured against claims resulting from accidental damage to another's property, and provides a legal defense if the insured is sued as a result of a covered loss.

Q

Quote

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An estimated cost of the premium that will be charged for a policy based on specific information including the vehicles to be insured, the drivers, and their driving records.

R

Renewal date

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The date your current insurance policy expires and the date your renewed policy would begin.

Renters insurance

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A type of Homeowners Coverage which protects Renters of apartments, condominiums, or single-family homes  from certian losses to their personal property and from some claims of damages or injury to others for which the insured is legally liable.

Roof surfaces loss settlement

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Under this coverage, roof losses caused by windstorm, hurricane, or hail will be paid as a percentage of the roof’s replacement cost rather than the full replacement cost after the applicable deductible is applied. The percentage of replacement cost coverage for your roof is determined by the age and type of roof. Adding this optional coverage to your policy can reduce your premium because only the percentage of the roof’s replacement cost would be paid in the event of a covered loss.

Multigenerational family cooking
Life insurance

AAA offers an array of life insurance products to meet the needs of you and your family in every stage of life, all from a name you can trust.

 

S

Salvage

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Damaged property where ownership is taken over by the insurance company after payment of a claim.

Special Equipment

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Equipment that does not come standard from the original manufacturer, such as a hydraulic lift, snowplow, wheelchair lift, winch, or a camper shell.

SR-22, Certificate of Financial Responsibility (CFR)

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A certificate mandated by the state to verify that an individual is maintaining automobile insurance liability coverage.

Sub-limits

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A pre-determined stated dollar amount or limit on coverage of particular items regardless of the other policy limits such as  jewelry, firearms, furs, and watercraft.

Supplement/supplemental estimate

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A revised estimate written to cover additional or hidden damage not included in the original estimate. 

T

Total loss

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Property that is damaged beyond reaosnable repair, that is less expensive to replace than to repair, or that is defined as unrepairable by state law.

U

Uninsured collision

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In California if you don’t have collision coverage, this coverage pays for repairs to your car or the cash value of your car (whichever is less) up to $3,500 if it’s damaged by an identified uninsured motorist.

Uninsured/Underinsured Motorist Bodily Injury Coverage

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Coverage which pays for an injury caused by an uninsured or underinsured driver, for which an insured  is entitled to recover compensation.

Uninsured Motorist Property Damage Coverage (UMPD)

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Coverage which pays for repairs or the actual cash value of your auto, whichever is less,  if it’s damaged by an at fault uninsured motorist. UMPD coverage varies by state and may be subject to a deductible, a limit of liability and/ or identification of the uninsured motorist. 

Underwriting

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The process to determine whether an insurer will provide coverage for an applicant.

V

Vehicle Identification Number (VIN)

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A 17-digit number assigned to each vehicle manufactured in the United States after 1980. This identification number is visible on the dashboard from outside the vehicle.

X

Currently no insurance glossary terms

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W

Currently no insurance glossary terms

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Y

Currently no insurance glossary terms

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X

Currently no insurance glossary terms

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Z

Currently no insurance glossary terms

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