Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 14, 2020

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Key takeaways...

  • One of the worst feelings is to be denied car insurance claim simply because you didn’t understand the lingo of your car insurance policy
  • Make sure you understand the basic terms for auto insurance to ensure you are getting the best coverage
  • Compare multiple quotes for the coverage you need to make sure you are getting the best rate

The car insurance industry is full of terms which many consumers hear only for the first time after an accident. One of the worst feelings is to be denied car insurance claim simply because you didn’t understand the lingo of your car insurance policy.

Below are some of the most common car insurance terms in our dedicated car insurance glossary section to help you get a better grasp understanding your car insurance policy.

Of course, if you have any questions or simply unsure about a term always contact your car insurance company or legal counsel to understand how the use of this term may affect or exclude you from coverage.

Make sure you compare rates with our free quote tool above today!

Car Insurance Terms

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Accident – An unforeseen incident involving loss to you and/or others.

Accident Forgiveness – A type of car insurance discount offered to people who have a solid driving record but are involved in a single accident. Think of it as having a free pass for your first accident where a car insurance company will not increase your rates. Not every company offers this option and some have restrictions on how long you have been a policyholder before this kicks in.

Acts of God – A natural occurrence which is beyond human control or influence. Acts of God include earthquakes, floods, and hurricanes for example.

Actual Cash Value – The book value or FVM (fair market value) of an asset. The calculation is basically replacement cost minus depreciation.

Actuary – The people who make car insurance companies profitable.  Actuaries are mathematical statisticians who focus on risk calculating car insurance premiums and risk levels in the auto insurance industry.

Additional Insured – Simply another person listed on your car insurance policy such as an additional driver who is covered under the same policy.

Admitted Company – An insurance company authorized by the state to do business.

Adverse Carrier – Industry term referring to the insurance company of the other party. If you get an accident with another person, your insurance company will refer to that person’s company as the adverse carrier.

Aftermarket Parts – Any part installed outside of the original items on a car are aftermarket parts.

Agent – Someone who works as a licensed insurance company representative selling insurance. Agents can be both exclusive and non-exclusive.

Agreed Price – The cost to repair a vehicle as agreed upon by both the insurance company/insurance adjuster and the repair shop.

Alien Insurance Company – An insurance provider incorporated in a foreign market.

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Amendment – A change made to an insurance policy. Unlike an endorsement or rider which adds coverage to a policy, an amendment changes the policy.

Anti-Lock Brakes (also known as ABS) – A computer-assisted braking system which helps a vehicle slow at a consistent rate, therefore, enabling a driver to have greater control when breaking.

Anti-Theft Device – Devices created to reduce the chances of auto theft or vandalism.

Application – A document detailing a formal request for insurance coverage.

Appraisal – A valuation of property or damages.

Arbitration – A legal process used to aid in settlement of disputes through the use of an unbiased and/or third party. Many times insurance companies opt for arbitration reducing the costs associated with litigation.

Assigned Risk – When a consumer does not qualify for insurance in the voluntary market he/she is forced to get insurance coverage through state plans.

Assigned risk – Essentially defines the result of a state’s decision to compel an insurance company to provide coverage for individuals. The risk behind the policyholder is considered assigned risk by the car insurance company.

Assured – Alternative word for insured.

At-Fault – Defines who is responsible for damages in a car accident.

Auto Damage Adjuster – An auto damage adjuster is a person who creates a repair estimate for damages. This person also can usually answer basic questions relating to the claim and your car insurance policy.

Auto Damage Division – Division of an insurance company that handles claims.

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