Auto Insurance Terms

Car Insurance Terminology Explained: Find out quick definitions of GAP, Insurance Waiver, Named Insurer and more.

People while dealing in various business activities comes across many business related terms and jargons. Most of the times, these terms are beyond understanding limits of the layman. The same thing happens when a person buys car insurance.

Here are the meanings of terms that are widely used in car insurance policies.

Additional Interest Insured: In this, a person or a company named in a car insurance policy is liable for an accident that involves an insured person or vehicle.

Anti-Theft Device: It is a device that endeavors to prevent vehicle theft. These devices can be either active or passive. Active anti-theft devices track and recover a vehicle and automatically contact a response center to start the recovery process, whereas Passive anti-theft devices attempt to prevent theft by using simple steering wheel locks and sophisticated electronic car alarms.

Bodily Injury Liability Coverage (BI): A BI coverage plan in car insurance pays for death or injuries to people that are involved in the accident other than the insured driver. If in case you are sued, this type of Liability Coverage also pays for the Defense cost.

Comprehensive Coverage: This type of car insurance coverage pays for the damages that happen other than collision. It pays for damages that occur from theft, fire, windstorm, flood and vandalism. In case your car is stolen, this type of coverage pays for transportation and loss of use expenses when applicable.

Collision Coverage: When your insured vehicle collides with another object, this type of car insurance coverage pays for the damage that is occurred to your vehicle.

Full Coverage: It is a common term that people use to describe how much car insurance coverage they have. Though there is no such term as 'full coverage', it frequently implies to the policy that is more than, just a Liability coverage.

Policy Limits: The car insurance holder selects a car insurance coverage limit. Majority of states have laws that specify this minimum limit, which must be purchased for every insurance coverage.

Named Insured: This is the first person on whose name the insurance policy is issued.

Collision Deductible Waiver: Having this coverage means that you car insurance company will pay for your selected deductibles if you are have been involved in an accident that is the fault of an uninsured driver.

Besides the above, there are large number of terms such as Medical Payments, Occasional Driver, Policy Expiration Date, PIP coverage, SR-22 and so on that a person willing to purchase a car insurance should know.