Understanding Insurance Terms

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Understanding Insurance Terms


Accident Forgiveness

In most states, if you've been accident-free for three to five years, you may qualify for Accident Forgiveness program.

Actual Cash Value

The fair market value of property; Computed by subtracting depreciation from replacement cost.


A statistician who computes insurance risks and premiums.


Similar to a Claim Examiner or Auto Damage Adjuster, these are individuals who are responsible for investigating and settling a claim and writing the repair estimate.

Adverse Carrier

Term used to refer to the other party's insurance company.


Individual who sells policies and acts as a representative of the insurance company.

Agreed Price

The price or cost of repairs agreed to by the AD (auto damage) adjuster or independent appraiser and the body shop representative.


A change to the basic policy contract. An amendment alters the policy; an endorsement adds to it.

Anti-Theft Device

A device that deters auto theft. Autos equipped with these devices may entitle you to a discount on your insurance premiums.


Process that determines the value of property, or the extent of damage, usually performed by an impartial expert.


A process of settling a dispute through an impartial party. It is used as an alternative to litigation.

Assigned Risk (AIP)

A driver or vehicle owner who cannot qualify for insurance in the regular market. He or she must get coverage through a state assigned risk plan which specifies that each company must accept a proportionate share of these drivers/owners.


Means the same as an insured, policyholder, or someone who has an insurance policy.


The party that is legally liable for the damages in an accident.

Auto Damage Adjuster

The auto damage adjuster is responsible for writing the repair estimate for your vehicle. This adjuster will also answer your questions about the repair process, your rental vehicle, or your total loss settlement.

Auto Insurance

Auto Insurance provides protection from losses resulting from owning and operating an auto. The insurance covers losses to the insured's property and losses for which the insured is liable as a result of owning or operating an auto.


A temporary agreement declaring that the policy is in effect. Used in certain cases to protect a policyholder when it is not possible to issue or endorse the policy immediately.

Bodily Injury

An injury sustained by a person.

Bodily Injury Liability Coverage

Pays damages for bodily injury or death resulting from an accident for which you are at fault and in most cases provides you with a legal defense. This coverage is subject to the terms, limits and conditions of your policy contract.


Termination of an insurance contract before the end of the policy period, by the insured or insurer.


The insurance company or insurer.


A disaster affecting a specific geographic area.  Catastrophes often cause injury or even death; most result in extensive property damage. Hurricanes, floods, tornadoes, and even large hailstorms are typical examples of catastrophes.

Certificate of Satisfaction

A form signed by the insured when