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Key Terms for Understanding Car Insurance Quotes

May 20, 2019
Auto Insurance, Insurance
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A glossary of auto insurance terms can really help you understand your policy as you deal with a claim. It can also help you compare car insurance quotes accurately as you’re shopping for car insurance.

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Here are no-nonsense definitions of common insurance terms.

Car insurance definitions

TermDefinition
Additional insuredA household member of the policyowner, who is also covered by the policy as a driver — typically all licensed drivers in the home aside from the primary driver.
At-fault accidentA crash that you cause, either partially or completely. After an at-fault accident, your liability insurance pays out up to the chosen limits for other people's injury and property damage bills, plus your legal defense costs if you're sued.
Auto insurance claimA request for payment from your car insurer to cover vehicle repairs, injury treatment or other costs.
Car insurance quoteAn estimate of how much a company will charge you for car insurance.
Collision coveragePays to fix your vehicle if you cause a crash or have a one-car accident, such as hitting a tree. Typically required with an auto loan.
Comprehensive coveragePays to repair your car after animal collisions, and also covers a specific list of noncollision issues — including car theft, falling objects and fire, among others. Typically required with an auto loan.
Covered incident (or covered accident or covered risk)Something your policy will pay for.
Declarations pageA page in your policy listing its most important details, including your car’s VIN and other information, your address, drivers insured on the policy, liability limits and included coverage.
DeductiblePredetermined amount your insurer subtracts from your settlement for collision and comprehensive claims. If your car repairs cost $5,000 and your deductible is $500, you'll get a claim check for $4,500.

Choosing a higher deductible means cheaper rates, but your insurer pays less if a claim occurs. Deductibles do not apply to liability claims.
Effective dateThe exact day your auto policy starts. You're not covered for accidents that happen before this date.
ExclusionSomething your policy won't pay for.
Full coverage car insuranceA policy that includes liability insurance plus collision and comprehensive coverage.
Gap coverageIf your car is totaled or stolen, pays the difference between its dollar value and your remaining auto loan balance, if the balance is the higher number. Sometimes required with an auto loan.
Liability insurancePays for others' injury treatment and property damage if you cause a crash, as well as your legal defense costs if you're sued.

Liability limits often appear in shorthand numbers — for example, 100/300/50 means you have up to $100,000 bodily injury coverage for each injured person, up to $300,000 bodily injury coverage per crash and up to $50,000 property damage coverage per crash.
LimitThe maximum amount your policy will pay for a given accident. Each coverage type has its own limits.
Medical payments coverage (MedPay)Pays for your own injury treatment and that of your passengers no matter who caused the crash up to your policy limit.
Personal injury protection (PIP)Similar to MedPay, PIP pays for your injury treatment and that of your passengers regardless of who caused the accident. It also pays for some costs that MedPay won't, such as lost income and physical therapy.
Primary useHow you most commonly use your vehicle, such as for commuting, pleasure or business.
PremiumThe cost of your auto insurance, either monthly, yearly or per six-month period.
SR-22 insurance formOfficial document some states require to prove you have sufficient car insurance. The SR-22, filed by your insurance company, allows you to keep or reinstate your driving privileges after serious or repeated traffic-related offenses, such as DUIs or driving without insurance.
State-required minimumThe car insurance coverages and limits that states require their residents to carry. These limits are often very low and would be insufficient if you caused a large accident.
UnderwritingThe insurance company's process of evaluating how risky you are, based on factors such as your vehicle, location, accident history, credit and age. An insurer uses its underwriting findings to calculate your rates.
Uninsured motorist coverageIf you're hit by a driver who lacks car insurance or has insufficient insurance, your coverage for uninsured/underinsured motorist bodily injury (or UMBI/UIMBI) pays for treatment of your injuries and those of your passengers, while coverage for uninsured/underinsured motorist property damage (or UMPD/UIMPD) pays to repair your car.

» MORE: What does car insurance cover?