Glossary & first-policy checklist
Two beginner tools in one place: plain-English definitions for every term you'll meet, and a step-by-step list of what to gather before you buy.
Plain-English glossary
Actual cash value (ACV)
What your car is worth today, accounting for depreciation — the basis insurers use to value a totaled car.
Assigned risk plan
A state-run insurer-of-last-resort program that provides auto coverage to drivers standard and non-standard insurers won't write; every state has some version, though the name and rules vary by state.
At-fault accident
An accident the insurer determines you primarily caused, which can raise your future premium.
Bodily injury liability
The part of liability coverage that pays for other people's injuries when you're at fault.
Bundling (multi-policy discount)
Combining two or more policies, such as auto and renters, with one insurer for a discount.
Business use exclusion
A common policy clause that excludes coverage while a car is being used for pay, such as rideshare or delivery driving, unless an endorsement or commercial policy is added.
Claim
A request to your insurer to pay for a covered loss.
Claims adjuster
The person who reviews a claim's evidence and damage to determine what the insurer will pay.
Collision
Pays to repair your own car after a crash, no matter who's at fault.
Combined single limit (CSL)
A single liability maximum covering both injury and property damage in an accident, instead of separate split limits.
Comprehensive
Covers non-crash damage: theft, weather, vandalism, hitting an animal.
Coverage limit
The most your policy will pay for a covered claim.
Credit-based insurance score
A score, built from your credit history but calculated separately from a lender's credit score, that some insurers use as one pricing factor; several states restrict or ban its use.
Declarations page (dec page)
The summary page of your policy listing your coverages, limits, deductibles, and premium.
Deductible
What you pay out of pocket on a claim before insurance covers the rest.
Defensive driving course
A driver-safety class, often available online or in person, that some insurers discount your premium for completing; approved providers and eligibility vary by insurer and state.
Department of Insurance
The state agency that regulates insurers and can help with complaints. Each state has its own.
Depreciation
The loss in a car's value over time from age, mileage, and wear.
Effective date
The date your coverage officially starts.
Endorsement (rider)
An add-on that changes or adds coverage to a standard policy.
Exclusion
Something your policy specifically does not cover.
Financial responsibility
A state's requirement that drivers be able to pay for damage they cause, usually met by carrying insurance.
Full coverage
Informal term for liability plus collision and comprehensive.
Gap insurance
Covers the difference between what you owe and the car's value if it's totaled.
Good student discount
A discount some insurers offer to students who maintain a certain grade average.
Grace period
A short window after a missed payment during which coverage may continue before the policy cancels. Length varies by insurer and state.
Lapse
A gap in your coverage, which can make your next policy more expensive.
Liability coverage
Pays for injury or damage you cause to others. Required in most states.
Listed driver
Anyone named on your policy who is permitted to drive the insured car.
Medical payments (MedPay)
Optional coverage that helps pay medical bills for you and your passengers after an accident, no matter who's at fault.
Multi-car discount
A discount many insurers offer for insuring more than one household vehicle on the same policy; the amount varies by insurer and applies per vehicle rather than as a flat household saving.
Named insured
The main person listed on the policy, who holds the coverage.
No-fault
A system used in some states where each driver's own insurer pays their medical costs after an accident, regardless of who caused it.
Non-owner car insurance
Liability coverage for someone who drives but doesn't own a car.
Non-standard insurance
Coverage from an insurer that specializes in drivers a standard company won't write, such as those with a serious driving record; it typically costs more and is written by specialty insurers rather than mainstream ones.
Personal injury protection (PIP)
Pays medical costs for you and your passengers after an accident regardless of fault. Required in some states, unavailable in others.
Policyholder
The person who owns the insurance policy and is responsible for paying for it.
Premium
The amount you pay for your policy — usually monthly or every six months.
Property damage liability
The part of liability coverage that pays for damage you cause to someone else's property, like their car or a fence.
Quote
An estimate of what a policy would cost, based on the information you provide.
Renewal
When your policy term ends and the insurer offers to continue it, usually at a repriced premium.
Rental reimbursement
Optional coverage that helps pay for a rental car while yours is being repaired after a covered claim.
Roadside assistance
Optional coverage for services like towing, jump-starts, and lockouts.
Salvage title
A permanent title status for a car declared a total loss and kept or rebuilt rather than scrapped. It follows the car through resale and typically limits how it can be insured or registered; requirements vary by state.
Split limits
Liability limits shown as separate maximums for injury per person, injury per accident, and property damage.
SR-22
A form filed to prove you carry the state-required minimum coverage, often required after certain violations.
State minimum
The least amount of coverage your state requires you to carry to drive legally.
Subrogation
When your insurer pays your claim and then recovers the cost from the at-fault party's insurer.
Surcharge
An extra amount added to your premium, often after an at-fault accident or a violation.
Telematics (usage-based insurance)
A program that tracks your driving through an app or device and can adjust your rate based on how you drive.
Total loss (totaled)
When repairing a car would cost more than it's worth, so the insurer pays out its value instead of fixing it.
Umbrella policy
Extra liability coverage that kicks in above the limits of your auto policy.
Underinsured motorist
Helps cover your costs when an at-fault driver has insurance, but not enough to pay for the damage.
Underwriting
How insurers assess your risk to set your price.
Uninsured motorist
Protects you if you're hit by a driver who has no insurance.
First-policy checklist
Tick these off before you request a quote. Your progress is saved as you go — check an item to mark it done.