Insurance Terms Glossary
Insurance is just one of those industries where they'll use a 25 cent word when a nickel one will do. Most of the concepts behind insurance are actually pretty simple. They're just hidden behind bureaucratic language.
Here are some of the most important terms from the world of auto insurance. This is a great guide to some common concepts – perfect for anyone new who is looking to learn:
Collision and Comprehensive Insurance
These sister policies are almost always sold together. Collision covers accidents with other cars on the road. Comprehensive covers all the other stuff which can happen like damage from severe weather, theft and other calamity.
An agreement between you and an insurance company. In return for regular monthly payments, they'll provide financial coverage for repair or replacement. The idea is that you're paying a little bit each month so you don't have to pay a large lump sum if there's ever an accident or other damage. Plus, in almost every state you need at least some type of liability insurance.
Alright, so not every insurance term is needlessly complicated. If you're "at fault," you're the one who caused the accident. This is an actual legal designation which determines what insurance policies pay out from which party.
This is distinction made by the insurance company regarding payout. A No Fault policy pays out regardless of who caused the accident.
You might have heard the term "No Fault State." This is a state where each driver's injuries are paid for by their respective insurance company. The party actually responsible for the accident isn't relevant in regards to this specific payout.
This is just another term for an insurance company. Don't worry if you didn't know this one – for whatever reason, this is one of the most commonly misunderstood words we're asked about.
What they call you when you join SHIELD. Also, a licensed professional who helps you find the best rate for your car. They'll know the market, and be able to find the best deal for your personal needs, budget and situation.
Agents can work for an insurance company. They might also be self-employed and work out of their home or a small agency. These days, a lot of agents are similar to Chimp Quote, with access to hundreds of insurance companies with tons of options for any budget.
This is your open "case" with the insurance company. When a crash, collision or other accident occurs, you'll contact your insurance company and start the claims process. The company will investigate the claim and pay out according to the situation and policy determinations.
If a car insurance company tells you "get a clue," don't be offended. They're really asking for your Comprehensive Loss Underwriting Exchange . Used along with your Motor Vehicle Report, your CLUE verifies the driving history you submitted during your application process.
Collision policies cover damage to your vehicle due to an accident. This could be a minor bumper bump at a stoplight, a wet patch on the road that spins your car into a tree or almost any other type of collision. This policy is often paired with Comprehensive Coverage.
Comprehensive coverage protects against damage caused by any non-collision, which can be a variety of inanimate objects. Examples include backing into your own closed garage door, hitting a deer which is crossing the road or some other random hazard. Severe weather such as hail and lightning are also covered.
Collision and Comprehensive coverage are often paired together and sold as a package. Since this covers a pretty wide range of damages which can occur, customers often refer to this bundle as Full Coverage.
That's perfectly fine. You can call it whatever you want. Insurance companies don't actually use this term all too often, however. An insurance agent will certainly understand what you mean. But if you're looking on insurance company websites for Full Coverage plans, you might find just Comprehensive and Collision bundles.
What's the fun in having car insurance if you can't go around proving it to everybody? Okay, probably not everybody -- but if you get pulled over by a cop, this is the piece of paper you'll want to have ready.
If a "piece of paper" is too old-fashioned, the insurance company can also send the info to your smartphone. Check your state for legality, but in most places you'll be fine. Whether on a card or screen, your insurance ID will include your name, the name of your insurer, your Vehicle Identification Number and your policy start and end dates.
Don't let your policy cancel or expire! Even just a day without car insurance will cause a headache when you want to renew or start a new policy somewhere else. One helpful trick here is to sign up for autopay.
Also, if you're thinking about switching to a new carrier, many offer Early Renewal Discounts. This is when you switch to a new carrier at least seven days before your policy with your present carrier is set to expire. No lapse but often big savings.
Insurance companies love to steal customers away from each other, and you certainly don't see us complaining. To switch, the new company usually requires something called a Letter of Intent. This is an official document verifying your previous duration of policy holding.
Bonus Definition: Relief!
What you'll feel knowing that you understand how to navigate the world of car insurance. This is also what you'll feel after you purchase car insurance which provides the coverage you need at the price you can afford.
The insurance agents at Chimp Quote can search through hundreds of top name insurance companies and find the best coverage for you fast. Results are tailor-made to fit your budget and current driving situation.