Auto Insurance Terms

We've compiled a list of definitions for the most commonly used auto insurance terms. You'll learn the difference between collision coverage and comprehensive coverage, what bodily injury liability provides, when you need an SR-22 insurance document, and more. Consider this as your course in "Auto Insurance 101."

Types of Insurance Coverage

  • Liability Only Car Insurance

    Liability only auto insurance coverage covers a driver for damages to other people and property caused in an accident. Liability only car insurance is usually the minimum car insurance required in each state.

    We sell cheap liability car insurance that will cover you and get you legal in many states.1 And if you need more comprehensive coverage, we offer that too.

  • Bodily Injury Liability Coverage

    If you are found at fault for an accident, then bodily injury liability coverage (BI coverage) pays for the injuries and death of people involved in the accident other than yourself. BI coverage also pays for legal defense costs if you are sued.

    It is commonly written in two parts where the first part is the amount of coverage per person, while the second part is the maximum coverage for all persons in an accident. For example, a bodily injury limit of $30,000/$60,000 means that $30,000 is the coverage for one person in an accident and $60,000 is the maximum coverage for everyone involved in an accident. Every state has its own state car insurance laws that list the minimum amounts that are required to drive legally.

  • Full Coverage Car Insurance

    The term "full coverage car insurance" is a bit of misnomer as there is no universal definition of "full coverage." There is no one policy for "full coverage" and it can mean different things to different people. When people refer to full coverage, they are usually looking for more than just the basic insurance many states require. It typically includes collision and comprehensive coverage, which covers damages to your car in case of an accident, theft, fires, floods, and more. Since it includes more coverage than only the state minimum requirements, full coverage auto insurance is more expensive than liability only coverage.

    We sell liability only coverage in addition to comprehensive and collision coverage as added means of protection. We also offer uninsured motorist coverage, underinsured motorist coverage as well as rental reimbursement coverage and towing & labor costs in the event that your vehicle is towed from the scene of an accident or suffered a mechanical failure.

  • Minimum Limits Auto Insurance

    We specialize in minimum limits auto insurance. It's what you need to be legal and get on the road.

    Minimum limits car insurance is the insurance your state requires for you to legally drive, and nothing more1. It is sometimes called liability only car insurance, but in some states the required insurance is actually more than just liability coverage.

    Since laws for minimum limits auto insurance are different in each state, it's important to make sure you're getting the right coverage for where you live. We have full details on the minimum limits laws of select states making it easy for you to know what you need to get on the road.

  • Property Damage Liability Coverage

    If you are involved in an accident and are found at fault, then property damage liability coverage (PD coverage) will help pay for damage to the other person's property as a result of the accident, not your property. PD coverage also pays for legal defense costs if you are sued. Certain exclusions apply, so please refer to your policy for additional information.

Types of Additional Coverage

  • Comprehensive Car Insurance Coveage

    Comprehensive car insurance coverage provides coverage for most other (non-collision related) physical damage losses you could incur. It protects you if your vehicle is damaged from things such as theft, hail, floods, fires, or impact with an animal. If you took a loan to buy or are leasing your vehicle, your financing or leasing company will probably require comprehensive coverage. If you own your vehicle outright, this coverage is optional but does provide protection for your vehicle in the case of a covered event.

  • Uninsured Motorist Coverage

    If you suffer bodily injury in an accident caused by someone else who does not have auto insurance, uninsured motorist coverage may provide compensation for you. Payment may be made up to the limit of coverage you have chosen for your vehicle.

  • Collision Car Insurance Coverage

    Collision car insurance coverage pays for damages to your car if it collides with another car or object. For example, if you hit another car in a parking lot, whatever damages incurred could be paid under your collision coverage. It is subject to a deductible, which is the amount of money you must pay out of pocket before insurance applies. Although this coverage is optional, if your vehicle is financed or leased, it will probably be required by the finance company to guarantee that your vehicle will be repaired or replaced in the event of a loss.

  • Underinsured Motorist Coverage

    If a driver or owner of a vehicle is legally liable for an accident but does not have enough insurance, you may be able to use underinsured motorist coverage for injuries, including death. Payment may be made up to the limit of coverage you have chosen for your vehicle.

Basic Auto Insurance Terms

  • Car Insurance Deductible

    A car insurance deductible is the amount of money you pay out-of-pocket before the insurance company covers the remainder if you're involved in a covered loss. For example, if you have a covered loss of $2,000 and your policy carries a $500 deductible, you'll pay the first $500 and the company will pay the remaining $1,500. As a rule of thumb, it's always a good idea to choose a deductible that you can readily cover when you are faced with an unexpected loss.

    If you have a low car insurance deductible, then you will have to pay more for your car insurance upfront. However, in the event of an accident or damages to your car, you will pay less towards your repair bill.

    If you have a high car insurance deductible, then you will pay less upfront for your car insurance. However, if you are in an accident, you will have to pay more towards your repair bill.

  • Car Insurance Premium

    A car insurance premium is the amount of money paid to an insurance company in return for insurance protection. Wondering how that is calculated? Companies usually look at the following factors to determine your premium:

    • What car insurance you're looking to purchase
    • What kind of car you drive
    • Where you drive
    • How much you drive
    • Your age, gender, marital status
    • Your driving record
    • Your credit history
  • Occasional Driver

    An occasional driver on a car insurance policy is a person who is not the primary or principal driver of the insured vehicle. This person could be a spouse, child or relative.

  • Policy Expiration Date

    A policy expiration date is the date on which your policy ends. This date can be found on your current policy documents, Declaration Page, insurance ID card or recent cancellation notice. Don't confuse this date with your payment due dates.

  • Driver Status

    Driver status refers to the classification of others on your policy.

    Those with a status of:

    • "Rated Drivers" are active drivers of vehicles on the policy.
    • "Excluded Drivers" are people who may not drive vehicles on the policy and no coverages will apply in the event of an accident.
    • "Listed Drivers" are residents of your household who do not drive the vehicles on the policy. Usually, if they are of driving age, then they should be excluded.
    • "Unlisted Drivers" are residents of your household who do not drive the vehicles on the policy.
  • Vehicle Identification Number (VIN)

    A VIN number is the Vehicle Identification Number, which is a combination of 17 letters and numbers that is used to identify the make, model and year of a car. This number can be found on the driver's side of your dashboard, the vehicle registration or the title.

    What is the purpose of the VIN number?
    Not only can the Department of Motor Vehicles (DMV) keep track of ownership and law enforcement agencies can identify stolen vehicles or parts, it also helps automobile manufacturers keep track of vehicles for recall, upgrades and other important information.

    Now more than ever, VIN numbers are important in tracking what has happened to a vehicle in the course of its "life." It can provide comprehensive vehicle history for those purchasing used cars. It also offers a way to track the services performed on a vehicle and whether the car was ever involved in an accident.

  • Lienholder

    A lienholder is someone who has either leased a vehicle to you with an insurable interest, or given you money on loan to buy it. The lienholder is usually a bank or another financial firm.

    When insuring your car, the lienholder is also included on your policy. This will protect the lienholder in the event that you are in an accident and damage the vehicle. The lienholder has a secured interest in the car.

  • Principal Driver

    A principal driver is the person who drives the car most often. The driving record of the principal driver will affect the car insurance premium. Your car insurance policy will typically cover all of the people in your household and multiple vehicles. However, the person who drives a vehicle most often is defined as the "principal driver" for that vehicle. Additional persons covered by your policy would be considered occasional drivers of that vehicle. You can also exclude a person from driving your vehicles and have them listed as excluded drivers on your policy.

  • Policy Term

    An auto insurance policy term is the length of time you are actively covered under your policy. This information can be found on your Declaration Page. Many auto insurance policy terms last only 6 months before you must renew, but we have you covered for a full year. This means that your low rates are guaranteed for a full 12 months.

Insurance Forms

  • Auto Insurance Declaration Page

    An auto insurance declaration page is a summary of your auto policy provided by your auto insurance provider. This page will include the following information:

    • Name of your car insurance provider
    • Policy number
    • Policy term
    • Types of coverage you have elected
    • Limit for each coverage
    • Cost for each coverage
    • Specified vehicles covered by the policy and information describing those vehicles
  • SR-22 Insurance Document

    An SR-22 is a form submitted by your insurance carrier that proves to the state that you are maintaining auto insurance liability coverage. This is usually required for those who have been convicted of a DUI/DWI, those who have failed to carry insurance or convicted of other traffic-related violations. Typically, these drivers are classified as high-risk drivers to insure. SR-22 terms and requirements may vary by state, so be sure to check your individual state's page for more information. Your state government office will usually notify you of the need to have an SR-22.

    Are you a high risk driver looking for SR-22 insurance quotes or cheap SR-22 car insurance?
    Your auto insurance company can send you the SR-22 insurance documents you need immediately after you get a quote and purchase an auto insurance policy.

    * Once you have purchased your policy, your auto insurance company can immediately send you a copy of your SR-22 insurance documents along with your auto insurance declaration page by email or fax. A mailed copy of these documents will take a few business days to arrive. The company will also provide the SR-22 insurance document to your state Department of Motor Vehicles (DMV) proving that you are maintaining auto insurance liability coverage. This is especially important if your driving privileges have been revoked as a result of a DUI/DWI, driving without auto insurance or another conviction.

    High risk drivers can start driving legal today by completing an online car insurance quote or call us directly at 855-646-4661.

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