RCU Insurance Services

Insuring Your Assets

Glossary of Automobile Insurance Terms

The terms used throughout the insurance industry can be unfamiliar. As you shop for insurance it’s important that you understand your options and know what you’re paying for. Find a list of terms and definitions here.

Actual Cash Value (ACV)
Unless otherwise defined in the policy, Actual Cash Value is defined in California as fair market value. The fair market value of an item is the amount at which a knowledgeable buyer (under no unusual pressure) would be willing to buy, and a knowledgeable seller (under no unusual pressure) would be willing to sell.

Adjuster
A person who evaluates the damage caused by an accident or other covered loss and determines the amount to be paid.

Agent
A person authorized, by and on behalf of an insurer, to sell and service insurance policies.

Assigned Risk
A risk which is not ordinarily acceptable to insurers and is, according to state law, assigned to an insurer participating in an assigned risk pool or plan. Each participating company agrees to accept its share of these risks.

Automobile Insurance
A type of insurance which protects the insured against losses involving automobiles. Different coverages can be purchased depending on the needs and wants of the insured, e.g., the liability coverages of Bodily Injury Liability, Property Damage Liability, and Medical Payments; and the physical damage coverages of Comprehensive and Collision.

Binder
A temporary or preliminary agreement which provides coverage until a policy can be issued/delivered.

Bodily Injury Coverage
Pays for an injured person's medical expenses and lost wages if you're at fault in a car accident, subject to the limits you choose when you buy your policy (California law mandates certain minimum limits). Also provides you with a legal defense if there is a lawsuit against you resulting from the accident.

Broker
A person who for payment of a fee (paid by you) secures insurance on your behalf.

Cancellation
The termination of an insurance policy before its normal expiration date.

Claim
A demand made by an insured, or an insured's beneficiary, for payment of benefits provided by an insurance policy.

Commission
That portion of the premium paid to the agent as compensation for his or her services.

Collision Coverage
Pays for damage to your car caused by a collision with another vehicle or with any other object, regardless who was at fault.

Commissioner of Insurance
The title of the head of most state insurance departments. In some states, the Director or Superintendent of Insurance is used instead.

Comparative Negligence
The percentage of fault shared by each driver in an accident in which both contribute to causing the collision.

Comprehensive Coverage
Pays for damage to your car caused by reason other than collision, such as fire, theft, windstorm, flood, etc.

Credit Insurance
Optional insurance that pays the scheduled unpaid balance if you die or scheduled monthly payments if you become disabled. As with most contract terms, the cost of optional credit insurance must be disclosed in writing and, if you want it, you must agree to it and sign up for it.

Credit Protection
Optional protection available with your auto loan which will cancel your required monthly payments and waive finance charges for a fixed period and/or cancel outstanding debt in the event of certain predefined occurrences (such as death, disability, or unemployment).

Coverage
The scope of protection provided under an insurance contract.

Declarations (Dec) Page
The front page of your policy is called the Declarations page. It contains useful information such as:

• the exact name of your insurance company
• the policy number
• your coverages and premiums
• your deductibles, if applicable
• the vehicles insured, their identification numbers, and the classifications for rating purposes.

Deductible
The amount of the loss which the insured is responsible to pay before benefits from the insurance policy are payable. You may choose a higher deductible to lower your premium.

Exclusion
A contractual provision in an insurance policy that denies coverage for certain perils, persons, property, or locations.

Extended Service Contract
Optional protection on specified mechanical and electrical components of the vehicle available for purchase to supplement the warranty coverage provided with the new or used vehicle. RCUIS provides this in the form of Mechanical Breakdown Protection (MBP).

GAP (Guaranteed Auto Protection)
Optional protection that pays the difference between the amount you owe on your vehicle and the amount you receive from your insurance company if the vehicle is stolen or destroyed before you have satisfied your credit obligation.

Insured
The person(s) entitled to coverage in case of an accident or loss.

Insurer
The insurance company providing the insurance.

Liability Insurance
Coverage for a policyholder’s legal liability resulting from injuries to other persons or damage to their property.

Limit
The maximum amount of benefits the insurance company agrees to pay in the event of a loss.

MBP (Mechanical Breakdown Protection)
You are reimbursed for reasonable costs to repair or replace any breakdown of a mechanical or electrical parts named in the policy, less any deductible. Replacement parts may be new, remanufactured, or used parts of like kind and quality. Read more here.

Medical Payments Coverage
Covers the medical costs (up to the specified limit you choose) resulting from an auto accident for you, your family, and others in your car. It pays regardless of fault.

Nonrenewal
The termination of an insurance policy at its normal expiration date.

Policy
Written contract of insurance.

Premium
The money paid for an insurance policy based upon the coverage provided.

Premium Finance Company
A lending institution that finances insurance premiums for a fee.

Private Passenger Automobile
Four-wheeled motor vehicles of the private passenger, station wagon, or van type. Private passenger automobiles are designed for use on public highways and subject to motor vehicle registration.

Producer
A term applied to an agent, solicitor or other person who sells insurance.

Property Damage Liability Coverage
Pays for damages to another person's property (such as a fence, car, or home) if you're at fault in a car accident, subject to the limits you choose when you buy your policy (California law mandates certain minimum limits). Also provides you with a legal defense if there is a lawsuit against you resulting from the accident.

Quote
An estimate of the cost of insurance based on information supplied to the insurance company.

Replacement Cost
Replacement cost is the cost of replacing lost or damaged property with new property of like kind and quality, at current market prices.

Salvage
Property taken over by an insurer to reduce its loss.

Subrogation
The process in which an insurance company, after paying a loss to its insured, recovers the amount of the loss for damages (plus the insured´s deductible) from the legally liable party.

Surcharge
An extra charge applied to the premium by the insurer, usually for at fault accidents or moving violations.

Underinsured Motorist Coverage
Pays for bodily injury or wrongful death caused by an underinsured motor vehicle (that is, a vehicle which is insured, but at an amount that is less than your uninsured motorist bodily injury (UMBI) limits).

Uninsured Motorist Coverage (UMC)
Provides coverage for a policyholder involved in a collision with a driver who does not have liability insurance. UMC comes in two parts:

• UMBI and uninsured motorist property damage (UMPD). UMBI coverage pays for injuries to you or any person in your car when there is a collision with an uninsured driver.
• UMPD coverage pays for the property damage to your car when there is a collision with an identified uninsured driver.

For more information or to receive a no-cost, no-obligation insurance quote please get an online quote here or call us today: toll free (866) 477-4225 or local (707) 576-5120.