1. Claim
This is a request by the insured party to the insurance company to cover an incurred loss. The claim can be filled in writing, online, or through a phone call.

2. Deductible
This is the amount that the insured must pay out of pocket for the covered losses before the insurer pays the claim. Collision and Comprehensive coverages generally have a deductible of $500 or $250. Choosing a higher deductible saves you money, but it’s a tradeoff between having to pay the deductible if a loss happens or saving on your annual premium payments.

3. Indemnity
This is the main principle that all auto insurance policies are based on. According to the principle, the main role of the insurance company is to restore the insured party to the same financial position they were in before the loss happened.

4. Premium
This is the amount the insured is required to pay to the insurer for the insurance policy to remain in force. For auto insurance policies, premiums are usually quoted for either six month or annual policy periods.

5. Surcharge
This is the increase in your insurance premium as a result of an accident where you were at fault or a moving violation.

6. Liability limits
This is the maximum amount of money that your liability policy can pay. Coverage is usually sold with a total per loss and per person maximum amount. For instance, the basic coverage for cars is called “25/50/25” which means the policy must pay $25,000 per injured person, up to $50,000 in total per accident, and $25,000 per accident for property damage.

7. Carrier
The insurance company that underwrites and issues an insurance policy. The term carrier is used to refer to the fact that the insurance company carries certain risks on behalf of the policyholder.

8. SR-22
Also known as a certificate of insurance or financial responsibility filing, an SR-22 is a United States vehicle liability insurance document that is required by the offices of the Department of Motor Vehicles for high-risk insurance policies.

9. No fault insurance
This refers to any type of insurance policy under which the insured parties are indemnified by their own insurance company, regardless of who caused the incident that led to the losses.

10. Gap insurance
This is a form of add-on vehicle insurance coverage that helps drivers cover the gap between the money they owe on their car and the actual cash value of the car in the event of an accident.

11. Cancellation
This is the termination of the insurance policy by the insured or the insurance company before the renewal date.

12. Collision coverage
This pays for any damages to your vehicle caused as a result of an impact with another vehicle, object, or a rollover.

13. Comprehensive coverage
This pays for damage caused by any other hazards apart from collision, such as theft, fire, explosion, hail, windstorm, water, hurricane, or contact with an animal.

14. Declination
This is the insurance company’s refusal to provide coverage for an individual after an evaluation of the insurance application and other relevant factors.

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