# Car insurance glossary

> Plain-English car insurance glossary: deductibles, liability limits, full coverage, PIP, SR-22 and the other auto insurance terms you meet, A to Z.

Canonical page: https://statecover-guide.com/glossary/  
Last reviewed: October 28, 2026 by the StateCover Guide editorial team  
General information, not legal or insurance advice.

## Quick answer

This glossary explains, in plain English, the words you meet on car insurance quotes, policies, bills and claim letters. Each term has its own short page with a definition, how it works in practice and the official sources behind it. If you are new to auto insurance, start with the ten terms listed below.

## How to use this glossary

Insurance documents use precise words, and small differences matter. A "deductible" is not the same as a "premium," "cancellation" is not the same as "nonrenewal," and "full coverage" is not an official type of policy at all. When a word on your policy or in a letter from your insurer is unclear, look it up here before you sign, pay or argue a claim.

Each term page starts with a short definition, then explains how the term works, often with a simple example in round numbers. Related terms and a link to the full guide come next, followed by the official sources behind the page, such as state insurance departments and the National Association of Insurance Commissioners (NAIC).

Many terms work differently from state to state. Where a term only applies in certain states, such as an FR-44 in Florida and Virginia or choice no-fault in 3 states, the page says so. For the exact rules where you live, check your state's page or your state insurance department.

### The 10 terms most people need first

1. [Premium](https://statecover-guide.com/glossary/premium/): the price you pay for the policy.
2. [Deductible](https://statecover-guide.com/glossary/deductible/): the part of a claim you pay before the insurer pays.
3. [Liability insurance](https://statecover-guide.com/glossary/liability-insurance/): pays for injuries and damage you cause to others.
4. [Liability limits](https://statecover-guide.com/glossary/liability-limits/): the most your liability coverage will pay, often written like 50/100/25.
5. [Collision coverage](https://statecover-guide.com/glossary/collision-coverage/): pays for damage to your own car in a crash.
6. [Comprehensive coverage](https://statecover-guide.com/glossary/comprehensive-coverage/): pays for theft, weather, fire and other non-crash damage.
7. [Full coverage](https://statecover-guide.com/glossary/full-coverage/): an informal label for liability plus collision and comprehensive.
8. [Uninsured motorist coverage](https://statecover-guide.com/glossary/uninsured-motorist-coverage/): protects you when the at-fault driver has no insurance or flees.
9. [Personal injury protection](https://statecover-guide.com/glossary/personal-injury-protection/): pays your own medical costs and more, whoever caused the crash, in many states.
10. [Declarations page](https://statecover-guide.com/glossary/declarations-page/): the summary page that shows your coverages, limits and deductibles.

When a claim is involved, [actual cash value](https://statecover-guide.com/glossary/actual-cash-value/), [at-fault](https://statecover-guide.com/glossary/at-fault/) and [adjuster](https://statecover-guide.com/glossary/adjuster/) are the next terms worth knowing. For a fuller picture, our guides on [coverage types](https://statecover-guide.com/coverage/), [costs](https://statecover-guide.com/costs/) and [claims](https://statecover-guide.com/claims/) put these terms in context.

## All car insurance terms A to Z

Every term in the glossary, sorted alphabetically. Select a term to read its definition.

- [Accident forgiveness](https://statecover-guide.com/glossary/accident-forgiveness/): Accident forgiveness is an insurer's promise not to raise your premium because of a qualifying at-fault accident.
- [Actual cash value](https://statecover-guide.com/glossary/actual-cash-value/): Actual cash value is what your car was worth just before a loss, usually replacement cost minus depreciation.
- [Aftermarket parts](https://statecover-guide.com/glossary/aftermarket-parts/): Aftermarket parts are replacement parts made by companies other than the carmaker, also called non-OEM parts.
- [Appraisal clause](https://statecover-guide.com/glossary/appraisal-clause/): An appraisal clause lets you and your insurer settle a dispute over the amount of a loss using appraisers and an umpire.
- [Assigned risk plan](https://statecover-guide.com/glossary/assigned-risk-plan/): An assigned risk plan is a state program that places drivers who can't find regular car insurance with an insurer.
- [Bodily injury liability](https://statecover-guide.com/glossary/bodily-injury-liability/): Bodily injury liability pays for injuries you cause to other people in a crash, up to your per-person and per-accident limits.
- [Choice no-fault](https://statecover-guide.com/glossary/choice-no-fault/): Choice no-fault lets drivers pick a policy that limits lawsuits for a lower price or one that keeps the full right to sue.
- [Collision coverage](https://statecover-guide.com/glossary/collision-coverage/): Collision coverage pays to repair or replace your own car after it hits another vehicle or object, minus your deductible.
- [Combined single limit](https://statecover-guide.com/glossary/combined-single-limit/): A combined single limit is one liability limit covering all bodily injury and property damage from an accident, instead of split limits.
- [Comparative negligence](https://statecover-guide.com/glossary/comparative-negligence/): Comparative negligence splits fault between drivers and reduces what each person can recover by their own share of the blame.
- [Credit-based insurance score](https://statecover-guide.com/glossary/credit-based-insurance-score/): A credit-based insurance score is a rating built from your credit history that insurers may use to predict losses and set prices.
- [Declarations page](https://statecover-guide.com/glossary/declarations-page/): The declarations page summarizes your car insurance policy: who and what is insured, your coverages, limits, deductibles and price.
- [Depreciation](https://statecover-guide.com/glossary/depreciation/): Depreciation is the loss in a car's value from age and wear and tear, which insurers subtract when they pay actual cash value.
- [Exclusion](https://statecover-guide.com/glossary/exclusion/): An exclusion is a policy provision that removes or limits coverage for certain losses, uses, property or people.
- [Financial responsibility law](https://statecover-guide.com/glossary/financial-responsibility-law/): A financial responsibility law requires drivers to show they can pay for crash damage and injuries they cause, usually with insurance.
- [Gap insurance](https://statecover-guide.com/glossary/gap-insurance/): Gap insurance pays the difference between your car's value and what you still owe on the loan or lease if it is totaled or stolen.
- [Good driver discount](https://statecover-guide.com/glossary/good-driver-discount/): A good driver discount is a lower car insurance rate for drivers with a clean record; California requires insurers to offer one.
- [Hit-and-run](https://statecover-guide.com/glossary/hit-and-run/): A hit-and-run is a crash in which a driver leaves the scene without stopping to give their information or help.
- [Insurance agent](https://statecover-guide.com/glossary/insurance-agent/): An insurance agent is a state-licensed person or business authorized to sell and service insurance policies for insurers.
- [Insurance fraud](https://statecover-guide.com/glossary/insurance-fraud/): Insurance fraud is a deliberate deception to get money or a lower price from insurance that a person is not entitled to.
- [Lapse in coverage](https://statecover-guide.com/glossary/lapse-in-coverage/): A lapse is a period when your car has no active insurance, usually because a policy ended before new coverage began.
- [Liability limits](https://statecover-guide.com/glossary/liability-limits/): Liability limits are the most your insurer will pay for injuries and damage you cause, usually shown as three numbers.
- [Loss of use](https://statecover-guide.com/glossary/loss-of-use/): Loss of use is the cost of being without your car while it is repaired or replaced after a covered loss.
- [Medical payments coverage (MedPay)](https://statecover-guide.com/glossary/medical-payments-coverage/): Medical payments coverage pays medical bills for you and your passengers after a crash, whoever caused it, up to a set limit.
- [Multi-policy discount](https://statecover-guide.com/glossary/multi-policy-discount/): A multi-policy discount is a lower price for buying more than one policy, such as auto and home, from the same insurer.
- [Named insured](https://statecover-guide.com/glossary/named-insured/): The named insured is the person or people the policy names as the insured, usually shown on the declarations page.
- [No-fault insurance](https://statecover-guide.com/glossary/no-fault-insurance/): No-fault insurance means your own policy pays your injury costs after a crash, whoever caused it, and lawsuits are limited.
- [Non-owner car insurance](https://statecover-guide.com/glossary/non-owner-car-insurance/): Non-owner car insurance is a liability policy for people who drive but do not own a car, covering harm they cause to others.
- [Nonrenewal](https://statecover-guide.com/glossary/nonrenewal/): Nonrenewal is an insurer's decision not to continue your policy after its current term ends.
- [Permissive use](https://statecover-guide.com/glossary/permissive-use/): Permissive use means someone drives your car with your permission, which most policies cover unless that driver is excluded.
- [Personal auto policy (PAP)](https://statecover-guide.com/glossary/personal-auto-policy/): A personal auto policy is the standard car insurance contract for privately owned vehicles used for personal driving.
- [Personal injury protection (PIP)](https://statecover-guide.com/glossary/personal-injury-protection/): Personal injury protection pays medical bills and often lost wages for you and your passengers after a crash, regardless of fault.
- [Cancellation](https://statecover-guide.com/glossary/cancellation/): Cancellation is when you or your insurer end a car insurance policy before its normal expiration date.
- [Policy term](https://statecover-guide.com/glossary/policy-term/): The policy term is the period your car insurance is in effect, from the effective date to the expiration date.
- [Premium](https://statecover-guide.com/glossary/premium/): A premium is the price you pay an insurer for your policy, usually set for each policy term.
- [Property damage liability](https://statecover-guide.com/glossary/property-damage-liability/): Property damage liability pays for damage you cause to other people's vehicles and property, up to your policy's limit.
- [Rate filing](https://statecover-guide.com/glossary/rate-filing/): A rate filing is the set of rates and rating rules an insurer submits to a state insurance regulator for review.
- [Rental reimbursement](https://statecover-guide.com/glossary/rental-reimbursement/): Rental reimbursement is optional coverage that pays for a rental car while yours is being repaired after a covered claim.
- [Rideshare endorsement](https://statecover-guide.com/glossary/rideshare-endorsement/): A rideshare endorsement is an add-on to a personal auto policy that extends coverage to time spent driving for a ride-hailing app.
- [SR-22](https://statecover-guide.com/glossary/sr-22/): An SR-22 is a certificate an insurer files with the state to prove a driver carries the required liability insurance.
- [Salvage title](https://statecover-guide.com/glossary/salvage-title/): A salvage title is a branded title a state issues for a badly damaged car, often after an insurer declares it a total loss.
- [State insurance department](https://statecover-guide.com/glossary/state-insurance-department/): A state insurance department is the government agency that regulates insurers and agents and helps insurance consumers in that state.
- [Subrogation](https://statecover-guide.com/glossary/subrogation/): Subrogation is your insurer's right to recover the money it paid on your claim from the party who caused the loss.
- [Telematics (usage-based insurance)](https://statecover-guide.com/glossary/telematics/): Telematics is technology that records how, when and how much a car is driven, used by insurers for usage-based pricing.
- [Tort threshold](https://statecover-guide.com/glossary/tort-threshold/): A tort threshold is the injury severity or medical cost level you must reach in a no-fault state before suing the at-fault driver.
- [Total loss](https://statecover-guide.com/glossary/total-loss/): A total loss is a car so damaged that repairs would cost too much compared with its value, so the insurer pays its value instead.
- [Underinsured motorist coverage (UIM)](https://statecover-guide.com/glossary/underinsured-motorist-coverage/): Underinsured motorist coverage pays you when the at-fault driver has insurance, but not enough to cover your losses.
- [Underwriting](https://statecover-guide.com/glossary/underwriting/): Underwriting is how an insurer evaluates your risk to decide whether to insure you and at what price.
- [Uninsured motorist property damage (UMPD)](https://statecover-guide.com/glossary/uninsured-motorist-property-damage/): Uninsured motorist property damage pays for damage to your car caused by a driver who has no insurance.
- [VIN (vehicle identification number)](https://statecover-guide.com/glossary/vin/): A VIN is the unique code a manufacturer assigns to each vehicle, used to identify it on titles, registrations and insurance policies.
- [OEM parts](https://statecover-guide.com/glossary/oem-parts/): OEM parts are replacement parts made by or for the vehicle's original manufacturer, as opposed to aftermarket parts.
- [Rating factors](https://statecover-guide.com/glossary/rating-factors/): Rating factors are the characteristics insurers use to calculate your premium, such as driving record, location and vehicle.
- [At-fault](https://statecover-guide.com/glossary/at-fault/): At-fault means being legally responsible for a crash; in at-fault states, the responsible driver's insurance pays for the damage.
- [Full coverage](https://statecover-guide.com/glossary/full-coverage/): Full coverage is an informal term for liability plus collision and comprehensive, not a policy that covers everything.
- [Insured](https://statecover-guide.com/glossary/insured/): An insured is any person covered by an insurance policy, including the named insured and others the policy defines as covered.
- [Agreed value](https://statecover-guide.com/glossary/agreed-value/): Agreed value is a car's value that you and the insurer settle on in advance and write into the policy, common for classic cars.
- [Arbitration](https://statecover-guide.com/glossary/arbitration/): Arbitration settles an insurance dispute outside court: a neutral arbitrator hears both sides and issues a decision, usually binding.
- [Comprehensive coverage](https://statecover-guide.com/glossary/comprehensive-coverage/): Comprehensive coverage pays for damage to your car from causes other than a collision, such as theft, fire, hail, flood or animals.
- [Contributory negligence](https://statecover-guide.com/glossary/contributory-negligence/): Contributory negligence is a strict fault rule: an injured person who was even slightly at fault cannot recover damages.
- [Diminished value](https://statecover-guide.com/glossary/diminished-value/): Diminished value is the drop in a car's resale value after it has been damaged in a crash and repaired.
- [Bad faith](https://statecover-guide.com/glossary/bad-faith/): Bad faith is an insurer handling a claim unfairly, such as refusing to pay or settle without a reasonable basis or investigation.
- [Liability insurance](https://statecover-guide.com/glossary/liability-insurance/): Liability insurance pays for injuries and property damage you legally cause to other people, up to your policy limits.
- [Mini-tort (Michigan)](https://statecover-guide.com/glossary/mini-tort/): Mini-tort is a Michigan rule that lets a driver recover limited uninsured vehicle damage from the driver who caused the crash.
- [Primary and secondary coverage](https://statecover-guide.com/glossary/primary-and-secondary-coverage/): Primary coverage pays first when more than one policy applies; secondary or excess coverage pays only after the primary is used up.
- [Proof of insurance](https://statecover-guide.com/glossary/proof-of-insurance/): Proof of insurance is a document or record showing your vehicle has the liability coverage your state requires.
- [Property protection insurance (PPI)](https://statecover-guide.com/glossary/property-protection-insurance/): Property protection insurance is a required Michigan coverage that pays for damage your car does to other people's property in Michigan.
- [Reinstatement](https://statecover-guide.com/glossary/reinstatement/): Reinstatement means restoring something that was canceled or suspended, such as an insurance policy or driving privileges.
- [Replacement cost](https://statecover-guide.com/glossary/replacement-cost/): Replacement cost is the amount needed to replace damaged property with new property of similar kind and quality, without depreciation.
- [Roadside assistance (towing and labor)](https://statecover-guide.com/glossary/roadside-assistance/): Roadside assistance, or towing and labor coverage, pays for help when your car breaks down, such as a tow or a jump-start.
- [Short-rate cancellation](https://statecover-guide.com/glossary/short-rate-cancellation/): Short-rate cancellation lets an insurer keep part of your unearned premium when you cancel early, so your refund is below pro rata.
- [Stacking (stacked coverage)](https://statecover-guide.com/glossary/stacking/): Stacking lets you add together the uninsured motorist limits for each car on your policy to get a higher limit for one accident.
- [Umbrella insurance](https://statecover-guide.com/glossary/umbrella-insurance/): Umbrella insurance is extra liability coverage that pays after the limits of your auto or home policy are used up.
- [Uninsured motorist coverage (UM)](https://statecover-guide.com/glossary/uninsured-motorist-coverage/): Uninsured motorist coverage pays for your injuries, and sometimes car damage, when the at-fault driver has no insurance.
- [Binder](https://statecover-guide.com/glossary/binder/): A binder is a short-term agreement that gives you temporary insurance coverage until the insurer issues or delivers the policy.
- [CLUE report](https://statecover-guide.com/glossary/clue-report/): A CLUE report is a LexisNexis record of your past auto and home insurance claims that insurers check when pricing a policy.
- [Captive agent](https://statecover-guide.com/glossary/captive-agent/): A captive agent sells and services insurance for one company, or one group of companies, rather than several insurers.
- [Claim](https://statecover-guide.com/glossary/claim/): A claim is a formal request asking an insurance company to pay for a loss that may be covered by a policy.
- [Adjuster](https://statecover-guide.com/glossary/adjuster/): An adjuster is the person who investigates a car insurance claim, inspects the damage and estimates what the insurer should pay.
- [Deductible](https://statecover-guide.com/glossary/deductible/): A deductible is the part of a covered loss you pay yourself before your car insurance pays the rest.
- [First-party claim](https://statecover-guide.com/glossary/first-party-claim/): A first-party claim is one you make on your own insurance policy, such as collision or comprehensive, rather than on someone else's.
- [Garaging address](https://statecover-guide.com/glossary/garaging-address/): A garaging address is where your car is mainly kept and driven from, which insurers use to set your price.
- [Grace period](https://statecover-guide.com/glossary/grace-period/): A grace period is extra time to pay a premium before coverage ends; car insurance often has no legally required one.
- [High-risk driver](https://statecover-guide.com/glossary/high-risk-driver/): A high-risk driver is someone insurers expect to file more or costlier claims, often because of a DUI, tickets or at-fault crashes.
- [Lienholder](https://statecover-guide.com/glossary/lienholder/): A lienholder is the lender that has a legal claim on your car until the loan is paid off.
- [Loss payee](https://statecover-guide.com/glossary/loss-payee/): A loss payee is a party, usually your lender or lessor, entitled to share in claim payments for damage to your car.
- [Named driver exclusion](https://statecover-guide.com/glossary/named-driver-exclusion/): A named driver exclusion removes coverage when one specific, listed person drives the cars on your policy.
- [Policyholder](https://statecover-guide.com/glossary/policyholder/): The policyholder is the person who owns the insurance contract and pays its premium, also called the first party.
- [Surcharge](https://statecover-guide.com/glossary/surcharge/): A surcharge is an extra charge added to your premium, usually after an at-fault accident or a moving violation.
- [Third-party claim](https://statecover-guide.com/glossary/third-party-claim/): A third-party claim is a claim you make against someone else's insurance policy, usually the at-fault driver's liability coverage.
- [Add-on state](https://statecover-guide.com/glossary/add-on-state/): An add-on state lets drivers get injury benefits from their own policy while keeping the full right to sue the at-fault driver.
- [Endorsement](https://statecover-guide.com/glossary/endorsement/): An endorsement is a written change to an insurance policy that adds, removes or alters coverage and overrides the standard wording.
- [FR-44](https://statecover-guide.com/glossary/fr-44/): An FR-44 is a certificate your insurer files in Florida or Virginia to prove you carry higher liability limits after a DUI.
- [Independent agent](https://statecover-guide.com/glossary/independent-agent/): An independent agent represents several insurance companies and can quote and service policies from each of them.
- [Insurance broker](https://statecover-guide.com/glossary/insurance-broker/): An insurance broker is a licensed professional who sells and services insurance on your behalf and may charge a broker fee.
## FAQ

### What is the difference between a premium and a deductible?

The premium is what you pay the insurer to keep the policy in force, monthly, every six months or once a year. The deductible is what you pay toward a covered claim on your own car before the insurer pays the rest. A higher deductible usually lowers the premium, but you pay more when you claim.

### What do numbers like 50/100/25 mean on a policy?

They are split liability limits in thousands of dollars. Example: 50/100/25 means up to $50,000 for one injured person, up to $100,000 for all injuries in one accident and up to $25,000 for property damage. Some policies use one combined single limit instead.

### Is full coverage a real type of car insurance?

No. Regulators point out that no policy covers everything. "Full coverage" usually means liability plus collision and comprehensive, but the coverages actually included are the ones listed on your declarations page.

### What is the difference between an insurance agent and a broker?

An agent represents one or more insurance companies. A broker looks for coverage on your behalf and, in some states, may charge a fee on top of the premium. Both must be licensed by your state.

### Where can I find my state's official definitions?

Many state insurance departments publish consumer guides with their own glossaries, and the NAIC keeps a general glossary of insurance terms. Your policy's own definitions section controls how a term applies to you.

## Sources

- [NAIC, Glossary of Insurance Terms](https://content.naic.org/glossary-insurance-terms) — general insurance definitions
- [California Department of Insurance, Automobile Insurance Terms](https://www.insurance.ca.gov/01-consumers/105-type/95-guides/01-auto/autoterms.cfm) — auto insurance definitions from a state regulator
- [Pennsylvania Insurance Department, Auto Insurance Guide](https://www.pa.gov/content/dam/copapwp-pagov/en/insurance/documents/consumer-help-center/learn-about-insurance/auto-insurance-guide.pdf) — auto insurance glossary and consumer guide
- [NAIC, A Shopping Tool for Auto Insurance](https://doi.nebraska.gov/sites/default/files/doc/ShoppingGuideAuto.pdf) — no such thing as a full coverage policy
- [California Department of Insurance, Automobile Insurance Text Version](https://www.insurance.ca.gov/01-consumers/105-type/95-guides/01-auto/auto101.cfm) — agents and brokers, broker's fees
- [Insurance Information Institute, Background on: No-fault auto insurance](https://www.iii.org/article/background-on-no-fault-auto-insurance), as of October 28, 2026