Auto Insurance Glossary

Stop SignA supplement to the Pennsylvania Insurance Department’s Automobile Insurance Guide

These definitions are offered to give you a general understanding of the terms you may hear that are associated with automobile insurance. Please note that your individual company may define similar terms differently. The definitions page in your policy is the final authority regarding your coverage.

Adjuster — The person who manages the various aspects of the claim and determines what will be paid out in accordance with the policy and the facts.

Aftermarket Crash Part — A non-original equipment manufacturer (OEM) replacement part, either new or used, for any of the non-mechanical parts that generally constitute the exterior of the motor vehicle, including inner and outer panels.

Appraiser — The person who evaluates the damage caused by an accident or other covered loss and determines the amount to be paid under the policy terms.

Assigned Risk Plan — A mechanism for drivers to obtain coverage when insurance companies are unwilling to sell automobile insurance to them.

Binder — A short-term agreement that provides temporary insurance coverage until the policy can be issued or delivered.

Bodily Injury Liability — If you injure someone in a car accident, this coverage pays his/her medical and rehabilitation expenses and any damages for which you are found liable. The minimum limit is $15,000/$30,000. The $15,000 pays for injuries to one person while the $30,000 represents the total available for one accident.

Cancellation — The termination of a policy at a date other than its annual expiration date.

Claim — Notice to an insurance company that a loss has occurred which may be covered under the terms and conditions of the policy.

Collision — This benefit pays to repair damage to your car as a result of an accident. Most banks or lenders require you to buy this coverage to receive a car loan. Under Pennsylvania law, the company applies a $500 deductible unless you request a lower amount. The higher your deductible, the lower your premium.

Commission — A portion of the policy premium that is paid to an insurance producer (agent) by the insurance company as compensation for the producer’s work.

Source: Pennsylvania Insurance Department