Glossary of Commonly Used Insurance Terms
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Adjuster - A person who investigates and settles insurance claims.
Agent - A person who sells insurance policies for an extra fee on top of your insurance policy.
Authorised driver - Those people you allow to drive your vehicle.
Bodily injury (BI) - Physical injury to a person.
Cancellation - Termination of an insurance policy by the company or insured before the renewal date.
Claimant - A person making the car insurance claim.
Collision coverage - Pays for damage to your car without regard to who caused an accident. The company must pay for the repair or up to the actual cash value of your vehicle, minus your deductible.
Comprehensive coverage - The most cover you can buy to protect your car. In addition to vehicle related accidents you're also covered from vandalism, flood, fire, and theft.
Contract - In most cases, the term contract in insurance refers to an insurance policy. A policy is considered to be a contract between the insurance company and the policyholder.
Deductible - The amount the person who took out the policy must pay towards the claim before payment starts from the company. The higher the deductible you're willing to pay the lower your premium.
Depreciation - The act of lowering an item´s value due to use or wear and tear.
Lapse - Termination of a policy due to non-payment of premiums.
Liability insurance - Pays for injuries to the other party and damages to the other vehicle resulting from an accident you caused. It also pays if the accident was caused by someone covered by your policy, including a driver operating your car with your permission.
Liability limits - The maximum amount your liability policy will pay. Your policy must pay at least $25,000 for each injured person, up to a total of $50,000 per accident, and $25,000 for property damage per accident. This basic coverage is called "25/50/25"
Main driver - The main driver is the person who will be driving the car MOST OFTEN. In a family where two people are driving the car and one drives 100km once a month and one person drives 1km every day, the person who drives every day would be the main driver.
Named driver - A person specifically named on the policy to be included in the car insurance cover as selected by the person buying the car insurance.
Non-renewal - A decision by an insurance company not to renew a policy.
Policy period - The period from the beginning or effective date to the expiration date of an insurance policy.
Premium - The amount you pay to an insurance company to obtain or maintain an insurance policy. You can choose to pay once yearly or in 0% interest monthly instalments.
Primary use - Primary use is how you mainly use your vehicle. Primary use options include to/from work, business and personal.
Rider - A written agreement attached to the policy expanding or limiting the benefits otherwise payable under the policy. Same as an "endorsement."
Surcharge - An extra charge added to your premium by an insurance company. With car insurance, a surcharge is usually added if you have at-fault accidents.
Underwriter - The person who reviews an application for insurance and decides if the applicant is acceptable and at what premium rate.
Underwriting - The process an insurance company uses to decide whether to accept or reject an application for a policy.