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CAR INSURANCE TERMS EXPLAINEDAdditional Insured A person , other than the named insured or covered person, who is protected under the named insured's auto policy. Anti-Theft Device Devices designed either to reduce the chance an auto will be vandalized or stolen, or assist in its recovery. Examples include car alarms, immobilisers and tracking devices. Car Insurance A form of insurance that protects against losses involving cars. Different type of cover includes comprehensive cover, limited cover and Third party only liability. Basic Limits of Liability Most car insurance policies limits the maximum amount that the insurance company will pay for liabilities per incident (accident). Commission That portion of the premium paid to the insurance broker as compensation for their services. Comprehensive Coverage Covers damage to a vehicle caused by any physical damage to the vehicle Examples include fire, theft, vandalism, and falling objects. Mechanical damage ( like engine failure ) is not included. Continuous Coverage or Continuous Liability Insurance Continuous coverage refers to the length of time you have maintained insurance on your vehicle. Covered Person This refers to the individuals (named insured, spouse, resident relatives, etc.) insured under a policy contract. Earned Premium The portion of a premium that has been "used up" during a policy term. With a one-year policy, half of the total premium has been earned after six months. Effective Date/Inception Date The date that coverage begins on an insurance policy. Excess The amount an insured person must pay before the insurance company pays the remainder of each covered loss, up to the policy limits. Expiry Date The date your coverage ends. There is usually a time of day associated with this date, for example, an expiration date of 31/12/2005 at 12:01am. This means your coverage ends one minute after midnight on the date listed. Gap Insurance (also known as top-up insurance) If your vehicle is financedand you experience a total loss, there may be a difference (gap) between the market value of your vehicle(what the insurance company will pay) and what you still owe on it. This optional coverage pays the difference. Multi-car discount A discount offered by some insurance companies for those with more than one vehicle insured on the same policy. In some cases, if you drive a company car insured by your company, your own insurance company may give you the multi-car discount. Named driver Any person, designated by name as the insured person(s) in a policy. Others may be protected by policy definition even though their names aren't on the policy, such as other drivers operating (with consent) the named insured's covered car. Per Occurrence Limit This refers to the cap amount an insurance company will pay for all claims arising from a single incident. In an automobile accident, it comprises bodily injuries sustained by all parties. When Bodily Injury coverage is purchased in split limits, the second limit is the "per occurrence" limit: e.g. $100,000(per person)/$300,000(per occurrence) Per Person Limit (same as limit of indemnity) This refers to the cap amount an insurance company will pay for any one person's injuries arising from a single incident. Personal car insurance Policy The most common car insurance policy sold today. The type of cover provided by various insurance companie is basically the same. Physical Damage Damage to your covered vehicle from perils including (but not limited to) collision or upset with another vehicle object, fire, vandalism and theft. Policy The written documents of a contract for insurance between the insurance company and the insured. Such documents include forms, endorsements, riders and attachments. Policy Period The period of time in which a policy is in effect. (For example, six months or one year). Policyholder One who maintains ownership in an insurance policy. This may refer to the policy owner or those covered under the policy. Preferred Risk Any risk considered to be better than the standard risk on which the premium rate was calculated. Premium The price of insurance an insured person pays for a specified risk for a specified period of time. Private Passenger vehicle ( car ) A four-wheeled motor vehicle that is subject to motor vehicle registration and used for private personal use. Renewal The process of keeping an active policy in force through the issuance of a renewal policy. Term The length of time for which a policy or bond is in force. Towing and Labor Costs This endorsement, which is added to the physical damage coverage, provides reimbursement up to a specified limit to tow your vehicle or pay for on-site labor costs. Usage This refers to the primary function or purpose in which you intend to operate your vehicle. For example, if you primarily drive your car to and from work, the usage is considered private use. "if you're self-employed and you primarily drive to see customers, the usage is considered "business;" if you're retired, your usage is also considered private. VIN Vehicle Identification Number A Vehicle Identification Number is a 17-digit alpha-numeric code that provides valuable information concerning the vehicle's serial number, make, model, options, and year in official records (like an identity number for your car). Waiver of excess This option cancell your excess (first amount payable ) when you claim from your car insurance. This cover is usually gained by paying an additional monthly premium.
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