Glossary of Insurance Terms
In the days, weeks and months after a car accident, chances are you’ll encounter many unfamiliar words, terms and phrases that you’ve never heard before. In this article, we hope to provide more than a mere definition of common jargon used by insurance companies during a car crash claim. Where possible, we will supply additional information that will help give you a practical understanding of the often confusing world of insurance terminology in our glossary of insurance terms.
Understand that there isn’t a book that all insurance companies must abide by. Therefore, there might be slightly different wording used by different insurance companies. However, the industry as a whole is unified on the basic concepts, and most insurance companies do use the same terminology.
After reading this glossary of insurance terms, you should be in a much better place to discuss your claim with friends and family, as well as address your claim with the insurance adjuster.
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Actual Accident Insurance Terminology
- Facts of loss. This is what happened in the accident and is typically captured in the narrative of the accident police report. However, any verifiable fact can be considered part of the facts of loss. As a practical matter, discussions over facts of loss are typically restricted to those facts that could arguably make a difference in a decision over who caused the accident. Never underestimate the power of more information supplied to the insurance adjuster, especially if the information is objective in nature and not subjective opinion.
- Reporting officer. This is the police officer who wrote the accident report. In some cases, a police officer witnessed an accident as it was taking place. You should know that this is not necessarily the reporting officer. The officer who witnessed the accident will be listed as a witness in the reporting officer’s accident report. The reporting officer will be listed at the bottom of the accident report along with their badge number. If you need to address an error or discrepancy in the accident report, the reporting officer is the person you will need to contact. If you aren’t getting a response from the reporting officer, contact their supervisor.
- Independent witness. This is any person who saw the accident as it happened. An independent witness will have no personal interest or association with anyone involved in the accident. Therefore, if you have a family member in your vehicle who experienced the accident, they are not considered an independent witness. If a personal friend or associate saw the accident as a bystander on a nearby street corner, they aren’t an independent witness either.
An independent witness must have no personal association with you or any person involved in the accident. Always obtain witness information at the accident scene. Their testimony may change the final outcome of a claim.
- Liable (or “liability”). This term in our glossary of insurance terms applies to the person responsible for accident-related damages. Liability can relate to either property damage or bodily injury that resulted from the accident. Sometimes fault is shared between drivers and this is called shared liability (sometimes referred to as comparative negligence or comp neg). In cases of shared liability, more than 1 party is said to be the cause of the accident.
When comparative negligence is between all liable drivers, the percentage of responsibility is divided between all the drivers involved according to the amount of fault each driver contributed to the crash. For example, one driver in an accident may be determined to be 90 percent responsible for causing a collision, while the other driver in that same collision is deemed to be 10 percent responsible. In such a case, the first driver owes the other driver 90 percent of all damage caused.
Filing a Claim Insurance Terminology
- Coverage. This is what an insurance policy is responsible for in the event of an occurrence involving a loss. Coverage from your own auto insurance policy to yourself is referred to as first-party coverage. Coverage from another person’s auto policy to you is referred to as third-party coverage. In some cases, you may hear an adjuster tell you that they are “investigating coverage.” If you hear this, it is because there is a question regarding coverage. If the accident in question doesn’t meet the definition of a covered loss according to the policy language, then the insurance company may not be responsible for paying anything.
Consider this example:
State Farm insures Driver A. The driver’s policy with State Farm indicates that they don’t cover Driver A if they get into an accident while in the scope of employment. Let’s say you are hit by Driver A while they are delivering packages for work. In this case, there would be no applicable coverage from State Farm.
Some auto insurance policies exclude coverage if an insured driver causes an accident while committing a crime. This being said, if the insured driver caused property damage or injuries to another person while fleeing from the police, it is likely that the insurance carrier for that vehicle will deny coverage.
In other cases, verification of coverage may involve determining if there is even a policy that exists in the first place. This often happens when an at-fault driver provides a responding police officer with old or outdated insurance information. If the driver isn’t the owner of the at-fault car, the police officer may have no choice but to rely on what the at-fault driver gives them in terms of insurance information. Contrary to popular belief, police don’t have an infallible system for checking all insurance information at the scene. Often, a driver had a policy at one point but it lapsed due to non-payment. The insurance adjuster will need to complete a full coverage investigation in order to see if the policy was intact at the time of the accident.
- Policy limits. This refers to the maximum amount of money an insurance policy has available for a covered loss. It’s important to understand that the amount available in policy limits is not necessarily the amount owed to an injured person. The insurance company owes for the value of the claim regardless of the policy limits. In some instances, the value of a claim is equal to or exceeds the policy limits. Often, the value of a claim is well inside the policy limits. This must be assessed on a case-by-case basis.
- Excess coverage. This is additional coverage that goes above and beyond the policy limits of the applicable liability coverage. It acts as a kind of back-up coverage that may apply if and only if there isn’t enough money to cover the damages caused by the at-fault driver under the standard liability policy in a covered loss. This coverage is sometimes referred to as an “umbrella policy.” Umbrella policies typically have at least $1 million in additional coverage after the policy limits of the liability coverage are exhausted.
Insurance providers typically only provide this coverage in cases where the liability limits are already $250,000 in available coverage for each injured person. On rare occasions, a provider may grant an umbrella policy where the policy limits are only $100,000 in available coverage for each injured person. You should not expect that an umbrella policy exists if the at-fault driver’s policy limits are $50,000 or less.
- Medical payments coverage. This is coverage that pays for the accident-related medical expenses of any insured person involved in an auto accident, regardless of who is at fault for causing the collision. Medical payments coverage is sometimes called “MedPay” for short. The amount of MedPay one has on their policy is determined by each person. It can be as low as $1,000 per person/per incident and as high as $20,000 per person/per incident —or more. The average amount selected is $5,000 per person/per incident.
In cases where an individual has health insurance, MedPay is sometimes used in conjunction with health care coverage. By doing so, the MedPay portion is utilized to cover the co-pays and deductibles not paid by a health insurance plan, while the health plan itself is used to pay off the medical bills. With both coverages used at the same time, an accident victim practically has no out-of-pocket medical expenses.
- Declarations page. This is the page of a policy that specifies the name of the insured person, the insured’s address, the policy period, the types of coverage, and all policy limits for each coverage purchased by an insured. It is sometimes referred to as “the dec page” for short.
In an auto accident, all parties involved that have insurance coverage have a corresponding dec page. After an accident, you should review your dec page to ensure what coverages may apply. If you don’t have access to your dec page, ask your insurance company for a copy and should be able to email you a copy upon request.
The dec page is crucial to ensuring that the accident happened inside the policy period noted on your dec page. If you see that the accident happened outside of the policy period shown on your dec page, no coverage from that dec page will likely apply. You should call your insurance agent immediately.
- Full coverage. This is a common insurance term in our glossary of insurance terms used with the public and is possibly one of the most misunderstood terms for policyholders. The average person understands the term “full coverage” to mean that everything is sufficiently covered. There’s nothing to worry about. This is, unfortunately, false security.
First, one can have all bases covered with very little coverage and it still is considered full coverage by the public. In general, all it takes to have full coverage is having the lowest possible policy limits for each majority category of coverage. Imagine having only $25,000 in liability coverage, comprehensive coverage, uninsured motorist coverage, and collision coverage. Technically, you have full coverage since no base is uncovered. However, in the event of a catastrophic accident, not only may you not have sufficient coverage to pay for the damages you are liable for causing, but it’s possible you may not have sufficient coverage to address the damage to your own vehicle either.|
Second, in the literal sense, there is no such thing as full coverage. It’s always possible that damages caused by an at-fault driver will exceed your available policy limits. The closest someone may come to being fully protected in a liability case is if, before the accident, an insured driver purchased a policy for $250,000/$500,000 (or higher) — and added a $1 million umbrella
policy on top of that.
- Minimum limits. This is the least amount of liability insurance coverage an insured driver can purchase by law. Minimum limits vary from state to state. In Florida, for example, it’s required that everyone have at least $10,000 in liability insurance coverage. In Georgia, however, the minimum limit is $25,000 for liability coverage.
If a driver from Florida causes an accident in Georgia and has only $10,000 in liability coverage on their liability policy, the at-fault driver from Florida gets the benefit of the Georgia state minimum. In short, the at-fault driver from Florida is covered up to $25,000 in liability coverage, regardless of having only $10,000 listed on their dec page.
However, the opposite is not true. The Georgia driver who is covered with $25,000 in liability coverage doesn’t drop down to $10,000 when they cross the Florida line. They keep the same coverage of $25,000.
- Uninsured/underinsured coverage. This is coverage that protects you if an at-fault driver either has no insurance or not enough coverage. It is sometimes called UM (uninsured motorist) or UIM (underinsured motorist). Unlike collision coverage, UM/UIM coverage may not payout on a claim if the other driver is not considered liable for causing the accident.
Keep in mind that UM/UIM coverage is acting in the place of the missing liability insurance of the at-fault driver. In such cases, your insurance will determine who was liable for causing the accident. Under UM/UIM coverage, your own insurance company may side against your belief that the other driver was at fault and, consequently, deny your claim based on their liability investigation. You should understand that such a denial is not a denial of coverage; it’s a denial of liability regarding the other car that has no insurance. Additionally, if anything is paid to you under your UM/UIM coverage, then it will be with a reduction for the deductible owed as listed on your declarations page.
Property Damage Insurance Terminology
- Rental coverage. This is coverage that is selected by an insured person when their policy is updated or purchased. Rental coverage isn’t automatically granted after an accident because your transportation was lost in an accident. If you do have rental coverage, it will cover the cost of a rental car after an accident if your car is either not operational or not road-legal because of the damage.
The amount of rental coverage purchased should be specified on your declarations page and must be purchased before an accident takes place to apply. Rental coverage purchased after an accident will not apply to the accident in question. Be sure to contact your car insurance company before obtaining a rental to ensure your rental car is going to be covered.
- Deductible. This is the amount of money an insured individual owes when an insurance company is paying a claim. In auto accident cases, this is owed if and only if the insured person is going through their own insurance. It’s typically owed when an insured person is using either their collision coverage or their uninsured coverage to address the physical damage to their vehicle.
Deductible amounts are selected by the insured policyholder when a policy is updated or purchased. The insurance company shouldn’t dictate it to you. The most common deductible amount for a collision claim is $500. Often, uninsured motorist claims have a deductible of $250. However, there is no set rule, rhyme or reason for any deductible amount.
If you are using your collision coverage or uninsured motorist coverage to have your car fixed, you should know that the repair shop will not let you have your car back until you pay the deductible. Remember, the insurance company doesn’t pay your deductible for you. You owe it.
- GAP coverage. GAP stands for “Guaranteed Asset Protection.” It’s typically offered at the time of a car purchase as the final paperwork is being processed in the finance office of a car dealership. In general, GAP coverage becomes applicable when a borrower’s vehicle is deemed a total loss, and that borrower owes more to a finance company than the actual cash value of their totaled vehicle. This is sometimes called being upside down.
Your auto insurance company only provides coverage for the actual cash value (ACV) of a vehicle. They don’t owe for the entire balance of your car loan. Therefore, if a borrower is upside down, they may owe a balance to the bank after the insurance carrier pays the ACV value. However, if a borrower purchased GAP insurance, a claim can be made under GAP coverage and the balance will be paid off, leaving no balance owed by the borrower.
While GAP coverage is typically purchased in the finance office of a car dealership at the time of the car purchase, it’s sometimes offered through an auto policy. Keep in mind that GAP coverage sold through auto insurance policies are very different from those sold in the finance office at the dealership. Unlike the coverage purchased at the dealership, GAP coverage sold through insurance carriers typically only pays an additional 20 percent of the ACV of your vehicle. If you are upside down, this may not be sufficient to cover the remaining difference owed to the bank. Buyer beware.
- Storage fees. These are the fees charged to you by the tow yard holding your vehicle after an accident. When your vehicle is towed from an accident scene, it’s sometimes taken to a tow yard for safekeeping. This often happens when victims of an accident are taken away by ambulance. In such cases, your vehicle may be towed from the scene to a tow yard that isn’t necessarily of your choosing. The accident victim will finally go home from the hospital and not fully understand what happened to their vehicle.
The owner of the stored vehicle will have to pay for all storage fees and additional costs. As soon as possible after your accident, you should find out where your car is located and move it to a free storage facility. This can be done through your own insurance or the at-fault driver’s insurance. If you decide you want to move your vehicle yourself, you will not be able to do so without first paying for all current fees owed. Be sure to keep all receipts as you do this.
- Mitigate. This is a reference to your responsibility to keep your loss to a minimum. You may hear an adjuster say, “You have an obligation to mitigate your damages.” This means that you must help keep the costs down regardless of another driver causing the accident. The insurance company expects that they must pay for the damage a negligent driver caused. However, that’s all they owe.
For example, if your damaged car is exposed to the elements after an impact due to a shattered side window, it’s expected that you will cover up exposed areas to prevent further damage. If the interior of your vehicle is further damaged because you did nothing to protect the exposed area (with plastic or a tarp, perhaps), then the insurance company will likely argue that you failed to mitigate your damages. They will pay for what their insured caused, but not what you caused by failing to mitigate.
Another common example of not mitigating damages is related to storage fees. If your damaged vehicle sits in a tow yard incurring storage fees for weeks or months, and you did nothing to mitigate that expense, then the insurance company will likely only pay what they deem reasonable and related. The at-fault driver is responsible for the damaged vehicle being transferred to a tow yard, but their insurance company didn’t cause your vehicle to sit for weeks and months with mounting storage fees accruing. You must always take proactive steps to keep your losses to a minimum.
- Repairable. When a vehicle is damaged, the insurance company will make a judgment as to whether your car is a total loss or repairable. If the cost of repairing your vehicle exceeds its actual cash value, the vehicle will be deemed a total loss (aka “totaled”). If the cost of repair is less than the actual cash value of the car, then it’s deemed repairable.
In theory, any car is repairable given enough time and money. However, in the insurance world, that’s not how it works. “Repairable” means that the insurance company isn’t totaling your vehicle since the cost of repair is less than the ACV.
- Made whole. This is a reference to being put back to a pre-accident state. Other fancy words for this are “indemnity” or “indemnification.” The idea behind indemnity, at least in theory, is to bring a person back to where they were before the accident occurred. Making someone better than they were before the accident is not the point of indemnity.
For example, if an innocent victim is driving a 2006 Dodge Caravan that is totaled by an at-fault driver, the value of the 2006 Dodge Caravan will be assessed and this will be the amount paid to the claimant. The insurance company doesn’t owe the innocent driver for the cost of a brand new Dodge Caravan. The insurance carrier is only responsible for paying the value of something lost, nothing more.
With respect to bodily injuries, compensation should be proportionate to the loss experienced. For example, if a victim of an accident has a sore neck for 30 days, it’s a disproportionate expectation to believe one is owed $50,000 for pain and suffering. On the flipside, if one becomes paralyzed for life, it’s disproportionate to believe that $50,000 is enough compensation.
Admittedly, what it takes to make a person whole again is subject to what a jury or judge in a particular venue may say. At the same time, the value of an injury claim is based on the experience of both the attorneys and adjusters before any verdict is heard. Those experiences help gauge what is normal and customary regarding the value of a claim, and whether or not a certain dollar amount is sufficient to indemnify properly.
- Total loss. This is a term in our glossary of insurance terms used to declare that the cost of repairing a damaged vehicle is more than the actual cash value (ACV) of that vehicle. Total loss is a mathematical formula and not necessarily an indicator of the apparent severity of the damage.
For example, if a 1979 Chevy Vega is hit from behind, repairing even a small amount of damage could exceed the value of the vehicle as a whole. In such a case, the Chevy Vega would be deemed a total loss. This is true even if the car is still drivable. With newer or more expensive vehicles, it takes more damage for a vehicle to be deemed a total loss.
In summary, if the cost of repair is higher than the car’s value, the vehicle will be totaled — no questions asked.
Bodily Injury Insurance Terminology
- Injuries. This term refers to harm or damage to one’s body as a direct result of an auto accident. Sometimes the victim of an auto accident is questioned by an adjuster and asked whether or not they were injured. Because the word “injury” almost sounds like someone who just returned home from war, the average person may sometimes answer with “no,” even though they are, in fact, very sore. You must be very careful with your answer here.
If your body has been hurt, harmed or damaged as a result of someone else’s negligence, the answer should always be yes — you were injured.
Sometimes the victim of an accident will go to the emergency room due to soreness in their neck, back, or shoulder. Days later, you speak with the insurance adjuster and tell them you weren’t injured. Unfortunately, what you meant to say is that you weren’t hospitalized. Later, you talk to your adjuster about your soreness. You need your medical bills paid and feel as though you should be compensated. There’s just one problem: You already told the adjuster you weren’t injured. They probably have it captured in a recording to boot. Not only are you not going to be compensated for the pain you experienced, but the at-fault driver’s insurance won’t pay for your medical bills.
You always want to tell the truth. That being said, if you tell the adjuster you aren’t injured when you really were, then you shouldn’t expect to be compensated. Be very careful about how you express yourself regarding pain after an accident. The right attorney can help you with what to say.
- Treatment. This is a term in our glossary of insurance terms to the medical attention you receive as a direct result of being injured in an accident. The kind of treatment you receive will be listed in the medical notes in written form, as well as in the form of CPT codes in your medical documentation. CPT codes are numerical and refer to Current Procedural Terminology. It’s a standardized form of reporting treatment and a quick way for doctors to notate medical, surgical, and diagnostic procedures by caretakers.
In the world of injury claims, if you have no treatment that documents your injuries and the need for treatment, the credibility of your claim for bodily injuries is significantly diminished. For many of the large insurance companies, no treatment equals no injuries.
- Claimant. Refers to the person who is making a claim. If you’re making a claim against another driver through their insurance, then you are the claimant. The other driver will be referred to as “their insured.” If you are making a claim against your policy (such as in a collision or uninsured motorist claim), your own insurance company will refer to you as both the claimant (because you are making a claim) and their insured (because you are insured with them too).
- Soft tissue injury. This is a common term used in our glossary of insurance terms pertaining to the context of a liability injury claim to describe soreness after an accident. It commonly refers to injuries to the neck or back involving a sprain or strain to the muscles in those injured areas. Soft tissue injuries are considered subjective and therefore have few objective indicators for verification of truthfulness.
In auto accidents, soft tissue injury claims are generally accepted as believable except in car accidents involving extremely minimal physical damage to the cars. Soft tissue injuries to the neck or back are often treated by an orthopedist who will prescribe several weeks or months of physical therapy. Physical therapy for soft tissue injuries normally lasts around 2 to 3 months.
Pain involving soft tissue injuries doesn’t always show up at the moment of impact. Typically, pain from soft tissue injuries will begin to manifest itself hours later or not until the next morning. Immediate pain in the neck or back from an accident could be an indication of something more than a soft tissue injury and could be the result of disc damage or sudden nerve impingement.
- Gap in treatment. This is a common argument made by the insurance adjuster to argue down the credibility of your injury claim. The adjuster will argue that your claim to injuries is debatable because of “notable gaps” in your medical treatment. Treatment gaps don’t look good in your medical record. When you are in an accident, you should seek treatment immediately and stay on the treatment plan prescribed by your treating physician.
Sometimes good people try to fight through the pain and never see a treating physician until later when the pain becomes unbearable. They may take over-the-counter medication and do the best they can. Unfortunately, this is a red flag for insurance adjusters. Typically, if someone is hurt from an accident, they would first seek treatment and then the treatment would slowly taper off over time.
If you are hurt, seek medical attention and stay on the path of treatment prescribed by your treating physician. Gaps in treatment will only hurt your injury claim.
- Preexisting condition. This is a common term in our glossary of insurance terms used by the insurance adjuster in the context of their evaluation of your injury claim to explain how the accident didn’t cause your injuries. When the adjuster characterizes your injury as preexisting, notice that they aren’t saying you aren’t injured. The adjuster is acknowledging that you do have an injury. However, they deny that the accident caused it.
In preexisting injury cases, it’s possible that something in your medical records was found that either implies or directly states that your injury previously existed. If your adjuster makes this argument to you, there are 3 basic responses:
- First, if the injury didn’t exist prior, address the matter head-on and ask them to show you where in the medical records they found this.
- Second, if an injury did previously exist, it could be that it is now worse and the accident exacerbated the already existing injury. In such cases, you should still be owed compensation.
- Third, if an injury previously existed and wasn’t exacerbated by the accident, it’s reasonable to argue that the accident aggravated your previously existing condition.
- Top offer. This is the insurance adjuster’s final monetary offer to you regarding the value of your injury claim. There is no way to know for sure if the adjuster is truly offering their actual top offer. However, if you don’t have any attorney representing you, the adjuster’s supervisor typically wants to extend their “best” offer in order to discourage a claimant from hiring an expert injury attorney.
Statistically speaking, the insurance company knows that if you hire an attorney, the final cost of the settlement will be much higher. Top offers extended by an adjuster to an unrepresented claimants are typically lower than those represented by an attorney.
- Settlement. This is an agreement you make with an insurance company on the amount of money owed for your loss. More specifically, a settlement is what the insurance company pays out on a claim that attempts to bring you back to a pre-accident state. A settlement is finalized with a document called a “release.” The release specifies the agreement between the adjuster and the claimant.
It’s critical that you read the release agreement carefully. If you accept the terms offered by the adjuster, you will be asked to sign the release and agree to not pursue the matter against their insured any further. A release is legally binding. Once you sign the release and settle your case, there is no turning back. The claim is over. Always make sure you are in full agreement before signing.
Have questions? Talk to an experienced Atlanta car crash injury lawyer
Now that you’ve ready this glossary of insurance terms, you’ll be better prepared to discuss your claim with the insurance company. However, adjustors have many tricks up their sleeves that help them avoid liability and convince you to settle for less than your claim is worth. Claimants who are represented by a lawyer typically receive higher insurance payouts after a car accident.
At Scholle Law, we’ve successfully recovered over $75 million for our clients. We have over 20 years of experience representing crash victims, including car accidents, truck accidents and motorcycle accidents. Give us a call or send a message to ask us a question about your case. Don’t let not understanding a glossary of insurance terms prevent you from getting the compensation you deserve.