Insurance Dictionary
Auto Insurance Dictionary
40 plain-English auto insurance terms explained simply. Start with the simple meaning, then read the insurance meaning when you want more detail.
Accident forgiveness
Simple meaning: A feature that may keep one qualifying accident from increasing your price under the program's rules.
Insurance meaning: An insurer program or endorsement that may limit certain rating consequences after a qualifying accident. Eligibility and effect vary by insurer and state.
Important: It does not erase the accident from the record or guarantee the premium will not change for other reasons.
Auto insurance deductible
Simple meaning: The amount you pay toward covered damage to your own car before the insurer pays the rest, up to policy terms.
Insurance meaning: A deductible that commonly applies separately to collision or comprehensive claims. Liability coverage usually does not use a deductible for the insured in ordinary personal auto policies, though policies vary.
Auto liability insurance
Simple meaning: Coverage that can pay when you are legally responsible for hurting someone or damaging their property with a vehicle.
Insurance meaning: Auto liability coverage generally includes bodily injury liability and property damage liability, subject to policy limits, exclusions, and state law.
Bodily injury liability
Simple meaning: Coverage for injuries you are legally responsible for causing to other people in an auto accident.
Insurance meaning: Auto liability coverage that can pay covered damages for bodily injury to others for which an insured is legally liable, up to policy limits.
Business use (personal auto)
Simple meaning: Using a personal vehicle for work-related driving.
Insurance meaning: Use of a personal vehicle in connection with work or business. Some uses may be covered, limited, or excluded under a personal auto policy depending on policy terms.
Collision coverage
Simple meaning: Coverage for damage to your car from hitting another car or object, or from certain rollovers.
Insurance meaning: Physical damage coverage for the insured vehicle when it collides with another vehicle or object or overturns, subject to deductible and policy terms.
Combined single limit (CSL)
Simple meaning: One liability limit shared across covered bodily injury and property damage from an accident.
Insurance meaning: A single total liability limit available for covered bodily injury and property damage arising from one accident, subject to policy terms.
Also called: CSL
Commute use
Simple meaning: Driving regularly to and from work or school.
Insurance meaning: An auto use classification based on routine commuting. Mileage and frequency may affect rating.
Comprehensive auto coverage
Simple meaning: Coverage for many kinds of car damage that are not collisions, like theft, hail, fire, or falling objects.
Insurance meaning: Auto physical damage coverage for specified non-collision causes of loss, usually subject to a deductible. Covered causes and exclusions are defined by the policy.
Also called: Other-than-collision coverage
Diminished value
Simple meaning: The drop in a vehicle's market value after it has been damaged and repaired.
Insurance meaning: A claimed reduction in market value because a vehicle has a damage history. Whether and how it is recoverable depends on facts, policy, claim type, and state law.
Excluded driver
Simple meaning: A person the policy specifically says is not covered to drive the vehicle.
Insurance meaning: A driver specifically excluded by endorsement or policy provision. Exclusions are regulated and may not be available or enforceable the same way in every state.
FR-44
Simple meaning: A financial-responsibility filing used in a small number of states for certain higher-risk drivers.
Insurance meaning: A state-specific proof of financial responsibility that may require higher liability limits than ordinary minimums. It is not used nationwide.
Full coverage
Simple meaning: A casual phrase people use for an auto policy with more than just liability coverage.
Insurance meaning: An informal, nonstandard term. It often means liability plus collision and comprehensive, but there is no universal insurance definition and it does not mean every possible loss is covered.
Important: Avoid using full coverage without explaining the actual coverages and limits.
Gap insurance
Simple meaning: Coverage that may help with the difference between what a totaled or stolen car is worth and what you still owe on a loan or lease.
Insurance meaning: Coverage designed to pay some or all of the difference between a vehicle's covered claim value and an outstanding finance or lease balance, subject to contract terms and exclusions.
Also called: Loan/lease gap coverage
Garaging address
Simple meaning: The place where a vehicle is usually kept.
Insurance meaning: The primary location where an insured vehicle is principally garaged or kept, which may affect underwriting and pricing.
Hired and non-owned auto (HNOA)
Simple meaning: Business liability coverage for certain rented cars and employee-owned cars used for work.
Insurance meaning: Liability coverage for specified hired and non-owned autos used in business operations. It generally does not insure physical damage to an employee's own car unless separately arranged.
Also called: HNOA
Hired auto
Simple meaning: A vehicle a business rents, leases, hires, or borrows under certain conditions.
Insurance meaning: A commercial auto term for certain autos the insured leases, hires, rents, or borrows, as defined by the policy.
Liability-only auto insurance
Simple meaning: An auto policy without collision or comprehensive coverage for your own car.
Insurance meaning: An informal term usually describing a policy that carries liability and any other required coverages but excludes collision and comprehensive physical damage for the insured vehicle.
Medical payments coverage (auto)
Simple meaning: Coverage that may help pay medical bills for you or passengers after an auto accident.
Insurance meaning: Optional or state-specific auto coverage that can pay covered medical or funeral expenses for insured people after an accident, often without regard to fault.
Also called: MedPay
Mileage rating
Simple meaning: Using how much you drive as one part of the insurance price.
Insurance meaning: Rating that considers annual or estimated vehicle mileage as an exposure factor.
No-fault insurance
Simple meaning: A system where certain accident benefits can be paid by your own insurer even before deciding who caused the crash.
Insurance meaning: An auto insurance system used in some states in which specified first-party benefits are paid without regard to fault, subject to state rules. It does not always mean fault is irrelevant for every claim.
Non-owned auto
Simple meaning: A vehicle a business does not own but that is used for business, such as an employee's car.
Insurance meaning: A commercial auto term for certain vehicles not owned, leased, hired, rented, or borrowed by the business but used in connection with its operations, subject to policy definitions.
Permissive use
Simple meaning: Someone drives your car with your permission.
Insurance meaning: Use of an insured vehicle by another person with the named insured's permission. Coverage for permissive drivers depends on policy wording and state law.
Personal injury protection (PIP)
Simple meaning: Coverage that may pay certain medical costs and other listed expenses after an auto accident, no matter who caused it.
Insurance meaning: A no-fault style auto coverage available or required in some states that may cover medical expenses, lost income, essential services, or other benefits defined by state law and the policy.
Also called: PIP
Pleasure use
Simple meaning: Driving mainly for personal reasons, not primarily for work or business.
Insurance meaning: An auto use classification for primarily personal driving. Definitions and rating treatment vary by insurer.
Property damage liability
Simple meaning: Coverage for property you are legally responsible for damaging with a vehicle.
Insurance meaning: Auto liability coverage that can pay covered damages to another person's property when an insured is legally liable.
Rated driver
Simple meaning: A driver whose information is used when the insurer prices the policy.
Insurance meaning: A household or listed driver whose characteristics are considered in underwriting or rating, subject to insurer rules and state law.
Rental reimbursement coverage
Simple meaning: Coverage that may help pay for a rental car while your covered damaged car is being repaired.
Insurance meaning: Optional auto coverage that reimburses temporary transportation or rental costs after a covered loss, subject to daily and total limits and eligibility rules.
Roadside assistance
Simple meaning: Help for things like a tow, dead battery, flat tire, lockout, or running out of fuel.
Insurance meaning: Optional service or coverage for specified roadside emergencies. Services, limits, and claim handling vary by provider and policy.
Salvage value
Simple meaning: What damaged property may still be worth after a loss.
Insurance meaning: The remaining value of damaged property after a loss, often relevant in total-loss settlements and salvage disposition.
Split limits
Simple meaning: Different liability limits for different parts of an auto claim.
Insurance meaning: Auto liability limits stated separately, commonly as per-person bodily injury, per-accident bodily injury, and per-accident property damage limits. For a current state example, see California’s minimum auto liability requirements.
SR-22
Simple meaning: A form an insurer files to show a driver has required liability insurance.
Insurance meaning: A certificate of financial responsibility filed with a state by an insurer for a driver who is required to prove qualifying auto liability coverage. Requirements vary by state.
Important: An SR-22 is not itself an insurance policy.
Stacking
Simple meaning: Combining certain insurance limits from more than one vehicle or policy when the law and policy allow it.
Insurance meaning: A method of combining UM/UIM or other applicable coverage limits. Whether stacking is allowed, restricted, or waivable varies by state.
Telematics
Simple meaning: Technology that records information about a vehicle or how it is driven.
Insurance meaning: Technology used to collect and transmit vehicle or driving data. Insurers may use permitted telematics information for discounts, pricing, underwriting, or services.
Total loss
Simple meaning: Damage is so serious that the insurer treats the vehicle as not reasonable to repair under the applicable rules.
Insurance meaning: A vehicle is considered a total loss when repair economics or legal thresholds make total-loss settlement appropriate. Standards vary by state and insurer.
Towing and labor coverage
Simple meaning: Coverage that may help pay towing or roadside labor costs.
Insurance meaning: Optional auto coverage for towing and specified labor performed at the place a vehicle becomes disabled, subject to limits.
Underinsured motorist (UIM) coverage
Simple meaning: Coverage that may help when the at-fault driver has insurance, but not enough for a covered loss.
Insurance meaning: Coverage that may pay certain damages when an at-fault motorist's liability limits are insufficient. Rules vary significantly by state.
Also called: UIM
Uninsured motorist (UM) coverage
Simple meaning: Coverage that may help if a driver with no liability insurance hurts you or causes a covered loss.
Insurance meaning: Coverage for certain losses caused by an uninsured or hit-and-run motorist. Availability, required offers, limits, and covered damages vary by state.
Also called: UM
Usage-based insurance (UBI)
Simple meaning: Auto insurance that uses driving information to help price or manage the policy.
Insurance meaning: An auto insurance program that may use mileage or telematics data such as braking, acceleration, time of day, or other driving behavior, subject to program terms and law.
Also called: UBI
Vehicle identification number (VIN)
Simple meaning: A vehicle's unique identifying number.
Insurance meaning: A standardized identifier assigned to a motor vehicle and used to identify the exact vehicle for underwriting, claims, registration, and other purposes.
Also called: VIN
Back to the Insurance Dictionary
About Ensurance
Ensurance is a U.S. insurance-shopping company that helps people shop for better insurance prices and coverage options through one protected request.
Ready to shop for auto insurance? Start one protected request with Ensurance.
Get an Auto Quote Now from Ensurance
More help. More choices. Less spam. Explore Auto Insurance