It is recommended that you look over your car insurance policy and read it carefully so that you know the details of what is covered and what is not. As good as that sounds, the language of an auto insurance coverage contract can be pretty tricky to understand. To help you better understand your auto insurance coverage, here are the definitions of 10 terms that will help you navigate any car insurance policy.
Car Insurance Definition #1: Admitted Company
An admitted company is an insurance company authorized to do business in your state.
Car Insurance Definition #2: Adverse Carrier
An adverse carrier is the opposing party’s insurance company.
Car Insurance Definition #3: Binder
A binder is a temporary agreement that states that your new car insurance policy is in effect when it is impossible to endorse the auto insurance plan right away.
Car Insurance Definition #4: Competitive Auto Repair Parts
Competitive auto repair parts are vehicle parts used to repair your car that are made by a different manufacturer than the company that made your car. They cost less but are of comparable quality and are usually covered by car repair insurance claims.
Car Insurance Definition #5: Drive-Other-Car Endorsement
Drive-other-car endorsement is an optional feature on your car insurance policy that expands your coverage so that other cars you don’t own will be covered when you are driving.
Car Insurance Definition #6:Endorsement
An endorsement is any document attached to your car insurance policy that modifies or changes the original policy in any way.
Car Insurance Definition #7:Indemnification
Indemnification refers to the act of providing compensation for a loss (whether it’s a property loss or a medical cost) with the goal of restoring that person to the financial status they enjoyed before the incident. That is, in a car insurance policy, the term refers to the fact that if you are hit by someone or your car or person are damaged, then thanks to your insurance coverage, you will be covered for all your costs.
Car Insurance Definition #8:Lapse in Coverage
A lapse in coverage refers to any point at which your auto insurance policy is not valid. This term applies whether your car insurance policy is canceled, terminated due to lack of payment or voided for any other reason.
Car Insurance Definition #9:Material Misrepresentation
Material misrepresentation refers to the event in which you make false statements to an insurance company. This can occur when you apply and “misrepresent” the car as being safely parked in a garage as opposed to less safely parked on the street or when you file an insurance claim and “misrepresent” the facts of the claim in order to receive money fraudulently.
Car Insurance Definition #10:Payment Recovery or Subrogation
If you are hurt or your car is damaged in a car accident that was the fault of another driver and you ask your insurance provider to cover the claim, they are within their rights to reimburse your costs and then ask for reimbursement in turn from the insurance company providing car insurance coverage to the at-fault driver.
Sources
Insurance Information Institute
U.S. Department of Transportation
Consumer Action: Auto Insurance
