Alphabetical List Of Popular Car Insurance Terminology
Reading an automobile insurance policy can be hard.
Talking to an insurance lawyer about your insurance policy can be even more difficult. Sometimes insurance lawyers are so experienced in insurance and the words used in insurance policies that we forget that many of the words are not common, that we learned them over the course of a career.
I hope to help define some of these terms to help non-lawyers better understand their policy and the advice of the attorneys they consult about the policy.
Here is the list of the most popular car insurance terminology that you may need to know;
Adjuster: An employee or agent of the insurance company responsible for attempting to settle a claim.
Arbitration: Many insurance policies contain a requirement or an offer that disputes be resolved through arbitration, not a jury trial. In most personal injury contexts requirements to participate in arbitration are unenforceable.
Bad Faith: The term given to conduct of an insurance company that is not legal. See also “good faith” and “good faith and fair dealing”
Benefits: The term used to describe what promises the insurance company makes to the insured person in an insurance policy.
Claim: The title given to the right of a person to collect benefits from an insurance policy. In the personal injury context, this is typically used to say that one files or brings a claim against an insurance company. Unresolved, a claim may become a lawsuit against the insurance company.
Cooperation/Duty to Cooperate: Most first-party insurance policies contain a requirement that the insured cooperate with the insurance company in the investigation of a claim by doing certain acts to assist the insurance company in its investigation.
Co-pay/co-insurance: The amount, usually a percentage of benefits paid, that an insured must pay after the insurance company has done so.
Declarations Page: The page in an insurance policy that sets forth all of the coverages and limits available under the policy, usually at the beginning of the policy.
Deductible: The amount of money an insured must pay before an insurance company is required to pay benefits under an insurance policy.
Examination Under Oath (EUO): The process by which an insurance company, through an attorney it hires, asks questions of an insured to assist it in determining what coverages and benefits are available to the insured.
First-Party Insurance/Insurer: There are two types of insurance, first party insurance and third party insurance. First-party insurance is insurance that provides benefits to the person who owns the policy. Health insurance is an example of first-party insurance as is PIP, UM, and UIM insurance.
Good Faith: The term is given to the conduct of an insurance company that is legal.
Good Faith and Fair Dealing: Under the law, insurance companies must treat their insureds fairly—more fairly than other businesses in the United States. This phrase is often used to describe the level of fairness required.
Insurance Medical Exam (IME): Most insurance policies contain a requirement that the insured person attend a medical examination by a doctor hired by the insurance company. These examinations are called Insurance Medical Exams or IMEs.
Insured: The person who is entitled to benefits under an insurance policy.
Insurer: The company that provides benefits under an insurance policy.
Liability Limit: The maximum amount of benefits available under a given coverage in an insurance policy.
Personal Injury Protection (PIP): A first-party coverage under an insurance policy that pays the costs of medical bills made necessary because of an injury in a car accident.
Recorded Statement: Following an accident, an insurance company may ask to take a recorded statement about the crash. Usually, you must give a recorded statement to your own insurance company and you do not have to give a recorded statement to the other insurance company.
Right of Reimbursement: The right of an insurance company to be paid back for benefits paid if you receive compensation for the same expenses from another source. For example, if health insurance pays medical expenses following a collision, and if a person collects money from another driver's automobile insurance for the same expenses, the health insurer may have a right of reimbursement for the amount it paid.
Subrogation: The legal right of an insurer to sue directly itself to enforce its right of reimbursement. True subrogation is rare.
Third-Party Insurance/Insurer: There are two types of insurance, first-party insurance, and third-party insurance. Third-party insurance is insurance that provides benefits to another person or entity. Liability insurance is an example of third-party insurance.
Uninsured Motorist Insurance (UM): First-party coverage is available under many insurance policies that provide benefits if a person is injured in a motor vehicle collision by a person who does not have any liability insurance.
Hopefully, this sheds some light on the sometimes difficult to know meanings of words used in an insurance policy and when discussing insurance policies. If you come across a word that isn't here, and if Google doesn't provide an easy-enough-to-understand definition, feel free to reach out.