FR Glossary of Terms

A

ABSOLUTE COVERAGE**

A motor vehicle liability policy, certified as proof of financial responsibility for the future, under which the insurer cannot use the normal policy defenses if the insured violates a provision of the policy. (See Motor Vehicle Liability Policy.)

ABSTRACT*

A complete history in abbreviated form of a case found on court record.

ACCIDENT**

A sudden event which is unforeseen and unintended, sometimes caused by negligence, that results in injury, loss or damage. (sometimes referred to as a "Crash.")

ACCIDENT REPORT*

A form designed for reporting accidents to motor vehicle authorities.

ACTUAL CASH VALUE (ACV)**

The cost of replacing or restoring property at prices prevailing at the time and place of the loss less depreciation.

ADDITIONAL INSURED**

Any person (or legal entity) provided coverage in the policy other than, or in addition to, the named insured (q.v. named insured).

ADDITIONAL PERSONAL INJURY PROTECTION (ADDITIONAL PIP)**

Added first-part no-fault coverage which an insurer makes optionally available, at an additional premium, to the named insured above Basic PIP.

AFFIDAVIT*

Generally a sworn statement as to a fact.

ARBITRATION**

A non-judicial process involving the referral to disinterested but knowledgeable parties of a case in controversy when the insurer(s) and/or insureds cannot agree on the final disposition of a claim. The decision agreed upon is binding upon both parties; however, the decision may be appealed to the courts in some instances.

ASSIGNED RISK PLAN (AUTOMOBILE INSURANCE PLAN)**

Insurance plan for persons unable to secure coverage from insurance companies on a voluntary basis. There is one rate level and individual policies are assigned to specific companies according to the percentage of the market they insure.

AUTOMATIC LIABILITY PROVISION*

One that automatically extends liability coverage to the insured if he purchases an additional or replacement vehicle of similar classification.

AUTOMOBILE**

Any motor vehicle required to be registered for use on the roads.

B

BASIC PERSONAL INJURY PROTECTION (Basic PIP)**

Minimum no-fault coverage required to be afforded under an automobile insurance policy. Depending on the extent and specific limits within which a particular no-fault law applies, benefits are generally provided for medical, hospital and funeral expenses, rehabilitation, loss of income, loss of services and survivors' loss.

BENEFITS**

Payment under an insurance policy for loss or expenses incurred by the insured.

BINDER**

An agreement between the insurer and applicant to provide temporary coverage until a policy can be issued.

BODILY INJURY**

Physical harm, sickness, or disease, to an individual including death resulting from an accident involving the ownership, maintenance or use of a motor vehicle.

BODILY INJURY LIABILITY INSURANCE (BIL)**

Protection against loss arising out of the liability imposed by law upon the insured for damages due to bodily injury (see above) sustained by any person or persons.

BROAD FORM (DRIVE OTHER CARS) COVERAGE*

An endorsement to an owner's policy extending coverage to an insured because of bodily injury or death or destruction of property arising out of the use of any non-owned vehicle.

C

CANCELLATION**

The termination of an insurance policy before its normal expiration date. Such action is subject to the terms of the policy.

CASES, FILES, FOLDERS*

Records that have been collected and recorded by the motor vehicle authorities. Usually contain accident reports, insurance information and driving record.

CDL****

Commercial Drivers License (See Commercial Drivers License)

CERTIFICATE OF INSURANCE (also see I.D. Cards)**

Evidence that an insurance policy has been issued, showing the amount and type of insurance provided. (In certain jurisdictions, a Certificate of Insurance implies that coverage is in force until terminated.)

CERTIFICATE OF MAILING*

A document showing that an item was placed in the postal system.

CLAIM**

Demand by a first - or third-party for payment of a loss, estimated or actual, covered under an insurance policy.

First-part claim - Demand for payment by an insured directly to his own insurer.

Third-party claim - Demand for payment under a liability policy by someone other than an insured under the policy. Payment hinges on the question of negligence by an insured in injuring the person or property of a third party.

CLAIM FREQUENCY**

A measure of the rate at which claims are experienced. It may be expressed as the number of claims per vehicles insured for a specific period of time, or as the number of claims per a certain number of coverages (e.g. 100) for a specific period of time.

CLAIM SEVERITY**

Average cost per claim.

COLLISION COVERAGE (INSURANCE)**

Covers damage to the insured vehicle caused by collision or upset with any object, stationary or moving.

COMMERCIAL DRIVERS LICENSE (CDL)****

A license issued by a State or other jurisdiction, in accordance with the standards contained in 49 CFR Part 383, to an individual which authorizes the individual to operate a class of a commercial motor vehicle.

COMPARATIVE NEGLIGENCE**

Tort system in which an insured person may recover damages, even if such person is found to be negligent in some degree. However, recovery is reduced in proportion to such negligence.

COMPLIANCE*

To fulfill the requirement(s) stated in a revocation or suspension order.

COMPREHENSIVE COVERAGE (INSURANCE)**

Covers Physical Damage to the Vehicle other than by collision or upset.

COMPULSORY (SECURITY LAW)**

Statutory requirement that a vehicle be insured during the period of registration or when operated. (This statutory requirement can be satisfied in most states by either the purchase of insurance, a bond, negotiable securities, or by a qualified self-insurance program.)

CONTRIBUTING CIRCUMSTANCES*

A shared occurrence such as negligence.

CONTRIBUTORY NEGLIGENCE**

Tort system in which an injured person may not recover any damages if that person was negligent to any degree and that negligence contributed to cause the accident.

CONVICTION REPORTS*

Document filed by the court with motor vehicle authorities as evidence of conviction of a traffic law violation.

COVERAGE**

The extent of insurance protection afforded by a policy of insurance - such as Liability coverage, Physical Damage coverage, U M coverage, No-Fault coverage. (Used interchangeably with the word "protection" to denote the insurance provided under the terms of a policy.)

D

DAMAGES**

Legal term referring to the sum awarded as compensation pursuant to a lawsuit to one who has suffered bodily injury or property damage because of another person's negligence. Generally divided into two classifications:

Special Damages for economic loss involving actual out-of-pocket expenses incurred; e.g., through loss of income, medical expenses, and repair bills for damaged property.

General Damages for intangible loss that cannot be measured directly in monetary terms; e.g., pain and suffering, mental anguish, inconvenience, loss of the enjoyment of life, loss of a bodily member, loss of vision, etc.

DECLARATIONS PAGE**

That portion of the policy which sets forth such information as the person and property insured, the coverage period, the amount of insurance coverage provided, applicable premiums, etc.

DEDUCTIBLE**

An amount specifically provided for in the policy to be deducted from any loss payment. (Premium is reduced as deductible is increased.)

DISQUALIFICATION****

Means either:

the suspension, revocation, cancellation or any other withdrawal by a State of a person's privileges to drive a commercial motor vehicle; or

a determination by the FHWA, under the rules of practice for motor carrier safety continued in Part 386, that a person is no longer qualified to operate a commercial motor vehicle under Part 391; or

the loss of qualification which automatically follows conviction of an offense listed in Part 383.51

DRIVER RECORD*

See MVR

DRIVING PRIVILEGE*

An entitlement to operate motor vehicles under the laws of a state.

E

EFFECTIVE DATE**

The date on which an insurance binder or policy goes into effect, and from which time protection is provided.

ENDORSEMENT**

A page or form added to the policy which changes the policy provisions in some manner; i.e., change of name, change in coverage, etc.

EXCLUSION**

A provision of an insurance policy referring to hazards, perils or property not covered by the policy.

EXEMPTION*

Free from an obligation or duty required of others.

EXPIRATION**

A specified date shown in the policy at which time the policy will cease to be in effect.

F

FINANCIAL RESPONSIBILITY*

Ability to respond to liability for damages arising out of the ownership, maintenance, use or operation of a motor vehicle

FINANCIAL RESPONSIBILITY LAW**

A law under which a person involved in a reportable automobile accident may be required to furnish security for such accident and must provide proof of available security for future accidents.

FINANCIAL RESPONSIBILITY LIMITS*

Minimum amounts of liability and property damage insurance that must be carried to meet statutory requirements.

"FIRMED UP"**

Used in connection with cancellations to indicate the point at which a policy cannot be rewritten or reinstated without a lapse in coverage

FLAT CANCELLATION**

The cancellation (see above) of a policy at its effective date, before the company has assumed liability. This requires the return of paid premium in full.

G

GRACE PERIOD**

An administrative procedure used by some insurers whereby premiums may be paid within a short period following the premium due date thereby permitting the policy to continue in force without interruption.

GUEST STATUTE**

Law exempting drivers from tort actions by passengers who ride voluntarily and without charge, unless an accident is caused by the driver's gross negligence or willful or wanton misconduct.

H

HABITUAL OFFENDER*

A driver determined to be unfit to operate a vehicle because of multiple traffic violations.

HAZARD**

Condition or element which increases certainty of loss.

HEARING (ADMIN)*

An opportunity afforded by motor vehicle authorities for an individual to present his side of a case.

HOLD IN ABEYANCE*

To temporarily set aside or stop a license withdrawal action.

I

IDENTIFICATION CARD (I.D. CARD)**

A card issued by an insurance company as evidence of automobile insurance being in force at the time of the card's issuance.

IICMVA**

Insurance Industry Committee on Motor Vehicle Administration.

INSURED**

The individuals protected by an insurance policy. Besides the named insured, may also include others; (e.g., resident household members, permissive users of an automobile covered by the policy, guest occupants of, and pedestrians struck by the insured automobile).

INVOLVEMENT*

A state of being included

L

LAPSE**

The expiration of coverage due to nonpayment. This may be after the premium due date or immediately following any "grace period" if allowed.

LEGALLY PARKED VEHICLE*

Any vehicle properly parked in an area which does not prohibit parking of vehicles.

LIABILITY**

Generally, any legally enforceable obligation. The term is most commonly used in a monetary sense.

LIABILITY INSURANCE**

A term frequently used to describe a form of coverage (see BIL, PDL) whereby the insured is protected against liability claims. Also applicable to UM coverage (see below).

LIABILITY LIMITS**

The maximum amount(s) of liability insurance agreed to by the insured and the insurance company.

LIMITED LICENSE*

A license to drive only under certain conditions specified on the license. This could include driving to and from alcohol treatment program, to and from health care facility, to and from school, and for hardship cases for homemakers. (See Occupational and Restricted License.)

M

MANDATORY*

Required by law.

MATERIAL DAMAGE**

(See physical damage coverage)

MEDICAL PAYMENTS INSURANCE**

Optional coverage available on a supplementary basis under various liability insurance policies. Regardless of the insured's liability, the company will reimburse the insured (and others, as specifically provided in the policy) for medical or funeral expenses incurred because of bodily injury or death by accident under conditions specified in the policy.

MOTOR VEHICLE***

Any vehicle which is self-propelled and every vehicle which is propelled by electric power obtained from overhead trolley wires, but not operated upon rails, except vehicles moved solely by human power and motorized wheelchairs.

MOTOR VEHICLE LIABILITY POLICY**

In certain jurisdictions, an automobile liability policy which has been certified as proof of financial responsibility for the future under a certificate of insurance, such as an SR-22, filed by the insurer on behalf of its insured with the Department of Motor Vehicles. (See Absolute Coverage.)

MOTOR VEHICLE RECORD (MVR)*

Transcript of driver record maintained by state on the convictions and sometimes the accidents a licensed driver has had. Not all MVR's include accident information. (Sometimes referred to as "Driver History Record" or a "Driver License Record.")

MOVING VIOLATION*

Violation of any motor vehicle law pertaining to the operator or operation of a motor vehicle except parking violations where points to license/record may be required.

N

NAMED INSURED**

Any person (and resident spouse), or legal entities specifically named in the policy.

NEGLIGENCE**

Failure to use the care that a reasonable and prudent person would have used under the same or similar circumstances in avoiding harm to others. Such failure can result in the imposition of liability.

NO-FAULT AUTO INSURANCE**

Generally, a plan in which the insured is covered regardless of fault for some or all of his loss, subject to specified limits, as the result of an automobile accident. Whether or not tort immunity applies depends on the type of no-fault law in effect - Pure, Modified or Add-On:

Pure No-Fault - Pays all special damages without permitting any recourse to the tort liability system.

Modified No-Fault - Pays most special damages, subject to specified limits, and permits recourse to the tort liability system only under specified circumstances.

Add-On No-Fault - Pays some special damages, generally medical expenses and lost wages at minimal limits, for which coverage is merely added on to the policy without restricting one's recourse to the tort system.

NONRENEWAL**

The termination of an insurance policy at the expiration date or at the anniversary date, with no succeeding policy being issued.

O

OCCUPATIONAL LICENSE*

A license to drive only while in the performance of one's job; a restricted, limited license. (See Limited and Restricted License.)

OPERATOR*

Every person who drives or is in actual physical control of a motor vehicle upon a highway or who is exercising control over or steering a vehicle being towed by a motor vehicle.

OPERATORS PRIVILEGE*

An entitlement to operate motor vehicles under the laws of a state. (See Driving Privilege.)

OWNER***

A person, other than a lien holder, having property in or title to a vehicle. The term includes a person entitled to the use and possession of a vehicle subject to a security interest in another person, but excludes a lessee under a lease not intended as security.

P

PAIN AND SUFFERING**

(See Damages, General)

PEDESTRIAN***

Any person traveling on foot.

PERIL**

The cause of a loss insured against in a policy; e.g., fire, windstorm, explosion, theft, etc.

PERSONAL INJURY PROTECTION (PIP) COVERAGE**

A first party no-fault coverage in which insurers pay within specified limits medical, hospital and funeral expenses of the insured, others in the vehicle, and pedestrians struck by them.

PHYSICAL DAMAGE COVERAGE**

Insurance providing payment to the named insured because of damage to, or loss of, the insured automobile resulting from collision, fire, theft or other perils.

POLICY**

A written contract of insurance.

POLICY NUMBER**

A unique number used to identify each insurance policy.

POLICYHOLDER**

(see Named Insured)

POSSIBILITY OF JUDGMENT*

A determination of competent authority that there is a reasonable chance that a judgment could be rendered.

PRIMARY (OR EXCESS) COVERAGE**

Refers to a policy coverage which will initially pay losses (primary) and to a policy coverage which will only pay after another policy coverage is exhausted (excess).

PROBABILITY OF JUDGMENT*

A determination by competent authority that there is a reasonable chance that a judgment could be rendered.

PROOF PERIOD*

The period for which a person is required to furnish proof of financial responsibility for the future.

PROPERTY DAMAGE**

Damage to or loss of use of any property of others as the result of an accident involving the ownership, maintenance or use of an automobile. (Not to be confused with Physical Damage insurance under which the insured may recover damage to an owned automobile on a first-party basis, regardless of fault.)

PROPERTY DAMAGE LIABILITY INSURANCE (PDL)**

Protection against liability for damage to the property of another - not in the care, custody and control of the insured - as distinguished from liability for bodily injury.

PROTECTION**

The extent of insurance protection afforded by a policy of insurance - such as Liability coverage, Physical Damage coverage, U M coverage, no-fault coverage. (Used interchangeably with the word "coverage" to denote the insurance provided under the terms of a policy.)

PURVIEW/SCOPE*

The range or limit of authority.

R

RECIPROCITY*

Agreements between jurisdictions.

REGISTRATION***

The registration certificate or certificates and registration plates issued under the laws of a state pertaining to registration of vehicles.

REINSTATEMENT* (OF OPERATOR'S LICENSE)

Restoration of driving privileges following suspension or revocation.

REINSTATEMENT FEE*

Fee required to be paid to the proper authorities before a suspended or revoked license may be reinstated.

RELEASE*

To relieve from debt or obligation; to relinquish.

RENEWAL**

A policy issued to replace one which is expiring.

RENEWAL CERTIFICATE**

A policy is sometimes renewed by issuing a certificate rather than writing a new policy. The certificate refers to the policy, but does not enumerate all of its terms.

REPORTABLE ACCIDENT*

A motor vehicle accident with personal injury and/or property damage amounting to the minimum dollar amount established by the state wherein the accident occurred.

RESPONDENTS*

One who answers in legal proceedings

RESTRICTED LICENSE*

A license to drive only under certain conditions specified on the license. This could include driving to and from alcohol treatment program, to and from health care facility, to and from school, and for hardship cases for homemakers. (See Occupational and Limited License.)

REVOCATION***

A termination by formal action of the department of a person's privilege to drive or register a motor vehicle on the highways.

RISK**

Uncertainty of loss. (Also commonly used to refer to the named insured.)

S

SECURITY DEPOSIT*

Bonds, cash or securities required to be deposited to satisfy claims arising from an accident.

SELF CERTIFICATION**

Motor vehicle owner's statement that he has, and will continue to maintain, the coverage(s) required by statute. This statement is usually made part of the application for registration or submitted upon inspection of the vehicle.

SELF INSURED*

An owner or other appropriate person that has been approved by the jurisdiction and has been provided evidence that reliable financial arrangements, deposits, or commitments exist to provide assurance, substantially equivalent to that afforded by a policy of insurance for payment of tort liabilities, basic economic loss benefits, and all other obligations that are imposed by the jurisdiction.

"STOP" -- "BLOCKED"*

Flagging a person's registration and/or driving record.

SUBROGATION**

Process by which an insurer assumes the insured's right to seek reimbursement from a liable third-party for any loss the insurer has paid the insured.

SUSPENSION*** (OF OPERATOR'S LICENSE)

The temporary withdrawal by formal action of the department of a person's privilege to drive or register a motor vehicle.

T

THRESHOLD**

A pre-condition set forth in modified no-fault statutes which must be met or exceeded in order to bring a bodily injury action or claim for general damages. Once the threshold is met, there is no limitation on the amount of tort recovery. Generally, these pre-conditions are stated as dollar amounts of medical expenses or days of disability.

TERMINATION NOTICE**

A form which advises the insured of the cancellation or nonrenewal of the policy. Under certain circumstances, copies are sent to motor vehicle departments.

TORT**

A wrongful act, injury or damage, other than a breach of contract, which violates a duty imposed by law upon a person, and for which a civil action can be brought.

TORTFEASOR**

One who commits a tort.

TORT LIABILITY**

Legal obligations for payment of damages by one judged to have committed a tort.

U

UMVARA*

Uniform Motor Vehicle Accident Reparations Act.

UNDERWRITING**

The process of accepting or rejecting risks offered to insurance companies. It also includes the classifying and pricing of accepted risks.

UNINSURED MOTORIST COVERAGE**

A coverage which affords liability payments by an insurance company to its own insured when the tortfeasor is: 1) uninsured, 2) unidentified, or 3) insured by an insolvent insurance company.

UNDERINSURED MOTORISTS COVERAGE**

A coverage which affords liability payments by an insurance company to its own insured when the tortfeasor is insured but has liability limits which are less than that of the innocent insured.

V

VEHICLE IDENTIFICATION NUMBER (VIN)*

Identification number of a motor vehicle.

VERIFICATION OF INSURANCE**

A response by the insurance company to a motor vehicle department's request which confirms or denies the motorist's claim of insurance coverage. This response may be required on each inquiry (positive) or only in those instances where coverage cannot be confirmed (negative).

W

WAIVE*

To refrain from requiring or enforcing; dispense with.