| A glossary of common Insurance terms |
Actual Cash Value:
The value of lost, stolen, or damaged property after taking into consideration the age, condition, amount of use, and obsolescence of the property. It is commonly referred to as "ACV". |
Agent:
A person licensed to sell insurance. An agent is helpful in guiding you to coverages that are appropriate to you and your family and for giving you more personalized service. Our Agents, along with the entire AAA family strive to provide Legendary Service. (See: Finding offices near you) |
Anti-Theft Device:
These are active and passive devices that may qualify for a discount on insurance rates. These include systems which must be activated by the driver (active) or which are activated automatically (passive) when the ignition key is turned off. An additional type of anti theft device is the vehicle identification number etched into the glass of all the windows of the vehicle and on or near the front and rear bumpers. This VIN etching is available through AAA. |
'At Fault':
An accident involving a named insured, a resident of the named insured 's household, or any other operator who regularly drives the insured vehicle which results in death, bodily injury to a third party, damage to property of a third party, or a one car collision or vehicle upset. Also see Negligence. |
Business Use:
This means the covered vehicle is used for work-related purposes but is not owned by the business. An example of this is a salesman driving to visit his customers. |
Claim:
A request for payment by any person from an insurer that is due or believed to be due from a covered loss. |
Deductible:
The amount the policyholder is responsible for that will be deducted from any loss payment. For example, if a covered comprehensive claim is $1000 and the comprehensive deductible selected is $250, the policyholder would pay $250 and the insurance company will pay $750. If the covered comprehensive claim were $200 and the deductible selected is $250, the policyholder would pay $200 and the insurance company would pay nothing. Deductibles help to keep insurance rates lower by allowing the policyholder to raise the amount of their deductible and assume more of the risk of a covered loss. Raising the amount of the deductible generally lowers the cost of insurance, but carefully consider the amount of money that you would be able to pay on short notice before selecting your deductible. |
Depreciation:
The lowering in the value of property caused by age, obsolescence, and other factors that affect the actual cash value. |
Endorsement:
An attachment to an insurance policy that changes the insurance contract's original terms. |
Garaging Location:
The place where your vehicle is parked when not in use. This usually corresponds to your primary residence. |
Insured:
A person who has financial interest or liability in property or injury that are protected under an insurance policy. |
Lapse:
Termination of coverage for nonpayment of premiums. |
Liability:
An obligation, according to law, to compensate another found to have been harmed by one's negligent acts or omissions. Also see 'At Fault' and Negligence. |
Loss:
A claim paid or payable due to an insurance company's contractual obligations to the policyholder. |
Member:
An individual or organization affiliated with AAA with the full benefits of a member. (See: Member Benefits) |
Named Insured:
The person in whose name the policy is issued and listed on the policy declarations page. Also the spouse of that person if a resident of the same household. |
Negligence:
Failure to exercise the care that a prudent person normally exercises. Helps to determine liability. Commonly known as 'at fault'. |
No-fault Insurance:
A legislated system of insurance in several states, specifically Arkansas and Kansas, under which payment is made by the insured's own insurance company regardless of who is at fault. Details of this system vary significantly from state to state and the benefits are outlined in detail in the policy of insurance. |
Non-Member:
An individual or organization that is not yet affiliated with AAA and does not have the benefits of a member. (See: How to Join) |
Policy:
The written forms, including endorsements, that make up the insurance contract between a policyholder and the insurance company. A policy includes all terms and conditions of the coverage including important exclusions. |
Policy Declarations:
The part of the insurance contract that lists basic underwriting and policy information, including the insured's name, address, descriptions of insured vehicles, and policy limits. |
Policyholder:
The owner of an insurance policy. |
Policy Limits:
The maximum amount payable under each coverage. These limits are often regulated by each state and should be carefully considered to meet your needs and protect your assets. |
Policy Period:
The amount of time an insurance policy lasts. This period is from the time that the policy is bound to the time that the policy is canceled or renewed for another policy period. |
Premium:
The price for insurance coverages selected for the policy period. |
Settlement:
The payment or adjustment of an account or claim. |
Underwriting:
The process of reviewing applications for acceptance and classification based on factors such as vehicle type, garaging location, prior accidents, traffic violations, and other factors. |
VIN:
Refers to the vehicle identification number of your vehicle. This unique number is found on the metal tag attached to your dash board on the driver's side. You can see the tag by looking through the windshield from the outside of your vehicle. It can also be found on the "Safety Compliance Certification Label " located on the drivers side door lock or latch pillar. This number is also listed on state vehicle registrations and vehicle titles. The VIN number is a combination of letters and numbers 17 characters in length (after 1980) that can be used to identify the make, model, and year of your car as well as other encoded information such as restraint type. |
