Assigned Risk
If an applicant for auto insurance cannot find a company able to insure him or her voluntarily, the state assigns the risk to an insurance company in that state.

Bodily Injury Liability
Coverage that protects you against financial loss and pays legal defense costs when you are legally liable for injuring other persons in an auto accident. In auto insurance, both Bodily Injury and Property Damage liability are usually required by state law. The two are often referred to jointly as liability insurance.

Claim
A policyholder's request to recover losses covered by an insurance policy.

Collision Insurance
Coverage that reimburses you for damage to your own car resulting from a rollover or collision with another object (not necessarily another vehicle).

Comprehensive Insurance
Coverage that reimburses you for damage to your own car from causes other than collision, rollover or general wear-and-tear. It covers dangers such as hail, flood, theft, fire, glass breakage, falling objects, missiles, explosions, earthquakes, windstorms, vandalism or malicious mischief, and damage from a bird or animal.

Coverage
Indicates the type of coverage and/or how much the protection your insurance policy will provide.

Deductible
The amount you must pay before your insurance coverage begins paying. For example, if you had a $250 deductible and a loss of $800, you would pay the first $250 and the insurance company would pay the remaining $550. However, if the loss were less than or equal to $250, you would pay the entire amount and the insurance company would pay nothing.

Depreciation
The decrease in the value of your car or its parts due to age and general wear-and-tear.

Exclusion
A type of loss your policy will not cover.

Insured
A person covered by a policy.

Liability
Any legally enforceable obligation.

Liability Insurance
Covers accidental losses resulting from injury to the body or damage to the property of someone else for which the insured is legally responsible (legally liable). If the loss is covered by the insurance policy, the payment is made directly to the party that suffered the loss.

Limits
The maximum amount of insurance that can be paid for a covered loss. For example, if you have a $5,000 loss and the limit on your policy is $2,500, then $2,500 is the maximum your insurance company will pay.

Loss The basis for an insurance claim. Insurers also refer to losses as payments made on behalf of the insured.

Medical Payments Insurance
Coverage that reimburses you and your passengers -regardless of legal liability - for medical or funeral expenses stemming from bodily injury or death by accident.

Peril
The cause of a loss. Perils include theft, glass breakage, flood, hail and fire.

Policyholder
The person who pays a premium to an insurance company in exchange for the protection outlined in an insurance policy.

Premium
The amount of money paid for an insurance policy.

Property Damage Liability
Insurance that protects you against financial loss if you are legally liable to others for auto-related damage to their property.