Vocabulary
Glossary
Definitions written for drivers deciding between liability-only and full coverage, and those choosing liability limits. Each term links back to the guides where it matters.
- Actual cash value (ACV)
- What your car was worth just before a loss—replacement cost minus depreciation. The basis for deciding whether collision is worth keeping.
- Bodily injury liability (BI)
- Pays for injuries you cause to others—medical costs, lost income, pain and suffering—and your legal defence, up to the per-person and per-accident limits.
- Collision coverage
- Pays to repair or replace your own car after a crash, minus the deductible. Not included in a liability-only policy.
- Combined single limit (CSL)
- One limit covering all injuries and property damage in a single crash, instead of split limits.
- Comprehensive coverage
- Pays for non-crash damage to your car—theft, weather, flood, fire, vandalism, animals, glass. Can be carried without collision.
- Deductible
- What you pay before collision or comprehensive pays. Liability coverages have no deductible.
- Endorsement
- A mid-term change to a policy, such as removing collision, with the premium adjusted pro-rata.
- Full coverage
- Informal term for liability plus collision and comprehensive.
- Lapse
- A gap in coverage. Rated as a risk factor by most insurers; avoid by changing coverage rather than cancelling.
- Liability limits
- The maximum your policy pays for liability claims, written as three numbers in thousands (e.g. 100/300/100).
- Personal injury protection (PIP)
- No-fault coverage for your own injuries regardless of fault, required in about a dozen states.
- Premium
- The price of a policy, quoted per six or twelve months.
- Property damage liability (PD)
- Pays for damage you cause to other people's property—vehicles, buildings, fences—up to the per-accident limit.
- Split limits
- Separate limits for BI per person, BI per accident and PD per accident—the common 25/50/25 format.
- State minimum
- The lowest liability limits (and any other coverages) a state requires to register and drive a vehicle. A legal floor, not a recommendation.
- Umbrella policy
- Extra liability coverage—usually $1 million or more—that sits above your auto and home limits. Requires underlying limits of about 250/500.
- Uninsured/underinsured motorist (UM/UIM)
- Pays for your injuries (and in some states vehicle damage) when the at-fault driver has no or too little insurance. Required in about twenty states.