In order to understand the repair process and to be better informed in your decisions, we have included brief descriptions of common industry terminology.
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Accident Forgiveness: a relatively new option offered on an auto policy (not all insurers offer this option). This option acts like an extra insurance within the auto policy. If an insured is involved in an accident and they are deemed liable/responsible for the accident; this option will negate a rate increase on their policy.
Actual cash value: an amount equal to the cost of replacing a damaged item with a new one, minus depreciation.
Adjuster: a person who investigates and evaluates for an insurance carrier the damages caused in an accident
Aftermarket Parts: These are parts that are produced by independent parts manufacturers. The vehicle manufacturers do not produce them. They are copied versions of the original parts and are of good quality. They are less expensive than OEM parts.
Agent: an insurance salesperson who sells and services policies. An independent agent usually represents two or more insurers in a sales and service capacity and is paid on a commission basis. An exclusive agent or captive agent represents only one company, usually on a commission basis.
At-fault: the party involved in an accident and deemed responsible for an accident. The % to which a party is deemed responsible for an accident may vary depending on the circumstances of the accident with respect to the “rules of the road” in any specific jurisdiction.
Auto Insurance Policy: The six basic coverages contained in an Auto Policy are: Bodily Injury, Medical or Personal Injury Protection, Property Damage, Collision, Comprehensive, and Uninsured Motorist Coverage
Binder: a temporary insurance contract that provides proof of coverage until you receive a permanent policy from the company. A binder is subject to the payment of a premium.
Bodily injury liability: insurance that pays for another person’s bodily injury or death in an automobile accident caused by you. It compensates those people for pain, suffering, and other personal hardships, and will also pay for some economic damages (i.e., lost wages).
Broker: an insurance salesperson who deals with insurance companies to find insurance for consumers.
Cancellation: a termination of a policy before its normal expiration date.
Claim: a request for reimbursement for damages on an insured loss. Your claims to your company are “first-party claims or No Fault claims.” Claims made by one person against another person’s company are known as “third-party claims.”
Collision coverage: optional insurance that pays for physical damage caused when your own car hits another car or object, regardless of who is at fault. Collision coverage carries a deductible which is usually decided upon by the insured -- a stated amount that you must first pay out of your own pocket.
Comprehensive physical damage coverage: pays for damage to your auto caused by fire, theft, vandalism, flood, falling objects, or hail. This coverage will also carry a deductible.
Declarations page or “Deck Page”: the front page of your policy containing information such as the exact name of your insurance company, the policy number, your coverages, the amounts of your coverages, and your deductibles.
Deductible: the amount you must pay from your own pocket for each claim or accident before the company pays on a claim. The greater the deductible, the cheaper the coverage.
Depreciation: the decrease in value of your vehicle or its parts due to wear, tear, and age.
Disappearing Deductible: a relatively new option offered on an auto policy (not all insurers offer this option) . For every year an insured goes without having a claim on their auto policy, their deductible is reduced by a predetermined %.
High Risk company or Non Standard: sells insurance at high rates to drivers with poor driving records or other problems.
Insured: a person who purchases insurance and to whom a policy is issued.
Lapsed policy: a policy terminated because of failure to pay the premium(s)
Liability: any legally enforceable obligation.
Liability insurance: insurance that pays when you are liable for injuries to other Persons or damage to their property.
Limits: the maximum amount of benefits the insurance company agrees to pay on a loss.
LKQ: refers to Like, Kind and Quality vehicle parts. This term generally refers to used parts from a vehicle recycling center or salvage yard. These parts are defined as Like Kind and Quality because they are from a vehicle just like the one being repaired. Typically they should be from a vehicle the same year model, or newer, as the vehicle being repaired. . LKQ parts are most often utilized on vehicles 2 years of age or older. In an insurance claim, the type of replacement parts to be put back on a vehicle are always determined by the Insurance company.
Loss ratio: the dollar amount an insurer pays in claims compared to the amount it collects in premiums.
Material misrepresentation: a significant misstatement in an application form. For example, you did not tell the truth about a situation which could affect your right to, or cost of insurance. Being more honest at the time of applying for insurance would have caused the company to deny you insurance if they had known the truth.
Negligence: failure to exercise a generally acceptable level of care and caution that results in injury or damage to a third party.
No-fault insurance: a form of insurance available in many jurisdictions under which each driver in an accident files claims for losses, such as medical expenses, with their own insurance company, regardless of who caused the accident. IT DOES NOT mean that parties involved in an accident are deemed not responsible for their % of negligence or liability towards the cause of an accident.
Nonstandard company or High Risk: sells insurance at high rates to drivers with poor driving records or other problems.
OEM parts: refers to Original Equipment of Manufacturer or new parts from the vehicle manufacturer. In an insurance claim, the type of replacement parts to be put back on a vehicle are always determined by the Insurance company.
Preferred Vendor/Service Provider: refers to a business relationship which has been established within the insurance or auto repair industry. An auto body shop must adhere to strict repair standards and procedures if they want to be recognized by any given insurance company as a preferred vendor/ supplier. Insurance companies choose such vendors/suppliers based on their customer service, workmanship and professionalism. The preferred vendor/supplier will always offer a lifetime guarantee when they have completed and insurance related repair.
Proof of loss: documents that you give the insurer to support your request for payment of losses.
Property damage liability: this coverage protects you from claims and lawsuits by people whose property is damaged as a result of an accident you caused.
Rate Increase: increases in auto insurance rates are generally determined by market forces or are in directly correlation with an insured being liable/negligent in an auto accident (at fault).