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Insurance Dictionary

Insurance coverage can be confusing, but it doesn’t have to be. To help you make informed decisions about your insurance coverage, take a look at some of the common insurance terms and definitions. Still have questions? Review these frequently asked questions or contact your ERIE insurance agent.

Acceleration clause

A clause used in your insurance contract that gives your insurer the right to demand payment for your policy in full, under specific circumstances outlined there. What could cause your insurer to invoke the acceleration clause? A couple of examples would be non-payment of premiums by a certain date or destruction of property.

Accident forgiveness

Insurance accident forgiveness is a type of discount you may qualify for that refers to your insurance rates not raising after your first at-fault car accident.

Accident report form 

If you’re involved in an auto accident, the police officer on the scene produces this document, which is also known as the police report. This report has important details about the accident that will be useful to the insurance claims adjuster and it assists with processing and evaluating your claim.

Here are just a few details you’ll find in the report: Location of the accident, people who were involved in the accident, their account of what caused the accident, outcomes of the accident such as damage to vehicles and other property, weather conditions, extent of injuries (if any) and whether citations were issued.

Actual cash value (ACV)

Actual cash value is the amount you’ll be reimbursed for what the items or damage cost to repair or replace, minus the depreciation. Actual cash value is likely to be different than the replacement cost value.


An insurance agent at ERIE is a licensed and trusted insurance advisor, ready to help answer any questions you have about your insurance. Agents are often certified with insurance designations showing they have completed education and training to help customers during the insurance buying process. Erie Insurance agents are independent agents.


An appraisal is the assessment of the value of your property or the extent of property damage that has been documented by a qualified professional. Appraisals are performed to determine the value of property after a covered loss.

At fault

When someone’s involved in an accident, the insurance company has to figure out who caused it and how other drivers (if there were any) played a role. In the end, the insurance companies assign a percentage of fault to each driver. The insurance companies investigating the claims use these percentages to determine how much each insurance company pays to cover the costs of the damages.


A binder is a temporary insurance contract that provides proof of coverage until a permanent policy is issued. For example, when you purchase a new vehicle and you need to call your ERIE Agent to bind coverage until you get the official paperwork complete.

Bodily injury liability (coverage)

If you are responsible for a car accident that causes bodily injury to others, bodily injury liability coverage helps pay for the medical expenses of the people (not including you) harmed in the accident. Most states have laws that require you to have bodily injury liability coverage on your car insurance policy.


Cancellation is the termination of insurance at any time other than the renewal date. Typically, you will be given notice explaining the reason why your policy is being cancelled.


If you're involved in a car accident, or something else happens that damages your car, one of the first things you'll do is report it to your insurance company — that's filing a claim. This begins the process so you can get reimbursed for your loss.

Claims adjuster

Once you file a claim, the insurance company representative you’ll be working with is the claims adjuster. You can expect the claims adjuster to contact you, explain the process and then begin his or her investigation of the claim. It’s helpful to keep your information about your policy and claim in one place and within reach throughout the claims process.

When the investigation is completed, the claims adjuster will make a settlement, which is the amount the insurance company will pay for the loss. Their goal is to help you understand the process, and make sure you and any other individuals involved are fairly compensated.


Coinsurance, in property insurance terms, requires the policyholder to carry insurance equal to a specified percentage of the value of property to receive full payment on a loss. For health insurance, it’s a percentage of each claim above the deductible paid by the policyholder.

Collision coverage

Collision coverage helps you cover the costs of repairing or replacing your vehicle after it is damaged in a collision. Most drivers end up paying a deductible, so check your policy or ask your agent to find out what your up-front expense would be. Collision insurance is often required by lenders, but once you own the vehicle, it may be optional. Talk to your agent to find out if collision coverage makes sense for you.

Comprehensive coverage

Comprehensive coverage helps you pay for damages caused by theft, fire, vandalism, a falling tree and other things that are covered in your policy. Your auto lender may require you to carry comprehensive on your automobile policy. But once you own the vehicle outright, this coverage is optional.


Coverage is the protection and benefits provided in an insurance contract. Insurance coverage helps consumers recover financially from unexpected events. A trusted insurance agent can help you select the best coverage to suit your needs.


Term life insurance coverage that can be converted into permanent insurance, regardless of an insured’s physical condition and without a medical examination.

Covered loss

The types of accidents, damages and situations that are covered by your insurance policy. If you have any specific concerns or questions about what is covered and what isn’t, be sure and talk to your agent so you understand how your automobile policy works for you.


Damage refers to the physical harm to or loss of a person or property.


Damages is the money one party is legally obligated to pay to another party.

Declarations page

Your insurance declarations page, also known as the dec page, is customized to you and summarizes the information essential to your insurance coverage. It includes your name and address, effective policy dates, insured property, policy coverages, limits, deductibles, discounts, policy forms and endorsements.You’ll also find your Erie Insurance agent’s contact information on the declarations page.


The deductible is how much money you’ll be paying out of pocket before insurance kicks in. Let’s say you crash your car into a tree, causing $1,200 in damages to your car. Your policy has a $500 deductible. That means you would pay the first $500 toward the repair bill and the insurance company would pay for the remaining $700. Many people opt for higher deductible plans in exchange for lower premiums.


An insurance discount is a reduction in insurance premium determined by several factors. As an ERIE customer, you may be eligible for one or more of the discounts we offer. Discounts vary by state.

Effective Date

The date your policy’s coverage goes into effect.

Emergency road service

Emergency road service is available from ERIE as an additional coverage at a low cost. Emergency roadside service is for unexpected events on your insured vehicle that leave the vehicle disabled. (And just in case you need it—here’s the number to reach ERIE’s Roadside Service—800-FOR-ERIE (800-367-3743).


An endorsement is when a change is made to an existing insurance policy. What often triggers an endorsement are life changes, which include: marriage, moving, buying a new vehicle, adding a driver to your family or removing a driver. When events like these happen, it’s always a good time to review your insurance policies and make sure you have all the coverage you and your family need. Endorsements could also mean a coverage part. For instance, if you purchase Roadside and Rental, the Roadside and Rental coverage will be attached to your policy.


Exclusions are specific situations that your insurance company will not cover. It’s important to understand the exclusions included in the policy. For example, if you work for a rideshare company, you will want to talk to your agent about whether you need additional insurance to cover your needs.


A floater is a separate policy available to cover the value of goods beyond the coverage of a standard renters insurance policy, including movable property such as jewelry or sports equipment.

Gap insurance

If you’re paying on a car loan or a lease, your car may be valued for less than what you owe. So, if your car is totaled in an accident, gap insurance helps you pay off your loan or lease, minus the deductible.


A hazard is any circumstance that causes or increases the likelihood of a peril or loss.

Independent agent, independent agency

Many insurance agents work directly for one specific insurance company. Some, however, are independent agents. Independent agents may represent multiple insurance companies. Their goal is to help you find the best policy that meets your insurance needs.


Insurance helps protect you from losing money when faced with an unexpected event. By purchasing insurance, the company where insurance is purchased from takes on the risk that is stated in the insurance policy.

Insurance identification card

An insurance identification (ID) card contains basic information about your insurance policy. Insurance ID cards may be used to provide proof of insurance.

Insurance adjuster

Insurance adjusters will evaluate your claim and determine if the claim is covered and the amount the insurance company should pay you.

Insurance score

Insurance score is one variable used to help calculate your rate for insurance coverage. It’s different than a credit score and the method for calculating it varies from insurer to insurer.


The insured is the person (or people) covered in an insurance policy in the event of a loss or claim.


The insurer is the company providing you with financial coverage in the case of unexpected events covered on your insurance policy. If you have a policy through ERIE, ERIE would be your insurer.


A lapse in coverage is when you don’t have insurance for a period of time. No matter the cause of the lapse, your rates may go up if an insurance company sees there was a time you had no insurance. It’s important you protect yourself by having insurance at all times.

Liability coverage

Let’s say you caused an accident and were found at fault. Perhaps you rear-ended a car stopped at a traffic light, or perhaps you lost control of your car on an icy road. Your liability will cover the costs of the damage you caused the other vehicles and property, as well as injuries to other people involved in the accident. In most states, liability coverage is mandatory. Property damage liability won’t cover damage to your own vehicle. That’s where collision coverage comes in.


An insurance limit is the maximum dollar amount an insurance company will pay for a covered claim.


The costs or expenses incurred due to a claim.

Medical payments coverage

If you are hurt in a car accident, this coverage pays for your medical expenses, even if you were found at fault. It also covers injuries suffered by other passengers, as well as any funeral expenses.

Motor vehicle report (MVR)

This report includes information your state has on your driving record. Your insurance company will review it because it gives them one indication of how likely you are to file a claim in the future. This report includes your license status, driving class and restrictions. This report also notes any traffic citations (speeding tickets), accidents and convictions (e.g., driving under the influence.)

Having a number of citations and convictions on your motor vehicle report can have an impact on what you pay for insurance. Maintaining a clean driving record is one factor that could keep your auto insurance costs down.

Multi-policy discount

A multi-policy discount may be available when you buy more than one insurance policy from the same company. ERIE offers many bundling options that could qualify you for a money saving, multi-policy discount.

No-fault insurance

No-fault insurance can help pay for a covered loss regardless of who is found at fault. No-fault insurance is sometimes referred to as personal injury protection insurance (PIP) and may not be available in all states.


Perils are potential events that can cause a loss, such as fire or a break-in. Your insurance policy contains a list of covered perils.


The premium is the amount you pay to keep your insurance coverage in effect.


The policy is the written agreement between you and the auto insurance company. This document details what is covered by your policy (see: “covered loss”) and what isn’t covered by your policy (see: “exclusions”). It also details what your premium costs are. If you have questions about your policy and what it covers, be sure and talk to your agent.


Insurance rates are based on what an insurance company believes they’ll need to pay out in claims to provide security for their customers. Every company determines its rates differently based on multiple factors that are highly individualized. An insurance agent can help you compare rates and features to make sure you are getting the best car, home, business or life insurance to meet your needs.


An insurance risk is a threat that an insurance company agrees to insure against in the policy documentation.

Road service

Breakdowns, lockouts, flat tires, dead batteries — these are all situations that can keep you from getting where you need to be. If you add road service protection to your auto insurance policy, help is just a phone call away. With it, you can get a tow, a battery jump, help with your tires, gas delivery and more.


Subrogation protects you and your insurer from paying for losses that aren’t your fault. It allows your insurer to recoup costs from the at-fault party, including your deductible, if the accident wasn’t your fault.


A term is the amount of time you’ll be covered by your auto, home, business or life policy.

Total loss

A car is generally considered a total loss when the actual cash value at the time of the loss exceeds the cost of the vehicle’s repair plus its salvage value. Appraisers will estimate the costs of repairs using factors that may differ by state.


A personal umbrella policy provides an extra layer of liability protection. It provides an additional $1 million coverage (up to $5 million available) for you and your eligible family members against lawsuits arising from personal injury or property damage claims.

Underinsured motorist bodily injury coverage

Let’s say you’re hurt in an automobile accident that was caused by another driver. Ideally, their bodily injury liability policy would have you covered. But what happens if the driver’s policy limits are not high enough to cover the damages to your car, or your injuries? That’s where your underinsured motorist bodily injury coverage kicks in.

Uninsured motorist bodily injury coverage

Similar to underinsured motorist bodily injury coverage, this coverage comes into play when you’re injured in an auto accident caused by someone else. The difference is that the driver either has no insurance or committed a hit-and-run. Because they were at fault and have no insurance to help cover your medical expenses, uninsured motorist bodily injury coverage protects you from having to pay those expenses out of pocket.


Underwriting is how an insurance company evaluates its risk of insuring a home, car, driver or person. After looking at the risks involved, an insurance underwriter will set the insurance premium that will be charged in exchange for providing coverage.

Vehicle identification number (VIN)

The vehicle identification number is your car’s serial number. It has 17 characters containing numbers and letters and it’s assigned by the manufacturer. This code reveals information about your car’s make, model and year. You can locate your vehicle’s VIN in a number of places: on the dashboard, printed on the sticker inside your door jamb, on your title documents and on your auto insurance policy.