Glossary of Insurance Terms

Insurance-related lingo can be confusing. Here are frequently used terms that may help clarify your policy.

Application – A form you fill out with information about you that an insurance company will use to decide whether to issue you a policy and how much to charge.

Binder – A temporary insurance contract that provides proof of coverage until you receive a permanent policy.

Business Vehicle – A vehicle that is owned/leased, registered and insured by the business.

Cancellation – Termination of an insurance policy by the company or insured before the renewal date.

Certificate of Insurance – Proof of active insurance listing, insurance coverage types, limits, insurance company name an policy expiration dates.

Deductible – The amount the insured must pay in a loss before any payment is due from the insurance company.

Employee Reimbursement for Auto – Compensation paid by an organization for use of personal vehicle. Sometimes paid as a set monthly amount or based on miles driven normally using the IRS mileage rate, the current 2020 rate is 5.75 cents per mileage for business use.

Negligent Entrustment – A cause of action in tort law that arises where one party (the entrustor) is held liable for negligence because they provided another party (the entrustee) with a dangerous instrumentality, and the entrusted party caused injury to a third party with that instrumentality.

Personal Vehicle – A vehicle that is owned/leased, registered and insured by an individual. Oftentimes, drivers using personal vehicles are reimbursed.

Policy Period – The period a policy is in force, from the beginning or effective date to the expiration date.

Premium – The amount paid by an insured to an insurance company to obtain obtain or maintain an insurance policy.

Rental reimbursement coverage – Pays a set daily amount for a rental car if your car is being repaired because of damage covered by your auto policy.

Subcontractor – A business or person that carries out work for a company as part of a larger project.

Subrogation – The legal right of insurance companies to pursue another person’s insurance company after the other person caused a loss to their policyholder. This is usually done to get back any money the insurance company paid for a claim.

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The above is meant as general information to help you understand the different aspects of insurance. The content of this blog is not an insurance policy, does not refer to any specific insurance policy, and does not modify any provisions, limitations, or exclusions expressly stated in any insurance policy. In order to fully understand the coverages and other features of a specific insurance policy, we encourage you to read the applicable policy and/or speak to a Holman Insurance Services agent. Coverages and other features vary between insurers, vary by state, and are not available in all states. Coverages are subject to the terms and conditions of the actual insurance policy or policies involved in a claim. References to average or typical premiums, amounts of losses, deductibles, costs of coverages/repair, etc., are illustrative and may not apply to your situation. We are not responsible for the content of any third-party sites linked from this page