Car Accident & Insurance Glossary
Understanding insurance terminology is crucial when navigating a car accident claim. Use this glossary to decode the jargon and protect your rights.
A
Actual Cash Value (ACV)
The fair market value of your vehicle immediately before the accident, considering its age, mileage, condition, and comparable sales in your area. This is what insurance pays for a totaled car.
Adjuster
An insurance company employee or contractor who investigates claims, assesses damage, determines fault, and negotiates settlements. Also called a claims adjuster or insurance adjuster.
Aftermarket Parts
Replacement parts made by companies other than the original vehicle manufacturer. Often less expensive than OEM parts but may vary in quality.
At-Fault State
A state where the driver who caused the accident is financially responsible for damages. The at-fault driver's liability insurance pays for the other party's injuries and property damage.
B
Bodily Injury Liability
Insurance coverage that pays for injuries you cause to others in an accident. Covers medical bills, lost wages, pain and suffering, and legal defense if you're sued.
Brake Checking
When a driver suddenly brakes to intimidate or cause a rear-end collision with the following vehicle. Can shift fault from the rear driver to the lead driver in certain circumstances.
C
Claim
A formal request to an insurance company for payment of losses covered under a policy. First-party claims are against your own insurer; third-party claims are against another driver's insurer.
Collision Coverage
Optional insurance that pays to repair or replace your vehicle after an accident, regardless of fault. You pay your deductible first, then insurance covers the rest up to your car's ACV.
Comparative Negligence
A legal doctrine where fault is divided among parties based on their percentage of responsibility. Your compensation is reduced by your percentage of fault.
Comprehensive Coverage
Insurance that covers non-collision damage to your vehicle: theft, vandalism, weather damage, animal strikes, falling objects, and fire.
Contributory Negligence
A strict rule in a few states where any fault on your part (even 1%) bars you from recovering any damages. Only used in Alabama, DC, Maryland, North Carolina, and Virginia.
D
Deductible
The amount you pay out-of-pocket before insurance coverage kicks in. Higher deductibles mean lower premiums. Common amounts are $250, $500, and $1,000.
Demand Letter
A formal written request for compensation sent to an insurance company or at-fault party, outlining your damages and the amount you're seeking to settle your claim.
Diminished Value
The loss in resale value of your vehicle after it's been in an accident and repaired. Some states allow you to claim this loss from the at-fault driver's insurance.
E
Excess Policy
Additional insurance coverage that kicks in after your primary policy limits are exhausted. Umbrella policies are a type of excess coverage.
F
First-Party Claim
A claim you file with your own insurance company. Examples include collision, comprehensive, or uninsured motorist claims.
Frame Damage
Structural damage to a vehicle's frame or unibody. Severe frame damage often leads to a total loss determination due to safety concerns and repair costs.
G
GAP Insurance
Guaranteed Asset Protection insurance that pays the difference between what you owe on your car loan and the vehicle's ACV if it's totaled. Essential if you're underwater on your loan.
H
Hit-and-Run
An accident where one driver leaves the scene without stopping to exchange information or render aid. A criminal offense in all states.
I
Independent Appraiser
A professional hired to provide an unbiased valuation of your vehicle or damages, separate from the insurance company's assessment.
L
Liability Coverage
Insurance that pays for injuries and property damage you cause to others. Includes bodily injury liability and property damage liability. Required in almost all states.
Lien
A legal claim on property (your car) as security for a debt. If you have an auto loan, the lender has a lien on your vehicle until it's paid off.
Loss of Use
Compensation for not being able to use your vehicle while it's being repaired. May cover rental car costs or a daily amount if you don't rent.
M
MedPay (Medical Payments Coverage)
Optional coverage that pays medical expenses for you and your passengers after an accident, regardless of fault. Similar to PIP but usually with lower limits and fewer benefits.
Modified Comparative Negligence
A fault system where you can recover damages only if you're less than 50% or 51% at fault (depending on state). Your award is reduced by your percentage of fault.
N
No-Fault Insurance
A system where each driver's own insurance pays their medical bills and lost wages regardless of who caused the accident. Limits lawsuits except for serious injuries.
O
OEM Parts
Original Equipment Manufacturer parts—replacement parts made by the same company that made the original parts for your vehicle. Generally considered higher quality than aftermarket.
Owner-Retained Salvage
When you keep your totaled vehicle instead of surrendering it to the insurance company. Your settlement is reduced by the salvage value, and you receive a salvage title.
P
Pain and Suffering
Non-economic damages for physical pain, emotional distress, and reduced quality of life caused by an accident. Calculated using multiplier or per diem methods.
PIP (Personal Injury Protection)
Insurance coverage in no-fault states that pays your medical expenses, lost wages, and essential services regardless of who caused the accident.
Policy Limits
The maximum amount an insurance policy will pay for a covered loss. Expressed as split limits (e.g., 50/100/50) or combined single limit (CSL).
Property Damage Liability
Insurance that pays for damage you cause to others' property in an accident—typically their vehicle, but also fences, buildings, or other property.
Pure Comparative Negligence
A fault system where you can recover damages even if you're 99% at fault, though your award is reduced by your percentage of fault. Used in states like California, Florida, and New York.
R
Rear-End Collision
When one vehicle strikes the back of another. The rear driver is usually presumed at fault, though exceptions exist for brake-checking or sudden lane changes.
Replacement Cost
The cost to replace your vehicle with a similar one without deducting for depreciation. Some policies offer replacement cost coverage instead of ACV.
S
Salvage Title
A title designation for a vehicle that's been declared a total loss. Significantly reduces resale value and may affect insurance options.
Salvage Value
What your totaled vehicle is worth in its damaged state—typically sold to salvage yards or rebuilders. Deducted from your settlement if you keep the car.
Statute of Limitations
The legal deadline for filing a lawsuit after an accident. Varies by state (typically 2-4 years) and type of claim. Missing it bars your case forever.
Subrogation
The process where your insurance company recovers money from the at-fault party's insurer after paying your claim. May affect your deductible reimbursement.
Supplement
Additional repair costs discovered after the initial estimate, often when hidden damage is found during repairs. The shop requests additional payment from insurance.
T
T-Bone Accident
A side-impact collision where one vehicle strikes another at a roughly perpendicular angle, forming a "T" shape. Among the most dangerous crash types.
Third-Party Claim
A claim you file against another driver's insurance company. You're the third party; the at-fault driver and their insurer are the first and second parties.
Threshold (No-Fault)
The legal requirement that must be met to sue for pain and suffering in a no-fault state. Can be monetary (medical bills exceed a set amount) or verbal (specific injury types).
Total Loss
When the cost to repair your vehicle exceeds a certain percentage of its value (or repair cost + salvage value exceeds ACV). The insurance pays ACV instead of repairs.
Total Loss Threshold
The percentage of a vehicle's value at which insurance declares it totaled. Varies by state (50-100%) or uses the Total Loss Formula (TLF).
U
UM/UIM (Uninsured/Underinsured Motorist)
Coverage that protects you when hit by a driver with no insurance or insufficient coverage. Pays for your injuries and sometimes property damage.
W
Whiplash
A neck injury caused by rapid back-and-forth movement of the head, common in rear-end collisions. Symptoms may be delayed 24-72 hours after impact.
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