Auto Insurance Terminology Explained

Auto Insurance Terminology Explained

Granted, auto insurance terminology can sometimes be difficult to understand. Whether you’re considering filing a claim, trying to understand the process, regulations, or your policy, sometimes you have to dig through the dictionary to understand the terms used.

In our opinion, insurance doesn’t need to be so complicated. That’s why we’ve compiled a useful glossary of terms you’re likely to encounter in your insurance journey, explaining them in easy-to-understand language. That way, you’ll feel more confident when it comes to car insurance.

Auto Insurance Glossary

Accident Assistance: A useful button in the TD Insurance mobile app that you can use to instantly call a trailer and start a new claim. You will be quickly connected to our emergency response center.

Traffic Accident Claims Forgiveness: Sometimes referred to as “Claim Forgiveness”, this is a product we offer by agreeing not to increase your premiums the first time you have a fully or partially responsible traffic accident.

Actual Cash Value: The current market price of your car before it was damaged.

Additional Driver: Anyone (other than you) who can drive your car, including family members and friends. You can add these people to your policy.

Insurance adjusters: Sometimes referred to as “consultants”, they are dedicated individuals assigned by us who have extensive experience in collecting information about your car, coordinating assessments and determining the cash value of the car, or determining the number of payouts based on damage or loss assessments.

Negligence: After an accident, your liability for negligence varies from 0% to 100%, depending on the circumstances of the accident. Anyone with 1% or more negligent liability in an accident will have a negligent liability incident listed on their insurance record. There are different ways of determining fault liability in different claims. Certain provinces have guidance on determining negligence, and specific negligence determinations will vary depending on the circumstances and evidence.

Auto Insurance Claim Tracker: A feature that allows you to track the status of your claims. After you file a claim with us, you can follow the progress of your claim in five key stages through the TD Insurance mobile app or the MyInsurance policy management website. A dedicated advisor will also provide you with status updates via email or text message, depending on your choice

Claim: An application you submit to us after damage or loss to your car so that we can verify and approve your claim for damages. You also need to file a claim if you cause damage or injury to another person or their property.

Insurance – Traffic Accident Coverage: Expenses (medical or other) covered by insurance after an accident, regardless of who is at fault. This may include medical and income compensation, among others.

Insurance – All Risks Insurance: Optional insurance covering all causes of loss except for the exceptions directly mentioned in the policy. If your car is stolen or damaged by an extra driver or your family, All Risks Insurance will also pay for loss or damage caused.

Coverage – Personal Injury Covers liability for damage to another person’s property, including loss of use of the property.

Insurance – Collision Coverage: Optional coverage for your car that will cover the cost of repairs if the car is involved in a collision and/or damaged by a collision or overturning with another object. With this insurance, we will cover the cost of repairing your car, minus the deductible.

Insurance – Comprehensive Insurance: A combination insurance for your car that covers your car against specific risks such as hail, flood, theft, or fire. This does not include coverage provided by collision insurance.

Insurance – Direct Indemnity: Insurance that pays for your car and its contents if the other party is at fault, and you can get the compensation directly from your own insurance company.

Insurance – Family Protection Insurance: This benefit expands coverage so that you and your family can enjoy the coverage provided by insurance, up to and including your liability coverage. This type of coverage also works if the other party to the accident only has a minimum amount of liability coverage. Home insurance is a fixed type of insurance in Canadian auto insurance, but Quebec does not provide home insurance.

Insurance – Grand Touring Long-distance Driving Rider®: We offer this product as an optional insurance policy for drivers in Canada or the United States in the event of an accident, theft or vandalism of your car, damage to your car due to the elements, etc., this insurance will pay you. This insurance also provides coverage in the event of damage to the rental car, as well as a hit-and-run deductible and reimbursement for the cost of emergency roadside assistance services you may need.

Insurance – Limited Glass Insurance: This insurance covers your car’s windshield and glass, even if you have comprehensive insurance. Limited glass insurance also provides some coverage if your glass is damaged by theft or vandalism, but does not cover cracks and splintering caused by use.

Insurance – Liability Insurance: In the event of damage and injury to a third party or third party’s property, this mandatory insurance protects you from personal liability for the situation. The amount of your liability coverage depends on your policy, and you can purchase additional liability coverage for several different situations. For example, you can purchase civil liability insurance, which will provide you with coverage if the insured vehicle causes injury to others.

Insurance – Limited Depreciation Insurance: An optional policy that usually allows you to pay the actual purchase price of the car if the car is deemed to be a total loss1. Insurance is valid for 36 months from the date of the original delivery of your vehicle.

Note that in Ontario, this insurance is called “Removal of Depreciation Deduction Insurance”. In Quebec, this insurance is called “depreciation waiver insurance”.

Insurance – Single Policy: A very basic car insurance that only covers liability coverage and does not cover damage to the car.

Insurance – Risk: The specific risk or situation that is covered by your insurance. Includes risks such as fire, flood, and theft.

Coverage – Property Damage: Covers liability for damage to other people’s property, including loss of use of the property.

Insurance – Specific Risks: Also known as named risks, these are the perils that are directly mentioned in the policy and are therefore covered. For example, your policy may list specific risks such as:

  • fire
  • theft or attempted theft
  • lightning
  • storm
  • hail
  • flood
  • earthquake
  • explode
  • riot or civil unrest
  • Crash or forced landing of aircraft or failure of aircraft components; grounding, sinking, burning, derailment, or collision of any type of conveyance

Insurance – Uninsured Coverage: This benefit provides coverage for repairs, injury, or death if the other party to the accident is uninsured or in a hit-and-run accident (the deductible is based on your insurance and the laws of the province where the accident occurred. Certainly).

Deductible: You are responsible for the amount of the claim paid upfront, regardless of who is at fault. When you file an insurance claim, the deductible is the pre-agreed amount that you must pay before the insurance provides coverage. This fee will be refunded if you are determined not to be at fault and the other party to the accident meets the necessary criteria.

Depreciation: Depreciation is the loss in value of an asset over a long period. Cars depreciate from the moment they leave the dealership and continue to depreciate over time.

Uninsured Driver: Any driver not covered by your insurance, or specifically excluded from coverage and unable to use your car. This is ideal if you want to exclude young drivers or drivers who are at fault while driving your vehicle to avoid premium increases.

Exception: Situations not covered by your insurance. For example, damage caused by pests or rodents, as well as normal wear and tear is typical “exceptions”.

First-party: First-party insurance refers to the compensation you can get under your insurance.

Liability: An agreement between parties to confirm that we will indemnify you in the event of loss or damage caused by the other party. This compensation can help cover any financial loss you suffer as a result of the accident.

Active: Active insurance. Your insurance is considered active if it is not lapsed or canceled.

Insurable Interest: An insurable interest is created by owning, owning, or having a direct relationship with the car. An insurable benefit applies if you have a vested interest, financial interest, etc. in the car, and if the car is damaged, you will suffer a loss (financial or otherwise).

Lessee: A person who leases a car. Accidents and claims can have an impact on the lessee from a premium and liability perspective.

Lessor: A company or car dealership that provides you with car rental services.

Lien: A lender that owns your car and leases it to you with an insurable interest or provides you with financing or a loan for your car purchase. It remains a lien until you pay off the rent.

Statute of limitations: The time limit within which you can take legal action against the insurance company. Timeframes vary by province and territory.

Finder Tool: A feature that helps you easily find a TD Insurance Auto Center or a TD Insurance Featured provider near you.

Named Insured: An individual, company, institution, or any member thereof, specifically named in the policy as an insured and who is directly covered by the insurance.

No-fault: A system in which insurance claims are handled by each party’s insurance company regardless of who is at fault in an auto accident. You don’t have to deal with another driver, instead, we handle injuries, damages, and claims directly. Despite the term “no-fault”, you may still be held solely or partially responsible for the accident. Only Ontario, Quebec, New Brunswick, Nova Scotia, and Prince Edward Island have adopted this system.

Premium: The cost you pay to buy insurance. You can choose to pay your premiums monthly or annually. We can also open checking accounts and credit card pre-authorized payments for you to pay your premiums.

Registered Owner: The person identified as the owner of the car in the registration information. More strictly, this refers to the person who has possession of the car (unless they have leased the car to the lessee, in which case the lessee has possession).

Reporting Lag: The time lag between when an incident occurs and when we receive an incident report. This term is used to describe situations where there is a long lag between the occurrence of an incident and the time the incident was reported. You must report the accident within 7 days of the accident before we can review the claim.

TD Insurance Auto Center: An innovative auto repair shop that provides TD Insurance customers with a one-of-a-kind, one-stop service. A consultant will walk you through the entire claims process, a certified service technician will repair your car, and you can also rent a car here, depending on your coverage.

Third-Party Liability: If someone uses your car and causes injury or loss, you are legally responsible even if you were not present at the time of the accident. This also covers damage or injury you cause to third parties while driving the car.

Full Coverage: Greater coverage that covers damage you can cause as well as damage to your car. This applies to situations such as rollovers, collisions, theft, vandalism, hail, or fire. Please understand it in conjunction with the definition of “single insurance” above.

Total Scrap: Also known as a total loss, this is when the cost of repairing a car, after deducting the recovery or salvage value, is higher than the car’s actual value before the accident that caused the damage or loss to it. In this case, you will usually be paid based on coverage.

By Master James

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