Car insurance terms can be confusing. The fine print often includes words with a different meaning than you are used to. These words are commonly used among insurance and legal professionals, but may not be regular in your everyday life. To help you better understand insurance, we want to help you understand these tricky car insurance terms!

Below, find some of the most commonly used car insurance terms that you may not know.


This is an interesting circumstance that sometimes occurs because of an accident. The wrongdoer’s insurer must pay someone harmed, even if the wrongdoer has violated their insurance policy. This can happen if the wrongdoer has an expired license.


This is an insurance professional that looks at stats and data to determine risk. They then take that information to create a premium that you’ll pay.


A Binder is a temporary insurance contract that says your policy is in effect. It’s important to have this until you have the permanent policy issued to you. This is especially true if you are driving and need to have proof of insurance.


After an accident, your car will be labeled with one of four brandings.

  • Salvage, meaning it costs more to repair than its cash value.
  • Irreparable, meaning the car cannot be fixed and its only value is in parts.
  • Rebuilt, where a car has received extensive damage but has been repaired and inspected.
  • Stolen, as the name says, marks the vehicle as stolen from the owner. But, only police can use or remove this term from the car.


While most Drive-Ins Theaters in Ontario have closed, an insurance drive-in is where you bring your vehicle after an accident. There, your insurance provider will do damage inspection and provide you with an estimate.


This refers to changes made to your insurance policy where both parties have agreed to the change. This can include things like raising or lowering your deductible, adding more people or other cars to the policy.


This is a term that describes the person who is insured by the policy. Other terms for First Party include ‘insured’ or ‘policyholder’. It can be a person or an organization.


Insurance contracts are generally made in good faith. This means that a standard of honesty is greater than other types of contracts.


An occasional operator is someone insured on a car insurance policy but is not the primary driver. This is most commonly used for new drivers such as teenagers.


This is the process of getting back the money you paid because of an accident, but the other party was found at-fault. As such, you have the right to recover your losses from the at fault party.


A tort is a legal term that comes up to describe when someone has caused loss or harm to someone else. Torts enable the harmed party to recover their losses from the other party.


An umbrella or umbrella liability policy, is one that covers the liability losses that exceed your auto insurance coverage. You can learn more about umbrella and excess liability insurance in here .

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