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Claims terms
Filing, fighting and getting paid after a loss.
BettermentA deduction an insurer takes when a repair replaces a worn part with a new one, leaving the car in better condition than before the loss.Claim numberThe unique reference an insurer assigns when a loss is reported, used to track every call, document and payment on that claim.Claim reserveMoney an insurer sets aside on its books to pay a claim it expects to settle, based on its estimate of the eventual cost.Claims adjusterThe insurance company employee or contractor who investigates a claim, decides what the policy covers and sets how much is paid.Direct repair programAn arrangement between an insurer and approved body shops that accept its pricing and procedures in exchange for referred repair work.First notice of lossThe first report to your insurer that a crash, theft or other loss has happened, which opens the claim and starts the clock on handling it.First-party claimA claim you make under your own insurance policy, such as collision, comprehensive, PIP or uninsured motorist coverage.Loss of useCompensation for not being able to use your car while it is repaired or replaced after a crash someone else caused, usually paid as a rental car.Third-party claimA claim you make against another driver's insurance for damage or injuries that driver caused, rather than against your own policy.Actual cash valueWhat a car was worth just before a loss — replacement cost minus depreciation — and the basis of most total-loss payouts.Agreed valueCoverage where you and the insurer set a car's value when the policy is written, and that amount is paid if the car is totaled, with no depreciation.DepreciationThe loss in a car's value over time from age, mileage and wear, which insurers account for when calculating actual cash value.Diminished valueThe resale value a car loses after a crash, even when fully repaired, because buyers pay less for a car with an accident history.LienholderThe bank, credit union or finance company with a legal claim on a financed car until the loan is paid off, usually named on the insurance policy.Loss payeeThe lender or leasing company named on your auto policy to receive claim payments for the car, alone or jointly with you, until the loan is paid off.Owner-retained salvageKeeping your car after the insurer declares it totaled; the payout drops by the car's salvage value and the title is usually branded.Replacement costWhat it would cost to replace damaged property with new property of like kind and quality, with no deduction for depreciation.Salvage titleA branded vehicle title issued after a car is declared a total loss, warning future buyers of serious damage; it must be rebuilt to drive legally.Salvage valueWhat a damaged or totaled car is worth as a wreck, usually the amount an insurer expects to get for it at a salvage auction.Total lossA car so badly damaged that repairs would cost more than it is worth, or more than a state threshold, so the insurer pays its value instead.Total loss thresholdThe point, set by state law or insurer practice, at which a damaged car is declared totaled rather than repaired, often a percentage of its value.Appraisal clauseA policy provision letting you or the insurer call in independent appraisers, plus an umpire if needed, to settle a dispute over the amount of a loss.Bad faithAn insurer's unreasonable handling of a claim, such as denying, delaying or underpaying without a proper basis, which can expose it to damages.Demand letterA written request to an at-fault driver's insurer that sets out your injuries and losses and asks for a specific settlement amount.Policy limits demandAn injured person's offer to settle for the at-fault driver's full liability limit by a deadline; mishandling it can expose the insurer to bad faith.Release of liabilityA document an injured person signs to accept a settlement and give up further claims against the at-fault party for that accident.Statute of limitationsThe legal deadline for filing a lawsuit after a crash, set by each state and often different for injury and property damage claims.At-fault accidentA crash in which you are found mainly responsible, which your liability coverage pays for and which usually raises your premium at renewal.Comparative negligenceA fault rule that reduces an injured person's recovery by their own share of blame for a crash, instead of barring recovery entirely.Hit and runA crash in which a driver leaves without stopping to share information or help, which is a crime and leaves victims relying on their own coverage.NegligenceFailing to use the care a reasonable person would use, causing harm to someone else; the legal basis for most car accident claims.Primary insuranceThe policy that must pay first when more than one could cover the same loss; other policies pay only after its limits are used up.SubrogationAn insurer's right, after paying your claim, to recover that money from the party who caused the loss, often getting your deductible back too.