Accident Terms and Definitions

Cancellation
The termination of an insurance policy before its normal expiration date.

Nonrenewal
The termination of an insurance policy at its normal expiration date.

Negligence
The absence of ordinary care.

Comparative Negligence
The percentage of fault shared by each driver in an accident in which both contribute to causing the collision.

Limits
The maximum amount of benefits the insurance company agrees to pay in the event of a loss.

Premium Finance Company
A lending institution that finances insurance premiums for a fee.

Liability Insurance
Coverage for a policyholder's legal liability resulting from injuries to other persons or damage to their property.

Binder
A temporary or preliminary agreement which provides coverage until a policy can be issued/delivered.

Airbag Deployment
Occurs when the driver, passenger or side airbag has been used or deployed during a crash or other incident.

Total Loss
An insurance company declares a vehicle a total loss when a claim exceeds the full value of the vehicle. Insurance companies typically take possession and obtain the title of such vehicles.