A term which has two meanings. Firstly, it refers to the types of coverage provided by umbrella insurance which are not covered at all under primary insurance policies, such as personal auto insurance. Liabilities which arise under contracts, for example, are not covered at all under the personal liability provisions of personal auto or home insurance policies. Secondly, it refers to a type of coverage which one can purchase when financing or leasing a new car. That type of coverage provides protection for the difference between the amount owing on the vehicle and its market value, if the former is greater than the latter. See guaranteed auto protection.
A provision within an insurance policy limiting coverage to damage or loss which occurs within a specified geographical area. For example, an auto insurance policy might restrict coverage to a particular state, and might have different geographical limitations depending on the type of damage or loss. See also territorial limitation.
A percentage discount given by auto insurance companies to policyholders who meet specified criteria. These criteria vary by insurance company, but they typically include being more than 25 years of age, having no moving violations in the previous three-year period, not being at fault in any car accident causing death or injury in the last three years, having no convictions for driving under the influence of alcohol or drugs in the last three years and having a good credit rating. The discount varies by company and by state, but is typically in the range of 10% to 20% of the premium. A ‘good driver’ is also referred to in this context as a ‘preferred risk driver’. See also safe driver plan. Learn about other auto insurance discounts.
Laws which protect people from personal legal liability when they tend to others who are injured. The intention behind Good Samaritan laws is to encourage bystanders to help people who are injured, such as in a car accident, and not to hold back for fear of becoming personally liable if their actions actually make matters worse. Good Samaritan laws do not exist in every state, and those in which they do exist vary considerably. Some jurisdictions provide protection to any person who renders assistance, while others restrict it to qualified personnel such as doctors and paramedics. In some instances the legal principle of ‘imminent peril’ applies, which means that protection is only given if the injured person is in immediate danger of further harm, either as a result of the injury itself or through an additional cause. As a general rule, immunity is not provided to any person who is remunerated for their actions in helping another. Some statutes also include ‘duty of care’ provisions which actually require a person to render assistance, such as those in Vermont and Minnesota.
A percentage discount on the premium rate charged by auto insurance companies for student policyholders who achieve academic results above a specified level. The common eligibility criteria for the discount is that students must be enrolled full-time in a high school or college, be aged between 16 and 24 years of age inclusive, have achieved a B-average prior semester result or a 3.0 grade point average, be on the dean’s list or honor roll, or have achieved a top 20% SAT, ACT or PSAT score. The discount rate is normally in the range of 10% to 15%. Learn about other auto insurance discounts.
Driver’s licenses granted by states whereby driving rights are ceded to new drivers over time, commonly in three stages. These stages comprise a learner’s permit, an intermediate license and a full driver’s license. Graduated driver licensing was first introduced in 1996 in Florida, and has now extended to all states. The purpose of graduated driver licensing is to phase in full driving ‘privileges’ to new (and especially young) drivers, so as to try and minimize the rate of accidents and resulting injuries due to inexperience and exuberance. The learner’s stage usually commences at age 16, and consists of at least 30 hours (or six months) of supervised driving. This is followed by a period in which restrictions apply to the times at which driving can occur, and the passengers who can be transported by the ‘intermediate’ driver. These restrictions normally limit night driving and the carrying of teen passengers, and often apply until the learner driver has attained age 18 years. Learn how to insure a teen driver.
A conscious failure to use reasonable care, in circumstances which are likely to result in serious harm to a person or damage or loss to property. It differs in degree from ordinary negligence, which is simply the failure to use reasonable care, and is made extreme by the proximate danger to life and property caused by the failure. While gross negligence is an extreme form of negligence, it falls short of willful and wanton conduct, which is purposeful conduct which results in injury, loss or damage. The contributory negligence of another party (in states which have adopted that system) can be a defense against gross negligence, but it cannot be a defense against willful and wanton conduct. In addition, gross negligence does not normally result in exemplary damages awards, whereas willful and wanton conduct does.
A stand-alone policy, or an endorsement to an auto insurance policy, which prospectively pays a benefit in the event of a total loss claim on a leased or financed car. The actual cash value of a new car depreciates quickly after purchase, and it often falls below the amount outstanding on the car lease or loan for a period of time. If the car is totaled through damage or theft during this period, then the insurance payable on the car (calculated as the actual cash value of the car immediately prior to the loss) would be insufficient to pay the amount outstanding under the lease or finance contract, leaving the owner a balance to pay. Gap insurance is designed to make up for this shortfall. However, any late lease or loan payments remaining unpaid at the time of loss, plus any skipped payments, would be deducted from any benefit paid.
A fund established in each state and under state law by the state’s insurance commissioner, in order to make good on benefits underwritten in the state by an insurance company which becomes insolvent. The ‘make good’ can entail payments directly to policyholders or to the insolvent company itself. A guaranty fund is funded by each insurance company which is licensed to sell insurance in the state, with a levy calculated as a percentage of the business sold in the state (commonly 1% to 2%). Guaranty funds contribute to a sense of security with consumers, which itself promotes the development of the insurance market in each state.