An individual or entity specified by name as an insured person in an insurance policy. Named insureds are commonly used in insurance policies which extend coverage to persons who are not specifically named. For example, auto insurance policies typically do not require every insured person to be named, but instead they provide coverage to the policyholder (a named insured) and to his or her immediate family, together with any other person who drives the car with the consent of the policyholder. In addition to the policyholder, any other person can be added to a policy as a named insured with the agreement of the insurer.
A failure in a duty to act with a standard of care which a reasonable person in the same circumstances would have acted, resulting in harm to another person, such that the harm causes damage. There are generally five components required to establish legal negligence, namely: (1) a duty to use reasonable care; (2) a failure to use reasonable care in discharging that duty; (3) harm caused to another person through that failure; (4) damages resulting from the harm caused; and (5) the damages create a legal liability for the person who failed to use reasonable care. Negligence is ordinarily a tort (a civil wrong), but it can also be a criminal offense. See also contributory negligence and comparative negligence.
The net amount by which an insurance company suffers loss in a claim, calculated as the total amounts paid out by way of claim investigation, handling and settlement, minus all offsetting receivables. Often the incidental amounts paid out by an insurer, such as associated legal and defense costs, exceed the amount of the settlement check. The offsetting receivables typically comprise reinsurance payments, salvage payments and any subrogation payments received from liable third parties.
A term common to personal auto insurance policies, and which refers to vehicles acquired by an insured during the term of an existing policy. A newly acquired auto is automatically insured under an existing auto insurance policy, subject to a number of strict limitations. For example, coverage only applies if the vehicle is acquired by the named insured or the insured’s resident spouse. If it is acquired by any other person, even if they have coverage under the existing policy (such as a son or daughter of the named insured), then the newly acquired auto is not covered under the policy. Coverage is also for a limited period, such as 14 days or 28 days, and expires if the insurer is not advised of the acquisition before that period ends. The inclusion of specific types of coverage, such as collision and comprehensive, also depends on whether that type of coverage is provided under the existing policy. Learn more about insurance for new autos.
A term used to describe laws in certain states which prevent drivers from recovering damages from at-fault, insured drivers, if they themselves are (one or more of) uninsured, DUI, if they intentionally cause the accident, if they flee the scene or if they are involved in a felony offense. These laws are based on the premise that such drivers ought not to be able to benefit from drivers who are compliant with the law while contemporaneously denying such benefits to those who might suffer damages through accidents which they cause. No pay, no play laws are currently enacted in the states of Alaska, California, Iowa, Louisiana, Michigan, New Jersey, North Dakota and Oregon. Those states each have quite different forms of no play, no pay laws, with some only applying the restriction to non-economic damages.
A legal system implemented in nine states (Florida, Hawaii, Kansas, Massachusetts, Michigan, Minnesota, New York, North Dakota and Utah), having two principal characteristics. Firstly, claims arising for personal injury resulting from a car accident must be filed with the injured party’s own insurance company, irrespective of who is at fault. Secondly, limitations exist on the right to sue under tort law for damages arising from such injuries. No-fault states correspondingly mandate a type of insurance referred to as personal injury protection (PIP), with minimum levels of coverage specified by each state. If injuries incurred in a car accident are sufficiently severe then lawsuits for recovery of damages are permitted, provided they meet a threshold specified by each state, Thresholds can be either quantitative (monetary) or qualitative (descriptive). No-fault laws are restricted to personal injury—they do not apply to property or other damage. Learn more about auto insurance laws.
Damages resulting from personal injury or wrongful death which are not readily quantifiable in monetary terms. Examples of non-economic damages are pain, suffering, anguish, disfigurement, discomfort, inconvenience, humiliation, injury to reputation, loss of enjoyment, loss of society and loss of consortium (the company, attention and affection of a spouse). Non-economic damages are also referred to as hedonic damages. Jury awards for non-economic damages tend to fluctuate widely, often as a result of the emotional effects on jurors of testimony given during personal injury lawsuits. For this reason a tort reform movement has spawned, which seeks to limit non-economic damages awards to an arbitrary dollar limit.
Coverage which is designed to provide protection against liabilities incurred in relation to a vehicle which is driven but not owned. For example, employers’ non-owned coverage provides protection for an employer against liabilities incurred when employees use their own vehicles while undertaking employment duties, coverage which is not provided under the employer’s commercial auto insurance policy. Hired auto insurance provides employers with liability coverage in instances where a vehicle is rented for business purposes, provided that the rental period does not exceed a specified maximum, usually 30 days.
An insurance agent who is licensed to conduct insurance business in a jurisdiction in which the agent is not domiciled. For example, an insurance agent who resides in California and is licensed to conduct insurance business in Nevada would be classified as a non-resident agent in the state of Nevada. Licensing requirements for non-resident agents commonly differ from those of resident agents, although those differences may not be material in some states. The types of licenses granted by states also commonly differ as between resident and non-resident agents.
Auto insurance which is issued on premium rates which are neither standard nor preferred. Drivers who are classified as higher risk may be denied coverage at standard rates, and in that instance would only have recourse to non-standard auto insurance if they wish to be covered. For example, drivers with a history of driving violations or auto insurance claims may be denied coverage at standard rates. This could also apply to inexperienced drivers, drivers with modified vehicles and those who have previously allowed their insurance coverage to lapse.