Auto Insurance Glossary – S Definitions

Safe Driver Plan

A plan created at state level which is designed to reward drivers who maintain clean driving records, and which correspondingly penalizes those who don’t, through higher auto insurance premiums. Safe driving plans target two areas, namely at-fault accidents and moving traffic violations. Points, often called surcharge points, are awarded to a driver if they are found to have a minimum threshold level of fault in an accident which causes injury or property damage of a certain monetary level. Surcharge points accumulate in respect of unrelated incidents, and the total number of points earned by a driver determines the percentage excess which is charged for the driver’s auto insurance. Drivers who maintain clean driving records (namely a points balance of zero) for several years are entitled to a good driver discount. Learn more about auto insurance discounts.

Safe Driver Pledge

A pledge developed by insurance companies and road safety authorities which is targeted at teen drivers. The pledge is designed to keep teenage drivers and their passengers safe, and it works as a kind of quid pro quo whereby parents provide their teenage children with a degree of latitude in using their cars and staying out to certain hours, in return for teens pledging to abide by a number of safe driving practices and other conditions. For example, safe driving pledges might contain statements such as “I will never permit a passenger in the car if I am aware that they have taken alcohol or drugs”, and “While driving, I will never use a cell phone for calls, texts, tweets or any other purpose”. Learn how to insure a teen driver.

Salvage Value

With respect to autos, the market value of a vehicle when considered no longer fit for purpose. The question of a car’s salvage value most commonly arises in total loss claims following a road accident. In that instance salvage value is assessed by a claims adjuster working on behalf of an insurance company, and is typically calculated either by applying a percentage of pre-accident actual cash value or by obtaining quotes from auto salvage yards. Salvage value is significantly affected by the nature of the damage to the car. For example, an accident which causes front-end damage, particularly if it extends well into the engine bay, is likely to be substantially lower than the corresponding salvage value for damage due to rear-ending.

Sine Qua Non Rule

A Latin and legal term which means “without which not”, and which is colloquially referred to as the “but for” rule. It is commonly applied in negligence lawsuits in which plaintiffs are required to demonstrate that the damage which is the subject of the lawsuit could not have occurred “but for” the negligence of the defendant. In other words, the sine qua non rule is applied to test whether negligence was an actual cause of the damage, without which the damage could not have occurred in the first place.

Single and Split Limits

Alternative methods used by auto insurance companies for structuring liability insurance. A personal auto policy invariably provides liability protection for auto accidents in two distinct areas, namely bodily injury caused to others and damage caused to others’ property. Under single limits coverage, one total limit of liability applies to all injuries and property damage caused in each auto accident, irrespective of how the limit is made up. Under split limits coverage, three separate limits are applied as follows: (1) An injury limit per person; (2) An injury limit per accident, and (3) A property damage limit per accident. It is therefore possible for all liabilities in an auto accident to be met in full under single limits coverage, but only partly met under split limits coverage due to one or more of the three individual limits being reached. Learn more about single and split limits.

Specified Causes of Loss Coverage

Commercial auto insurance which provides protection against losses caused by specific events, as opposed to the broad protection provided under all-risks insurance such as comprehensive coverage. The specified causes of loss typically comprise theft, fire, explosion, lightning, earthquake, windstorm, hail and flood. Coverage is also provided in the event that the insured auto is damaged or lost due to derailment, collision, burning or sinking while it is being transported. The coverage can (optionally) be applied to autos owned by the insured (whether new or used) and to the insured’s interest in financed autos.

Stacking

The term given to adding together the policy limits for uninsured and underinsured motorists coverage when an auto insurance policy provides coverage for two or more vehicles. This type of coverage provides protection specifically for bodily injuries caused to yourself or your passengers in a car accident caused by an uninsured or underinsured motorist. In states which allow stacking, and with insurance companies which include a stacking option in their auto policies, a policy owner can pay an additional premium and have the limits for uninsured and underinsured motorists coverage for two or more cars covered under the same policy added together to produce a higher limit. There are approximately 30 states which permit stacking.

Subrogation Clause

A clause in an insurance contract which substitutes (subrogates) the insured with the insurer with respect to rights to recover damages at law, if the insurer makes a payment to or in respect to the insured in compensation for those damages. Personal auto policies invariably contain subrogation clauses in their General Provisions sections, and in addition to providing the insurer with subrogation rights, those clauses specify that the insured must do whatever is necessary for the insurer to exercise its subrogated rights, and to do nothing to prejudice them. In addition, the clauses specify that, should an insured recover damages from another party after receiving compensation from the insurer for those damages, then the insured must hold the proceeds of the recovery in trust for the insurer and reimburse the insurer to the extent of the lesser of the amount recovered and the amount of the compensation.

Supplementary Payments

Payments specified in the Liability Coverage section of a personal auto insurance policy which provide for additional amounts payable by the insurer. These typically comprise (1) up to $250 for the cost of bail bonds required as a result of an accident which causes insured bodily injury or property damage; (2) premiums on bonds for appeal or attachment releases in a lawsuit; (3) interest which accrues on any amount awarded against the insured under the policy, up to the limit of coverage; (4) up to $200 per day for loss of earnings due to attendance at trials or hearings when requested by the insurer, and (5) any other reasonable expenses incurred at the request of the insurer.