Auto Insurance Glossary – T Definitions
Temporary Agent
A term given to a person who has been issued a temporary insurance license by a state insurance office, normally for the purpose of continuing or winding down the business of a fully licensed agent who is no longer able to operate the business. This can be due to a number of causes, including death, significant disablement, natural disaster or even military service. Temporary insurance licenses are granted without the usual requirement to complete an insurance examination, and they can be granted for any period approved by the state insurance commissioner. However, temporary insurance licenses are typically issued for a period of 90 days.
Territorial Limitation
A provision within an insurance policy which specifies that the insurer’s liability is limited to losses which occur within a defined territory. For example, the territorial limitation clause contained within the personal auto policy wording produced by the Insurance Services Office, which most auto insurers have adopted, states that the policy only applies to losses which occur in the Unites States and its territories, Puerto Rico or Canada. The clause is contained within the General Provisions section of the policy, which means that coverage does not apply under any section of the policy for losses which occur outside these territories. In particular, there is no coverage for personal liability arising from auto accidents outside these territories.
Third Party Insurance
Insurance which provides protection to a policyholder for personal liability to a third party. For any insurance policy, the policy owner is the first party, the insurer which issues the policy is the second party, and any person or legal entity in respect of which coverage is provided under the policy is a third party. For example, if a driver who has auto insurance causes an accident which results in personal injury to another driver, then the auto policy provides coverage for any personal liability which the at-fault driver has towards the injured driver and which arises from the accident, up to the relevant policy limit.
Tort
A civil wrong (as opposed to a criminal wrong) that involves a breach of duty (other than a contractual duty) that results in injury or harm to another person, their property, or their reputation, and which gives the injured party grounds for a lawsuit to obtain compensation. See also tort states below.
Tort States
A term given to states which have adopted auto insurance laws based on tort law with respect to personal injuries arising from auto accidents. Consequently a person who is injured in an auto accident in a tort state is able to take a lawsuit against an at-fault driver for damages due to bodily injuries caused by the accident. These damages could comprise medical costs, pain and suffering and loss of earnings. 28 states have adopted a tort system for injuries arising from car accidents, although each system is overlaid with one of four alternatives with respect to contributory or comparative negligence. States which have not adopted a tort system have adopted no-fault laws, or a combination of the two systems in choice states and add-on states.
Tort Threshold
The damages threshold specified in the auto insurance laws of no-fault states above which the no-fault system does not necessarily apply, and where tort law may be invoked. There are two types of thresholds in no-fault states, namely quantitative thresholds and verbal thresholds. A quantitative threshold is a dollar value of the sum of all injury-related damages caused to a person from an auto accident, and it is consequently also referred to as a monetary threshold. A verbal threshold is a specified degree of bodily injury caused to a person in an auto accident, and it is therefore a qualitative threshold. A verbal threshold is also referred to as a descriptive threshold as is describes the extent of injuries beyond which an injured person may take an action in tort law to recover damages arising from the injuries.
Total Loss
A loss in which an insured item is deemed by the insurer or by state law to be damaged to such an extent as to be economically irreparable, or which is deemed physically irretrievable. For example, a car which has been involved in a crash may be deemed to be a total loss claim if its estimated repair costs equal or exceed the actual cash value of the car immediately preceding the crash, less its salvage value after the crash. Similarly, a car which has been stolen and which has been unable to be recovered, or a car which has been lost after falling overboard from a vessel, would constitute a total loss. Learn more about total loss claims.
Transportation Expenses
Expenses covered under the collision and comprehensive section of a personal auto insurance policy for temporary transportation during a period in which an insured or non-owned auto is not available for use due to damage or deprivation. Transportation expenses are typically limited to $20 per day, and are subject to an overall maximum of $600 for each loss. If the loss of use is caused by damage, then the minimum period of loss of use before which a benefit is payable is 24 hours. If the loss of use is caused by theft, then transportation expenses become payable 48 hours after the theft occurs, and end when the vehicle is returned to use or the insurer makes payment for its loss.
