Car Accident & Insurance Glossary
Insurance policies and legal documents use technical language that most people have never needed to understand — until they are in an accident. This glossary defines the most important terms in plain language so that accident victims can understand their rights, their coverage, and the claims process before negotiating with an insurance company.
Why This Matters: Insurance adjusters and defense attorneys use this terminology every day. Understanding these terms before speaking with an insurer or signing any documents can protect your claim and prevent costly mistakes.
Insurance Terms
Bodily Injury Liability (BI)
Coverage that pays for injuries you cause to other people in an accident you are at fault for. Required in most states. Limits are expressed as two numbers — for example, 25/50 means $25,000 per person and $50,000 per accident.
Collision Coverage
Optional coverage that pays to repair or replace your vehicle after a collision, regardless of fault. Subject to your deductible. Required if you have an auto loan or lease.
Comprehensive Coverage
Optional coverage that pays for vehicle damage caused by events other than collisions — including theft, vandalism, weather, fire, and animal strikes. Also subject to a deductible.
Deductible
The amount you pay out-of-pocket before your insurance pays the rest of a covered claim. A $500 deductible means you pay the first $500 of repair costs; your insurer covers the remainder.
Diminished Value
The reduction in a vehicle's market value after it has been in an accident and repaired. Even a properly repaired car is worth less than a vehicle with no accident history. Diminished value claims can be pursued against the at-fault driver's insurance.
Gap Insurance
Coverage that pays the difference between what your insurance company pays for a totaled vehicle and what you still owe on your car loan or lease. Without it, you may owe thousands after a total loss.
MedPay (Medical Payments Coverage)
Optional coverage that pays medical expenses for you and your passengers after an accident, regardless of fault. Available in most states as an alternative or supplement to PIP.
PIP (Personal Injury Protection)
Coverage that pays for medical expenses, lost wages, and other costs after an accident regardless of who was at fault. Required in no-fault states. Limits and covered expenses vary by state and policy.
Property Damage Liability (PD)
Coverage that pays for damage you cause to another person's property — typically their vehicle — in an accident where you are at fault. Required in nearly all states.
UM/UIM (Uninsured/Underinsured Motorist Coverage)
Coverage that protects you when the at-fault driver has no insurance (UM) or insufficient insurance to cover your damages (UIM). Critically important — roughly 1 in 8 drivers on U.S. roads is uninsured, according to the Insurance Research Council.
Legal Terms
Comparative Negligence
A legal rule used in most states that reduces a victim's compensation by their percentage of fault. If you are 20% at fault in a $100,000 accident, you recover $80,000. Some states use "pure" comparative negligence (any fault allowed); others use "modified" comparative negligence (typically barring recovery if you are 50% or 51% at fault).
Contributory Negligence
A strict legal rule used in a small number of states (Alabama, Maryland, North Carolina, Virginia, and D.C.) that bars recovery entirely if the victim is found even 1% at fault. If you contributed to the accident in any way, you cannot recover damages.
Damages
The compensation a victim is entitled to recover after an accident. Divided into economic damages (medical bills, lost wages, property damage — all objectively measurable) and non-economic damages (pain and suffering, emotional distress, loss of enjoyment of life).
Duty of Care
The legal obligation to act with reasonable care to avoid causing harm to others. Drivers owe a duty of care to other road users, pedestrians, and passengers. A breach of this duty that causes injury is the basis of a negligence claim.
Liability
Legal responsibility for an accident or injury. Establishing liability requires proving the other party was negligent — they owed a duty of care, breached it, and that breach directly caused your damages.
Loss of Consortium
A legal claim made by the spouse or close family member of a severely injured accident victim for the loss of companionship, affection, and support caused by the victim's injuries.
Negligence
The failure to exercise reasonable care, resulting in harm to another person. The four elements required to prove negligence are: (1) duty of care existed, (2) duty was breached, (3) the breach caused the injury, and (4) actual damages resulted.
Pain and Suffering
Non-economic damages awarded for the physical pain and emotional distress caused by an accident and resulting injuries. Calculated using either a multiplier of economic damages (typically 1.5x–5x) or a per diem rate for each day the victim suffers.
Proximate Cause
The direct legal cause of an injury — meaning the negligent act was close enough in the chain of events to be the reason the harm occurred. An injury must be a foreseeable result of the negligent act to establish proximate cause.
Punitive Damages
Additional damages awarded above actual losses, intended to punish defendants for especially reckless or intentional conduct — such as drunk driving or road rage. Not awarded in most standard accident cases; reserved for egregious misconduct.
Respondeat Superior
Latin for "let the master answer." A legal doctrine that holds employers liable for the negligent acts of employees performed within the scope of their employment. Key in truck accident cases — it allows victims to sue the trucking company, not just the driver.
Statute of Limitations
The deadline by which a lawsuit must be filed after an accident. Varies by state — typically 2–3 years for personal injury claims, though some states allow as little as 1 year. Missing the deadline permanently bars the claim. Claims involving government vehicles may have notice requirements as short as 60–180 days.
Subrogation
The process by which your insurance company, after paying your claim, steps into your shoes to recover that money from the at-fault party's insurer. If your insurer pays $20,000 for your medical bills, they may pursue the at-fault driver's insurance to recover that amount.
Tort
A civil wrong that causes harm to another person, giving rise to a legal claim for damages. Personal injury lawsuits from car accidents are a type of tort claim.
Wrongful Death
A legal claim brought by surviving family members when a person dies as a result of another party's negligence. Damages can include funeral costs, lost future income, loss of companionship, and pain and suffering experienced before death.
Claims & Settlement Terms
Adjuster (Insurance Adjuster)
The insurance company employee who investigates your claim, determines fault and coverage, and decides how much the insurer will pay. Adjusters work for the insurance company — not for you. Their goal is to settle claims for as little as possible.
Bad Faith Insurance
When an insurance company unreasonably denies, delays, or undervalues a valid claim. Examples include ignoring evidence, failing to investigate, or offering far less than a claim is worth. Victims can sue for bad faith in addition to the underlying claim.
Demand Letter
A formal letter sent to the at-fault party's insurer outlining your injuries, damages, and the compensation you are demanding. It typically includes medical records, bills, lost wage documentation, and a settlement amount. It formally begins the negotiation process.
Independent Medical Examination (IME)
A medical exam requested by the insurance company and conducted by a doctor of their choosing. Despite the name, IME doctors are paid by the insurer and frequently produce reports that minimize injury severity. You have the right to have your own doctor review their findings.
Lien
A legal claim against your settlement proceeds by a party that paid for your medical treatment — typically a health insurer, Medicare, Medicaid, or a hospital. Liens must be resolved before you receive your settlement funds.
Settlement
An agreement between the injured party and the at-fault party's insurer to resolve a claim for a specified amount of money. Settling ends the legal dispute — once signed, you typically cannot pursue additional compensation for that accident.
Total Loss
A vehicle is declared a total loss when the cost to repair it exceeds a threshold — typically 70–80% of its actual cash value, depending on the state and insurer. The insurer pays the vehicle's pre-accident market value minus your deductible.
Accident & Regulatory Terms
At-Fault State
A state where the driver responsible for causing the accident is financially responsible for resulting injuries and damages. The at-fault driver's liability insurance pays for the other party's losses. The majority of U.S. states are at-fault states.
Black Box (EDR — Event Data Recorder)
A device installed in most modern vehicles that records data in the seconds before and during a crash — including speed, braking, steering input, and seatbelt use. This data can be critical evidence in accident reconstruction. In truck accidents, the black box must be preserved immediately as it can be overwritten.
Commercial Vehicle
A vehicle used for business purposes, including semi-trucks, delivery vans, and buses. Commercial vehicles are regulated by the FMCSA and subject to stricter safety standards, hours-of-service rules, and inspection requirements than personal vehicles.
FMCSA (Federal Motor Carrier Safety Administration)
The federal agency that regulates commercial trucking in the United States. FMCSA rules govern driver hours of service, vehicle maintenance, cargo loading, and licensing. Violations of FMCSA regulations are common evidence in truck accident lawsuits.
No-Fault State
A state where each driver's own insurance pays for their medical expenses and lost wages regardless of who caused the accident. No-fault states include Florida, Michigan, New York, and New Jersey. In no-fault states, lawsuits are generally limited to serious injuries that meet a defined threshold.
NHTSA (National Highway Traffic Safety Administration)
The federal agency responsible for road safety in the United States. NHTSA sets vehicle safety standards, conducts crash tests, issues safety recalls, and publishes the national crash statistics used throughout this site.
Serious Injury Threshold
In no-fault states, the legal standard an injury must meet before a victim can step outside the no-fault system and file a lawsuit against the at-fault driver. Thresholds vary by state and typically include permanent injury, significant disfigurement, or medical expenses exceeding a dollar amount.
Note: These definitions are provided for general educational purposes only and do not constitute legal or insurance advice. Laws and policy terms vary by state and individual policy. Consult a licensed attorney or insurance professional for guidance specific to your situation.