We've organized the most common financial terms and explained them in simple, friendly ways.
Typically the spouse or family member of a policyholder who is also covered under the policy when using the insured vehicle.
An ARM starts off with a fixed interest rate, typically for five or seven years, before adjusting periodically based on a corresponding mortgage market index. As a result, the interest rate on a ARM can increase or decrease after the initial fixed-rate period.
An employee from the insurance carrier responsible for settling claims brought on by a claimant/insured. The adjuster reviews the claim and determines whether or not it will be paid based on the accident and policy terms.
An amortization schedule, within a loan repayment process, is the process of paying off debt in regular monthly installments, in which a portion of the payment goes toward interest and another portion goes toward the principal. With most amortization schedules, interest is front-loaded during the beginning of the repayment process, so the borrower pays more toward the principal as time goes on.
Common with higher-end credit cards featuring reward structures, an annual fee is charged to renew a credit card.
The yearly interest rate charge applied to a loan, whether it is a personal loan, student loan, mortgage, or auto loan. While loan APRs include other costs and fees baked into the percentage, the APR of a credit card is identical to the interest rate charged to the principal amount, with zero additional costs or fees (which for credit cards, typically is charged as compounding interest).
An annual percentage yield (APY), typically associated savings accounts, is a yearly interest rate that allows applicants to compare offers with varying compounding structures.
In tort states, drivers who are deemed “at-fault” for an accident are responsible for covering the damages, although fault is not always fully imposed on one driver (e.g., if a driver is found 60% at fault, they are responsible for 60% of the costs). The majority of states use some form of tort law.
A formal request by the insured to their insurance carrier to cover damages caused by an accident, whether it’s vehicle repairs, injury treatment, or other associated costs.
A deductible must be paid out of pocket by the insured before the insurance carrier will cover costs in a claim. Typically, a policy with a higher deductible will have a lower monthly premium, and vice versa.
The policy is a contract between the insured (policyholder) and the insurance carrier, which states all of the coverage details, as well as legal terms and conditions.
A quote is the estimated cost for an auto insurance policy, specifically the monthly premium paid to the insurance carrier. The quote is based on several factors including, but not limited to, the type of policy/coverage, the applicant’s credit and driving history, the type of vehicle being insured, and more.