Sometimes looking at your car insurance options can be like trying to read something in a foreign language. Many insurance terms sound so lawyerly — and frankly scary — when all you want to do is find out if you’re covered or what the status of your claim is. Fear not. Here are 7 confusing car insurance terms that and what they actually mean.

Salvage Title

A “salvage title” is given to a car when it’s been declared a “total loss.” That’s when it’s more expensive to repair than replace it. A vehicle is given a title so that it’s harder for an unscrupulous dealer to repair and palm it off to an unsuspecting customer. Even if they’ve “washed” the title so it appears clean, you can still find out all about a car’s background through its Vehicle Identification Number (VIN), which’ll report all of its claims.

Full Coverage

Sounds comforting, right? The thing is … there is no such thing. This is a phrase that’s kicked around a lot at dealerships, but unfortunately it’s not an actual insurance term. When people say “full coverage,” they usually mean a policy that has liability, comprehensive, and collision. All 3 are great to have, but please, please know that it doesn’t cover EVERYTHING. To get your coverage where it should be, start by using Coverage Counselor®

Lapsed Coverage

Whoops! You thought you could get away with skipping a car insurance payment? Bad idea…if you are driving without coverage, you’re, well, not covered. But even worse, it’s illegal in many states, and it could mean that you pay even a higher premium when you do come to your senses and reinstate your coverage. 

However, sometimes you might have a completely legit reason to drop coverage. Maybe you sold your car or decided to bike to work. But be aware that dropping coverage for any reason — even these understandable ones — could still affect your rates in the future.

Uninsured/Underinsured Motorist Coverage

Well that’s not fair that someone who’s uninsured walks away scot-free? Unfortunately in some cases those with no insurance just say, “Sorry!” and you’re on the hook, even if you weren’t at fault. Uninsured or underinsured motorist coverage means that your insurance company will help pick up the slack. (And in some states, it’s required!)

Medical Payments Coverage

You hate to think about it, but if there are victims in an accident, bills can mount rapidly. Medical Payments Coverage helps with the medical expenses of covered drivers and passengers after an accident, no matter who’s at fault. Even if you’re struck by a car while walking or you’re injured as a passenger in someone else’s car, coverage could still step in.


Yes, it sounds fancy but what it really means is that you will be compensated for damages. And yes, that’s good news indeed!

Gap Insurance

Thinking of leasing or financing a vehicle? Most lenders will require you to add what is known as “gap coverage” to your auto policy. And for good reason. Gap coverage helps cover the “gap” between what you still owe on the car, and its market value at the time of the accident. Also important to note is, you typically have to have comp & collision on your policy before you can get gap insurance. 

Not sure what coverage to get? Try Esurance’s very own Coverage Counselor®. Answer a few easy questions, and our tool will suggest coverages and coverage limits worth looking into. It’s even available to non-Esurance customers. From there, you can also a free auto quote —  and see how much you could be saving on insurance. When insurance is affordable and simple, it’s surprisingly painless.

Insurance 101 | Car insurance 101


about Cathie

Cathie Ericson writes about personal finance, real estate, health, lifestyle, and business topics. When she's not writing she loves to read, hike, and run. Find her @CathieEricson.