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Accidental death benefit
|
Sometimes called double indemnity, a provision in a policy that pays additional
amounts of death benefit if the cause of death is by accidental means.
|
| Actual cash value (ACV) |
Actual
cash value is the actual or current value of an item at the time of loss.
|
| Agreed value (or agreed amount) |
The value
of property insured under an agreed value provision is the lesser of the
following:
-the actual
cash value; or
-the cost
to repair or replace the item; or
-the amount
stated on the declarations page
of the
policy.
The insured and the insurer agree on
the value at the time the policy is written.
|
| All-risk |
All-risk property policies, also called
"special" or "open-perils" policies, cover any loss unless it is caused by an
excluded peril described in the policy. In an "all-risk" policy, the burden of
proof is on the insurer. All losses are covered unless the insurance company
can prove that the loss was caused by an excluded peril. |
| Anti-lock braking system (ABS) |
In a vehicle with a standard braking system, a
driver who brakes suddenly can lock the vehicles' wheels and skid, causing loss
of control and extending stopping distances. An ABS pumps the brakes
automatically (many times a second) to prevent lockup and to enable a driver to
maintain control. |
| At-fault |
This is a term used to describe a person's legal
liability for an accident. This ranges from contributory negligence to
primary negligence and is usually expressed as a percentage.
|
Auto physical damage coverage
|
Auto physical damage coverage, also known as "damage
to your auto" coverage, insures against loss resulting from damage to an auto
owned or operated by the insured. It also provides coverage if the car is
stolen. |
Auto towing and labor coverage
|
Pays for road service or towing and
labor performed at the site of disablement. |
|
Beneficiary
|
The person designated to receive the death benefit when the insured dies.
|
| Cancel, cancellation |
Stopping coverage during the policy period is
cancellation. A policyholder can cancel most policies at any time. State
laws often restrict the reasons an insurer can cancel a policy after it has
been in effect for a period of
time.
|
|
Cash surrender value
|
The amount available to the policy owner when they terminate the life insurance
policy prior to maturity or death.
|
| Central station alarm |
Contacts a security company that responds to the
residence and contacts the police. |
| Claim |
A demand by a person or business seeking to recover
for a loss. A claim might be made against an individual or against an insurance
company. |
| Claim adjuster |
The person directly responsible for investigating,
evaluating, and settling claims that might be covered by insurance. |
| Claim file |
A folder or computer record that is created (opened)
when a claim is made. |
| Claimant |
Anyone who presents a claim that might be covered by
insurance. For a liability insurance loss, the claimant is a person or business
that has suffered a loss and seeks to collect for that loss from an insured.
For a property insurance loss, the claimant is the insured who wants the
insurance company to pay for repairing or replacing his or her damaged
property. |
| Collision |
Coverage that applies to the impact of a vehicle
with another vehicle or object or the upset (overturn) of the vehicle. |
|
Contingent beneficiary
|
The person designated to receive the death benefit, if the beneficiary dies
before the insured or is disqualified by law.
|
|
Conversion
|
An option on a term insurance policy that allows the owner/insured to change
the policy, in full or in part, to a permanent plan without providing evidence
of insurability. Premiums for the new policy are typically based on the
insured's age at the time of the conversion.
|
| Credit report |
A record of an individual's income, debt, and
payment history. Insurance companies use an "insurance score" provided by
credit bureaus which take into account many factors, one of which is
credit.
|
| Damage |
Loss or harm resulting from injury to a person,
property, or to someone's reputation. |
| Damages |
Money that the law requires one party to pay another
because of loss or injury suffered by the other party. |
|
Death benefit
|
The amount payable to the beneficiary on the insured's date of death.
|
| Declarations, declarations "dec" page |
This is a document that identifies the persons or
property covered by the policy and identifies the coverages and limits
provided.
|
| Declination |
Occurs when an insurer rejects an application. |
| Deductible |
A portion of a covered loss that is not paid by
insurance. The deductible is subtracted from the amount the insurer would
otherwise be obligated to pay. |
| Defense costs |
Expenses associated with defending a liability
claim. Such expenses include wages the defendant loses to prepare for a trial,
investigation expenses, witness fees, and premiums for bonds. |
| Depreciation |
Loss in value of property that develops as items
age, wear out, or become obsolete. In a sense, depreciation reflects value that
has already been used up. |
|
Dividend |
A refund of excess premiums paid to the owner of an individual participating
life insurance policy. Dividends are usually directly affected by the insurance
company's expenses, claim experience and the general interest rate environment.
|
| Driver training discounts |
Applied to personal auto policies for youthful
drivers who have completed an approved driver training course. |
| Endorsement |
A document used to amend the coverage or provisions
in an insurance policy.
|
| Exclusions |
Insurance policy provisions that restrict the broad
terms of the insuring agreement by stating some exceptions to coverage -
certain activities, loss causes, property, persons, and places - for which the
insurer does not provide coverage. |
| FAIR plans |
Fair Access to Insurance Requirements residual
market plans provide property insurance for those who cannot obtain coverage in
the voluntary market. |
| Good student discounts |
Applied to personal auto policies for youthful
drivers who have good scholastic records. |
| Indemnify |
To restore the party that has had a loss to the same
financial position they held before the loss. |
| Insurance |
A system by which a risk is transferred by a person,
business, or organization to an insurance company (insurer), which reimburses
the insured for covered losses and provides for sharing the costs of losses
among all insureds. |
| Insurance premium |
A periodic payment by the insured to the insurance
company in exchange for insurance coverage. A periodic payment is one that must
be made at certain time intervals. |
| Insurance Services Office (ISO) |
The largest insurance service office in the country,
ISO performs a variety of services, such as developing statistical
classification systems and collecting statistical data on insured claims from a
large number of insurance companies, analyzing this information, and using it
to develop cost data. Insurance companies that subscribe to ISO's services may
use this loss-cost information in setting their own insurance rates. ISO
also develops standardized insurance contracts and forms which are used
throughout the industry.
|
| Insurer |
Also known as an insurance company, an organization
that sells insurance policies that protect insureds against financial hardship
caused by financial loss. |
| Intangible losses |
Losses that cannot be appraised tangibly, for
example, items with sentimental value. |
| Liability (legal concept) |
As a legal concept, liability means that a person,
organization, or group of people is legally responsible, or liable, for the
injury or damage suffered by another person, organization, or group of people. |
| Liability insurance |
Covers accidental losses resulting from bodily
injury or damage to someone else's property for which the insured is legally
responsible (legally liable). If the loss is covered by the insurance policy,
the payment is made directly to the party that suffered the loss.
|
| Litigation |
The process of carrying on a lawsuit. |
| Local alarm |
Creates a loud noise that can be heard only at or
near the premises. |
| Loss control |
A risk management technique that reduces the
frequency or severity of a loss. |
| Loss prevention |
A loss control technique that seeks to lower the
probable frequency of losses. |
| Loss reduction |
A loss control technique that seeks to lower the
severity of losses that occur. |
| Motor vehicle reports (MVR) |
A state's official record of driving information,
which usually contains traffic violation and accident information.
|
| Named perils |
Coverage provided by an insurance policy is
specified by a list of covered perils. Perils that do not appear on the list
are not covered. |
| No-fault car insurance |
Offers automobile policyholders the right to recover
financial losses from their own insurance, regardless of who caused the
accident. This recovery is offered in the form of personal injury protection
(PIP) coverage. |
| High risk auto insurance |
High-risk drivers are those whom insurers normally
reject in a standard market. |
| Other than collision |
This coverage is found in personal auto policies. It
covers physical damage perils that are not otherwise excluded. This is also
known as comprehensive insurance and provides protection against the following
list of perils: missiles or falling objects; fire, explosion, or earthquake;
theft, larceny, vandalism, malicious mischief, riot, civil commotion;
windstorm, hail, water, or flood; contact with a bird or animal and breakage of
glass. |
|
Owner |
The person named on the life policy application who has the right to exercise
all policy rights and privileges while the insured is living. The owner may or
may not be the insured. |
|
Paid-up insurance
|
A life insurance policy feature that uses the accumulated cash surrender value
to purchase a reduced amount of fully paid up life insurance. The policy owner
surrenders the cash value to pay for this reduced amount of insurance.
|
| Peril |
A cause of property losses. Fire is one example of a
peril. |
|
Permanent life insurance |
A life
insurance policy that is designed to provide lifelong protection in case of
premature death. Premiums are generally level throughout the lifetime. There
are three main types: whole, universal and variable. All permanent policies
accumulate cash value.
|
| Personal articles floater (PAF) |
Provides broad coverage for scheduled items such as
jewelry, furs, silverware, and fine arts. |
| Personal auto policy (PAP) |
A specific standard auto policy designed to meet the
auto insurance needs of a typical person or family. |
| Personal autos |
Vehicles that are structurally created for
individual and family use; personal autos include private passenger autos, vans
and trucks. |
| Personal injury |
Personal injury refers to physical or emotional
injury to a person or injury to a person's reputation.
|
| Personal injury protection (PIP) |
No-fault coverage that applies to auto-related
injuries. |
| Personal insurance |
Insurance coverages purchased by individuals and
families to cover non-business exposures. This term is often used
interchangeably with "personal lines." |
| Personal liability |
These are damages that the law holds a person
legally responsible for.
|
| Personal Liability Umbrella
|
See Umbrella policy.
|
| Personal property |
Property other than land, buildings and items
permanently attached to either.
|
| Physical damage coverage (auto) |
Auto physical damage coverage, also know as "damage
to your auto" coverage, insures against loss resulting from damage to an auto
owned or operated by the insured. It also provides coverage if the car is
stolen. |
| Policy |
A contract that states the rights and duties to the
insurance company and the insured. |
| Policy limits |
Limits, also called limits of insurance, limits of
liability, or policy limits, indicate how much insurance is provided. The
limits in the policy set the maximum dollar amount the insurance company will
pay. |
|
Policy loans |
Many permanent plans that accumulate cash value allow the policy owner to
borrow part or the entire amount accumulated at a prescribed rate of interest.
Policy loans reduce the amount of death benefit paid at the time of the
insured's death. |
| Policy provision |
Any statement in an insurance policy. |
| Preferred auto market |
Preferred auto market refers to a type of risk most
desired by an insurance company. These risks generally have few
accidents or violations, if any. The typical preferred program has lower
rates than the other programs, coupled with stricter underwriting
standards. Other requirements might involve type of car (no sports cars)
or age of the drivers (all over twenty-five).
|
|
Premium |
The payment to the insurance company for the insurance coverage. |
| Private passenger autos |
Vehicles that are individually or family-owned and
used primarily for the transportation of people. |
| Proprietary alarm |
In the event of a break-in, a proprietary alarm
notifies a security guard on the premises, who responds.
|
| Real property |
Land, buildings, and other items permanently
attached to the land or building. |
| SR-22 |
The form number of the document that is required by
the department of transportation from an insurance company to confirm that
required coverage is in force.
|
| Standard auto market |
Risks that do not qualify for the preferred market
are placed in the standard market. This market segment is composed of drivers,
falling just short of qualifying for preferred treatment, generally because of
a prior claim record but also for other reasons, such as certain newly licensed
drivers or youthful operators.
|
| Stated amount |
A loss settlement option that might be applied to a
personal auto policy for physical damage coverages. An appraisal is obtained
for the vehicle, and the appraised value becomes the basis for rating. Maximum
loss settlement is based on the lowest of (1) the stated amount, (2) the ACV,
or (3) the amount to repair or replace. |
| Subrogate, Subrogation |
When an insurer pays an insured for a loss, the
insurer takes over the insured's right to collect damages from the other party
responsible for the loss. The insurance company might subrogate against the
party directly responsible for the loss. |
| Term |
Policy period; the period during which a policy
provides coverage. |
|
Term life insurance |
A life insurance policy designed to provide protection for a specific period of
time, such as 10, 20 or 30 years. Term policies provide a death benefit in
exchange for premiums paid. |
| Termination |
A policy cancellation during its term or a
non-renewal at the end of its term. |
| Third party |
When this term is applied to an insurance contract,
it means an entity who has certain rights under the terms of an insurance
policy as a result of the insured's negligent acts covered by the policy. |
| Tort |
A wrongful act other than a crime or a breach of
contract for which relief may be obtained in the form of damages or an
injunction.
|
| Tort state |
A state that provides for compensation to a victim
of an auto accident through legal remedies. |
Towing and labor
coverage (auto) |
Pays for road service or towing and labor performed
at the site of disablement. |
| Umbrella policy |
A liability insurance policy that takes over where
basic liability policies end. Personal umbrella policies typically provide $1
million or more worth of coverage in addition to auto or homeowners policies. |
| Underwriting guidelines |
Also called "guides" or "underwriting policies,"
these are a set of parameters or limitations on the type of risks to be
written. Guides are established by each insurance company for each line of
business written. |
| Uninsured/underinsured motorist coverage |
A coverage in personal or commercial auto policies
that provides protection against bodily injury loss (also property damage in
some states) when the insured is involved in an accident with a motorist who
either is not insured, or has insurance, but that insurance either is less than
the limits the insured carries, or the limits are not enough to pay the
insured's damages. In some states, these coverages are combined; in others,
they are listed as separate coverages. |
|
Universal life |
A permanent life insurance policy that provides the owner with flexible amounts
of death benefit and the ability to raise or lower premiums within certain
prescribed limits. Cash value accumulates at a rate that fluctuates according
to the investment performance of the company with a guaranteed minimum interest
rate. |
|
Whole life |
A permanent life insurance policy designed to last for a lifetime, during which
premiums remain level and cash accumulates over time as premiums are paid. |
|
Waiver of premium |
A rider on life insurance policies that indicates the insurance company will
waive the premiums payable under the policy should the insured become totally
disabled. |