| 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.
|