Actual
Cash Value (ACV)
"Actual Cash Value" is the replacement
cost of property damaged or destroyed at the time of loss, with deduction for depreciation. Actual cash value cannot
exceed the applicable limit of liability shown in the declarations of
the policy, nor the amount it would cost to repair or replace such
property with material of like kind and quality within a reasonable
amount of time after a loss.
Adjuster
The person who handles the settlement of claims on behalf of
an insurance company, either as an employee of the company or an
independent engaged by contract. Also called a claims representative.
Agent
The representative of an insurance company responsible for
selling and servicing policies. Can be an employee representing only one
company (sometimes called a "captive agent" or a "direct
writer" or an "independent agent" who, through
contractual agreements, may represent several different companies
without being an employee of any of them.
Applicant
A person who signs and submits a written application for
insurance coverage.
Arson
The willful, unlawful burning of property. If it is proved
the policyholder was responsible for the arson, the insurance company
will not pay for the loss.
Auto
Medical Payments
Optional automobile coverage that pays for medical expenses
incurred by the insured driver or his or her passengers, without regard
to who is responsible for the accident
Automobile
Insurance
Contractual protection against losses resulting from the
ownership and use of an automobile. Coverages common in auto policies
include FIRE, THEFT, COMPREHENSIVE, COLLISION, PROPERTY DAMAGE and
BODILY INJURY LIABILITY and UNINSURED MOTORIST.
Benefit
The money to be paid by an insurance company under the terms
of the insurance policy.
Beneficiary
The person(s) named in the policy to receive the life
insurance proceeds upon the death of the insured.
Binder
A legal agreement between an insurance buyer and an insurance
company or its agent. it provides temporary insurance coverage until a
policy is either issued or refused.
Blanket
Policy
A policy that covers a group of people ( such employees of
the same company) or several properties of exposures (kinds of possible
losses) under a single contract.
Bodily
Injury
Injury to the body of a person as specifically defined in an
insurance policy. Bodily injury liability is the legal responsibility
for medical and related cost that may result from injury to the life or
health of another person.
Cancellation
The termination of an insurance policy either by the insured
party or the insurance company, before its normal expiration date. A
cancelable policy includes a provisions the the contract can be
terminated by either party upon notice to the other. By contrast, a
non-cancelable policy cannot be canceled by the insurance company during
its specified term. (unless non-payment of premium)
Carrier
A trade term for an insurance company.
Cash
(Surrender) Value
The amount that is available in cash for loans and that may be
available for withdrawals. Accessing Cash Surrender Value may reduce the
death benefit and may increase the risk of lapse.
Claim
A demand for payment by a policyholder to an insurance
company, or by an injured party to the policyholder, for recovery of a
loss.
Clause
A section of a policy which deals with a particular subject,
such as coinsurance clause.
Collision
Coverage
Insurance against a loss resulting from damage to the covered auto
through collision with another object or upset of the auto.
Comprehensive
Coverage
Covers damage to the auto not resulting from collision. For
example: an auto is parked near a building being painted and becomes
splattered with paint. Most claims paid under this coverage are for
fire, theft and windshield breakage.
Conditions
The part of an insurance policy that spells out the
responsibilities of the policyholder and the insurance company.
Convertible
Term Insurance
Term insurance which can be exchanged (converted), at the
option of the policyowner and without evidence of insurability, for a
permanent insurance policy.
Coverage
The guarantee to pay if specific losses occur, according to the
terms of the insurance policy.
Debris
Removal Clause This clause extends insurance coverage to include the cost of
debris removal resulting from damage caused by a covered loss up to a
specified limit of loss. The clause is an additional property insurance
coverage
Demolition
Coverage
An optional coverage with some fire policies that provides for
the cost of demolishing portions of a building still intact after a fire
or explosion. Such demolition is sometimes required by ordinance for
safety reasons or by the building code in connection with rebuilding.
Declaration
Normally the first page of a policy (Also referred to as the
Dec Page), it includes the insured's name, how long the coverage
applies, and how much insurance is being provided.
Dividend
A return of part of the premium on participating insurance
that is based on the insurer's investment, mortality, and expense
experience. Dividends are not guaranteed.
Exclusions
Provisions of an insurance policy that state what the company
will NOT pay for.
Face
Amount
The amount stated on the face of the policy that will be paid
in case of death. It does not include additional amounts payable under
accidental death or other special provisions, or acquired through the
application of policy dividends.
Fraud
Deception or action intended to cheat. In insurance,
ordinarily involves intentional misrepresentation or concealment.
Insurance
A contractual agreement that calls for one party, in exchange
for a consideration, to reimburse anther party for certain specified
losses. The insurance contract is call a policy. The consideration is
called a premium.
Insurability
Acceptability to the company of an applicant for insurance.
Insured or
Insured Life
The person on whose life the policy is issued.
Lapse
Expiration or cancellation of an insurance policy by
nonpayment of premium.
Larceny
The unlawful taking of money or property belonging to
another.
Level
Premium (Life Insurance)
Life insurance for which the premium remains the same from
year to year. The premium is normally more than the actual cost of
protection during the earlier years of the policy and less than the
actual cost in the later years. The building of a reserve is a natural
result of level premiums. The payments in the early years, together with
the interest that is to be earned, serves to balance out the
underpayment of the later years.
Liability
A condition of being bound by law to do something,
enforceable in the courts. For insurance purposes it most often involve
the payment of damages.
Libel
Publication of defamatory information. This CAN be covered by
liability insurance.
Lien
A hold or claim one party has on the property of another,
usually as security for the debt or other obligation. For example:, a
home mortgage or loan on a car.
Limits
The largest total
amount the insurance company will pay for covered losses. Many policies
have multiple limits - a certain amount per person, another amount per
accident and sometimes, an aggregate limit on all losses paid during the
policy term.
ie.... 100/300/100. In
this example, the first 100 represents $100,000 bodily injury coverage
PER PERSON. The 300 represents $300,00 per accident for bodily injury.
The last 100 represents $100,000 limit for property damage.
Loan
(Policy Loan)
A loan made by a life insurance company from its general funds to
a policyowner on the security of the cash value of a policy.
Loss
of Use
In the event you could not live in your home after an
insured peril occurs, the homeowners policy offers payment of temporary
living quarters while you are waiting for repair work to be completed.
You would also have additional expenses such as food and laundry paid
for as well.
Ordinance
or Law Coverage
(1) Coverage for Loss to the Undamaged Portion of the Building.
Pays for
the loss of value of an undamaged portion of the existing building which
must be demolished and/or removed to conform with municipal ordinance,
code, etc.
(2) Demolition Cost
Pays for
the cost of demolition of the undamaged portions of the building
necessitated by the enforcement of building, zoning or land use
ordinance or law.
(3) Increased Cost of Construction
Pays for
any increased expenses incurred to replace the building with one
conforming to building laws or ordinances, or to repair the damaged
building so that it meets the specifications of current building laws or
ordinances.
Paid-up
Insurance
Insurance that will remain in force with no need to pay
additional premiums.
Participating
Policy
A life insurance policy that is eligible for the payment of
dividends by the insurer (see also Dividend.)
Permanent
(Life Insurance)
Any form of life insurance except term; generally insurance
that builds up a cash value, such as whole life.
Physical
Damage
Normally refers to the comprehensive and collision coverages
of an auto policy.
Policyowner
The person who owns a life insurance policy. This is usually
the insured person, but it may also be a relative of the insured, a
partnership or a corporation.
Premiums
Payments to the insurance company to buy a policy and to keep
it in force.
Replacement
Cost Coverage
Unlike other types of insurance, replacement cost insurance does
not depreciate your property of contents values. Every covered item that
needs to be replaced will be treated as if it were brand new.
Renewable
Term Insurance
Term insurance which can be renewed at the end of the term,
at the option of the policyowner and without evidence of insurability,
for a limited number of successive terms. The rates generally increase
at each renewal as the age of the insured increases
Term
Insurance
Life insurance that does not build up cash value and where
the premium normally increases as the insured gets older.
