Ultimate Insurance Terms Guide

Accident: Any unintended event that causes loss to property or life.

Act of God: Natural Occurrences that cause unpreventable accidents or events such as severe storms.

Actual Cash Value: The amount the property was worth at the time of loss.

Actuary: Person who assess risk ratios for the insurance company.

Adjuster: Person who evaluates claims for the insurance company and determines loss on claims.

Agent: A person who sells insurance policies and is licensed to do so.

Aggregate Limit: Limitation of policy determined by time regardless of amount of accidents within that time period.

Agreed Value: Common in boat policy where the insurance company and insured agree on a value for a boat and it is considered the amount you would receive in the event of loss rather than the market value.

All Terrain Vehicle Insurance (ATV): Policy that covers off road vehicles such as four wheelers.

Anti Theft Device: Any deterrent that prevents theft of property such as a car alarm.

Appraisal: A systematic approach to determining amount of damage and the cost to repair or claim a total loss. Also determines the value of property to assess taxes and initiate policies.

Arson: The intentional setting of a fire to property.

Assessed Values: Used in taxation to value properties.

Auto Death and Dismemberment Coverage: An additional coverage that pays for death or loss of limbs due to an auto accident.

Beach and Windstorm Policy: State sponsored insurance risk pool to provide coverage for hurricanes or other coastal storms.

Beneficiary: The person who is awarded claim money in the event of a loss.

Binder: A temporary agreement with the insurance company and insured that insurance is in effect.

Blue Water: water territory further than five miles from shore.

Boat insurance (marine coverage): Coverage for vessels propelled on the water with either engine, wind or oars.

Bodily Injury Liability Coverage: Coverage that pays for the injured party if you are at fault in an accident. May also cover legal fee's, lost time at work and other related expenses to an injured person.

Burglary and Theft Coverage: Additional coverage that pays for loss due to criminal theft.

Broker: A person who compares and finds insurance policies for a consumer. They do not represent a particular insurance company but rather the consumer.

Brown Water: Water territory less than five miles from shore.

Bundling: Coverage that includes multiple policies such as home and auto which when combined can save the consumer premium costs.

Calendar Year: Used for dating policy begin and end dates, which means a policy would be in effect for 365 days.

Cancellation: The end of a policy and coverage either due to policy end date or non payment.

Cash Value: The actual value of property at the time of loss also considered the market value. It does not consider replacement value or amount owed.

CARFAX: A report that can be obtained to show the accident and repair history of a vehicle by researching it's VIN number.

Car Pool Discount: Discounts on policy premiums for those that have proof they participate in a car pool for commuting purposes.

Carrier: Another name for the insurance company.

Casualty Insurance: Coverage for a person who is killed or injured in an accident.

Catastrophe: A destructive sudden disaster that causes loss.

Certificate of Insurance: A written document that proves coverage is in force during a specific time period.

Citation: A violation of either moving or non-moving laws in which an official serves a ticket to the person at fault.

Claim: A request to the insurance company for compensation due to a covered loss.

Claim number: A distinct number assigned to each claim for reference.

Coinsurance: A portion of a claim that is paid by the insured towards the cost of the claim.

Commercial Vehicle: A vehicle that is used for business purposes and not for commuting or private use.

Commute: The drive between home and work or school and back home. This is usually measured in miles each day or amount of time on the road.

Competitive replacement parts: When replacing damaged parts from an accident these parts may be used versus the standard manufactured parts from the factory of origin.

Comprehensive Coverage: Coverage for loss not caused by a collision such as damage from fire or theft.

Compulsory Auto Insurance: The state required basic minimum liability coverage which is legally required in most states. Severe penalties can be given if you are caught driving without insurance.

Conditions: These are limitations on policies that can deny coverage for certain criteria defined in the policy.

Contents Coverage: Additional coverage for items contained, housed or stored within a covered property.

Clause: A specific part or wording of a policy which may include exclusions or exceptions.

Comprehensive Personal Liability Policy (CPL): A homeowners additional coverage option that includes liability coverage for family or individuals to cover loss such as from pet ownership, sports participation and other everyday activities.

Condominium Insurance: Coverage for your personal property and the interior of your condo. May also contain liability coverage for someone injured in your home.

Continual Coverage: Coverage that has not had any lapses for a specific time period and no gaps of time between policies without coverage. Collision Coverage: Coverage for physical damages caused by an accident with another car or object.

Coverage: Reimbursement protection for loss according to a written insurance policy.

Coverage Area: A specific area such as a state or country in which coverage exists, outside of the area coverage is excluded.

Crash Test Ratings: Safety ratings for a specific vehicle on their performance during simulated or controlled crash tests.

Credit Risk: A person or entity which has a higher chance of default on policy premiums. Some insurance companies compare credit risk to overall responsibility of the driver and those with higher risk are generally charged higher premiums.

Crime Insurance: Coverage for damage or loss incurred during a crime such as theft or burglary. Some areas with higher crime rates may choose for this additional option.

Date Restrictions: Some policies only cover during seasonal use when you are using watercraft. Coverage is only in effect during the dates set in the policy.

Death Benefit: Payments made to a beneficiary due to the death of a person in a covered accident.

Declarations Page: A specific part of your policy which describes the type and amounts of coverage.

Deductible: A portion of a claim that is paid by the insured which is a set amount agreed upon during the purchase of the policy. Usually the higher the deductible, the lower the premium. This amount is paid either per occurrence or per calendar year depending on the coverage type. It is to be paid to the servicing agent who is repairing the damaged property.

Defensible Space: A designated area around a fireplace or other hazard to prevent fires or accidents.

Defensive Driving Course: A traffic safety course which improves driving. It may be taken to prevent a citation from being placed on your driving record or to reduce insurance premiums.

Deposit: A monetary contribution toward premiums which guarantees scheduled payments.

Depreciation: When the actual value of property is lowered to reflect age, misuse or neglect.

Disaster: A natural occurring event that creates unpreventable loss.

Driving Record: A detailed account of an individual’s driving violations.

Drought: A recorded deficiency in rainfall that leads to loss of property or makes fire conditions dangerous.

Driving Under the Influence: Driving a motor vehicle when you are under the effects of drugs or alcohol. Each state has a legal limit for alcohol use and if you test above that limit your will be cited for DUI or DWI. Severe penalties have been placed in each state for each offense and special insurance may need to be purchased after conviction of DUI or DWI.

Effective Date: The beginning date of policy coverage.

Emergency Coverage: Coverage for services during an accident such as towing.

Endorsement: These are changes to your original policy and can include adding additional drivers or selecting additional coverage or deductibles.

Evidence of Insurance: A written proof of insurance coverage for a specific period of time.

Exclusions: Any policy exception that is not covered under your policy.

Excluded Driver: Any licensed driver that is excluded from your policy. This person will not be covered in the event of an accident because they have been excluded from the policy.

Extended Replacement Cost: Additional coverage for replacement value of your property. If labor and material costs rise you may not be able to replace your property to its previous condition at the market value.

Family Member: A person who resides with you at the same address who is also related to you. However a college student who lives away from home is also usually considered as a family member for policy purposes.

FEMA: Federal Emergency Management Agency. Handles emergency situations such as severe storms and the destruction they cause.

Financial responsibility laws: Laws that make it illegal to not have the minimum state standards of insurance liability insurance.

Fire Insurance: Coverage that pays for loss associated with fire.

Floater: Additional coverage for personal items that may not always be either at home or in your possession such as jewelry or art. It may also cover these items during transit or when being serviced or repaired.

Flood Insurance: Additional coverage that covers for loss associated with flood waters. This coverage may be mandatory depending on the zoning laws of your area.

Full Coverage: Covers liability, collision and comprehensive on a specific vehicle. Most financed vehicles are required to carry full coverage.

Gap Insurance: The market value of your vehicle may not be how much you owe on your loan. Gap insurance covers the monetary amount owed to the finance company in the event of total loss.

Garage Address: This is your primary residence where your vehicle is kept the majority of the time.

Glass Insurance: Additional coverage for loss associated with glass windows and doors.

Grace Period: Additional time that you have to pay your premium without penalty.

Graduated Driver license: A license that limits the driving privileges until further driving experience time has passed.

Gross Negligence: Reckless behavior that specifically harms another without regard for their safety or property.

Guaranteed Renewal: A policy that is automatically renewed after each policy term as long as premium is paid accordingly.

Guaranteed Replacement cost coverage: Additional coverage that will pay the full replacement value of property that has incurred loss to restore it to its original condition prior to the loss.

Hazard: Any safety issue such as exposed wiring that could cause a fire.

Homeowners Insurance: A policy in which covers the homeowner’s property and also liability coverage for anyone injured at his property.

Hurricane: A severe coastal storm that produces winds of 75mph and has the ability to cause flooding, excessive rain and tornadoes.

Lapse: A period of no coverage such as periods of non-payment or between policy effective dates.

Lay Up Period: Periods of time when you will not use insured vehicle or craft and are not covered.

Liability Coverage: Coverage that pays someone that you have injured or property you have damaged and it is declared your fault.

Licensed Driver: A person who has fulfilled a states requirements for driving a vehicle and has been issued a currently valid license.

Limits: The maximum amount of coverage provided under the policy or exceptions that are not covered.

Limited Liability: Minimum coverage for liability claims.

Loss: Any personal or financial damage that may be caused by another person, accident or other serious event.

Manufactured home coverage: Coverage specifically for mobile homes.

Material Misrepresentation: When someone acquires coverage for property and falsely states its value or condition.

Mediation: An agreement between two opposing sides with the assistance of a neutral third party.

Mortgage Guarantee Insurance: Coverage to protect mortgage companies from default on a homeowners loan.

Motorcycle Coverage: Coverage pertaining to registered motorcycles including liability, collision and comprehensive.

Motor Vehicle Report: A detailed accounting of a driver’s driving history and citations.

Medical Payment Coverage: Covers payments of medical expenses such as ER Visits, and Ambulance transportation associated with an auto accident. There is usually a set monetary limit on this coverage.

Named Perils: Specific hazards that are called out within a policy and may limit coverage based upon further neglect of these safety issues.

Navigational Limits: Coverage only within certain boundaries of water and if you travel further you will not be covered.

National Flood Insurance Program (NFIP): An insurance risk pool that helps defray the insurance companies costs associated with severe flooding.

Negligence: Careless regard for the safety of another or their property.

No Fault: Several states have no fault laws that allow you to use your own medical payment insurance regardless of who may have been at fault for the accident. It allows for the patient to receive immediate medical care.

Non Renewal: A policy that will not automatically renew at the end of the policy term.

Notice of Loss: As a policy holder you must notify your insurance company of any loss immediately or risk losing the ability to file a claim or have the claim denied.

Occurrence: Each individual event such as an accident.

Operators: Only specific drivers or operators are allowed to operate the vehicle or craft. If anyone else operates the craft it is not covered.

Package Policy: A policy that offers discounts for multiple policies such as home and auto.

Passive Alarm: An alarm that is activated automatically and emits a warning sound. It also disables the vehicle until disarmed.

Personal Injury Protection: Also known as medical payment insurance. It covers medical costs and treatment associated with an accident up to a certain monetary policy limit.

Personal Watercraft: Vehicles such as jet ski’s that operate in the water and are not classified as a boat.

Pet Coverage: Additional coverage for pets that are injured during an accident.

Policy: The written coverage details that you plan entails.

Policy Holder: The person who purchases the policy, usually the beneficiary.

Preferred Auto: Insurance coverage at a discount that is given to drivers who have exceptionally good driving records or are considered low risk.

Premium: The cost of the policy that must be paid in order to be covered.

Proof of Loss: Any documentation that can show that there has been property loss such as accident reports or police reports.

Proof of coverage: Written document that shows insurance coverage for the specific property for a specific time period.

Property Damage Coverage: Coverage for any damage to your property such as broken windows.

Qualifying Event: Any event that meets the requirements of a covered loss.

Recreational Vehicle (RV): Coverage for motor homes, trailers and campers.

Reinstatement: When a policy lapses due to non payment, once you pay your premium you policy may become effective again.

Renewal: At the end of a policy term you have the option of renewing your policy for another term.

Rental Car Reimbursement: Coverage associated with paying for a rental car when your vehicle is damaged or being repaired due to an accident.

Rental Property: Any property that is leased or rented.

Renter: A tenant of a leased or rented property.

Renters Policy: A policy that covers loss to personal property in a rental property.

Replacement Cost: The actual material and labor costs to replace damaged property to restore it to the original condition prior to the occurrence.

Rider: Any additional coverage added to your policy.

Risk Ratio: All risk factors associated with a policyholder and their property that determines the insurance premium.

Road Side Assistance Coverage: Additional coverage that provides assistance such as towing, battery jump start or emergency key replacement services.

Salvage: When a vehicle is considered a total loss and unrepairable.

SR 22: Insurance required for convicted DUI or DWI drivers.

Supplemental coverage: Any additional coverage added to a policy.

Total Loss: When property is so damaged that the repair cost is more than the market value of the vehicle.

Towing and Labor: Additional coverage that covers expenses associated with towing a vehicle.

Umbrella Policy: Provides personal liability insurance when other policies are not effective at covering all possible events under the current policies.

Under writer: Person who determines insurance premiums and policy limits.

Uninsured/Underinsured Coverage: Coverage for when an accident is caused by someone who does not have enough coverage to cover your loss or has no insurance coverage at all.

Vehicle Identification Number (VIN): Every vehicle has a specific identifying number.

Water Damage Policy: Covers damage to property caused by water damage such as plumbing issues but not flood water.