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02/10/2008
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Actual cash value
The value of property at the time it was stolen or destroyed,
arrived at by subtracting depreciation from the replacement cost of the item.
B
Bodily injury liability coverage
Pays for medical expenses, legal expenses, and judgments when
the policyholder’s car is involved in an accident that causes property damage
and/or the injury or death of another person.
C
California Earthquake Authority (CEA)
A state-sponsored partnership between private companies and the government
offering earthquake insurance policies in the state.
Cancellation
When an insurer discontinues an auto policy because a driver fails to pay
the premium, loses driving privileges, or has not accurately reported the facts
relating to his level of risk. A cancellation may make it difficult to get
insurance for a long time to come.
Claim
A request to an insurer for compensation for a loss.
Collision coverage
Covers the damage to a policyholder’s vehicle resulting from a collision,
regardless of who is responsible. Collision coverage typically requires the
payment of a deductible by the policyholder.
Comprehensive physical damage coverage
Pays for damage to a policyholder’s car that is not the result
of an auto accident, such as theft, vandalism, fire, hail, natural disasters,
hitting a deer. Comprehensive coverage requires a deductible, and will only pay
as much as the car was worth before sustaining the damage.
D
Damage depreciation
Commonly used in aviation policies to describe the inherent loss of value to
an aircraft that has been damaged and repaired. An identical aircraft that had
never been damaged would be worth more in a sale than one that has been
repaired, even if the repair work was exemplary.
Deductible
The amount of a claim that the insured must pay before the insurance company
will cover the rest.
Depreciation
The loss of an asset’s value over time.
E
Earthquake insurance
A specific policy covering home repair and the replacement of personal
property lost to seismic activity.
Endorsement
An agreement added to a policy to change the amount of coverage
offered by that policy. Once attached, an endorsement supersedes the original
terms of the policy.
F
First-party claim
Request to an insurance company by one of its policyholders for compensation
for a loss.
Floater
A separate policy designed to extend the coverage of the basic insurance
policy for an item or collection of items. It's called a floater because
sometimes the asset may “float” from location to location with the owner’s use.
Flood insurance
A private or government-sponsored policy covering home repair and the
replacement of personal property damaged by a flood. Normally not included in
basic homeowner's policies.
Flood insurance rate map (FIRM)
A map developed by the National Flood Insurance Program showing base flood
elevations, risk zones, and floodplain boundaries; used in determining flood
insurance premiums.
Flood zone
Area in which the likelihood of a flood is much higher than
average.
H
Homeowner's insurance
An insurance policy that covers a home and its contents against loss, and
protects the insured from liability claims.
Hull insurance
Portion of an aircraft or a yacht policy that covers physical
damage to the insured craft.
I
Intentional misconduct
Willful damage to property or injury to others; distinct from
negligence.
L
Lienholders interest endorsement
Also called “breach of warranty”; optional coverage in an aviation policy
that pays a lienholder the balance of a loan in the event the aircraft is
damaged in a manner that also voids the policy; favors the lienholder, not the
policyholder.
Loan/lease gap insurance
Covers the difference between a car’s actual cash value and the
amount still owed on a loan or lease.
M
Medical payments coverage
Covers the medical bills incurred by policyholders and their
passengers after an auto accident, regardless of who is at fault.
N
National Flood Insurance Program (NFIP)
Coverage against flooding for personal and business property under the
National Flood Insurance Act of 1968, provided by a partnership of private
insurers and the government.
Negligence
Failure to exercise care, resulting in injury to others or damage to
property.
No-fault laws
Regulations in some states that require each person involved in an auto
accident to pay his or her own medical expenses and lost wages. Stricter
versions disallow certain pain-and-suffering lawsuits.
Non-renewal
Means only that a company does not want to offer the driver a
policy any longer, possibly because of the driving or claims record over the
last three to five years. More than likely, other insurers will provide
insurance at a higher price.
O
Open pilot clause
Minimum competency required by an aviation policy for a pilot to
be covered under the policy.
P
Peril
A specific cause of loss, such as fire or vandalism. There are 17 named
perils in most homeowner's policies.
Personal injury protection (PIP)
Auto insurance required in many no-fault states, which pays extensive
medical expenses, lost wages, and a small death benefit for the driver and all
passengers. PIP usually comes with a 20 percent deductible.
Personal liability insurance
The part of a homeowner's policy that covers the insured from legal expenses
and claims for compensation should the insured accidentally injure others or
damage their property.
Personal property
In regards to homeowner's insurance, the possessions of the insured.
Personal watercraft
A small but powerful motorized watercraft sold under brand names such as Jet
Ski or Wave Runner. Distinct from a boat or yacht.
Policyholder
Person who buys and maintains an insurance policy; also called the
"insured".
Premium
Payment required to initiate and continue an insurance policy.
Property and indemnity coverage
Common name for liability portion of a yacht insurance policy.
Property damage liability coverage
Pays for damages to the property of others caused by the
policyholder in his or her vehicle.
R
Rent-loss provision
Portion of a policy that would reimburse an owner for rent that is lost
while repairs are being made to rental property.
Rental reimbursement coverage
Pays a set amount per day for transportation expenses or car rental while
the insured’s car is being repaired due to a covered loss.
Renter's insurance
Policies available to those who rent a dwelling; usually covers personal
possessions and liability, but not the dwelling itself.
Replacement cost
The cost of replacing a lost or destroyed item; does not factor in
depreciation or market value.
Rider
A provision attached to a policy that adds or changes coverage.
Risk
Potential for loss or injury.
S
Special flood hazard areas (SFHA)
A categorization of the different risk areas associated with
floods, used in determining premiums for flood insurance. “V” is the most
hazardous.
T
Third-party claim
Claim made to an insurance company for damage or injury caused by one of its
policyholders.
Total, totaled
Classification for a vehicle in need of repairs that will cost more than the
vehicle’s actual value.
Towing and labor coverage
Provides emergency road service and pays for towing charges.
This coverage is not limited just to accidents, but can be used any time the
insured’s car breaks down.
U
Umbrella liability policy
An extra protection against liability that covers the amount above the
maximum limits of homeowner's and auto policies.
Unearned premium
Portion of a premium that may be returned to the policyholder if a claim
resulting in a total loss takes place before the end of the policy term and
eliminates the need for continued coverage.
Uninsured/underinsured motorist (UM/UIM) coverage
Covers the costs associated with damage or injury caused by an
uninsured, underinsured, or hit-and-run driver.
Y
Yacht
Typically, a recreational watercraft that is 26 feet or more in length;
distinct from a boat or a personal watercraft. |
