Insurance Terms Glossary
Last updated: July 15, 2011 by TheEventHelper
Actual Cash Value
The current market value of lost or damaged property at the time of a covered loss. For example, a three-year-old car's value is based on similar three-year-old cars selling on a used car lot. In a home insurance policy, actual cash value is the replacement cost of the property, less depreciation; the balance is reimbursed upon replacement of the property.
An individual or organization covered by an insurance policy other than the named policyholder. In a car insurance policy, anyone who drives your car with your consent is an additional insured. In a home insurance policy, a mortgage company may be listed as an additional insured.
An evaluation by a claims representative or appraiser estimating the amount of damage to your property or vehicle, and the cost to repair the property or vehicle, or, in the worst-case scenario, the determination of a complete loss.
Injury to the body of a person. In insurance, people often refer to Bodily Injury as the liability coverage afforded for financial protection against injury to a person resulting from an accident for which the insured is alleged to be legally responsible.
A sudden, severe disaster that results in a large amount of damage and causes a high number of car and home insurance claims.
A request for payment under an insurance contract due to a covered loss or accident.
Provisions that set forth the rights, duties, and responsibilities of the parties to an insurance contract.
Additional Living Expense
If you are temporarily unable to live in your home because of a covered loss, an additional living expense is any necessary increase in living expenses you incur, so your household can maintain its normal standard of living.
Basic/State Minimum Financial Responsibility Limit
The lowest coverage amount, as prescribed by law or the insurance company, for which an insurance policy can be written.
This insurance covers a loss to your vehicle caused by its impact with another vehicle or object, or damage caused by a covered weather event.
This insurance protects against any loss or damage to your vehicle except those caused by collision or by upset (i.e., glass repair/replacement or coverage against fire or theft).
Compulsory Auto Financial Responsibility Laws
Laws which make it illegal to operate a vehicle without first establishing the ability to pay for a judgment that may result from an accident (i.e., proof of insurance).
Any vehicle shown in the policy declarations or, in some cases, a substitute vehicle used temporarily because of breakdown or repair of your own covered vehicle.
A sum of money that a party is legally obligated to pay to another as compensation for property damage or injury.
The part of the policy that provides detailed information about the policyholder, the insurer, and the various coverages provided by the policy.
The amount of a claim that you agreed to pay at the time you purchased insurance. This amount is deducted from a claims payment.
The date coverage begins under an insurance contract (policy). An endorsement, which modifies coverage, may also have an effective date.
An endorsement is attached to your policy to modify the terms of the insurance contract. It can amend your policy to cover unique items or circumstances. An endorsement can also represent a change to a policy that is made during the policy's term.
Part of an insurance contract that excludes coverage of certain risks, persons, property, or locations.
The ending date of an insurance contract (policy).
Part of your homeowner's policy, insuring against direct loss by fire, lightning, and other defined causes.
Coverage for accidental breakage to glass or vandalism. This coverage is not available in all states. Where it is not offered, damage to glass is covered under Comprehensive coverage, and subject to the applicable deductible.
Part or parts of an insurance policy that state the various coverages provided by the policy.
Situation or condition that increases the possibility or extent of a loss, such as flammable liquid kept on your property or downspouts pouring onto a driveway or walkway.
Insurance to Value
The amount of coverage provided by your policy compared with the replacement value of the property.
If you injure someone, or damage someone's property, in a car or other accident, liability insurance protects you for covered losses up to your liability limit.
Limit of Liability
The maximum amount available under your policy for covered losses.
A car accident or damage to your home covered by your insurance policy, the amount sought in a claim, or the amount paid on your behalf under an insurance contract. A partial loss is a loss that does not completely destroy your property.
Loss of Use Insurance
Compensation for loss you incur due to the inability to use your property or vehicle.
Mortgage or Loss Payee Clause
A clause in your insurance policy that makes a claim jointly payable to you and your lender.
The person or persons named as insureds in the policy declarations. Additional persons or entities may also be added as additional named insureds under certain circumstances.
Medical Payments Insurance
In certain states, Medical Payments insurance is a coverage under which an insurer agrees to pay, up to a specified limit, for medical, surgical, hospital, and funeral expenses, regardless of liability.
No-Fault Insurance/Personal Injury Protection(PIP)
In certain states, No-Fault insurance permits car accident victims to be directly reimbursed for medical and hospital expenses and potential loss of income from their own insurance companies regardless of who is at fault. In certain states, PIP provides insurance that covers medical costs, loss of earnings, and funeral costs for occupants of your automobile. Some states require a basic amount of PIP; optional or extra coverage can be purchased.
A formal written contract of insurance. The policy includes your declarations and all endorsements.
The person or persons to whom a policy is issued who agrees to pay a premium to an insurer in return for the insurer's promise to provide specified insurance protection.
The amount that you agree to pay to the insurance company for an insurance policy.
Damage to a car or someone else's personal property resulting from an accident that may be covered by an insurance policy.
A policy issued to replace one that has expired.
Coverage for the cost of replacing your car or property with new materials in the event of a covered loss.
The cause of a possible accident, loss, or claim (such as fire or wind).
Rental reimbursement coverage is optional. If you must rent a car because your own car is out of service due to a covered loss, rental coverage pays you back for money you spent on the rental car (up to the specific limit you selected at the time you purchased your car insurance). Some restrictions may apply, such as a maximum dollar amount or specific time limitations.
Part of home, condominium or renters insurance, this is first party personal property insurance against physical loss or damage.
When an insurance company pays money to you, for a loss caused by another person, the insurance company has the right to recover that money from the party that was legally at fault for the loss. This typically includes money paid for property damage, medical expenses and rental expenses. As part of this process, your insurer will reimburse the appropriate percentage of your deductible to you based on the amount recovered.
An accident or event that leaves your car or home irreparable by insurance company standards.
Listing specific personal property for a stated policyholder value. This is usually considered for valuable items that are subject to limited coverage.
Towing / Labor
Towing / Labor is an optional coverage. It pays the cost of having your car towed or repaired on site (up to a specific limit) when your car breaks down. You are covered for the on-site labor costs at the breakdown site (not any parts) needed to get the car running again. Some restrictions may apply, such as maximum dollar amount allowed per claim or specific time limitations, among other items.
Uninsured or Underinsured Motorists Coverage
Uninsured or Underinsured Motorists coverage provides protection in the event damage is caused by a motorist who has no insurance or not enough insurance to cover the loss.