Insurance Glossary
A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
A
Accidental Death And Dismemberment (AD&D) Benefit*
A supplementary life insurance policy benefit that provides for an amount of money in addition to the policy’s basic death benefit. This additional amount is payable if the insured dies as the result of an accident or if the insured loses any two limbs or the sight in both eyes as the result of an accident.
Actual cash value
A form of insurance that pays damages equal to the replacement value of damaged property minus depreciation.
Additonal Living Expenses
Extra charges covered by homeowner’s policies over and above the policyholder’s customary living expenses. They kick in when the insured requires temporary shelter due to damage by a covered peril that makes the home temporarily uninhabitable.
B
Boiler & Machinery Insurance
Often called Equipment Breakdown, or Systems Breakdown insurance. Commercial insurance that covers damage caused by the malfunction or breakdown of boilers, and a vast array of other equipment including air conditioners, heating, electrical, telephone and computer systems.
Bonding
A guarantee of performance required, either by law or consumer demand, for many businesses, most typically general contractors, temporary personnel agencies, janitorial companies and businesses with government contracts.
Broadened Collision
No deductible will apply if you are less than 50% at fault in accident. If car is parked and is hit by another’s moving vehicle.
Business interruption insurance
Pays for the cost of repairing or rebuilding business as well as income lost while business is out of commission.
Businessowner Policy
A policy that combines property, liability and business interruption coverages for small- to medium-sized businesses. Coverage is generally cheaper than if purchased through separate insurance policies.
C
Collision
Covers damage to your automobile (car) when your car is hit by or hits another vehicle or other object. Coverage will pay to fix your car minus the deductible you have chosen. Coverage is limited to the terms and conditions that are stated in your policy. Collision is not required, but if you have a loan or lease your vehicle, the lender may require collision.
Comprehensive
Will cover your vehicle for damages sustained by damages caused from things other than collision. Damages covered for example but not limited to are fire, theft, vandalism, glass breakage or hitting an animal. Coverage is limited to the terms and conditions stated in your policy. Comprehensive is not required, but if you have a loan or lease your vehicle, comprehensive may be required by lender.
D
Death Benefit
For a life insurance contract, the amount of money paid by an insurer to a beneficiary when a person insured under the life insurance policy dies. (2) For an annuity contract, the amount of money paid to a beneficiary if the contract owner dies before the annuity payments begin.
Disability insurance
Pays a fixed percentage of average earnings should the insured be unable to continue working due to disability.
Dwelling Coverage
The amount the insurance company will pay to rebuild the structure of your residence in the event of a loss.
E
Employment practices liability coverage
An optional part of workers' compensation coverage, this protects the corporation from being sued for acts of individual employees (such as in a sexual harassment case)
Errors and omissions liability coverage
Protects professionals, such as consultants or accountants, from damages resulting from an error or omission in their work.
F
"First" Named Insure
The first named insured appearing on a commercial policy. The latest forms permit the insurer to satisfy contractual duties by giving notice to the "first" named insured rather than requiring notice to all named insureds.
G
General liability coverage
insures the business against accidents and injuries that happen on its premises, as well as exposure to risk related to its products
H
Hazard
A circumstance that increases the likelihood or probable severity of a loss. For example, the storing of explosives in a home basement is a hazard that increases the probability of an explosion.
I
Indemnity
Restoration to the victim of a loss by payment, repair or replacement.
Insurable Interest
Interest in property such that loss or destruction of the property could cause a financial loss.
Inflation Protection
An optional property coverage endorsement offered by some insurers that increases the policy's limits of insurance during the policy term to keep pace with inflation.
J
K
L
Limited Collision
No deductible will apply if you are less than 50% at fault in accident. If car is parked and is hit by another’s moving vehicle.
If you are more than 50% at fault, there will be no damages paid for on your vehicle.
Liability Coverage (BI)
It pays the people you’ve injured for property damage, loss of services, bodily injury, sickness, medical services, disease, loss of income and death. Will also pay for legal defenses on your behalf. Will provide coverage you, family or other passengers while in any automobile or as a pedestrian.
Liability Coverage (Homeowner)
Liability insurance pays for damages to property owned by third parties or injuries to third parties, which an insured may cause unintentionally or through negligence.
Liability coverage consists of two parts: personal liability coverage and medical payments to others.
Personal liability coverage provides protection for the actions of an individual, which cause bodily injury or property damage to another, subject to exclusions.
M
Medical Payments Coverage Homeowner
May provide payment for medical expenses resulting from an accident on your property. Med Pay is intended for the immediate medical treatment of guests on your premises, without determining fault. This coverage is subject to specific dollar limits per incident and availability may vary.
N
Named Perils
Perils specifically covered on insured property.
Nonstandard Auto (High Risk Auto or Substandard Auto)
Insurance for motorists who have poor driving records or have been canceled or refused insurance. The premium is much higher than standard auto due to the additional risks.
O
Ordinance or Law
As building codes change over the years, your home may eventually be out of compliance with the latest standards. In the event that your home needs repairs following an insured loss, those repairs would need to meet the current building standards. The difference in value of your home currently, and what it would cost to rebuild adhering to current standards, is not covered by your policy without this endorsement.
Other Structure
In Homeowners policies, a structure located on the insured premises which is not directly attached to the dwelling structure. Examples include a detached garage, fence, tool shed, cabana, etc.
P
Property Damage (PD)
Protects you if you damage someone else’s property. Others property may include but not limited to: House, fence, landscaping, etc. It will also provide you with legal defense if another files a lawsuit against you, resulting from this type of damage.
Personal Injury Protection Coverage (PIP)
Covers within the specified limits of your policy the medical, hospital and funeral expenses occurred due to an auto accident to you, others in vehicle and pedestrians struck by automobile.
Personal liability coverage
Personal liability coverage provides protection for the actions of an individual, which cause bodily injury or property damage to another, subject to exclusions.
Q
Quick Assets
Assets that are quickly convertible into cash.
R
Replacement Cost
The cost of replacing damaged or destroyed property without deduction for depreciation in the value of the property.
S
Standard (Basic) Collision)
You must pay your deductible first regardless of who is at fault.
T
Term Life Insurance
A form of life insurance that covers the insured person for a certain period of time, the “term” that is specified in the policy. It pays a benefit to a designated beneficiary only when the insured dies within that specified period which can be one, five, 10 or even 20 years. Term life policies are renewable but premiums increase with age.
Terrorism Coverage
Included as a part of the package in standard commercial insurance policies before September 11, 2001 virtually free of charge. Since September 11, terrorism coverage prices have increased substantially to reflect the current risk.
U
Underwriting
Examining, accepting, or rejecting insurance risks and classifying the ones that are accepted, in order to charge appropriate premiums for them.
Underinsured Motorist (BI)
Covers you, members of your household and passengers for injuries, damages or death caused by another motorist who was negligent and does not have sufficient insurance coverage. After there coverage is maxed out, the underinsured coverage on your policy will pick up coverage up to the limits of your policy.
Uninsured Motorist (BI)
Covers you, members of your household and passengers for injuries, damage or death caused by another motorist who was negligent and has no insurance coverage.
Universal Life Insurance
A flexible premium policy that combines protection against premature death with a type of savings vehicle, known as a cash value account, that typically earns a money market rate of interest. Death benefits can be changed during the life of the policy within limits, generally subject to a medical examination. Once funds accumulate in the cash value account, the premium can be paid at any time but the policy will lapse if there isn’t enough money to cover annual mortality charges and administrative costs.
V
Valuation
A calculation of the policy reserve in life insurance. Also, a mathematical analysis of the financial condition of a pension plan.
W
Waiting Period
For a health insurance policy, the period of time that must pass from the date of policy issue before benefits are payable to an insured. Also known as elimination period and probationary period.
Whole Life Insurance
The oldest kind of cash value life insurance that combines protection against premature death with a savings account. Premiums are fixed and guaranteed and remain level throughout the policy’s lifetime.
Workers' compensation insurance
Covers medical and rehabilitation costs and lost wages for employees injured at work; required by law in all states.
X
Y
You/Your
These words are used to refer to the named insured in many of the modernized/personalized policy forms.
Z
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