Service Area:


    A
  • ACTUAL CASH VALUE

    A form of insurance that pays damages equal to the replacement value of damaged property minus depreciation. (See Replacement cost)

  • ADDITIONAL LIVING EXPENSES

    Extra charges covered by homeowners 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.

  • ADJUSTER

    An individual employed by a property/casualty insurer to evaluate losses and settle policyholder claims. These adjusters differ from public adjusters, who negotiate with insurers on behalf of policyholders, and receive a portion of a claims settlement. Independent adjusters are independent contractors who adjust claims for different insurance companies.

  • AGENT

    Insurance is sold by two types of agents: independent agents, who are self-employed, represent several insurance companies and are paid on commission; and exclusive or captive agents, who represent only one insurance company and are either salaried or work on commission. Insurance companies that use exclusive or captive agents are called direct writers.

  • APPRAISAL

    A survey to determine a property's insurable value, or the amount of a loss.

  • ARBITRATION

    Procedure in which an insurance company and the insured or a vendor agree to settle a claim dispute by accepting a decision made by a third party.

  • ARSON

    The deliberate setting of a fire.

  • B
  • BLANKET COVERAGE

    Coverage for more than one type of property at one location or one type of property at more than one location. Example: chain store

  • BODILY INJURY LIABILITY COVERAGE

    Portion of an auto insurance policy that covers injuries the policyholder causes to someone else.

  • BOILER AND 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.

  • BOND

    A security that obligates the issuer to pay interest at specified intervals and to repay the principal amount of the loan at maturity. In insurance, a form of suretyship. Bonds of various types guarantee a payment or a reimbursement for financial losses resulting from dishonesty, failure to perform and other acts.

  • BROKER

    An intermediary between a customer and an insurance company. Brokers typically search the market for coverage appropriate to their clients. They work on commission and usually sell commercial, not personal, insurance. In life insurance, agents must be licensed as securities brokers/dealers to sell variable annuities, which are similar to stock market-based investments.

  • BURGLARY AND THEFT INSURANCE

    Insurance for the loss of property due to burglary, robbery or larceny. It is provided in a standard homeowners policy and in a business multiple peril policy.

  • BUSINESS INCOME AND EXTRA EXPENSE INSURANCE (also known as BUSINESS INTERRUPTIONINSURANCE)

    Commercial coverage that reimburses a business owner for lost profits and continuing fixed expenses during the time that a business must stay closed while the premises are being restored because of physical damage from a covered peril, such as a fire. It also may cover financial losses that may occur if civil authorities limit access to an area after a disaster and their actions prevent customers from reaching the business premises. Depending on the policy, civil authorities coverage may start after a waiting period and last for two or more weeks.

  • BUSINESSOWNERS POLICY / BOP

    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
  • CATASTROPHE

    Term used for statistical recording purposes to refer to a single incident or a series of closely related incidents causing severe insured property losses totaling more than a given amount, currently $25 million

  • CATASTROPHE DEDUCTIBLE

    A percentage or dollar amount that a homeowner must pay before the insurance policy kicks in when a major natural disaster occurs. These large deductibles limit an insurer's potential losses in such cases, allowing it to insure more property. A property insurer may not be able to buy reinsurance to protect its own bottom line unless it keeps its potential maximum losses under a certain level.

  • CATASTROPHE REINSURANCE

    Reinsurance for catastrophic losses. The insurance industry is able to absorb the multibillion dollar losses caused by natural and man-made disasters such as hurricanes, earthquakes and terrorist attacks because losses are spread among thousands of companies including catastrophe reinsurers who operate on a global basis. Insurers' ability and willingness to sell insurance fluctuates with the availability and cost of catastrophe reinsurance. After major disasters, such as Hurricane Andrew and the World Trade Center terrorist attack, the availability of catastrophe reinsurance becomes extremely limited. Claims deplete reinsurers' capital and, as a result, companies are more selective in the type and amount of risks they assume. In addition, with available supply limited, prices for reinsurance rise. This contributes to an overall increase in prices for property insurance.

  • CLAIMS MADE POLICY

    A form of insurance that pays claims presented to the insurer during the term of the policy or within a specific term after its expiration. It limits liability insurers' exposure to unknown future liabilities. (See Occurrence policy)

  • COINSURANCE

    In property insurance, requires the policyholder to carry insurance equal to a specified percentage of the value of property to receive full payment on a loss. For health insurance, it is a percentage of each claim above the deductible paid by the policyholder. For a 20 percent health insurance coinsurance clause, the policyholder pays for the deductible plus 20 percent of his covered losses. After paying 80 percent of losses up to a specified ceiling, the insurer starts paying 100 percent of losses

  • COLLISION COVERAGE

    Portion of an auto insurance policy that covers the damage to the policyholder's car from a collision.

  • COMMERCIAL GENERAL LIABILITY INSURANCE / CGL

    A broad commercial policy that covers all liability exposures of a business that are not specifically excluded. Coverage includes product liability, completed operations, premises and operations, and independent contractors.

  • COMPLETED OPERATIONS COVERAGE

    Pays for bodily injury or property damage caused by a completed project or job. Protects a business that sells a service against liability claims

  • COMPREHENSIVE COVERAGE

    Portion of an auto insurance policy that covers damage to the policyholder's car not involving a collision with another car (including damage from fire, explosions, earthquakes, floods and riots), and theft.

  • CRIME INSURANCE

    Term referring to property coverages for the perils of burglary, theft and robbery.

  • CROP-HAIL INSURANCE

    Protection against damage to growing crops from hail, fire or lightning provided by the private market. By contrast, multiple peril crop insurance covers a wider range of yield reducing conditions, such as drought and insect infestation, and is subsidized by the federal government.

  • D
  • DEDUCTIBLE

    The amount of loss paid by the policyholder. Either a specified dollar amount, a percentage of the claim amount, or a specified amount of time that must elapse before benefits are paid. The bigger the deductible, the lower the premium charged for the same coverage.

  • DIMINUTION OF VALUE

    The idea that a vehicle loses value after it has been damaged in an accident and repaired.

  • E
  • EARTHQUAKE INSURANCE

    Covers a building and its contents, but includes a large percentage deductible on each. A special policy or endorsement exists because earthquakes are not covered by standard homeowners or most business policies.

  • EMPLOYEE DISHONESTY COVERAGE

    Covers direct losses and damage to businesses resulting from the dishonest acts of employees. (See Fidelity bond)

  • EMPLOYER’S LIABILITY

    Part B of the workers compensation policy that provides coverage for lawsuits filed by injured employees who, under certain circumstances, can sue under common law. (See Exclusive remedy)

  • EMPLOYMENT PRACTICES LIABILITY COVERAGE

    Liability insurance for employers that covers wrongful termination, discrimination and other violations of employees’ legal rights.

  • ENDORSEMENT

    A written form attached to an insurance policy that alters the policy's coverage, terms, or conditions. Sometimes called a rider.

  • ERRORS AND OMISSIONS COVERAGE / E&O

    A professional liability policy covering the policyholder for negligent acts and omissions that may harm his or her clients

  • EXPERIENCE

    Record of losses.

  • EXPOSURE

    Possibility of loss.

  • EXTENDED COVERAGE

    An endorsement added to an insurance policy, or clause within a policy, that provides additional coverage for risks other than those in a basic policy.

  • F
  • FARMOWNERS-RANCHOWNERS INSURANCE

    Package policy that protects the policyholder against named perils and liabilities and usually covers homes and their contents, along with barns, stables and other structures.

  • FIDELITY BOND

    A form of protection that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. It usually insures a business for losses caused by the dishonest acts of its employees.

  • FIDUCIARY BOND

    A type of surety bond, sometimes called a probate bond, which is required of certain fiduciaries, such as executors and trustees, that guarantees the performance of their responsibilities.

  • FIDUCIARY LIABILITY

    Legal responsibility of a fiduciary to safeguard assets of beneficiaries. A fiduciary, for example a pension fund manager, is required to manage investments held in trust in the best interest of beneficiaries. Fiduciary liability insurance covers breaches of fiduciary duty such as misstatements or misleading statements, errors and omissions.

  • FIRE COVERAGE

    Coverage protecting property against losses caused by a fire or lightning that is usually included in homeowners or commercial multiple peril policies.

  • FIRST-PARTY COVERAGE

    Coverage for the policyholder's own property or person. In no-fault auto insurance it pays for the cost of injuries. In no-fault states with the broadest coverage, the personal injury protection (PIP) part of the policy pays for medical care, lost income, funeral expenses and, where the injured person is not able to provide services such as child care, for substitute services. (See No-fault, Third-party coverage )

  • FLOATER

    Attached to a homeowners policy, a floater insures movable property, covering losses wherever they may occur. Among the items often insured with a floater are expensive jewelry, musical instruments and furs. It provides broader coverage than a regular homeowners policy for these items.

  • FLOOD INSURANCE

    Coverage for flood damage is available from the federal government under the National Flood Insurance Program but is sold by licensed insurance agents. Flood coverage is excluded under homeowners policies and many commercial property policies. However, flood damage is covered under the comprehensive portion of an auto insurance policy.

  • G
  • GAP INSURANCE

    An automobile insurance option, available in some states, that covers the difference between a car's actual cash value when it is stolen or wrecked and the amount the consumer owes the leasing or finance company. Mainly used for leased cars. (See Actual cash value)

  • GLASS COVERAGE

    Coverage for glass breakage caused by all risks; fire and war are sometimes excluded. Insurance can be bought for windows, structural glass, leaded glass and mirrors. Available with or without a deductible.

  • GUARANTEED REPLACEMENT COST COVERAGE

    Homeowners policy that pays the full cost of replacing or repairing a damaged or destroyed home, even if it is above the policy limit. (See Extended replacement cost coverage)

  • H
  • HOMEOWNERS INSURANCE POLICY

    The typical homeowners insurance policy covers the house, the garage and other structures on the property, as well as personal possessions inside the house such as furniture, appliances and clothing, against a wide variety of perils including windstorms, fire and theft. The extent of the perils covered depends on the type of policy. An all-risk policy offers the broadest coverage. This covers all perils except those specifically excluded in the policy. Homeowners insurance also covers additional living expenses. Known as Loss of Use, this provision in the policy reimburses the policyholder for the extra cost of living elsewhere while the house is being restored after a disaster. The liability portion of the policy covers the homeowner for accidental injuries caused to third parties and/or their property, such as a guest slipping and falling down improperly maintained stairs. Coverage for flood and earthquake damage is excluded and must be purchased separately. (See Flood insurance, Earthquake insurance)

  • I
  • IDENTITY THEFT INSURANCE

    Coverage for expenses incurred as the result of an identity theft. Can include costs for notarizing fraud affidavits and certified mail, lost income from time taken off from work to meet with law-enforcement personnel or credit agencies, fees for reapplying for loans and attorney's fees to defend against lawsuits and remove criminal or civil judgments.

  • INCURRED LOSSES

    Losses occurring within a fixed period, whether or not adjusted or paid during the same period.

  • INDEMNIFY

    Provide financial compensation for losses.

  • INLAND MARINE INSURANCE

    This broad type of coverage was developed for shipments that do not involve ocean transport. Covers articles in transit by all forms of land and air transportation as well as bridges, tunnels and other means of transportation and communication. Floaters that cover expensive personal items such as fine art and jewelry are included in this category. (See Floater)

  • INSURABLE INTEREST

    In insurance, a person exhibits an insurable interest in a potential loss if that person will suffer a genuine economic loss if the event insured against occurs. Without the presence of insurable interest, an insurance contract is not formed for a lawful purpose and, thus, is not a valid contract.

  • INSURANCE

    A system to make large financial losses more affordable by pooling the risks of many individuals and business entities and transferring them to an insurance company or other large group in return for a premium.

  • INSURANCE-TO-VALUE

    Insurance written in an amount approximating the value of the insured property.

  • L
  • LAPSE

    The termination of an insurance policy because a renewal premium is not paid by the end of the grace period.

  • LIABILITY INSURANCE

    Insurance for what the policyholder is legally obligated to pay because of bodily injury or property damage caused to another person.

  • LIMITS

    Maximum amount of insurance that can be paid for a covered loss.

  • LINE

    Type or kind of insurance, such as personal lines.

  • LIQUOR LIABILITY

    Coverage for bodily injury or property damage caused by an intoxicated person who was served liquor by the policyholder.

  • LOSS

    A reduction in the quality or value of a property, or a legal liability.

  • LOSS ADJUSTMENT EXPENSES

    The sum insurers pay for investigating and settling insurance claims, including the cost of defending a lawsuit in court.

  • LOSS COSTS

    The portion of an insurance rate used to cover claims and the costs of adjusting claims. Insurance companies typically determine their rates by estimating their future loss costs and adding a provision for expenses, profit, and contingencies.

  • LOSS RATIO

    Percentage of each premium dollar an insurer spends on claims.

  • LOSS RESERVES

    The company's best estimate of what it will pay for claims, which is periodically readjusted. They represent a liability on the insurer's balance sheet.

  • M
  • MALPRACTICE INSURANCE

    Professional liability coverage for physicians, lawyers, and other specialists against suits alleging negligence or errors and omissions that have harmed clients.

  • MANAGED CARE

    Arrangement between an employer or insurer and selected providers to provide comprehensive health care at a discount to members of the insured group and coordinate the financing and delivery of health care. Managed care uses medical protocols and procedures agreed on by the medical profession to be cost effective, also known as medical practice guidelines.

  • MARINE INSURANCE

    Coverage for goods in transit, and for the commercial vehicles that transport them, on water and over land. The term may apply to inland marine but more generally applies to ocean marine insurance. Covers damage or destruction of a ship's hull and cargo and perils include collision, sinking, capsizing, being stranded, fire, piracy, and jettisoning cargo to save other property. Wear and tear, dampness, mold, and war are not included. (See Inland marine , Ocean marine insurance )

  • MEDIATION

    Nonbinding procedure in which a third party attempts to resolve a conflict between two other parties.

  • MEDICAL PAYMENTS COVERAGE

    A coverage in which the insurer agrees to reimburse the insured and others up to a certain limit for medical or funeral expenses as a result of bodily injury or death by accident. Payments are without regard to fault.

  • MISREPRESENTATION

    A false or misleading statement. (1) In insurance sales, a false or misleading statement made by a sales agent to induce a customer to purchase insurance is a prohibited sales practice. (2) In insurance underwriting, a false or misleading statement by an insurance applicant may provide a basis for the insurer to avoid the policy.

  • MULTIPLE PERIL POLICY

    A package policy, such as a homeowners or business insurance policy, that provides coverage against several different perils. It also refers to the combination of property and liability coverage in one policy. In the early days of insurance, coverages for property damage and liability were purchased separately.

  • MUNICIPAL LIABILITY INSURANCE

    Liability insurance for municipalities.

  • N
  • NAMED PERIL

    Peril specifically mentioned as covered in an insurance policy.

  • NATIONAL FLOOD INSURANCE PROGRAM

    Federal government-sponsored program under which flood insurance is sold to homeowners and businesses. (See Adverse selection, Flood insurance )

  • NEGLIGENCE

    Failure to act with the legally required degree of care for others, resulting in harm to them.

  • NO-FAULT

    Auto insurance coverage that pays for each driver's own injuries, regardless of who caused the accident. No-fault varies from state to state. It also refers to an auto liability insurance system that restricts lawsuits to serious cases. Such policies are designed to promote faster reimbursement and to reduce litigation.

  • NOTICE OF LOSS

    A written notice required by insurance companies immediately after an accident or other loss. Part of the standard provisions defining a policyholder's responsibilities after a loss.

  • O
  • OCCURRENCE POLICY

    Insurance that pays claims arising out of incidents that occur during the policy term, even if they are filed many years later. (See Claims-made policy)

  • OCEAN MARINE INSURANCE

    Coverage of all types of vessels and watercraft, for property damage to the vessel and cargo, including such risks as piracy and the jettisoning of cargo to save the property of others. Coverage for marine-related liabilities. War is excluded from basic policies, but can be bought back.

  • OPERATING EXPENSES

    The cost of maintaining a business’s property, includes insurance, property taxes, utilities and rent, but excludes income tax, depreciation and other financing expenses.

  • ORDINANCE OR LAW COVERAGE

    Endorsement to a property policy, including homeowners, that pays for the extra expense of rebuilding to comply with ordinances or laws, often building codes, that did not exist when the building was originally built. For example, a building severely damaged in a hurricane may have to be elevated above the flood line when it is rebuilt. This endorsement would cover part of the additional cost.

  • P
  • PACKAGE POLICY

    A single insurance policy that combines several coverages previously sold separately. Examples include homeowners insurance and commercial multiple peril insurance.

  • PERIL

    A specific risk or cause of loss covered by an insurance policy, such as a fire, windstorm, flood, or theft. A named-peril policy covers the policyholder only for the risks named in the policy in contrast to an all-risk policy, which covers all causes of loss except those specifically excluded.

  • PERSONAL INJURY PROTECTION COVERAGE / PIP

    Portion of an auto insurance policy that covers the treatment of injuries to the driver and passengers of the policyholder's car.

  • POLICY

    A written contract for insurance between an insurance company and policyholder stating details of coverage.

  • POLLUTION INSURANCE

    Policies that cover property loss and liability arising from pollution-related damages, for sites that have been inspected and found uncontaminated. It is usually written on a claims-made basis so policies pay only claims presented during the term of the policy or within a specified time frame after the policy expires. (See Claims-made policy )

  • PREMISES

    The particular location of the property or a portion of it as designated in an insurance policy.

  • PRODUCT LIABILITY

    A section of tort law that determines who may sue and who may be sued for damages when a defective product injures someone. No uniform federal laws guide manufacturer’s liability, but under strict liability, the injured party can hold the manufacturer responsible for damages without the need to prove negligence or fault.

  • PROFESSIONAL LIABILITY INSURANCE

    Covers professionals for negligence and errors or omissions that injure their clients.

  • PROOF OF LOSS

    Documents showing the insurance company that a loss occurred.

  • PROPERTY/CASUALTY INSURANCE

    Covers damage to or loss of policyholders' property and legal liability for damages caused to other people or their property. Property/casualty insurance, which includes auto, homeowners and commercial insurance, is one segment of the insurance industry. The other sector is life/health. Outside the United States, property/casualty insurance is referred to as nonlife or general insurance.

  • R
  • RENTERS INSURANCE

    A form of insurance that covers a policyholder's belongings against perils such as fire, theft, windstorm, hail, explosion, vandalism, riots, and others. It also provides personal liability coverage for damage the policyholder or dependents cause to third parties. It also provides additional living expenses, known as loss-of-use coverage, if a policyholder must move while his or her dwelling is repaired. It also can include coverage for property improvements. Possessions can be covered for their replacement cost or the actual cash value that includes depreciation.

  • REPLACEMENT COST

    Insurance that pays the dollar amount needed to replace damaged personal property or dwelling property without deducting for depreciation but limited by the maximum dollar amount shown on the declarations page of the policy.

  • REPURCHASE AGREEMENT /'REPO'

    Agreement between a buyer and seller where the seller agrees to repurchase the securities at an agreed upon time and price. Repurchase agreements involving U.S. government securities are utilized by the Federal Reserve to control the money supply.

  • RESERVES

    A company’s best estimate of what it will pay for claims.

  • RISK

    The chance of loss or the person or entity that is insured.

  • S
  • SALVAGE

    Damaged property an insurer takes over to reduce its loss after paying a claim. Insurers receive salvage rights over property on which they have paid claims, such as badly-damaged cars. Insurers that paid claims on cargoes lost at sea now have the right to recover sunken treasures. Salvage charges are the costs associated with recovering that property.

  • SCHEDULE

    A list of individual items or groups of items that are covered under one policy or a listing of specific benefits, charges, credits, assets or other defined items.

  • SEWER BACK-UP COVERAGE

    An optional part of homeowners insurance that covers sewers.

  • STRUCTURED SETTLEMENT

    Legal agreement to pay a designated person, usually someone who has been injured, a specified sum of money in periodic payments, usually for his or her lifetime, instead of in a single lump sum payment. (See Annuity )

  • SUBROGATION

    The legal process by which an insurance company, after paying a loss, seeks to recover the amount of the loss from another party who is legally liable for it.

  • SUPPLEMENTAL COVERAGE

    An amount of coverage that adds to the amount of coverage specified in a basic insurance policy.

  • SURETY BOND

    A contract guaranteeing the performance of a specific obligation. Simply put, it is a three-party agreement under which one party, the surety company, answers to a second party, the owner, creditor or “obligee,” for a third party's debts, default or nonperformance. Contractors are often required to purchase surety bonds if they are working on public projects. The surety company becomes responsible for carrying out the work or paying for the loss up to the bond “penalty” if the contractor fails to perform.

  • T
  • 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.

  • THIRD-PARTY ADMINISTRATOR

    Outside group that performs clerical functions for an insurance company.

  • THIRD-PARTY COVERAGE

    Liability coverage purchased by the policyholder as a protection against possible lawsuits filed by a third party. The insured and the insurer are the first and second parties to the insurance contract. (See First-party coverage )

  • TITLE INSURANCE

    Insurance that indemnifies the owner of real estate in the event that his or her clear ownership of property is challenged by the discovery of faults in the title.

  • TORT LAW

    The body of law governing negligence, intentional interference, and other wrongful acts for which civil action can be brought, except for breach of contract, which is covered by contract law.

  • TORT REFORM

    Refers to legislation designed to reduce liability costs through limits on various kinds of damages and through modification of liability rules.

  • TOTAL LOSS

    The condition of an automobile or other property when damage is so extensive that repair costs would exceed the value of the vehicle or property.

  • U
  • UMBRELLA POLICY

    Coverage for losses above the limit of an underlying policy or policies such as homeowners and auto insurance. While it applies to losses over the dollar amount in the underlying policies, terms of coverage are sometimes broader than those of underlying policies.

  • UNDERINSURANCE

    The result of the policyholder’s failure to buy sufficient insurance. An underinsured policyholder may only receive part of the cost of replacing or repairing damaged items covered in the policy.

  • UNINSURED MOTORISTS COVERAGE

    Portion of an auto insurance policy that protects a policyholder from uninsured and hit-and-run drivers.

  • V
  • VANDALISM

    The malicious and often random destruction or spoilage of another person’s property.

  • W
  • WATER-DAMAGE INSURANCE COVERAGE

    Protection provided in most homeowners insurance policies against sudden and accidental water damage, from burst pipes for example. Does not cover damage from problems resulting from a lack of proper maintenance such as dripping air conditioners. Water damage from floods is covered under separate flood insurance policies issued by the federal government.

  • WORKERS COMPENSATION

    Insurance that pays for medical care and physical rehabilitation of injured workers and helps to replace lost wages while they are unable to work. State laws, which vary significantly, govern the amount of benefits paid and other compensation provisions.