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.

  • APPRAISAL

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

  • ASSETS

    Property owned, in this case by an insurance company, including stocks, bonds and real estate. Insurance accounting is concerned with solvency and the ability to pay claims. State insurance laws therefore require a conservative valuation of assets, prohibiting insurance companies from listing assets on their balance sheets whose values are uncertain, such as furniture, fixtures, debit balances and accounts receivable that are more than 90 days past due. (See Admitted assets)

  • AUTO INSURANCE POLICY

    There are basically six different types of coverages. Some may be required by law. Others are optional. They are: 1.Bodily injury liability, for injuries the policyholder causes to someone else. 2.Medical payments or Personal Injury Protection (PIP) for treatment of injuries to the driver and passengers of the policyholder's car. 3.Property damage liability, for damage the policyholder causes to someone else's property. 4.Collision, for damage to the policyholder's car from a collision. 5.Comprehensive, for damage to the policyholder's car not involving a collision with another car (including damage from fire, explosions, earthquakes, floods, and riots), and theft. 6.Uninsured motorists coverage, for costs resulting from an accident involving a hit-and-run driver or a driver who does not have insurance.

  • AUTO INSURANCE PREMIUM

    The price an insurance company charges for coverage, based on the frequency and cost of potential accidents, theft and other losses. Prices vary from company to company, as with any product or service. Premiums also vary depending on the amount and type of coverage purchased; the make and model of the car; and the insured's driving record, years of driving and the number of miles the car is driven per year. Other factors taken into account include the driver's age and gender, where the car is most likely to be driven and the times of day—rush hour in an urban neighborhood or leisure time driving in rural areas, for example. Some insurance companies may also use credit history related information. (See Insurance score)

  • B
  • BODILY INJURY LIABILITY COVERAGE

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

  • 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.

  • C
  • 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.

  • 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.

  • D
  • DECLARATION

    Part of a property or liability insurance policy that states the name and address of policyholder, property insured, its location and description, the policy period, premiums and supplemental information. Referred to as the “dec page.”

  • 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.

  • E
  • EARNED PREMIUM

    The portion of premium that applies to the expired part of the policy period. Insurance premiums are payable in advance but the insurance company does not fully earn them until the policy period expires.

  • 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.

  • ENDORSEMENT

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

  • ESCROW ACCOUNT

    Funds that a lender collects to pay monthly premiums in mortgage and homeowners insurance, and sometimes to pay property taxes.

  • EXCLUSION

    A provision in an insurance policy that eliminates coverage for certain risks, people, property classes, or locations.

  • EXTENDED REPLACEMENT COST COVERAGE

    Pays a certain amount above the policy limit to replace a damaged home, generally 120 percent or 125 percent. Similar to a guaranteed replacement cost policy, which has no percentage limits. Most homeowner policy limits track inflation in building costs. Guaranteed and extended replacement cost policies are designed to protect the policyholder after a major disaster when the high demand for building contractors and materials can push up the normal cost of reconstruction. (See Guaranteed replacement cost coverage)

  • F
  • 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.

  • FRAUD

    Intentional lying or concealment by policyholders to obtain payment of an insurance claim that would otherwise not be paid, or lying or misrepresentation by the insurance company managers, employees, agents and brokers for financial gain.

  • 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)

  • GRADUATED DRIVER LICENSES

    Licenses for younger drivers that allow them to improve their skills. Regulations vary by state, but often restrict nighttime driving. Young drivers receive a learner's permit, followed by a provisional license, before they can receive a standard driver's license.

  • 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.

  • INFLATION GUARD CLAUSE

    A provision added to a homeowners insurance policy that automatically adjusts the coverage limit on the dwelling each time the policy is renewed to reflect current construction costs.

  • 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 RISK

    Risks for which it is relatively easy to get insurance and that meet certain criteria. These include being definable, accidental in nature, and part of a group of similar risks large enough to make losses predictable. The insurance company also must be able to come up with a reasonable price for the insurance.

  • INSURANCE SCORE

    Insurance scores are confidential rankings based on credit information. This includes whether the consumer has made timely payments on loans, the number of open credit card accounts and whether a bankruptcy filing has been made. An insurance score is a measure of how well consumers manage their financial affairs, not of their financial assets. It does not include information about income or race. Studies have shown that people who manage their money well tend also to manage their most important asset, their home, well. And people who manage their money responsibly also tend to handle driving a car responsibly. Some insurance companies use insurance scores as an insurance underwriting and rating tool.

  • 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.

  • LOSS OF USE

    A provision in homeowners and renters insurance policies that reimburses policyholders for any extra living expenses due to having to live elsewhere while their home is being restored following a disaster.

  • M
  • MEDICAL PAYMENTS INSURANCE

    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.

  • N
  • NAMED PERIL

    Peril specifically mentioned as covered in an insurance policy.

  • 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.

  • 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.

  • O
  • 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
  • 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 ARTICLES FLOATER

    A policy or an addition to a policy used to cover personal valuables, like jewelry or furs.

  • 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.

  • PERSONAL LINES

    Property/casualty insurance products that are designed for and bought by individuals, including homeowners and automobile policies

  • PREMISES

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

  • R
  • REINSTATEMENT

    The process by which an insurer puts back into force an insurance policy that has either been terminated for nonpayment of premiums or continued as extended term or reduced paid-up coverage.

  • 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.

  • S
  • SEWER BACK-UP COVERAGE

    An optional part of homeowners insurance that covers sewers.

  • T
  • TERRITORIAL RATING

    A method of classifying risks by geographic location to set a fair price for coverage. The location of the insured may have a considerable impact on the cost of losses. The chance of an accident or theft is much higher in an urban area than in a rural one, for example.

  • TORT

    A legal term denoting a wrongful act resulting in injury or damage on which a civil court action, or legal proceeding, may be based.

  • 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.

  • UNDERWRITING

    Examining, accepting, or rejecting insurance risks and classifying the ones that are accepted, in order to charge appropriate premiums for them.

  • UNEARNED PREMIUM

    The portion of a premium already received by the insurer under which protection has not yet been provided. The entire premium is not earned until the policy period expires, even though premiums are typically paid in advance.

  • 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.

  • VOID

    A policy contract that for some reason specified in the policy becomes free of all legal effect. One example under which a policy could be voided is when information a policyholder provided is proven untrue.

  • 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.