INSURANCE GLOSSARY

Actual Cash Value (ACV): Cost to repair or replace damaged property with materials of like kind and quality, less depreciation

Additional Insured: A person or organization for whom insured status is arranged by endorsement

Advertising Injury: General liability coverage that insures against libel, slander, invasion of privacy, copyright infringement and misappropriation of advertising in connection with the insured's advertising of its goods or services (Commercial / Business Insurance Policy)

Agent: An authorized representative of an insurance company.

Aggregate: The maximum amount an insurance company will pay during the policy (Business Insurance Policy)

All Risk Coverage: Property insurance covering loss arising from all causes of loss except those that are specifically excluded (Homeowners & Commercial/Business Insurance Policy)

Annually Renewable Term: Term insurance that provides coverage for one year and allows the policy owner to renew his or her coverage each year. (Life Insurance)

Application: A form with the information needed for an insurance company to underwrite and rate a specific policy  (Used on all types of insurance)

Audit: A verification of the financial records, usually payroll or receipts, of an organization to determine exposures and premiums (Normally requested for Workman’s Comp & Commercial/Business Insurance)

Automobile: A land motor vehicle, trailer or semi-trailer designed for travel on public roads, not including 'mobile equipment'

Basic Cause of Loss Form: Property coverage for named perils: Fire, Lightening, Explosion, Smoke, Windstorm, Hail, Riot, Civil Commotion, Aircraft, Vehicles, Vandalism, Sprinkler Leakage, Sinkhole Collapse and Volcanic Action (Homeowners Insurance)
Basic Limits: The minimum limits of liability that can be carried by an insured

Beneficiary: The designated person set to receive the death benefit if the insured should die. (Life Insurance)

Best's Rating: A rating system by A.M. Best Company giving the financial condition of insurance companies

Binder: A temporary insurance policy that expires at the end of a specific time period or when a permanent policy is written. A binder is given to an applicant for insurance during the time it takes an insurance company to complete the policy paperwork. (Used for All types of Insurance)

Bodily Injury Liability Limit: The insured is legally liable for damages due to bodily injury, sickness, or disease, including resulting death (Personal Auto & Commercial Auto Insurance)

Broad Causes of Loss Form: Property coverage for the named perils: Fire, Lightening, Explosion, Smoke, Windstorm, Hail, Riot, Civil Commotion, Aircraft, Vehicles, Vandalism, Sprinkler Leakage, Sinkhole Collapse, Volcanic Action, Breakage of Building Glass, Falling Objects, Weight of Snow, Ice or Sleet, Water Damage (in the form of leakage from appliances) and Collapse from Specified Causes. (Homeowners Insurance)

Building Ordinance Coverage: Covers against loss caused by enforcement or ordinances or laws regulating construction and repair of damaged buildings (Homeowners Insurance)

Burglary: Theft of property by forcible entry, which is evidenced by visible signs, in a premises, by a person
Business Auto Policy: Auto Policy for businesses that includes auto liability and auto physical damage coverage’s

Business Income Coverage: Insurance covering loss of income by a business when operations are interrupted due to property loss that is a covered cause of loss (Business Owner Insurance Policies / Commercial Insurance)

Business Interruption Coverage: See Business Income Coverage

Business Owners Policy (BOP): A policy that combines property and liability coverage’s for special types of small businesses

Cancellation: The termination of an insurance policy usually before its expiration

Certificate of Insurance: A document providing evidence that insurance has been purchased

Claim: A request by a policyholder or a claimant for payment under a policy of insurance

Claim Expense: Expenses of settling or investigating a claim

Claimant: The person presenting a claim

Class: A group of businesses who have common or similar exposures and are grouped together for rating purposes

Collision Insurance: Provides for payment to a covered automobile resulting from the striking of another object by a moving vehicle (Personal Auto & Commercial Auto Insurance)

Commercial General Liability Policy (CGL): A coverage which protects business organizations against liability claims for bodily injury and property damage. Those claims may be the result of events at your place of business, from your business operations, the products or services you make or do, communications or advertisements your business broadcasts  (Commercial / Business Insurance)

Completed Operations: A General Liability coverage for the work of the insured that has been completed away from the business premises (Commercial / Business Insurance)

Comprehensive Auto Coverage: Covers an automobile for loss or damage for all causes except for those specifically excluded (Personal Auto & Commercial Auto)

Contract: An agreement between two or more parties with characteristics of mutual assent, competent parties, a valid consideration and legal subject

Decreasing Term Insurance: Term life insurance on which the face value slowly decreases in scheduled steps from the date the policy comes into force to the date the policy expires, while the premium remains level. The intervals between decreases are usually monthly or annually. (Life Insurance)

Debris Removal: The cost of removal of debris from covered property damaged by an insured peril (Homeowners Insurance Policy)

Deductible: The amount of loss which is paid or absorbed by the insured prior to determining the insurance company's liability

Depreciation: The reduction in value of property over a period of time. Usually as a result of age, wear and tear, or economic obsolescence (Homeowners Insurance: Contents)

Earned Premium: The amount of premium that has been used for certain periods of time (Common on all Insurance policies)

Earth Movement or Earthquake Exclusion: An exclusion found in most property insurance policies eliminating coverage for earth movement or earthquake, except ensuing fire

Effective Date: The date on which an insurance binder or policy goes into effect

Electrical Damage or Injury Exclusion: An exclusion usually contained in property insurance policies eliminating coverage for damage to electrical appliances caused by artificially generated currents, except for ensuing fire or explosion (Homeowners Insurance)

Employee Dishonesty Coverage: Coverage for theft of money, securities or property by an employee (Commercial / Business Insurance)

Employee Leasing: A staffing method which an employee leasing company provides all or most of its client's employees (Commonly used by businesses)

Endorsement: A document attached to an insurance policy that changes the original policy provisions

Equipment Floater: A property insurance coverage for equipment that is often moved from place to place (Commercial / Business Insurance)

Estimated Premium: A preliminary premium amount that could be adjusted based on a variance in exposures

Excess and Surplus Lines Insurance: Coverage that is provided by insurers not licensed in the states where the risk is located

Excess Liability Policy: A policy that provides additional limits in excess of an underlying liability policy

Exclusions: Specified hazards listed in a policy for which benefits will not be paid. (Can be found on all types of policies, call us for more information)

Expiration: The ending date of an insurance policy

Face Amount: The amount covered by the terms of an insurance contract, usually found on the first page of the policy.

Fiduciary Liability: The liability placed on trustees, employers, fiduciaries and professional administrators with respect to errors and omissions in the administration of employee benefit programs

Fine Arts Coverage: Property insurance for works of art

Fire Department Service Charge Coverage: Coverage in a property insurance policy for charges incurred by the insured from a fire department for their services in fighting a fire

Fire Legal Liability Coverage: Liability coverage for the insured's legal liability for fire damage to premises rented by the insured (Commerical / Business Insurance)

Fire Wall: A wall designed to prevent the spread of fire from one part of a building to another

Flat Cancellation: The full cancellation of a policy as of the effective date of coverage which requires the return of paid premium in full

Flood Coverage: Coverage for damage to property caused by flood (Flood insurance)

Flood Exclusion: A provision in most all property insurance policies eliminating coverage for damage by flood and possibly other types of water damage, such as seepage and sewer backup

Funeral Expenses: Expenses including casket, vault, grave plot, headstone and funeral director.

Garage Liability Insurance: Insurance coverage for the legal liability of automobile dealers, garages, repair shops and service stations for bodily injury and property damage arising out of their business operations (Garage Keepers Insurance)

Garagekeepers Coverage: Provides coverage to owners of storage garages, parking lots and body and repair shops for their liability of damage to automobiles left in their custody for safekeeping or repair (Commercial / Business Insurance)

General Aggregate Limit: The maximum amount of insurance payable during the policy period for losses (other than those arising from the products - completed operations hazards as covered under the standard commercial general liability policy) (Commercial / Business Insurance)

General Liability Insurance: Insurance protecting businesses from most liability exposures other than automobile and professional liability (Commercial / Business Insurance Policy)

Grace Period: Period of time after the due date of a premium during which the policy remains in force without penalty.

Gross Vehicle Weight (GVW): The weight specified by a manufacturer for the maximum total loaded weight of a single vehicle

Guaranteed Term: A form of renewable term insurance that remains in force as long as the premiums are paid on time. With guaranteed term insurance, the insurance company cannot terminate the policy during the term. (Life Insurance)

Hired Automobile: An automobile whose exclusive use has been temporarily given to another for a monetary sum or other consideration. The business auto definition of 'hired autos,' however, includes autos borrowed except those borrowed from employees or partners (Can be added to Commercial Auto & Commercial / Business Insurance Policy)

Improvements and Betterments: Additions or changes made by a lessee at his own expense to property that may not legally be removed. Usually covered under the tenants property coverage(This coverage normally applies to Condo / Townhouse Units where building is already coverage by association)

Insurance: A formal social device for reducing risk by transferring the risks of several
individual entities to an insurer. The insurer agrees, for a consideration, to pay for the loss in the amount specified in the contract.

Insurance Policy: The printed form which serves as the contract between an insurer and an insured.

Insured: The party who is being insured. In life insurance, it is the person because of his or her death the insurance company would pay out a death benefit to a designated beneficiary.

Insurer: The insurance company; Party that provides insurance coverage, typically through a contract of insurance.

Increasing Term Insurance: Term life insurance in which the death benefit increases periodically over the policy's term. Usually purchased as a cost of living rider to a whole life policy. (Life Insurance Policy)

Joint Venture: A business relationship when two or more persons join their labor or property for a business undertaking and share profits

Lapse: Termination of a policy due to the policy owner's failure to pay the premium within the grace period.

Liability: The legal obligation to pay a monetary award for injury or damage caused by one's negligent or statutorily prohibited action

Life Insurance: Insurance coverage that pays out a set amount of money to specified beneficiaries upon the death of the individual who is insured.

Limit of Liability: The most an insurance company agrees to pay in the case of loss

Loss: The amount an insurance company pays for damages under the terms of a policy

Medical Expenses: Reasonable charges for medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, prosthetic devices, and funeral expenses. What is considered reasonable is outlined in a policy.

Medical Payments, Auto: Coverage, which is optional, under an auto policy to pay for medical expenses for bodily injury caused by an auto accident, regardless of fault. Coverage for persons other than the named insured and his or her family members is typically restricted to circumstances when they are occupants of the insured auto

Medical Payments, General Liability: A general liability coverage that reimburses others, regardless of fault, for medical or funeral expenses incurred as a result of bodily injury or death sustained by an accident

Named Perils Coverage: A property insurance term referring to exact causes of loss specifically listed as covered

National Flood Insurance Program: A federally funded program established to make flood insurance available to properties located in participating communities National Flood Insurance Program: A federally funded program established to make flood insurance available to properties located in participating communities

Non-admitted Insurer: An insurance company that is not licensed to do business in a specific state. The insurers may write coverage through an excess and surplus lines broker that is licensed in these jurisdictions

Non-owned Automobile: In commercial auto policies, coverage for autos that are used in connection with the named insured's business but are neither owned, leased, hired, rented or borrowed by the named insured. The term specifically applies to vehicles owned by employees and used for company business

Occurrence: A continual, gradual or repeated exposure to substantially the same general harmful conditions. General liability policies insure liability for bodily injury or property damage that is caused by an occurrence

Package Policy: A policy providing several different coverages combined into one policy. Refers to a policy providing both general liability insurance and property insurance

Peril: Cause of loss such as fire, windstorm, collision, etc.

Personal Auto Policy (PAP): A policy insuring private-passenger autos owned by individuals

Personal Injury: A General Liability coverage for insurable offenses that cause harm, other than bodily injury, such as false arrest, detention or imprisonment, malicious prosecution, wrongful eviction, slander, libel and invasion of privacy

Personal Injury Protection (PIP): An automobile insurance coverage mandated by law in some states. The statutes typically require insurers to provide or offer to provide first-party benefits for medical expenses, loss of income, funeral expenses and similar expenses without regard to fault

Personal Property: All tangible property not classified as real property such as contents

Policy: The printed document given to the insured, outlining the terms and conditions of the Insurance coverage.

Policy Holder: The person who owns a life insurance policy. This is usually the insured person, but it may also be a relative of the insured, a partnership or a corporation.

Policy Period: The term or duration of a policy including the effective and expiration dates

Premises: The location where coverage applies

Premises-Operations: A category of hazard ordinarily insured by a general liability policy which is composed of those exposures to loss that fall outside the defined 'products-completed operations hazard,' including liability for injury or damage arising out of the insured's premises or out of the insured's business operations while such operations are in progress

Primary Policy: The insurance policy that pays first when you have a loss that's covered by more than one policy.

Pro Rata Cancellation: The cancellation of an insurance policy with the return premium being the full proportion of premium for the unexpired term of the policy, without penalty for early cancellation

Product: Items manufactured, sold, handled, distributed or disposed of by the named insured or others involved with the named insured in the course of their business. Includes containers, parts and equipment, product warranties and provision of or failure to provide instructions and warnings

Product Liability: The liability for bodily injury or property damage a merchant or manufacturer may incur as a consequence of some defect in the product sold or manufactured

Products-Completed Operations: General Liability coverage for liability arising out of the insured's products or business operations conducted away from the insured's premises once those operations have been completed (Commercial / Business Insurance policy)

Professional Liability: Coverage designed to protect professionals such as physicians and real estate brokers, against liability incurred as a result of errors and omissions in performing professional services (Commercial / Business Insurance)

Property Damage: In the general liability policy, a physical injury to property, resulting in the loss of use

Property Insurance: First-party insurance for real and personal property against physical loss or damage

Risk: The chance of injury, damage, or loss.

Short-Term Cancellation: Cancellation of an insurance policy prior to the expiration date in which a penalty in the form of a less than full pro-rata premium refund is allowed

Surplus Lines Insurance: Insurance written by insurers not licensed in the states where the risks are located and placed with such insurers under the surplus line laws of the various states. Before such placements can be made through specially licensed surplus line agents and brokers, state laws generally require evidence reported before some predetermined future date ('sunset')

Term Insurance: Protection during limited number of years; expiring without value if the
insured survives the stated period, which may be one or more years but usually is five to twenty years, because such periods usually cover the needs for temporary protection. (Life Insurance Policy)

Term: Period for which the policy runs. In life insurance, this is to the end of the term period for term insurance. (Life Insurance Policy)

Umbrella Liability Policy: A policy designed to provide additional protection against catastrophic losses covered under liability policies, such as the business auto policy, commercial general liability policy, watercraft and aircraft liability policies and employers liability coverage. It provides excess limits when the limits of the underlying liability policies are used up by the payment of claims and it drops down and picks up where the underlying policy leaves off when the aggregate limit of the underlying policy in question is exhausted by the payment of claims. It also provides protection against some claims not covered by the underlying policies, subject to a self-insured retention

Underinsured Motorists Coverage: Provides coverage for bodily injury, and in some states property damage, for losses incurred by an insured when an accident is caused by a motorist who does not have sufficient insurance limits (Personal Auto & Commercial Auto Insurance Policy)

Universal Life: An interest-sensitive life insurance policy that builds cash values. The premium payer has control over how the policy is structured. He has the flexibility to eliminate the premiums (essentially pay up the policy and pay no more premiums) or have the premiums continue for life. It is a matter of juggling three variables: the assumed interest rate, the cash value and the premium payment plan. The policy is interest-sensitive, and if interest rates change from the assumed interest, it will affect the other two variables. In the past, many Universal Life Policies were structured assuming a higher interest rate then was actually received, therefore, most of them have under performed. If you have a Universal Life Policy, you should have it evaluated to see if it needs
to have the premiums adjusted to get it back on track. A fourth variable that has not been a factor but could be in the future, and the owner should be aware of, is the Mortality variable. Universal Life policies are usually structured assuming current mortality rates. The insurance companies reserve the right to change those rates. (Life Insurance Policy – for more information give us a call)

Uninsured Motorist Coverage: Provides coverage for bodily injury, and in some states property damage, for losses incurred by an insured when an accident is caused by a motorist who is not insured (Personal Auto & Commercial Auto Insurance Policy)

Waiver of Premium: Rider or provision included in most life insurance policies exempting the insured from paying premiums after he or she has been disabled for a specified period of time, usually six months. (Life Insurance Policy)

Waiver of Subrogation: Also known as 'transfer of rights of recovery,' the relinquishment by an insurer of the right to collect from another party for damages paid on behalf of the insured.

Whole Life Insurance: Life insurance that is kept in force for a person's whole life as long as the scheduled premiums are maintained. All Whole Life policies build up cash values. Most Whole Life policies are guaranteed as long as the scheduled premiums are maintained. The variable in a Whole life Policy is the dividend which could vary depending on how well the insurance is doing. If the company is doing well and the policies are not experiencing a higher mortality than projected, premiums are paid back to the policy holder in the form of dividends. Policyholders can use the cash from dividends in many ways. The three main uses are: it can be used to lower or vanish premiums, it can be used to purchase more insurance or it can be used to pay for term insurance. (Life Insurance Policy – for more information give us a call)

Workers' Compensation: Protection which provides benefits to employees for injury or contracted disease arising out of and in the course of employment. Most states have laws which require such protection for workers and prescribe the length and amount of such benefits provided