|Actual Cash Value:
The value of property based on the cost of repairing or replacing it with property of the same kind and quality. Typically,
actual cash value equals the current replacement cost minus depreciation (age, condition, length of time in use, and obsolescence).
Applicant: The party applying for an insurance policy.
Application: A printed form developed by an insurer that includes questions about the prospective insured and the desired insurance
coverage and limits.
Assigned Risk: A risk insured through a pool of insurers and assigned to a specific insurer. These risks are generally considered
undesirable by underwriters, but due to state law or otherwise, they must be insured.
Auto Collision Coverage: Optional auto insurance which pays for damage to your car caused by collision with another car or object, or by
rolling the car over. Frequently required if you have a car loan.
Auto Comprehensive Physical Damage Coverage: Optional auto insurance which pays for damage to your auto caused by things other than
collision or rolling the car over, such as fire, theft, vandalism, flood or hail. Frequently required if you have a car loan.
Binding Receipt: A premium receipt acknowledging temporary insurance coverage immediately until the insurance company rejects the
application or approves it and issues a policy.
Claim: A person's request for payment from an insurer for a loss covered by the insurance policy.
Conditions: The part of your insurance policy that states the obligations of the person insured and those of the insurance company.
Contract: A legally enforceable agreement between two or more parties.
Deductibles: The portion of the loss that the policyholder agrees to pay out of pocket, before the insurance company pays the amount they
are obligated to cover. For example, if the covered claim is $1000 and your deductible is $250, you pay $250 and your company will pay
$750. Deductibles help to keep insurance rates reasonable. Raising the amount of the deductible lowers the cost of insurance.
Depreciation: Reduction in the value of property due to age and use.
Endorsement: Attachment or addendum to an insurance policy; an endorsement changes the contract's original terms.
Grace Period: The specified length of time, after a Life or Health premium payment is due in which the insured may make the payment and
keep the policy in force. (Usually 30 days.)
Incontestable Clause: A life insurance policy wording that provides a time limit (e.g. two years) on the insurer's right to dispute a policy's
validity based on material misstatements in the application.
Insurable Interest: Any interest a person has in property that is the subject of insurance, so that damage to this property would cause the
insured a financial loss.
Insurance Company: An organization that has been chartered by a governmental entity to transact the business of insurance.
Insured: The person whose insurable interest is protected under an insurance policy.
Insurer: See Insurance Company.
Lapse: Termination of a policy due to nonpayment of premiums.
Liability: A legal obligation to compensate a person harmed by one's acts or omissions.
Liability Coverage: Insurance that provides compensation for a harm or wrong to a third party for which an insured is legally obligated to pay.
Loss: A claim either paid or payable due to the insurer's policy obligations.
Medical Payments Coverage: Medical and funeral expense coverage for bodily injuries sustained from or while occupying an insured
vehicle, regardless of the insured's negligence.
Negligence: Failure to use a generally acceptable level of care and caution.
No-fault Insurance: A system of compensation enacted by law in many states under which indemnification is made by the insured's own
insurance company regardless of who is at fault. Details of this system vary significantly from state to state.
Peril: The cause of loss or damage.
Personal Property Insurance: Protects against the loss of, or damage to property other than real property (real estate) caused by specific
Policy: The written forms that make up the insurance contract between an insured and insurer. A policy includes the terms and conditions of
the coverage, the perils insured or excluded, etc.
Policy Declarations: The part of the insurance contract that lists basic underwriting information, including the insured's name, address and
description of insured locations as well as policy limits.
Policy Limits: The maximum amount an insured may collect or for which an insured is protected, under the terms of the policy.
Policyholder: The person who buys insurance.
Policy owner: An individual with an ownership interest in an insurance policy.
Policy Period: The amount of time an insurance contract or policy lasts.
Premium: The price for insurance coverage as described in the insurance policy for a specific period of time.
Proof of Loss: A sworn statement that usually must be furnished by the insured to an insurer before any loss under a policy may be paid.
Reimbursement: The payment of an amount of money by an insurance policy for a covered loss.
Reinstatement: The process by which a life insurance company puts back in force a policy that has lapsed or has been canceled for
nonpayment of premium.
Riders: An addition to an insurance policy that becomes a part of the contract.
Risk: The possibility or chance of loss or injury.
Settlement: An agreement between a claimant or beneficiary to an insurance policy and the insurance company regarding the amount and
method of a claim or benefit payment.
Theft Limit (or Inside Policy Limits): The highest amount an insurance company will pay on certain items of personal property. For instance,
some policies have a $5,000 limit for computers.
Underwriting: The process of reviewing applications for coverage. Applications that are accepted are then classified by the underwriter
according to the type and degree of risk.
Uninsured Motorist Coverage: Coverage that pays for covered damage for bodily injury that an uninsured motorist is legally liable but unable