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Insurance Info
Here you can find general information about commonly used insurance terms. Not all terms or coverages mentioned are valid in all states.
Sometimes called double indemnity, a provision in a policy that pays additional amounts of death benefit if the cause of death is by accidental means.
Actual cash value is the actual or current value of an item at the time of loss.
The value of property insured under an agreed value provision is the lesser of the following:
-the actual cash value; or
-the cost to repair or replace the item; or
-the amount stated on the declarations page
of the policy.
The insured and the insurer agree on the value at the time the policy is written.
All-risk property policies, also called "special" or "open-perils" policies, cover any loss unless it is caused by an excluded peril described in the policy. In an "all-risk" policy, the burden of proof is on the insurer. All losses are covered unless the insurance company can prove that the loss was caused by an excluded peril.
This is a term used to describe a person's legal liability for an accident. This ranges from contributory negligence to primary negligence and is usually expressed as a percentage.
Auto physical damage coverage, also known as "damage to your auto" coverage, insures against loss resulting from damage to an auto owned or operated by the insured. It also provides coverage if the car is stolen.
Pays for road service or towing and labor performed at the site of disablement.
The person designated to receive the death benefit when the insured dies.
Stopping coverage during the policy period is cancellation. A policyholder can cancel most policies at any time. State laws often restrict the reasons an insurer can cancel a policy after it has been in effect for a period of time.
The amount available to the policy owner when they terminate the life insurance policy prior to maturity or death.
Contacts a security company that responds to the residence and contacts the police.
A demand by a person or business seeking to recover for a loss. A claim might be made against an individual or against an insurance company.
The person directly responsible for investigating, evaluating, and settling claims that might be covered by insurance.
A folder or computer record that is created (opened) when a claim is made.
Anyone who presents a claim that might be covered by insurance. For a liability insurance loss, the claimant is a person or business that has suffered a loss and seeks to collect for that loss from an insured. For a property insurance loss, the claimant is the insured who wants the insurance company to pay for repairing or replacing his or her damaged property.
Coverage that applies to the impact of a vehicle with another vehicle or object or the upset (overturn) of the vehicle.
The person designated to receive the death benefit, if the beneficiary dies before the insured or is disqualified by law.
An option on a term (life) insurance policy that allows the owner/insured to change the policy, in full or in part, to a permanent plan without providing evidence of insurability. Premiums for the new policy are typically based on the insured's age at the time of the conversion.
A record of an individual's income, debt, and payment history. Insurance companies use an "insurance score" provided by credit bureaus which take into account many factors, one of which is credit.
Loss or harm resulting from injury to a person, property, or to someone's reputation.
Money that the law requires one party to pay another because of loss or injury suffered by the other party.
The amount payable to the beneficiary on the insured's date of death.
This is a document that identifies the persons or property covered by the policy and identifies the coverages and limits provided.
Occurs when an insurer rejects an application.
A portion of a covered loss that is not paid by insurance. The deductible is subtracted from the amount the insurer would otherwise be obligated to pay.
Expenses associated with defending a liability claim. Such expenses include wages the defendant loses to prepare for a trial, investigation expenses, witness fees, and premiums for bonds.
Loss in value of property that develops as items age, wear out, or become obsolete. In a sense, depreciation reflects value that has already been used up.
A refund of excess premiums paid to the owner of an individual participating life insurance policy. Dividends are usually directly affected by the insurance company's expenses, claim experience and the general interest rate environment.
Applied to personal auto policies for youthful drivers who have completed an approved driver training course.
A document used to amend the coverage or provisions in an insurance policy.
Insurance policy provisions that restrict the broad terms of the insuring agreement by stating some exceptions to coverage - certain activities, loss causes, property, persons, and places - for which the insurer does not provide coverage.
Applied to personal auto policies for youthful drivers who have good scholastic records.
To restore the party that has had a loss to the same financial position they held before the loss.
A system by which a risk is transferred by a person, business, or organization to an insurance company (insurer), which reimburses the insured for covered losses and provides for sharing the costs of losses among all insureds.
A periodic payment by the insured to the insurance company in exchange for insurance coverage. A periodic payment is one that must be made at certain time intervals.
The largest insurance service office in the country, ISO performs a variety of services, such as developing statistical classification systems and collecting statistical data on insured claims from a large number of insurance companies, analyzing this information, and using it to develop cost data. Insurance companies that subscribe to ISO's services may use this loss-cost information in setting their own insurance rates. ISO also develops standardized insurance contracts and forms which are used throughout the industry.
Also known as an insurance company, an organization that sells insurance policies that protect insureds against financial hardship caused by financial loss.
Losses that cannot be appraised tangibly, for example, items with sentimental value.
As a legal concept, liability means that a person, organization, or group of people is legally responsible, or liable, for the injury or damage suffered by another person, organization, or group of people.
Covers accidental losses resulting from bodily injury or damage to someone else's property for which the insured is legally responsible (legally liable). If the loss is covered by the insurance policy, the payment is made directly to the party that suffered the loss.
The process of carrying on a lawsuit.
Creates a loud noise that can be heard only at or near the premises.
A risk management technique that reduces the frequency or severity of a loss.
A loss control technique that seeks to lower the probable frequency of losses.
A loss control technique that seeks to lower the severity of losses that occur.
A state's official record of driving information, which usually contains traffic violation and accident information.
Coverage provided by an insurance policy is specified by a list of covered perils. Perils that do not appear on the list are not covered.
Offers automobile policyholders the right to recover financial losses from their own insurance, regardless of who caused the accident. This recovery is offered in the form of personal injury protection (PIP*) coverage. (*not available in AZ)
High-risk drivers are those whom insurers normally reject in a standard market.
This coverage is found in personal auto policies. It covers physical damage perils that are not otherwise excluded. This is also known as comprehensive insurance and provides protection against the following list of perils: missiles or falling objects; fire, explosion, or earthquake; theft, larceny, vandalism, malicious mischief, riot, civil commotion; windstorm, hail, water, or flood; contact with a bird or animal and breakage of glass.
The person named on the life policy application who has the right to exercise all policy rights and privileges while the insured is living. The owner may or may not be the insured.
A life insurance policy feature that uses the accumulated cash surrender value to purchase a reduced amount of fully paid up life insurance. The policy owner surrenders the cash value to pay for this reduced amount of insurance.
A cause of property losses. Fire is one example of a peril.
A life insurance policy that is designed to provide lifelong protection in case of premature death. Premiums are generally level throughout the lifetime. There are three main types: whole, universal and variable. All permanent policies accumulate cash value.
Provides broad coverage for scheduled items such as jewelry, furs, silverware, and fine arts.
A specific standard auto policy designed to meet the auto insurance needs of a typical person or family.
Vehicles that are structurally created for individual and family use; personal autos include private passenger autos, vans and trucks.
Personal injury refers to physical or emotional injury to a person or injury to a person's reputation.
No-fault coverage that applies to auto-related injuries.
Insurance coverages purchased by individuals and families to cover non-business exposures. This term is often used interchangeably with "personal lines."
These are damages that the law holds a person legally responsible for.
See Umbrella policy.
Property other than land, buildings and items permanently attached to either.
Auto physical damage coverage, also know as "damage to your auto" coverage, insures against loss resulting from damage to an auto owned or operated by the insured. It also provides coverage if the car is stolen.
A contract that states the rights and duties to the insurance company and the insured.
Limits, also called limits of insurance, limits of liability, or policy limits, indicate how much insurance is provided. The limits in the policy set the maximum dollar amount the insurance company will pay.
Many permanent plans that accumulate cash value allow the policy owner to borrow part or the entire amount accumulated at a prescribed rate of interest. Policy loans reduce the amount of death benefit paid at the time of the insured's death.
Any statement in an insurance policy.
Preferred auto market refers to a type of risk most desired by an insurance company. These risks generally have few accidents or violations, if any. The typical preferred program has lower rates than the other programs, coupled with stricter underwriting standards. Other requirements might involve type of car (no sports cars) or age of the drivers (all over twenty-five).
The payment to the insurance company for the insurance coverage.
Vehicles that are individually or family-owned and used primarily for the transportation of people.
In the event of a break-in, a proprietary alarm notifies a security guard on the premises, who responds.
The form number of the document that is required by the department of transportation from an insurance company to confirm that required coverage is in force.
Risks that do not qualify for the preferred market are placed in the standard market. This market segment is composed of drivers, falling just short of qualifying for preferred treatment, generally because of a prior claim record but also for other reasons, such as certain newly licensed drivers or youthful operators.
A loss settlement option that might be applied to a personal auto policy for physical damage coverages. An appraisal is obtained for the vehicle, and the appraised value becomes the basis for rating. Maximum loss settlement is based on the lowest of (1) the stated amount, (2) the ACV, or (3) the amount to repair or replace.
When an insurer pays an insured for a loss, the insurer takes over the insured's right to collect damages from the other party responsible for the loss. The insurance company might subrogate against the party directly responsible for the loss.
Policy period; the period during which a policy provides coverage.
A life insurance policy designed to provide protection for a specific period of time, such as 10, 20 or 30 years. Term policies provide a death benefit in exchange for premiums paid.
A policy cancellation during its term or a non-renewal at the end of its term.
When this term is applied to an insurance contract, it means an entity who has certain rights under the terms of an insurance policy as a result of the insured's negligent acts covered by the policy.
A wrongful act other than a crime or a breach of contract for which relief may be obtained in the form of damages or an injunction.
Pays for road service or towing and labor performed at the site of disablement.
A liability insurance policy that takes over where basic liability policies end. Personal umbrella policies typically provide $1 million or more worth of coverage in addition to auto or homeowners policies.
Also called "guides" or "underwriting policies," these are a set of parameters or limitations on the type of risks to be written. Guides are established by each insurance company for each line of business written.
A coverage in personal or commercial auto policies that provides protection against bodily injury loss (also property damage in some states) when the insured is involved in an accident with a motorist who either is not insured, or has insurance, but that insurance either is less than the limits the insured carries, or the limits are not enough to pay the insured's damages. In some states, these coverages are combined; in others, they are listed as separate coverages.
A permanent life insurance policy that provides the owner with flexible amounts of death benefit and the ability to raise or lower premiums within certain prescribed limits. Cash value accumulates at a rate that fluctuates according to the investment performance of the company with a guaranteed minimum interest rate.
A permanent life insurance policy designed to last for a lifetime, during which premiums remain level and cash accumulates over time as premiums are paid.
A rider on life insurance policies that indicates the insurance company will waive the premiums payable under the policy should the insured become totally disabled.