Insurance Glossary

Actual Cash Value
The current market value of lost or damaged property at the time of a covered loss. For example, the value of a three-year-old car is based on the value of similar three-year-old cars selling on a used car lot. In a home insurance policy, actual cash value is the replacement cost of the property, less depreciation.

Additional Insured
An individual or organization covered by an insurance policy other than the named policyholder. In a car insurance policy, anyone who drives your car with your consent is an additional insured. In a home insurance policy, a mortgage company may be listed as an additional insured.

Additional Living Expense
If you are temporarily unable to live in your home because of a covered loss, this is any reasonable and necessary increase in living expenses you incur so your household can maintain its normal standard of living.

Appraisal
An evaluation by a claims representative or appraiser to estimate the amount of damage to your property or vehicle, and the cost to repair the property or vehicle. In the worst-case scenario, a determination of a complete loss may be made.

Auto/Car Insurance
In exchange for the payment of a premium, an insurance company agrees to pay most or all of the reasonable costs associated with an accident or other damage to a vehicle.

Basic/State Minimum Financial Responsibility Limit
The lowest coverage amount for which an insurance policy can be written, as prescribed by law or an insurance company.

Bodily Injury
Liability coverage for financial protection against injury to the body of a person that results from an accident where the insured is alleged to be legally responsible.

Catastrophe
A sudden, severe disaster that results in a large amount of damage and causes a high number of car and home insurance claims.

Claim
A request for payment or repair under an insurance contract due to a covered loss or accident.

Collision Insurance
This insurance covers a loss to your vehicle caused by an impact with another vehicle or object.

Comprehensive Coverage
This insurance protects against any loss or damage to your vehicle except those caused by collision or by upset (i.e., glass repair/replacement or coverage against fire or theft).

Compulsory Auto Financial Responsibility Laws
Laws which make it illegal to operate a vehicle without first establishing the ability to pay for a judgment that may result from an accident. In most instances, drivers are required to provide proof of insurance in the form of a card or other documentation.

Conditions
Provisions that set forth the rights, duties, and responsibilities of the parties to an insurance contract.

Covered Auto(s)
Any vehicle shown in the policy declarations or, in some cases, a substitute vehicle used temporarily because of breakdown or repair of your own covered vehicle.

Damages
A sum of money that a party is legally obligated to pay to another as compensation for property damage or injury.

Declarations
The part of the policy that provides detailed information about the policyholder, the insurer, and the various coverages provided by the policy.

Deductible
The amount of a claim that you agreed to pay at the time you purchased insurance. This amount is deducted from a claims payment.

Effective Date
The date that coverage begins under an insurance policy. An endorsement, which modifies coverage, may also have an effective date.

Endorsement
Attached to your policy to modify the terms of the insurance contract. It can amend your policy to cover unique items or circumstances and it can also represent a change to a policy that’s made during the policy's term.

Exclusion
Part of an insurance contract that excludes coverage of certain risks, persons, property, or locations.

Expiration Date
The end date of an insurance policy.

Fire Insurance
Part of a homeowner’s policy that insures against direct loss by fire, lightning, and other defined causes.

Glass Insurance
Coverage for accidental breakage to glass or vandalism.

Home Insurance
In exchange for the payment of a premium, an insurance company agrees to pay most or all of the reasonable costs associated with damage to a private residence. Can also cover the costs of damage or theft of the possessions therein.

Homeowner
A person who owns and does not rent their home from another.

Insured
A person or organization covered by an insurance policy.

Insureds
More than one person or organization covered by an insurance policy.

Insuring Agreements
The part or parts of an insurance policy that state the various coverages provided.

Insurance to Value
The amount of coverage provided by your policy compared with the replacement value of the property.

Hazard
Any situation or condition that increases the possibility or extent of a loss.

Liability Insurance
Covers losses up to your policy’s limit in the event of personal injury or property damage.

Life Insurance
In exchange for the payment of a premium, an insurance company agrees to pay out a sum of money either on the death of the insured or after a set period of time.

Limit of Liability
The maximum amount for covered losses available under your policy.

Loss
Physical damage covered by your insurance policy, the amount sought in a claim, or the amount paid on your behalf under an insurance contract. A partial loss is a loss that does not completely destroy your property.

Loss of Use
Compensation for losses you incur due to the inability to use your property or vehicle.

Medical Payments Insurance
In certain states, a coverage under which an insurer agrees to pay up to a specified limit for the usual and customary medical, surgical, hospital, and funeral expenses, regardless of liability.

Mortgage or Loss Payee Clause
A clause in your insurance policy that makes a claim jointly payable to you and your lender.

Named Insured
The person or persons named as insureds in the policy declarations. Additional persons or entities may also be added as additional named insureds under certain circumstances.

No-Fault Insurance/Personal Injury Protection (PIP)
In certain states, car accident victims are directly reimbursed for the reasonable and customary medical and hospital expenses and potential loss of income by their own insurance companies, regardless of who is at fault. PIP provides insurance that covers medical costs, loss of earnings, and funeral costs for occupants of your automobile. Some states require a basic amount of PIP; optional or extra coverage can be purchased.

Peril
The cause of a possible accident, loss, or claim.

Policy
A formal written contract of insurance. The policy includes your declarations and all endorsements.

Policyholder
The person (or persons) who agrees to pay a premium to an insurer in return for the insurer's promise to provide specified insurance protection.

Premium
The amount that you agree to pay for an insurance policy.

Property Damage
Damage to someone else's personal property resulting from an accident that may be covered by an insurance policy.

Property Insurance
Part of home, condominium or renters insurance covering physical loss or damage.

Renewal
A policy issued to replace one that has expired.

Rental Reimbursement
If your car is out of service due to a covered loss, rental coverage pays you back for money you spent on the rental car up to the specific limit you selected at the time you purchased your car insurance.

Replacement Cost
Coverage for the cost of replacing your car or property with new materials or materials of like kind and quality in the event of a covered loss.

Scheduled Property
Listing specific personal property for a stated policyholder value. This is usually considered for valuable items that are subject to limited coverage.

Subrogation
When money is paid for a loss caused by another person, the insurance company has the right to recover that money from the party that was legally at fault for the loss. The appropriate percentage of any deductible is repaid based on the amount recovered.

Total Loss
An accident or event that leaves your car or home unable to be repaired by insurance company standards.

Towing / Labor
When the cost of having your car towed or repaired is covered up to limits specified in your policy.

Uninsured or Underinsured Motorists Coverage
Provides protection in the event that damage is caused by a motorist who has no insurance or not enough insurance to cover the loss.

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