Commercial InsuranceEmployee BenefitsPersonal Insurance

Glossary

The following are some general terms that may be helpful to you in reading and understanding your insurance policy with Members Insurance Advisors. Please take this opportunity to review these terms and please contact us if you have any questions.

Actual Cash Value (ACV): The cost of replacing or restoring property at prices prevailing at the time and place of the loss, less depreciation, however caused. Another definition: the sum of money required to replace property less depreciation, which includes physical wear and tear, and obsolescence.

Additional Insured: One who is protected by an insurance policy other than the named insured. Examples: In automobile insurance, one who drives the insured's car with his consent ordinarily is protected. In property insurance, this might be a co-owner, mortgagee, or lien holder.

Additional Living Expense: The purpose of this coverage is to pay for increased expense of living while the insured's residence is being rebuilt or repaired after damage from an insured peril. Examples are the extra cost of housing the insured's family in a hotel, dining in restaurants, etc.

Adjuster: A person who investigates and settles losses for an insurance carrier or the insured.

Agency: An organization which solicits insurance for one or more carriers and may perform other functions such as issuing policies and adjusting losses.

Agent: 1. An individual who solicits insurance for one or more carriers and may perform other functions, such as issuing policies. 2. Agents of a direct writer are sales employees of one company only.

Basic Limits: The lowest coverage amount, as prescribed by law or the company, for which an insurance policy can be written. Basic Limits primarily prescribe limits of liability.

Binder: A written or oral contract issued temporarily to place insurance in force when it is not possible to issue a new policy or endorse the existing policy immediately. A binder is subject to the premium and all the terms of the policy to be issued.

Bodily Injury Liability: An agreement by a company to protect an insured against loss from legal liability for injury to another person arising from an automobile accident. This is usually referred to as "third party coverage."

Builder's Risk Insurance: Insurance against loss resulting from damage to buildings and to materials incidental to construction, including machinery and equipment, while the buildings are under construction.

Cancellation: The discontinuance of an insurance policy before its normal expiration date.

Casualty Insurance: A general class of insurance covering liability resulting from accidents and some types of property insurance. It includes among other coverages: automobile, workers compensation, employers liability, general liability, plate glass, theft and personal liability. It excludes life, fire and marine insurance, but, as ordinarily used, includes health insurance and fidelity and surety bonds.

Claim: A request for payment of a loss which may come under the terms of an insurance contract. There are two types of claims. First party claim is one made by the policyholder in which the policyholder reports the claim directly to his company. A third party claim is one in which a person makes a claim against a policyholder of another company and payment, if any, is made by that company.

Claimant: One who makes a claim.

Collision (Also referred to as first party coverage): Collision is a form of insurance protecting the insured against loss resulting from any damage to his car caused by collision with any object, or upset, whether it was the insured's fault or not (other than his willful act). This does not cover other people's property.

Comprehensive: An agreement to protect an insured against loss resulting from damage to his automobile, exclusive of loss by collision or upset. Broad coverage is provided and includes protection from such hazards as fire, theft, glass damage, wind hail and malicious mischief (first party coverage).

Conditions: Provisions that set forth the rights, duties, and responsibilities of the parties to an insurance contract. Conditions may be found anywhere in the contract.

Contents: A term used to refer to the personal property contained in a building. It may be household furniture, personal effects, or other types of personal property, movable in nature and not firmly affixed to the real property.

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

Declarations: The part of the policy that provides detailed information about the insured, the insurer, and the coverages.

Deductible: The amount of a claim that the policyholder has agreed to pay. This amount is deducted from a claims payment.

Depreciation: A decrease in an automobile's value over time.

Direct Bill: The bill for premium is produced by the insurance company and sent directly to the policyholder. The policyholder then pays the insurance company directly.

Effective Date: The date the coverage begins on an insurance contract (policy).

Endorsements: An additional piece of paper, not a part of the original contract, which cites certain terms and which, when attached to the original contract, becomes a legal part of that contract.

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

Expiration Date: The specified date and time at which the policy terminates.

Insured: A person covered by an insurance policy.

Lapse: The termination or discontinuance of a policy due to non-payment of a premium.

Medical Payments: An insurance coverage under which an insurance company agrees to pay medical, hospital, and the expense of funeral services resulting from an automobile accident, regardless of the liability of the insured (first party coverage).

Non-Renewal: A policy that the insurer does not continue after its expiration date.

Payroll Deduction: The policyholder authorizes his or her employer to deduct amounts from the employee's earnings to cover the premium.

Peril: The cause of possible loss, such as fire, windstorm, theft, explosion, or riot.

Policy: The name generally used to mean the written contract of insurance.

Policyholder: One who owns an insurance policy.

Premium: The amount that a policyholder agrees to pay to the insurance company for an insurance policy.

Property Damage Coverage: An agreement by an insurance carrier to protect an insured against legal liability for damage by his automobile to the property of another.

Provisions: The statements in an insurance policy that explain the benefits, conditions, and other features of the insurance contract.

Rate: The cost of insurance per unit; used as a base for the determination of premiums.

Reinstatement: Returning a lapsed policy to its full value after its termination as if it was never terminated.

Renewal: A policy issued to replace one that has expired.

Rental Reimbursement: Rental reimbursement coverage is optional. If you must rent a car because your own car was out of service due to a covered loss, rental coverage pays you back for money you spent on your rental car (up to a specific limit you select). Be sure to review your policy for any restrictions which may apply such as maximum dollar amount allowed per claim or specific time limitations, among other items.

Replacement Cost: The cost to repair or replace property at construction costs prevailing at time of loss; the cost to repair or rebuild property without considering depreciation. (See Actual Cash Value.)

Risk: Chance of loss with respect to person, liability, or the property of the insured. Also used to mean "the insured."

Safe Driver Plan: A system for adjusting standard rates up or down according to good or bad driving records of the insureds.

Salvage: Recovery made by an insurance company by the sale of property which has been taken over from the insured as a part of loss settlement.

Schedule: A list describing the property or items insured under the policy.

SR-22 Filing: A form which must be filed by the insurance company stating that auto liability insurance is in effect for a particular individual. Required when insurance is provided to an individual who was in an accident or convicted of a traffic offense and was unable to show financial responsibility.

Subrogation: When your insurance company pays for a loss caused by another driver, your company may have the right by law or policy provision to recover an amount of the loss from the other person or their insurer.

Towing/Labor: Towing is an optional coverage. It pays the cost of having your car towed and on-site road repairs (up to a specific limit you select) each time your car breaks down (whether or not there is an accident involved). You are covered for the on-site labor costs at the breakdown site (not any parts) needed to get your car running again. Be sure to review your policy for any restrictions which may apply such as maximum dollar amount allowed per claim or specific time limitations, among other items.

Underwriter: One who judges the acceptance or rejection of insurance risks on behalf of the insurance company.

Uninsured Motorist Coverage: Protects the insured against financial loss resulting from bodily injury carelessly inflicted by an uninsured motorist, including a hit and run driver, who is legally liable.

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