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A

Actual Cash Value (ACV)

1) The cost of replacing or restoring property at prices prevailing at the time and place of the loss, less depreciation, however caused.

2) replacement cost minus depreciation. 

Additional insured

A person, company or entity protected by an insurance policy in addition to the insured. 

Attractive Nuisance

Condition that can attract and injure children. Occupants of land on which such a condition exists are liable for injuries to children. 

Auto Coverage Optional Coverage
  • Optional coverages for more security
  • Rental Reimbursement
  • Roadside Assistance(pdf)
  • Non-Owned Vehicle Coverage
  • Customizing Equipment Coverage
  • Auto Loan/Lease Coverage
Automobile Liability Insurance

Protection for the insured against financial loss because of legal liability for car-related injuries to others or damage to their property.

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D

Declarations

Statements in an insurance contract that provide information about the property or life to be insured and used for underwriting and rating purposes and identification of the property or life to be insured. 

Deductible

An amount which a policyholder agrees to pay, per claim or per accident, toward the total amount of an insured loss. 

Driver Education Credit

Student discount or reduction in premium amount for which young drivers become eligible on completion of a driver education course.

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E

Endorsement

An amendment of the policy.

Exclusions

Specific conditions or circumstances listed in the policy for which the policy will not provide benefit payments.

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F

FAIR Plan

A facility, operating under a program of the government and the insurance industry, to make fire insurance and other forms of property insurance readily available to persons and businesses for whom such insurance is not easily available or affordable.

Fair Rental Value

Amount payable to an insured homeowner for loss of rental income due to damage that makes the premises uninhabitable. 

Federal Flood Insurance

Coverage made available to residents of a community on a subsidized and non-subsidized premium rate basis after the community qualifies for protection under the National Flood Insurance Act. 

FEMA

The Federal Emergency Management Agency is responsible for coordinating federal disaster response. It oversees the National Flood Insurance Program (NFIP), which was established in 1968 and is run by the Federal Insurance Administration. 

Fire

A combustion accompanied by a flame or glow, which escapes its normal confines to cause damage. 

Fire Insurance

Coverage for losses caused by fire and lightning, plus resultant damage caused by smoke and water. 

Floaters

Insurance policies that cover property that can be moved from one location to another for both transportation perils and perils affecting property at a fixed location. 

Flood Insurance

A standard homeowner policy will not cover damages caused by flooding. You must have flood insurance from an insurer that writes for the National Flood Insurance Program. If your community participates in NFIP flood plain management program, you should be eligible to buy the coverage no matter if your flood risk is low, medium or high. The only people who may have trouble finding flood coverage are residents of "coastal barrier resource system" areas and communities that do not participate in NFIP programs. Flood insurance is also available to renters, condominium owners, and co-op owners. 

Flood perils

A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or two or more properties (at least one of which is your property) from: the overflow of inland or tidal waters: the unusual and rapid accumulation or runoff of surface waters from any source, mudflow. 

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G

Good Student Discount

Reduction of automobile premium for a young driver at least sixteen who ranks in the upper 20 percent of his or her class, has a B or 3.0 average, or is on the Dean's list or honor roll. It is based on the premise that good students are better drivers. 

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H

Hazard

Condition that creates or increases the chance of loss.

High Risk Automobile Insurer

Company that specializes in insuring motorists who have poor driving records or have been canceled or refused insurance. 

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I

Indemnity

Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss. 

Inflation-Guard Endorsement

Endorsement added at the insured's request to a homeowner's policy to increase periodically the face amount of insurance of the dwelling and other policy coverages by a specified percentage. 

Insurance Services Offices (ISO)

Major rating organization in property and liability insurance that drafts policy forms for personal and commercial lines of insurance and provides rate data on loss costs for property and liability insurance lines.

Insured

A person or organization covered by an insurance policy, including the "named insured" and any other parties for whom protection is provided under the policy terms.

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L

Liability Insurance

Insurance covering the policyholder's legal liability resulting from injuries to other persons or damage to their property. 

Loss

The happening of the event for which insurance pays.

Loss Avoidance

A risk management technique whereby a situation or activity that may result in a loss for a firm is avoided or abandoned. 

Loss Control

Any conscious action (or decision not to act) intended to reduce the frequency, severity, or unpredictability of accidental losses. 

Loss Prevention

Any measure which reduces the probability or frequency of a particular loss but does not eliminate completely all possibility of that loss. 

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M

Moral Hazard

Hazard arising from any nonphysical, personal characteristic of a risk that increases the possibility of loss or may intensify the severity of loss for instance, bad habits, low integrity, poor financial standing. 

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N

Named Perils

Coverage in a property policy that provides protection against loss from only the perils specifically listed in the policy rather than protection from physical loss. Examples of named perils are fire, windstorm, theft, smoke, etc. 

National Flood Insurance Program

Coverage against flooding for personal and business property under the National Flood Insurance Act of 1968, which encourages participation of private insurers in the program through an industry flood insurance pool of private insurers that provide initial flood insurance in cooperation with the U.S. Department of Housing and Urban Development (HUD). 

Negligence

Failure to use the care that a reasonable and prudent person would have used under the same or similar circumstances. 

No Fault Insurance

No Fault Insurance: An auto insurance policy that insures the holder for injury-related benefits caused by an auto accident, regardless of fault in the accident. Covered benefits may include medical costs, loss of wages, loss of services, and funeral expenses. In return for these guaranteed benefits, the right to sue for damages caused by an auto accident is limited. Thirteen states currently use some form of no fault insurance. 

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O

Occurrence

An accident, including continuous or repeated exposure to substantially the same general, harmful conditions, that results in bodily injury or property damage during the period of an insurance policy. 

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P

Per Person Limit

Refers to the cap amount an insurance company will pay for any one person's injuries arising from a single incident. In an automobile accident, it comprises bodily injuries sustained by each person. When Bodily Injury is purchased in split limits, the first limit is the "per person" limit: e.g. $100,000(per person)/$300,000(per occurrence.) 

Peril

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

Personal Articles Floater

A form of coverage designed to meet the needs for insurance on property of a moveable nature. The coverage usually protects against all physical loss, subject to special exclusions and conditions. Examples of property covered include jewelry, furs, silverware, and fine arts.

Personal Auto Policy

Also known as "PAP", personal auto policies are the most common type of auto insurance policies sold. They include coverage for liability, medical payments, uninsured/underinsured motorist coverage, and physical damage protection. 

Personal Injury Protection

Also known as "PIP", this is the name given to no fault benefits in those states that have some sort of no fault auto insurance laws. This type of coverage usually includes benefits for medical expenses, loss of income, essential services, accidental death, funeral expenses, and survivor benefits. 

Policy

The legal document issued by the company to the policyholder, which outlines the conditions and terms of the insurance; also called the policy contract or the contract.

Premium

The sum paid by a policyholder to keep an insurance policy in force.

Pro Rata

Refers to the amount of money that may be refunded to you based on the amount of time left on your policy that you have already paid for. 

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R

Reinsurance

The acceptance by one or more insurers, called reinsurers, of a portion of the risk underwritten by another insurer who has contracted for the entire coverage. 

Renewal

Continuance of coverage under a policy beyond its original term by the insurer's acceptance of the premium for a new policy term. 

Renter Policy

A package type of insurance that includes coverage similar to a homeowner policy to cover the personal property of a renter or tenant in a building. 

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.

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S

Special Flood Hazard Area

The most hazardous flood zones are V (usually first-row, beach-front properties) and A (usually, but not always, properties near water). 

Standard Flood Insurance Policy

This is the name for the flood insurance policy that property owners buy from the NFIP (overseen by FEMA). It refers to the contract between FEMA as the insurer and the insured's named in the policy. 

Standard Markets

Insurance companies for which the vast majority of people qualify.

Subrogation

Process by which one insurance company seeks reimbursement from another company or person for a claim it has already paid. 

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T

Tort

A civil wrong, other than a breach of contract, for which a court of law will afford legal relief, i.e. harming another by an act of negligence in driving an auto. 

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U

Umbrella Liability

Insures losses in excess of amounts covered by other liability insurance policies; also protects the insured in many situations not covered by the usual liability polices.

Unearned Premium

The part of your policy term remaining before expiration. If your six-month policy is in effect one month, the unearned premium is 5/6. 

Uninsured Motorists Bodily Injury

Uninsured motorists bodily injury coverage (which must be offered in most states) pays for a covered person's bodily injuries for which an uninsured or hit-and-run motorist is legally liable, but unable to pay. 

Uninsured/Underinsured Motorists Coverage

This coverage provides protection for the insured, resident relatives, and occupants of a covered vehicle in an accident in which the owner or operator of a motor vehicle who is legally liable and either does not have sufficient coverage or does not have any insurance to cover the loss, specified limits, the wage loss, medical, hospital and funeral expenses of the insured. 

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W

Write Your Own Program/Companies

Program under which policyholders get their insurance directly from private insurance companies rather than going to the NFIP. Write Your Own companies write and service about 90 percent of flood insurance policies for NFIP. You pay the same amount whether you buy it from the government or a company. 

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