Damage To Your Car

Note:
This glossary provides a comprehensive list of some of the most commonly used terms in the property/casualty, life and health insurance industries. However, it should not be viewed as all-conclusive.

Terms: A-D | E-H | I-L | M-P | Q-T | U-Z


Actual Cash Value:
Insurance under which the amount payable is the current replacement cost of the property new; reduced by an allowance for depreciation, wear and obsolescence.

Actuary:
A highly specialized mathematician professionally trained in the risk aspects of insurance, whose functions include the calculations involved in determining proper insurance rates, evaluating reserves, and in various aspects of insurance research.

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

Admitted Company (Carrier):
An insurance company licensed and authorized to do business in a particular state.

Agent:
Laws of all states require all insurance agents to be licensed by the state to sell insurance. Agents may be categorized as: (1) An Exclusive Agent, who is a sales employee or sales representative of one and only one insurance company or its affiliated group of insurance companies, and seeks and services business exclusively for that company or group (2) An Independent Agent, who usually represents two or more insurance companies or groups in a sales and service capacity as an independent business person.

Allied Lines:
Types of insurance associated with property insurance, which may include earthquake, sprinkler leakage, and income and extra expense coverages.

Annual Policy:
Insurance policy written for a term of one year or renewed one year at a time.

Annuitant:
The person during whose life an annuity is payable, usually the person to receive the annuity.

Annuity:
A contract that provides an income for life, a specified number of years, or a combination of the two.

Application:
The statement of information that a prospective insured gives when applying for an insurance policy and that an insurance company uses to help decide if it will issue the policy and what premium rate will be charged.

Apportionment:
The dividing of a loss proportionately among two or more insurers which cover the same loss.

Appraiser:
In insurance, a specialist that evaluates the size and cost of an object, such as jewelry or art; or the extent of damage based on a claim. Often works with a claims adjuster.

Appurtenant Structures:
Buildings on the same premises as the main building insured under a property insurance policy.

Arbitration:
Determination by impartial experts of the value of property or the extent of damage. Many insurance policies provide for appraisals where the company and the insured cannot agree on the amount or the extent of a loss. Arbitration also may be used to resolve liability and policy-coverage issues in certain situations.

Assessment:
The extra premium a mutual or reciprocal insurer’s policyholder may be required to pay in the event the insurer’s losses are greater than anticipated.

Audit:
An examination of the books of accounts, vouchers or other records of a person, corporation, firm or other organization for the purpose of ascertaining the accuracy or inaccuracy of the record.

Beneficiary:
Any person, institution, trust, etc., named in a life policy to receive the policy benefits upon the death of the insured.

Binder:
A written or oral contract issued temporarily to place insurance in force immediately prior to issuance of a new policy or endorsement of an existing one. A binder is subject to payment of the premium and provides coverage under the terms of the policy to be issued, unless otherwise specified.

Broker:
A representative of the buyer of property and liability insurance who deals with either agents or companies in arranging for the coverage required by the customer. A broker is paid a commission by the company or its agent.

Cancellable Policy:
A policy which may be cancelled by the company at any time by giving advance notice in compliance with state requirements to the insured citing the reasons such insurance is being cancelled and refunding any unearned premium. (Term is not usually applicable to life or health insurance.)

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

Carrier:
The insurance company or the one who agrees to pay the losses. The carrier may be organized as a stock or mutual company, a reciprocal exchange, as an association of underwriters or as a state fund.

Cash Value:
The cash fund which a life policy develops usually after the first or second year the policy has been in force. It is available when the policy is surrendered or may be borrowed earlier as a policy loan.

Claim:
A request for payment for a loss which may come under the terms of an insurance contract. There are two types of claims. A first-party claim is one made by the policyholder for reimbursement by his or her company. A third-party claim is one by a person against a policyholder of another company and the payment, if any, will be made by that company.

Combined Single Limit:
A liability coverage limit that combines both bodily injury and property damage into one aggregate amount.

Concealment:
Normally means the willful withholding of material fact which could affect an insurer's issuance of a policy or processing of a claim.

Conditions:
Provisions of an insurance policy which state the rights and duties of the insured and insurer.

Contributory Negligence:
Carelessness of the injured person that helped cause the accident in which he or she was injured. Some states bar recovery to the plaintiff if the plaintiff was contributorily negligent.

Coverage:
The scope of the protection provided under a contract of insurance; any of several risks covered by a policy.

Covered/Insured Peril:
The perils of loss you are protected against by an insurance policy. Examples of perils include fire, lightning, theft, vandalism and the threat of a lawsuit.

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Declarations:
That part of the policy describing the named insured, address, effective date, term of the policy, applicable coverages, the amount of insurance and the premium.

Deductible:
A provision in an insurance contract stating that the insurer will pay that amount of any insured loss that is in excess of a specified amount. The specified amount is the deductible.

Deductible Collision and Deductible Comprehensive Coverages:
Forms of collision or comprehensive auto insurance coverages which specify that an insurance company will pay the damage less a specified amount under the particular coverage. For example: For $100 Deductible Collision Coverage, the company would deduct $100 from the total damage under the collision coverage and be liable for the amount in excess of $100. Rates are reduced as the amount of the deductible is increased.

Depreciation:
A decrease in the value of property due to age, wear and tear.

Disability Threshold:
In no-fault insurance states with the disability threshold, it provides that a victim may not sue in tort unless he/she has been disabled (defined differently in various state plans) from an accident for a specific period of time.

Dollar Threshold:
In no-fault auto insurance states with the dollar threshold, it prevents individuals from suing in tort to recover for pain and suffering unless their medical expenses exceed a certain dollar amount.

Domestic Insurance Company:
An insurance company organized or domiciled in a given state is referred to in that state as a domestic carrier.

Endorsement:
An additional piece of paper, not a part of the original contract, which cites certain terms and which becomes a legal part of that insurance contract. Additions to life insurance contracts are accomplished through the use of riders, which are similar to endorsements.

Excess Limits:
Coverage against losses in excess of a specified dollar limit.

Exclusion:
A provision in an insurance policy which denies coverage for certain perils, persons, property or location.

Expense Ratio:
The ratio of a company's operating expenses to premiums written. (Expenses include losses and loss adjustment expenses.)

Expiration Date:
The date shown on the declarations page of the policy when coverage will stop. It may be a specific date or a statement that coverage is continuous until cancelled.

Financial Responsibility Law:
A state law which may require motorists to furnish evidence, either before or after involvement in an auto accident (depending on the individual state’s law), of ability to pay for damages up to certain minimum dollar limits. These requirements commonly are met by carrying auto liability insurance with specified minimum limits or more.

Fleet Policy:
An auto policy covering a number of vehicles owned by a single insured.

Floater:
A form of insurance that applies to movable property, whatever its location, within the territorial limits imposed by the contract. The coverage "floats" with the property.

General Damages:
In auto insurance, typically refers to awards for pain and suffering.

Generally Accepted Accounting Principles (GAAP):
A method of accounting used by insurance companies to produce results consistent with those of other industries. This is the method of reporting financial results required by the Securities and Exchange Commission of all industries under its jurisdiction and by the stock exchanges.

Good Driver Plan:
An auto insurance rating program that reflects the insured’s accident and traffic violation record as a factor in determining the premium.

Grace Period:
The number of days (31 in most cases) a life insurance policy will remain in force when a payment is overdue.

Hazard:
The presence of a condition that could cause loss or injury to property or persons. For example, smoking in bed increases the chance for loss of property and life resulting from fire.

Hold Harmless Agreement:
A contract under which one party's legal liability for damages is assumed by the other party to the contract.

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Indemnity:
In general, means reimbursement for loss, but also is used to mean a benefit provided by a policy. In health insurance it sometimes is used to designate an amount paid regardless of actual loss or expense incurred.

Inspection Report:
A report filed by an investigator employed by the insurance company or a credit agency, giving general information on the health and finances of the applicant and the physical condition of the property (if property is to be insured).

Insurance to Value:
Insurance written in an amount approximating the value of the property insured.

Insured:
A person covered by an insurance policy.

Joint Underwriting Association (JUA):
A device used to provide insurance to those who cannot obtain insurance in the voluntary market. Certain companies issue policies at one rate level and handle claims, but the ultimate costs are borne by all companies writing insurance in that state.

Lapsed Policy:
A life or health insurance policy terminated as a result of nonpayment of a premium before the end of the grace period.

Liability Limits:
The stipulated sum or sums beyond which an insurance company is not liable to protect the insured.

License—Agent or Broker:
Certification issued by a state’s department of insurance that an individual is qualified to solicit insurance applications in the state for the period covered.

License—Company:
Certification issued by a state’s department of insurance that an insurance company is qualified to do business in the state.

Life Insurance Cost Indexes:
The measurements used to determine the cost of life insurance protection.

Limit:
The maximum amount of benefits that an insurer agrees to pay in the event of a loss.

Line:
A type or kind of insurance.

Litigation:
The process of a lawsuit.

Loss:
An occurrence that is the basis for submission and/or payment of a claim. Losses can be covered, limited or excluded from coverage, depending on the terms of the policy.

Loss Exposure:
The possibility that a loss may occur.

Malicious Mischief:
The willful or intentional damage to or destruction of another’s property. Coverage for malicious mischief is usually combined with the vandalism peril in insurance policies.

Maturity:
The date at which the endowment amount of a life policy becomes payable.

Multiple-Line Company:
A company that writes a variety of basic or traditional lines of insurance known as property and casualty (liability) insurance, such as auto, boat owners, homeowners, commercial, etc.

Multiple-Line Policy:
A package policy which combines coverages from both the traditional property and liability insurance lines.

Mutual Insurance Companies:
Insurance companies without capital stock, owned by the policyholders.

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.

Negligence:
The failure of a person to exercise the care that a prudent person would exercise under similar circumstances.

Notice of Loss:
Notification to an insurance company by an insured or claimant that a loss has occurred. Written notice may be required, although many companies accept notice by telephone.

Occupational Hazard:
Dangers inherent in an occupation which increase the risk of sickness or injury.

Omnibus Clause:
An automobile policy provision that covers persons driving the named insured’s auto with the named insured’s permission.

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Package Policy:
A combination of two or more individual policies or coverages into a single policy. A homeowners policy, for example, is a package combining property, liability and theft coverages for the homeowner.

Paid Losses:
The actual dollar total that has been paid on incurred losses by issuing checks or drafts to claimants.

Partial Disability:
An impairment that prevents the insured from performing one or more, but not all, important duties of his/her job.

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

Personal Property:
This type of property is usually movable and easily transportable. On the other hand, real property generally is considered to be immovable, such as land and things affixed to it. A rule of thumb definition for personal property is "everything other than real property."

Physical Hazard:
This refers to the material, structural or operational features of the risk itself, apart from the persons owning or managing it. Electrical wiring, building construction and type of heating system are examples of physical hazards.

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

Policyholder:
One who owns an insurance policy. A mortgagee often is issued a copy of an insurance policy or certificate of insurance at the request of the insured, but it is not a policyholder.

Policy Loan:
The borrowing against a life insurance policy’s cash value.

Pool:
An organization of insurers or reinsurers through which particular types of risks are underwritten with premiums, losses and expenses shared in agreed ratios.

Premises:
The building, other structures and land where the insurance protection is applicable. It is usually described and defined in the property and casualty policy.

Premium:
The amount of money charged a policyholder for an insurance policy.

Principal:
In suretyship, the party whose honesty or performance is guaranteed.

Producer:
Any person directly involved in the sale of insurance.

Proof of Loss:
Documentation presented to the insurance company by the insured in support of a claim so that the insurer can determine its liability under the policy.

Protection Amount:
The face amount of a life insurance policy, or amount of money that will be paid to a beneficiary upon the death of an insured—depending upon the policy. This amount will be reduced by the amount of any outstanding policy loan.

Proximate Cause:
The dominating cause of loss or damage; an unbroken chain of events between the occurrence of an insured peril and damage to property. As an illustration, weather damage occurring from fire-fighting activities is covered under the fire policy because fire was the proximate cause of the loss.

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Rate:
A charge per unit in determining insurance premiums.

Rating Territory:
In various property and casualty lines, a geographical grouping within which insureds are likely to share an exposure to similar risks. Grouping of insureds within a territory helps establish equitable rates for the territory.

Reinstatement:
The restoration of a lapsed life or health insurance policy to its original premium-paying status—usually after evidence of good health has been submitted and past-due premiums have been paid.

Retrospective Rating:
Rating procedure that allows adjustment of an insured's final rate on the basis of the insured’s own loss experience.

Rider:
Additional provision added to a policy by issuance of an amending document.
(See Endorsement.)

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

Robbery:
The loss of property due to theft when a person is threatened with physical harm or injury.

Salvage:
Property damaged to the extent that it is not economical to perform repairs, taken over by an insurer after it has paid a claim, to reduce its loss by "salvaging" the remaining value of the property.

Schedule:
A list describing the property or items insured under the policy and the extent to which they are insured.

Standard Provisions:
Policy provisions required by law.

Standard Risk:
A person who according to a company's underwriting standards is entitled to insurance without extra rating or special restrictions.

Stock Company:
A company organized and owned by stockholders, as distinguished from the mutual form of company, which is owned by its policyholders.

Subrogation:
A principle of law incorporated in insurance policies that enables an insurance company, after paying a loss to its insured, to recover the amount of the loss from another who is legally liable for it.

Substandard or Extra Risk:
An individual who, because of health history or physical limitations, does not measure up to the qualifications of a standard life or health insurance risk.

Syndicate:
A group of insurers or underwriters that join to insure certain property that may be of such value or high hazard or so expensive to underwrite that it can be covered more safely or efficiently on a cooperative basis.

Term:
A period of time for which a policy is issued.

Third Party:
A person who files a liability insurance claim.

Tort:
Any wrongful act, damage or injury done willfully, negligently or in circumstances involving strict liability, but not involving breach of contract, for which a civil lawsuit can be brought.

Total Disability:
Disability that prevents a person from performing (a) any of his/her occupational duties, or (b) any duties for which he/she is reasonably qualified. Definitions vary within policies.

Vandalism:
Willful, intentional, often random, destruction or defacement of private or public property. Insurance against the vandalism peril is usually combined with the malicious mischief peril.

Workers' Compensation:
A system (established under state laws) under which employers provide insurance for benefit payments to employees for their work-related injury, death and disease regardless of fault. Not to be mistaken as health insurance.

Write:
To insure, underwrite or accept an application for insurance.


(Source: Ohio Insurance Institute)