DEFINITION
OF INSURANCE TERMS
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An
event arising out of natural causes with no human intervention which could not
have been prevented by reasonable care or foresight. Examples are floods,
lightning, and earthquakes.
Actual
Cash Value.
An
amount equivalent to the replacement cost of lost or damaged property at the
time of the loss, less depreciation. With regard to buildings, there is a
tendency for the actual cash value to closely parallel the market value of the
property.
Additional
Insured.
A
person other than the named insured who is protected under the terms of the
contract. Usually, additional insured's are added by endorsement or referred to
in the wording of the definition of "insured" in the policy itself.
Agency
Company.
An
insurance company that produces business through an agency network. Contrast
with Direct Writer.
Approved
Roof.
A
term used in building construction. It indicates a roof made of fire-resistive
materials, such as tile or asphalt shingles.
A
form of Property Insurance that covers, in a single contract, either multiple
types of property at a single location or one or more types of property at
multiple locations.
Broad
Form.
A
term generally used to designate policies that provide insurance for multiple
types of perils over and above the usual basic perils, or additional coverage's
beyond standard coverages.
Termination
of a contract of insurance in force by voluntary act of the insurer or insured
in accordance with the provisions in the contract or by mutual agreement.
Catastrophe
Hazard.
The
hazard of large loss by reason of occurrence of a peril to which a very large
number of insured's are subject. An example would be widespread loss due to a
hurricane or tornado.
Claim.
A
demand made by the insured, or the insured's beneficiary, for payment of the
benefits provided by the contract.
Coverage.
The
scope of the protection provided under a contract of insurance.
The
date stated in a policy as the date on which the contract was issued by the
insurer. This is not necessarily the effective date of the policy
Declaration.
A
term used in insurance other than Life or Health to denote that portion of the
contract in which is stated such information as the name and address of the
insured, the property insured, its location and description, the policy period,
the amount of insurance coverage, applicable premiums, and supplemental
representations by the insured.
Deductible.
The
portion of an insured loss to be borne by the insured before he is entitled to
recovery from the insurer.
Insurance
covering damage caused by an earthquake as defined in the contract.
Endorsement.
A
written or printed form attached to the policy which alters provisions of the
contract.
Exclusions.
Specific
situations, conditions, or circumstances that are listed in the contract as
being not covered.
Scheduled
or unscheduled classes of farm property which may be covered by the Farm
Property Coverage Form. It may include grain, feed, supplies, livestock, farm
machines and farm vehicles. Contrast with Household Personal Property. (PR)
Flood
Insurance.
A
form of insurance designed to reimburse property owners from loss due to the
defined peril of flood. Usually sold in connection with a government Flood
Insurance plan.
A
specific situation that increases the probability of the occurrence of loss
arising from a peril, or that may influence the extent of the loss. For example,
accident, sickness, fire, flood, liability, burglary, and explosion are perils.
Slippery floors, unsanitary conditions, shingled roofs, congested traffic,
unguarded premises, and uninspected boilers are also hazards.
Homeowners
Policy.
A
Property and Liability Insurance contract that provides insurance against any of
the Property and Liability perils to which a homeowner or renter is exposed
Household
Personal Property.
The
term given to household goods, furniture and personal belongings of residents of
a farm dwelling. The Farm Property Coverage Form uses the term
"household" to distinguish it from the separate coverage for
"farm" property. Contrast with Farm Personal Property.
Insurance
written in an amount approximating the value of the property insured.
Insured.
The
party to an insurance arrangement whom the insurer agrees to indemnify for
losses, provide benefits for, or render services to. This term is preferred to
such terms as policyholder, policy owner, and assured.
Insurer.
The
party to an insurance arrangement who undertakes to indemnify for losses,
provide pecuniary benefits, or render services. It is desirable to use the word
"insurer" in preference to "carrier" or "company"
since it is a functional word applicable without ambiguity to all types of
individuals or organizations performing the insurance function. The word insurer
is generally used in statutory law.
Item.
(1)
A term used to identify a statement in a policy as to what is insured. In a Fire
policy one might refer to the contents item, meaning the coverage in the policy
which applies to the contents. (2) An individual entry, such as a piece of
jewelry, listed with its description and valuation on a schedule by a policy
showing items covered.
Money
owed or expected to be owed.
Limits.
(1)
Ages below or above which the insurer will not issue a policy or above which it
will not continue a policy presently in force. (2) The maximum amount of
benefits payable for a given situation or occurrence, e.g., a limit of $50,000
on the contents of a home, or a $40,000 per accident limit for Property Damage
Liability.
Livestock
Insurance.
A
named perils contract that provides a prescribed lump sum payment to an insured
upon the death of any animal covered by the policy.
Loss.
Generally
refers to (1) the amount of reduction in the value of an insured's property
caused by an insured peril, (2) the amount sought through an insured's claim, or
(3) the amount paid on behalf of an insured under an insurance contract.
Similar
to vandalism. Purposely damaging the rights or property of another.
Mortgage
(or Mortgagee) Clause.
A
provision attached to a Fire or other direct damage policy that covers mortgaged
property, specifying that the loss reimbursement shall be paid to the mortgagee
as the mortgagee's interest may appear, that the mortgagee's rights of recovery
shall not be defeated by any act or neglect of the insured, and giving the
mortgagee other rights, privileges, and duties. For instance, one duty is that
the mortgagee must report to the insurer any change in hazards that he becomes
aware of.
Written
notice by an insurer of intent to cancel insurance, or written notice by an
insured requesting cancellation.
Notice
of Loss.
Notice
to an insurer that a loss has occurred. Notice of loss is a condition of most
policies, and it is frequently required within a given time and in a particular
manner.
An
event that results in an insured loss. In some lines of insurance, such as
Liability, it is distinguished from accident in that the loss does not have to
be sudden and fortuitous and can result from continuous or repeated exposure
which results in bodily injury or property damage neither expected nor intended
by the insured.
Other
Structures.
Structures,
such as a garage or storage shed, which are separated from an insured dwelling
by a clear space, or are connected only by a fence or utility line. Dwelling and
Homeowner policies provide coverage for other structures.
Any
insurance policy including two or more lines or types of coverages in the same
contract. Personal and commercial package policies are very common today. In
fact, most policies sold are package policies.
Peril.
The
cause of a possible loss.
Personal
Property.
Any
property of an insured other than real property. Homeowner policies protect the
personal property of family members.
Premium.
The
price of insurance protection for a specified risk for a specified period of
time
Property
Insurance.
Insurance
that indemnifies a person with an interest in physical property for its loss or
the loss of its income producing abilities. This definition encompasses all
lines of insurance written by Property and Inland Marine insurers and can also
include certain kinds of insurance written by Casualty insurers, e.g., Burglary
and Plate Glass coverages.
The
reestablishment of the in-force status of a policy, the term of which has
expired or will expire unless it is renewed.
Renewal
Certificate.
A
short form certificate which is used to renew a policy. It refers to the
original policy, keeping all of its provisions, but does not restate all of its
insuring agreements, exclusions, and conditions.
Replacement
Cost.
The
cost of replacing property without a reduction for depreciation. By this method
of determining value, damages for a claim would be the amount needed to replace
the property using new materials.
Usually,
a policy benefit or claim payment. It connotes an agreement between both parties
to the policy contract as to the amount and method of payment.
The
period of time for which a policy or bond is issue
A
condition in which not enough insurance is carried to cover the insurable value.
These
words are used to refer to the named insured in many of the
modernized/personalized policy forms.
