A fortuitous event, unforeseen and unintended.
ACTUAL CASH VALUE
An amount equivalent to the replacement cost of lost or damaged property at the time of the loss, less the amount of depreciation. For Actual Cash Value of buildings, generally the actual cash value closely parallels the market value of the property.
APPLICATION
A questionnaire which must be filled out by the person seeking insurance. It gives the company information about the proposed subject of insurance and the person to be insured, for the purpose of determining whether the company will issue the policy.
APPRAISAL
A survey of property made for the purpose of determining its insurable value or the amount of loss sustained. The Personal Auto Policy prescribes a method for appraisal when there is a dispute as to the amount of a covered loss.
ARBITRATION
A method to settle disputes between and insurer and the insured as to the applicability of coverage or the amount of a covered loss. (“Appraisal” is used only to settle disputes involving the amount of a covered loss)
BAILEE
A person or business having possession of property committed in trust from the owner.
BINDER
A preliminary agreement providing immediate insurance coverage until a policy can be written. It contains a definite time limit and should be in writing. It should also clearly designate the amount of coverage and perils insured against as well as indicate the type of insurance afforded. It is a temporary insurance contract.
BODILY INJURY
Bodily Injury means bodily harm, sickness, disease, or death. Both homeowner and auto policies provide coverage for bodily injury liability, subject to certain limitations and exclusions.
CANCELLATION
Termination of a contract of insurance in force by voluntary act of the insurance company or by the insured, which is effected in accordance with the provisions in the contract or by mutual agreement.
CLAIM
The formal demand for recovery for a loss which may be covered by an insurance contract.
CLAIM PAYMENT
The actual payment of the amount agreed upon at settlement.
COLLISION COVERAGE
Automobile insurance against loss or damage to a vehicle resulting from collision with another object. It also means loss caused by upset of the vehicle.
COMPREHENSIVE COVERAGE
Automobile insurance protecting against any loss or damage to an automobile, except by collision or upset. Comprehensive coverage includes loss caused by missiles, falling objects, fire, theft or larceny, explosion, earthquake, windstorm, hail, water, flood, malicious mischief or vandalism, riot or civil commotion, colliding with a bird or animal, or breakage of glass.
COMPULSORY INSURANCE
Insurance that is required by law.
CONSTRUCTIVE TOTAL LOSS
A partial loss that is of an amount that would make the cost of repair more than the worth of the property.
DECLARATION
The term used by insurers to identify that portion of the insurance contract which contains information such as the person or property insured, policy period, amount of insurance coverage, applicable premiums, and policy forms. It is often referred to as a "dec." page.
DEDUCTIBLE
That portion of an insured loss to be paid by the policyholder before they are entitled to recover from the insurance company.
EARTH MOVEMENT
Earth movement means any shaking, movement or trembling of the earth that is volcanic or tectonic in nature. It also includes earthquake, mud flow, earth sinking, rising, shifting, expanding, or contracting. Most basic homeowner insurance policies do not include coverage for many areas, limited coverage for earth movement may be purchased separately.
EFFECTIVE DATE
The date on which the protection afforded under an insurance policy begins. Effective time is usually 12:01 a.m.
EXCESS INSURANCE
Insurance that applies to a covered loss only when all other applicable insurance has paid its limits. For example the “Other Insurance” clauses of the Personal Auto Policy provide that the policy’s coverage is excess under certain circumstances.
EXCLUSIONS
Exclusions are contract provisions that deny coverage for certain perils, persons, properties, or locations. Exclusions are used to define what is not covered by a policy.
EXPIRATION DATE
The date an insurance contract terminates. Termination time is usually 12:01 a.m.
EXPOSURE
Calculated projection of the possibility of loss.
FINANCIAL RESPONSIBILITY LAW
A statute that requires all motorists to furnish evidence of ability to pay for damages, either before or after an accident.
INSURABLE INTEREST
Any interest in a subject of insurance, or any legal relation to it, of such a nature that certain circumstances could cause a monetary loss to the insured. For example, a Bank has an insurable interest in a creditor, a spouse always has an insurable interest in the other spouse, child or sibling.
INSURANCE
Coverage by contract where for a consideration (premium) one party (company) undertakes to assume, to a specific extent, losses suffered by another (insured).
INSURANCE POLICY
The printed document issued to the insured by the company stating the terms of the insurance contract. It is a written contract of insurance between an insurance company and the policyholder.
LIABILITY
In general terms, liability is an obligation to pay damages.
LIABILITY INSURANCE
Insurance that pays on behalf of an insured for losses arising our of his/her responsibility to others imposed by law or assumed by contract.
LIMIT
Limit means the limit of the liability that applies to the occurrence. This is the maximum amount of money available for payment of a covered loss.
LOSS
(1) The amount of reduction in value of an insured’s property caused by an insured peril, (2) the amount that is paid by the insurance company on behalf of an insured, (3) the amount of an insurance claim.
MEDICAL PAYMENTS
In respect to Personal Automobile Policies, insurance coverage that pays medical or funeral expenses of an insured or covered person, without regard to legal liability.
NAMED INSURED(S)
A person or business which is(are) specifically designated by name as the insured(s) in an insurance policy. This is opposed to those who are or may be covered by insurance, even though they are not actually named in the insurance. As an example, in liability provisions, a definition of “insured” also includes interests according to their status or in particular situations or circumstances.
NEGLIGENCE
Failure to use that degree of care which an ordinary person of reasonable prudence (prudent person) would use under the given or similar circumstances. A person may be negligent by acts of omission and/or commission.
NO FAULT INSURANCE
Automobile insurance that pays for loss without regard to legal liability or fault.
NON-OWNED AUTO
A private passenger auto, pickup, van or trailer in the custody of or being operated by the named insured or a family member, but not owned by or furnished or available for the regular use of the named insured of family members. Loss of damage to non-owned autos is covered under Part D of the Personal Automobile Policy.
PERSONAL INJURY
Personal Injury means injury arising out of one or more of the following offenses: false arrest, false imprisonment wrongful detention, libel, slander, defamation, invasion of privacy, wrongful eviction, or wrongful entry. Personal injury coverage is often included as a part of homeowner liability coverage. Personal injury is also subject to certain exclusions and limitations.
POLICY TERMS
Policy terms are all provisions, limitations, exclusions, conditions and definitions used in a particular policy. Together, the policy terms define exactly what claims are covered by a specific policy.
PREMIUM
The price for insurance protection for a specific limit of liability and a specific exposure for a stated period of time.
PROOF OF LOSS
A form signed by the insured which states in writing the nature of the claim and the dollar amount of the loss being claimed. A proof of loss form is usually required before claims are paid by an insurance company.
PROPERTY DAMAGE
Property Damage means physical injury to or destruction of tangible property, including loss of its use. Again, both homeowner and auto policies usually cover property damage liability, subject to certain restrictions.
RENEWAL
Renewal of an insurance policy is accomplished by either issuing a new policy, or renewal receipt or certificate, to take effect upon the expiration of the old policy,
RENTAL CAR COVERAGE
Automobile insurance that provides reimbursement for reasonable transportation expenses incurred due to the loss of use of an automobile.
REPLACEMENT COST
The cost or replacing property without deduction for depreciation.
SCHEDULE
The names of those individuals covered under one insurance policy.
SETTLEMENT
Agreement between the insurer and the insured or other injured party as to the nature of the claim and the amount of the loss.
STATED AMOUNT COVERAGE
An agreement by an insurance company to pay a specified amount of money to or on behalf of the insured of the insured upon the occurrence of a defined loss.
SUBROGATION
Subrogation may be defined as: “substitution”, whereby an insurance company seeks from a liable third party recovery of the amount paid to the insured.
TOWING AND LABOR COVERAGE
Automobile coverage that provides reimbursement for reasonable towing and labor costs incurred because of disablement of an automobile.
TRANSPORTATION EXPENSES
Expenses paid by a Personal Auto Policy so that the insured can procure a substitute method of transportation because of the total theft of the insured’s covered auto.
UNDERINSURED MOTORISTS COVERAGE
Insurance that pays for bodily injury (in some states, they will also pay for property damage) resulting from an accident involving an unidentified hit-and-run vehicle; a vehicle to which no liability insurance or adequate limits of insurance apply; or a vehicle whose insurer denied coverage or becomes insolvent.
VOLCANIC EFFUSION
Volcanic effusion means wind or airborne shock waves, ash, dust, particulate matter, or lava flow discharged or vented from a volcano. Volcanic effusion is generally covered under a homeowner policy subject to some specific limitations.
VOLCANIC ERUPTION
Volcanic eruption means the land shock waves, tremors, earthquakes, landslides, mud flows, tidal waves, flooding, earth sinking, earth rising, shifting, expanding, or contracting which occurs before, during, or after the eruption or explosion of a volcano. Volcanic eruption is not covered by most homeowner policies. In many areas, coverage for volcanic blast, shock wave, lava flow, and volcanic fallout may be purchased for an additional premium.