Glossary of Terms

Actual Cash Value
The value of your property when it is damaged or destroyed minus depreciation.

Additional Insured
A person, other than the named insured, who is protected by the terms of the policy. Usually a specified individual such as a spouse or a member of the insured's family but sometimes, as in automobile insurance, any person, provided that person is driving the insured vehicle with the insured's permission.

Agent
The state-licensed professional who represents the insurance company in the sale and servicing of insurance. The direct link between the insurance company and the policyholder.

Aggregate
The maximum amount an insured is able to collect under a single policy regardless of the number of claims, injuries, accidents, or number of insureds.

Agreed Amount
The insurance company accepts or "agrees" to the level of protection carried for a given property, thereby eliminating the possibility of a coinsurance penalty.

Blanket
Single limit for all buildings and business personal property insured under a policy.

Broad Form
A policy written on a broad form basis covers each and every loss except those specifically excluded.

Business Personal Property
All property - furniture, appliances, equipment, etc. - owned by the insured and used in the insured's business.

Claims Made
A policy written on a claims made basis covers any claim reported during the policy term provided the incident took place on or after the policy's retroactive date.

Coinsurance Penalty
Failure to carry sufficient insurance on property may result in a reduced payment should a loss occur.

Collision
A type of physical damage insurance that covers loss due to the insured object striking another object. Collision may also include upset of the insured object.

Comprehensive Basis
A policy written on a comprehensive basis consists of multiple policies combined to provide complete coverage.

Covered Loss
An event deemed to be covered through an investigation of the claim by a claim representative.

Declarations
Shows who is insured, what property is covered, when and where coverage is effective, and how much coverage applies.

Deductible
The amount of money you pay before the insurance company begins paying on a loss. The higher your deductible, the lower your insurance premium.

Depreciation
A decrease or loss in value because of wear, age, or other causes.

Endorsement
A form added to the policy that changes the policy coverage in some way. An endorsement may restrict or broaden the coverage.

Exclusions
Property, perils, persons, or situations that are not covered by the policy.
Hazard - A hazard is a condition that increases the probability of a loss occurring, such as faulty wiring, potholes or leaky plumbing; hazards lead to perils.

Insurable Interest
The extent to which an individual, entity or organization has an interest in a property or project that is protected by insurance.

Liability
A person's responsibilities to others imposed by law or contract.

Life Insurance, Term
A plan of insurance which covers the insured for only a certain period of time and not necessarily for his or her entire life. The policy pays a death benefit only if the insured dies during the term.

Life Insurance, Universal
A flexible premium life insurance policy under which the policyholder may change the death benefit from time to time and vary the amount or timing of premium payments.

Life Insurance, Variable
Life insurance under which the benefits relate to the value of assets behind the contract at the time payment is due.

Life Insurance, Whole
A life insurance policy that allows benefits to be payable to a beneficiary at the death of the insured whenever that occurs. Premiums may be payable for a specified number of years (limited payment life) or for life (straight life).

Limit
The maximum dollar amount of coverage an insurer will pay for a particular loss, or for losses incurred during the policy term.

Loss Payee
A party besides you (such as a lending institution) that has an insurable interest in the property.

No Fault
A no fault policy provides coverage to the insured regardless of who is responsible for the loss.

Occurrence
A policy written on an occurrence made basis covers any event, within policy limits, that occurred while the policy was in force regardless of when the claim is reported.

Peril
A peril is something that may cause harm such as fire, flood or wind.

Premium
The amount of money you pay for the insurance coverages provided.

Property Damage Liability Insurance
Property damage liability insurance is coverage in the event that a negligent act or omission of an insured results in damage to, or destruction of, another's property. In some cases, bodily injury liability may be covered under such a policy.

Reinsurer
An insurance company that assumes liability for some part of a policy written by another insurance company. Using reinsurance helps spread out risk and limits the possible maximum loss faced by the company that wrote the original policy.

Replacement Cost Basis
In the event of a loss, the insurer pays the amount required to replace the damaged property with an item of similar quality. Depreciation is not included.

Rider
A document which amends an insurance policy or certificate. It may increase or decrease benefits, waive the condition of coverage or in any other way amend the original contract.

Umbrella Liability Insurance
Umbrella Liability Insurance is a form of excess insurance that provide coverage above the stated limits of existing liability policies. An umbrella policy differs from standard excess policy, in that it drops down to accommodate policy limits that may differ among the underlying policies.