Insurance

Insurance terms

1. 2 to 4 Family Residence A residential building (excluding hotels and motels with normal room rentals for less than 6 months' duration) containing no more than four dwelling units.
2. Accelerated Death Benefits Benefits available in some life insurance policies prior to death.
3. Accidental Death Benefit A provision added to a life insurance policy for payment of an additional benefit in case of death as a result of an accident.
4. Act The National Flood Insurance Act of 1968 and any amendments to it.
5. Actual cash value An amount equivalent to the replacement cost of lost or damaged property at the time of the loss, less depreciation.
6. Actual Cash Value (ACV) (ACV) The value of your property, based on the current cost to replace it minus depreciation.
7. Additional Living Expenses Pays expenses over and above your normal living costs (motel rooms, restaurant meals, and laundry service) while your home is being repaired or rebuilt…
8. Additional living expenses (ALE) (ALE) Reimburses the policyholder for the cost of temporary housing, food, and other essential living expenses, if the home is damaged by a covered peril that…
9. Adjuster A person who investigates and settles losses for an insurance carrier.
10. Aftermarket Crash Part A non-original equipment manufacturer (OEM) replacement part, either new or used, for any of the non-mechanical parts that generally constitute the…
11. Agency A firm that solicits insurance for one or more insurance carriers. It also may issue policies and adjust losses.
12. Agent Agent means any individual, other than a broker-dealer, who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales…
13. Annuity A life insurance contract sold by insurance companies, brokers, and other financial institutions. It is usually sold as a retirement investment.
14. Application Under the Equal Credit Opportunity Act (ECOA), an oral or written request for an extension of credit that is made in accordance with the procedures…
15. Appraisal The act of evaluating and setting the value of a specific piece of personal or real property.
16. Appraiser The person who evaluates the damage caused by an accident or other covered loss and determines the amount to be paid under the policy terms.
17. Arbitration The process in which a third-party arbiter examines facts presented by both you and the insurance company when you disagree about a settlement offer.
18. Assigned Risk Plan The North Dakota Automobile Insurance Plan is a state-supervised insurance plan available to persons who are unable to obtain such insurance coverage in…
19. Auto Replacement Coverage A supplemental auto insurance coverage that guarantees your car will be completely repaired or replaced, even if the costs exceed its depreciated value.
20. Automatic Premium Loan A provision in a life insurance policy that any premium not paid by the end of the grace period (usually 31 days) will be automatically paid by a policy…
21. Base Flood The flood having a 1% chance of being equaled or exceeded in any given year.
22. Base Flood Elevation (BFE) (BFE) The elevation shown on the Flood Insurance Rate Map (FIRM) for Zones AE, AH, A1-A30, AR, AR/A, AR/AE, AR/A1-A30, AR/AH, AR/AO, V1-V30, and VE that…
23. Basement Any area of the building, including any sunken room or sunken portion of a room, having its floor below ground level (subgrade) on all sides.
24. Benchmark rate(s) The rates set annually by the Commissioner of Insurance that rate-regulated insurance companies use to reference their rates.
25. Beneficiary A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract.
26. Betterment A condition relating to original equipment, or older parts, on your automobile, when having been damaged in an accident may only be replaced with new…
27. Binder A temporary or preliminary agreement, in effect for less than 60 days, that provides coverage until a policy can be written or delivered.
28. Bodily injury (BI) (BI) Physical injury to a person.
29. Bodily Injury Liability If you injure someone in a car accident, this coverage pays his/her medical and rehabilitation expenses and any damages for which you are found liable.
30. Bodily Injury Liability Coverage Pays for another person's bodily injury or death in an accident that you may be found legally liable to pay.
31. Breakaway wall A wall that is not part of the structural support of the building and is intended through its design and construction to collapse under specific lateral…
32. Broker An agent who handles the public's orders to buy and sell securities, commodities or other property. A commission is generally charged for this service.
33. Builders Risk Coverage for a home under construction. Claim payments are based on the percentage completed at time of loss.
34. Cancellation Termination of a policy before its normal expiration date.
35. Cash Value (Cash Surrender Value) The amount available in cash upon surrender of a policy before it becomes payable upon death or maturity.
36. Claim Your request for the insurance company to pay you an amount under the terms of your policy.
37. Claimant A person who makes an insurance claim.
38. Claims Adjuster A person an insurance company hires to settle claims. The adjuster can be a company employee or an independent party under contract with the company.
39. Coinsurance Clause An agreement with the insurance company in which you agree to carry insurance on your property in an amount equal to a certain percentage of its actual…
40. Collision This benefit pays to repair damage to your car as a result of an accident. Most banks or lenders require you to buy this coverage to receive a car loan.
41. Collision Coverage Pays for damage to your vehicle when it collides with another vehicle or object or if it overturns.
42. Commission A portion of the policy premium that is paid to an insurance producer (agent) by the insurance company as compensation for the producer’s work.
43. Community A political entity that has the authority to adopt and enforce floodplain ordinances for the area under its jurisdiction.
44. Community Rating System (CRS) (CRS) A program developed by the FEMA Mitigation Division to provide incentives for those communities in the National Flood Insurance Program that have gone…
45. Company profile A summary of information about an insurance company, including its license status, financial data, complaint history, and a history of regulatory action.
46. Comparative fault A method of attributing fault to each party who contributed to causing an accident.
47. Comparative Negligence Law An Illinois law that sets forth how negligence for an accident is determined. Under these rules, you can collect from an at-fault driver only if you are…
48. Complaint A written communication primarily expressing a grievance against an insurance company or agent.
49. Complaint history Information collected or maintained by the Texas Department of Insurance relating to the number of complaints received against a particular insurer, agent…
50. Comprehensive Coverage Coverage that pays for damage to or the loss of your vehicle from causes other than collision (example: hail, vandalism, flood, fire and theft, etc.
51. Comprehensive physical damage coverage Optional insurance that pays for damage to your auto caused by things other than collision or rolling the car over such as fire, theft, vandalism, flood…
52. Conditions Part of an insurance policy that states your obligations and those of your insurance company.
53. Condominium That form of ownership of real property in which each unit owner has an undivided interest in common elements.
54. Contract In most cases, the term "contract" refers to an insurance policy. A policy is considered to be a contract between the insurance company and the…
55. Convertible Term Insurance Term insurance that offers the policyholder the option of exchanging it for a permanent plan of insurance without evidence of insurability.
56. Cost Index A way to compare the costs of similar plans of life insurance. A policy with a smaller index number is generally a better buy than a comparable policy…
57. Cost-Of-Living Rider An option that permits the policyholder to purchase increasing term insurance coverage.
58. Covered Expenses The losses or conditions that the policy will pay for.
59. Credit Score A number, roughly between 300 and 800, that measures an individual's credit worthiness. The most well-known type of credit score is the FICO® score.
60. Current Assumption Whole Life A variation of universal life insurance, this product involves fixed premiums and fixed death benefits. Its cash value growth depends on market conditions.
61. Custom/Non-factory Equipment Coverage Covers customized features such as those found on conversion vans, as well as non-factory items such as compact disc players, cellular phones or CB radios.
62. Debris removal Coverage for the cost of removing debris resulting from damage caused by an insured peril.
63. Declarations (DEC) Page (DEC) Usually the first page of an insurance policy, it contains the full legal name of your insurance company, your name and address, the policy number…
64. Declarations page The page your company sends as part of the policy which shows the terms, coverage limits, premium and endorsements.
65. Declarations Page ("Dec Page") A page your company sends you to show your premium and coverage. Some insurance companies only send a new declarations page at renewal unless there’s a…
66. Deductible The dollar amount you must pay out-of-pocket for each claim before the insurance company begins paying.
67. Depreciation The act of lowering an item´s value due to use or wear and tear.
68. Dividend See Dividends
69. Double Indemnity (See Accidental Death Benefit.)
70. Dwelling An insured's home.
71. Earned premium The portion of a policy premium that has been used to actually buy coverage, or that the insurance company has "earned.
72. Earthquake Insurance A type of catastrophic coverage available for an additional premium to repair or replace your property/personal belongings when damaged by an earthquake.
73. Effective Date The date on which an insurance policy becomes effective.
74. Elevated Building A building that has no basement and has its lowest elevated floor raised above the ground level by foundation walls, shear walls, posts, piers, pilings…
75. Elevation Certificate A certificate that verifies the elevation data of a structure on a given property relative to the ground level.
76. Emergency Program The initial phase of a community's participation in the National Flood Insurance Program.
77. Enclosure That portion of an elevated building below the lowest elevated floor that is either partially or fully shut-in by rigid walls.
78. Endorsement Amendment to the policy used to add, change, or delete coverage. Also referred to as a “rider.”
79. Escrow A financial instrument held by a third party on behalf of the other two parties in a transaction.
80. Exclusion A contractual provision in an insurance policy that denies or restricts coverage for certain perils, persons, property or locations.
81. Exclusions Specific situations or circumstances listed in your policy describing when benefits will not be paid.
82. Expiration date The date on which an insurance policy expires.
83. Extraordinary Medical Benefits This coverage pays when medical and rehabilitation expenses exceed $100,000. It provides a maximum of $1 million of coverage.
84. Face Amount The amount stated on the face of the policy that will be paid in case of death or at maturity.
85. Federal Emergency Management Agency (FEMA) (FEMA) Federal agency responsible for the emergency evaluation and response to all disasters, natural and man-made.
86. Federal Policy Fee A flat charge that the policyholder must pay on each new or renewal policy to defray certain administrative expenses incurred in carrying out the National…
87. File and Use Residential property rates utilize a system called “file and use.” Under this system, insurance companies file their rates with the Texas Department…
88. First Party The policyholder (insured) in an insurance contract.
89. First-party claim A claim filed by an insured against his or her own insurance policy.
90. Floater Additional coverage for personal property such as jewelry, artwork, or antiques not otherwise included in the homeowners policy, or included for a nominal…
91. Flood A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least…
92. Flood Disaster Protection Act (FDPA) of 1973 (FDPA) Made the purchase of flood insurance mandatory for the protection of property located in Special Flood Hazard Areas.
93. Flood Hazard Boundary Map (FHBM) (FHBM) Official map of a community issued by the Federal Insurance Administrator, where the boundaries of the flood, mudflow, and related erosion areas having…
94. Flood Insurance Flood insurance protects against water from an overflowing river or a hurricane's tidal surge and also covers damage from water that builds up during…
95. Flood Insurance Rate Map (FIRM) (FIRM) Official map of a community on which the Mitigation Division Administrator has delineated both the special hazard areas and the risk premium zones…
96. Flood Zone (Zone) A geographical area shown on a Flood Hazard Boundary Map or a Flood Insurance Rate Map that reflects the severity or type of flooding in the area.
97. Floodplain Any land area susceptible to being inundated by floodwaters from any source.
98. Floodplain Management The operation of an overall program of corrective and preventive measures for reducing flood damage, including but not limited to, emergency preparedness…
99. Full Replacement Policy A homeowner's policy that pays the full replacement cost, up to the policy maximum, to repair or restore damaged property.
100. Full Tort With a Full Tort selection, you retain unrestricted rights to bring suit against the negligent party.