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Glossary

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

A 

Actual Cash Value

Fair market value of an item (including your home) at the time it was damaged, stolen or destroyed. After a loss, your company will review the condition of your item. Based on the pre-accident condition of the item, a claim adjuster uses that value when settling your claim.

Adjuster

An employee or independent contractor representing the insurance company who investigates and settles claims.

Appraisal

A professional and written estimation of the value of property.

Assigned Risk Plan

State-managed auto insurance plan for individuals who cannot otherwise purchase insurance because of a variety of reasons.Assigned risk plans also exist for health insurance.

B

Bodily Injury Liability Coverage

A coverage that pays for the injury or the death of people involved in an accident for which the insured is legally liable. It does not cover bodily injury to the insured driver. Covered losses generally include medical expenses, pain and suffering, and lost income. Legal defense costs can be covered if you are sued as a result of the accident.

C

Claim

A report of a loss to an insurance company. A claim may be filed online, by phone or in writing.

Collateral

Asset pledged to a lender until a loan is repaid. If the borrower defaults, the lender has the legal right to seize the collateral and sell it to pay off the loan. Comprehensive and Collision coverages are required by lenders when a car is the collateral for a loan.

Collision Coverage

A coverage that helps pay for damages to your vehicle caused by a physical collision with another vehicle, object or a rollover.

Combined Single Limit (CSL)

Policies have a single amount for liability limits for property damage and bodily injury.

Comprehensive Coverage

A coverage that helps pay for accidental damage to your vehicle caused by circumstances other than a collision, such as fire, theft, hail, or contact with a live animal.

Comprehensive Loss Underwriting Exchange (CLUE)

Claims history database created by ChoicePoint. Insurance companies can report claims to, as well as access your claims information. A CLUE report is usually ordered when writing a new policy. The report includes information such as date of loss, type of loss and amounts paid, and vehicle description.

D

Deductible

An amount specified in the insurance policy for how much the policyholder must pay before insurance covers the claim. If you have a higher deductible, you will usually have a lower premium, and vice versa.

Depreciation

A decrease in value of property over a period of time or use of general wear and tear.

E

Endorsement

A written agreement attached to an insurance policy that changes the terms/and or coverage of a policy. Once attached, the endorsement takes precedence over the original terms of the policy. Also known as a coverage form.

Exclusions

Items that are specifically denied coverage under the terms of an insurance policy. As an example Homeowner’s policies exclude flood.

I

Indemnification

The compensation to a victim of a covered loss, in whole or in part, by payment, repair or replacement.

Independent Agent

An insurance professional who represents different insurance companies, is not an employee of any one of those companies, and earns commissions from policies sold.

L

Lapse

Termination of a policy at the end of its contract term, often resulting from failure to pay required renewal premium.

Liability Insurance

A coverage that helps pay your legal liability for bodily injury, property damage or financial losses caused to others.

M

Medical Payments Coverage

A coverage that helps pay the reasonable medical expenses arising from a covered auto accident, to you and your passengers, regardless of who is at fault.

Motor Vehicle Report (MVR)

Record of moving violations and license status.

P

Policy

The contract between an insured and the insurance company that dictates the terms of coverage.

Policy Period

Time period during which an insurance policy is in force. Most property insurance policies periods begin and end at 12:01 am in the local time zone.

Premium

The payment required for an insurance policy to remain in force.

Property Damage Liability Coverage

A coverage that helps pay for losses, up to the policy limit, that result when you damage or destroy someone else's personal property. This is required coverage in most states.

Q

Quote

An estimate of premium for a particular insurance policy based on driver and vehicle information, selected coverages, and assumed discounts.

R

Replacement Cost

The cost of replacing or repairing lost or damaged property without allowing for depreciation in value or considering the market value.

S

Split Limit

Split limit policies have three separate amounts for liability limits: one for bodily injury per person, one for bodily injury per accident, and one for property damage per accident, usually in that order.

Subrogation

After paying the insured, the process by which an insurer recovers payment from a third party, who is at least partially responsible for the loss.

Surcharge

An increase in your insurance premium due to a claim or a moving violation.

U

Umbrella Liability

A liability insurance policy that provides additional protection for car, home, renters or condo insurance policies.

Uninsured

A coverage that helps pay for injuries to you and others when involved in an accident with an uninsured driver.

Underinsured Motorist Coverage

Coverage when a driver does not have enough insurance to cover the loss. UM/UIM is not a required coverage in every state, but it is highly recommended.

V

Vehicle Identification Number (VIN)

A series of 17 numbers and letters that is used to identify the year, make and model of a vehicle. The VIN can usually be found on your vehicle registration, your title or on the dashboard of your car on the driver's side.