Glossary of Terms:

 

Accident
A sudden, unintended, unforeseen and unexpected event. To be insurable, a loss must be accidental with respect to acts of the insured.

Act of God
An unexplained happening contributed to a superior or natural force which is unpredictable and without human intervention.

Actual Cash Value
Under some contracts the amount of loss payables is determined by subtracting an amount for depreciation from the replacement cost (new) of the damaged or destroyed property. (ACV = RC - D).

Adjuster
Individual employed by a properly and casualty insurance company or an individual to settle on its behalf claims brought by insured. The adjuster evaluates the merits of each claim and makes recommendations to the insurance company.

Agent
An insurance agent is a person who acts on behalf of that insurance company with whom he or she is engaged. They may be a "Captive" or "Exclusive" agent which means they represent only one company, or they may be "Independent" agent which means they can represent more than one company.

Aggregate Limit
This is the total amount an insurer will pay for all covered losses during a specific period for a particular coverage.

All Risk
The term "All Risk" means there is coverage for all perils except those specifically excluded.

Binder
A contract for temporary insurance issued either in writing or orally pending issuance of a policy of insurance.

Broker
A person who acts or aids in soliciting, negotiating and procuring insurance on behalf of an insured. However, in the collection of insurance premiums the broker is deemed to be an agent for the company.

Builders Risk Insurance
Insurance designed to cover buildings in the course of construction.

Claim
Request by an insured for identification by an insurance company for loss incurred from an insured peril.

Concealment
This is the failure of an applicant for an insurance policy to reveal facts that are known. This can void the insurance contract whether the concealment was intentional or unintentional.

Conditions
A provision which sets forth the rights, duties and responsibilities of the parties to an insurance contract. They may be found anywhere in the policy.

Coverage
Protection under an insurance policy. In property insurance, coverage lists perils insured against properties covered, locations covered, individuals insured, and the limits of indemnification. In life insurance, living and death benefits.

Declarations
Section of insurance contract which sets forth information that identifies the parties to the contract, what is covered, where, when, and at what limits, as well as rates and premiums.

Deductible
A deductible serves to reduce the policy premium because the insured absorbs the small losses.

Effective Date
The date that coverage starts under an insurance contract.

Endorsement
An attachment to an insurance policy which is used to clarify, extend, or restrict coverage.

Exclusion
This is an limitation or restriction of the coverage granted by the insuring agreement of an insurance contract.

Flat Cancellation
This type of cancellation means that the policy was cancelled without charge, by agreement.

Flat Rate
An insurance rate which is used without any requirement that the coverage be in relationship to value.

Floater
This form provides coverage for those goods for which it is difficult to establish s specific location.

Fraud
This involves intentional deception which results in injury to another party.

Gross Premium
Total amount paid by insured.

Inception Date
The date that an insurance contract becomes effective.

Insurable Interest
A person is deemed to have an insurable interest in property when he has a lawful, substantial, economic interest in the preservation of the property. To collect under an insurance policy, an insured must have at the time of loss or damage an insurable interest in the property.

Insurance
A social device for reducing economic risk whereby many members of a group collect funds to pay the losses of a few of the members of the group.

Insured
The individual or organization for whom insurance protection is provided by an insurance policy.

Insurer
Company offering protection through the sale of an insurance policy to an insured.

Liability
Legal obligation to perform or not perform specified acts(s).

Liability Insurance
Provides protection from lawsuits of others.

Minimum Premium
The minimum amount an issuer will accept to issue a policy even if the gross premium is a lesser amount.

Named Insured
The individual(s) or organization(s) who the declaration section of an insurance policy specifically names as the insured.

Negligence
A tort, a civil wrong not based upon a contract. It is the failure to act as a reasonable and prudent person would have done in similar circumstances, i.e. the careless invasion by one party of the personal or property rights of another party.

Occurrence
A situation which exists over a period of time as opposed to an accident which can be fixed in time. It's an accident ehich can be the result of a repeated and continuous exposure to the same general harmful conditions.

Policy Limit
The policy limit is the dollar amount of coverage shown in the contract.

Policy Period
This is the period of time a policy is in effect.

Premium
The premium is the money consideration which the insured pays for the undertaking of the insurance company.

Proof of Loss
A written document which must be filled by an insured when a loss occurs under a property insurance policy.

Pro-Rata Cancellation
When a policy is cancelled and there is no penalty charged against the premium to be returned.

Reinstatement
Restoration of a policy that has lapsed because of non-payment of premium after the grace period has expired.

Short Rate Cancellation
This is a cancellation with a penalty. Generally when the insured cancels, it is on a short-rate basis. (Exceptions: insured going into the military or when insured cancels and reinsures in the same company).

Termination Date
The date that coverage expires on an insurance contract.