Glossary

Insurance Glossary

Glossary brought to you by Georgia Insurance Information Service (GIIS)

ACTUAL CASH VALUE (ACV): The cost of replacing or restoring property at prices prevailing at the time and place of the loss, less depreciation, however caused. Another definition: the sum of money required to replace property less depreciation, which includes physical wear and tear, and obsolescence.

ADDITIONAL EXTENDED COVERAGE: A second endorsement on the fire policy (fire and lightning with extended coverage) which insures the dwelling and/or contents against water damage from plumbing, etc.; boiler explosion; glass breakage; and damage by ice and snow, freezing, fall of trees, collapse, vandalism, vehicles owned by insured or tenants and landslide.

ADDITIONAL INSURED: One who is protected by an insurance policy other than the named insured. Examples: In automobile insurance, one who drives the insured’s car with his consent ordinarily is protected. In property insurance, this might be a co-owner, mortgagee, or lien holder.

ADJUSTER: A person who investigates and settles losses for an insurance carrier or the insured.

APPRAISAL: Determination of the value of property or the extent of damage by impartial experts. Many property insurance policies provide for "appraisals" where the company and the insured cannot agree on the amount or the extent of a loss.

ASSETS: All of the property owned by a carrier.

ASSIGNEE: One to whom the legal ownership of a policy or a limited interest therein is transferred

BINDER: A written or oral contract issued temporarily to place insurance in force when it is not possible to issue a new policy or endorse the existing policy immediately. A binder is subject to the premium and all the terms of the policy to be issued.

BODILY INJURY BENEFIT COVERAGE: This automobile coverage is designed to protect the insured and any passengers in this car against loss by reason of bodily injury or death caused by the owner or operator of an uninsured automobile (or a "hit-and-run"). Also called uninsured motorist coverage.

BODILY INJURY COVERAGE: This coverage, often called "public liability insurance," protects an insured against legal liability for injury to the person of another arising from an accident.

CANCELLABLE POLICY: A policy which may be cancelled by the company at any time by giving advance notice to the insured and refunding any unearned premium.

CANCELLATION: The discontinuance of an insurance policy before its normal expiration date.

CARRIER: The insurance company or the one who agrees to pay the losses. The carrier may be organized as a company, either stock, mutual, or reciprocal, or as an association of underwriters such as Progressive and Lloyds.

CASUALTY INSURANCE: A general class of insurance covering liability resulting from accidents and some types of property insurance. It includes among other coverages: automobile, workers compensation, employers liability, general liability, plate glass, theft and personal liability. It excludes life, fire and marine insurance, but, as ordinarily used, includes health insurance and fidelity and surety bonds.

CLAIM: A request for payment of a loss which may come under the terms of an insurance contract. There are two types of claims. First party claim is one made by the policyholder in which the policyholder reports the claim directly to his company. A third party claim is one in which a person makes a claim against a policyholder of another company and payment, if any, is made by that company.

CLAIMANT: One who makes a claim.

CONTINGENT BENEFICIARY: A beneficiary whose right to receive depends upon the occurrence of a certain contingency – for example, the right to receive certain benefits only in the event that another named beneficiary dies prior to the time of payment.

COVERAGES: Automobile --

Bodily Injury Liability: An agreement by a company to protect an insured against loss from legal liability for injury to another person arising from an automobile accident. This is usually referred to as "third party coverage."Collision or Upset (usually called collision – first party coverage: A form of insurance protecting the insured against loss resulting from any damage to his car caused by collision with any object, or upset, whether it was the insured’s fault or not (other than his willful act). This does not cover other people’s property.

Comprehensive: An agreement to protect an insured against loss resulting from damage to his automobile, exclusive of loss by collision or upset. Broad coverage is provided and includes protection from such hazards as fire, theft, glass damage, wind hail and malicious mischief (first party coverage).

Medical Payments: An insurance coverage under which an insurance company agrees to pay medical, hospital, and the expense of funeral services resulting from an automobile accident, regardless of the liability of the insured (first party coverage).

Property Damage Liability: An agreement by an insurance company to protect an insured against loss from legal liability for damage by his automobile to the property of another. The term includes damage to other automobiles, buildings, utility poles and other types of real and personal property (third party coverage).Uninsured Motorist

Coverage: Protects the insured against financial loss resulting from bodily injury carelessly inflicted by an uninsured motorist, including a hit and run driver, who is legally liable. Bodily Injury Benefit.

COVERAGES: Fire --

Additional Living Expense: The purpose of this coverage is to pay for increased expense of living while the insured’s residence is being rebuilt or repaired after damage from an insured peril. Examples are the extra cost of housing the insured’s family in a hotel, dining in restaurants, etc.

Broad Form: Can be written on dwelling and contents. Fire forms include Extended Coverage perils, plus such additional perils as falling objects, weight of ice, snow or sleet, collapse of buildings, accidental discharge, leakage or overflow of water or steam from plumbing, heating, or air conditioning systems, sudden and accidental tearing asunder, burning, bulging of appliances for heating water, freezing of plumbing, heating or air conditioning systems, and domestic appliances, glass breakage, and breakage of building glass.

Builder’s Risk Insurance: Insurance against loss resulting from damage to buildings and to materials incidental to construction, including machinery and equipment, while the buildings are under construction.

Extended Coverage: An extension of the fire policy to cover the additional perils of windstorm, hail, explosion, or riot, attending a strike, civil commotion, aircraft, vehicle and smoke.

Homeowners Policy: A policy in which Fire and extended or Broad coverage for dwelling and contents, residents’ theft insurance, additional living expense, and personal liability insurance are combined.Rents or Rental Value: Insurance against loss of the rental value of a property; protects against loss of rents resulting from an insured peril.

Replacement Cost: Insurance under which the amount payable is the current replacement cost of the property new, rather than the depreciated value. Applies only to the building items and covers loss from all insured perils.

DEDUCTIBLE: A provision in an insurance contract stating that the insurer will pay only that amount of any loss that is in excess of a specified amount. The specified amount if the deductible.

DEPRECIATION: A decrease in the value of property over a period of time due to wear and tear or obsolescence. Depreciation is used to determine the actual cash value of property at time of loss. (See ACTUAL CASH VALUE.)

DISABILITY: Disability which prevents a person from performing (a) any of his occupational duties, or (b) any duties of any occupation, or ( c) any duties for which he is reasonably qualified. Definitions vary within policies.

EXPOSURE: This term in the insurance field may have several meanings: (1) possibility of loss; (2) a loss potential as measured by type of construction, area or values; (3) a possibility of a loss being communicated to an insurance risk from its surroundings.

FULL COVERAGE: Insurance which covers all losses, with no deductions, up to the amount of the insurance. (See DEDUCTIBLE COLLISION COVERAGE.)

INSURED: A person covered by an insurance policy. In life insurance, the person upon whose life an insurance policy is issued.

INSURED NAMED: The person with whom an insurance contract is made, and who is named specifically for protection against loss under the terms of the policy. Any person or corporation, or any member thereof, such as the spouse of the specifically mentioned as named insured in a policy, as distinguished from others who, though unnamed, are protected under some circumstances.

LAPSE: The termination or discontinuance of a policy due to non-payment of a premium. the period during which premiums are paid. The premium remains the same from year to year, and is more than the actual cost of protection in the earlier years of the policy and less than the actual cost in the later years. The excess paid in the early years builds up the reserve.

LICENSE – AGENT OR BROKER: Certification, issued by the department of insurance, that an individual is qualified to solicit insurance applications for the period covered.

LIFE INSURANCE: A contract whereby, for a stipulated premium, the insuring company agrees to pay the insured, or his beneficiary, a fixed sum or its equivalent in income, upon the happening of death or some other specified event.

NEGLIGENCE: The failure to use the care that a reasonable and prudent person would have used under the same or similar circumstances.

OCCUPANCY: This refers to the use of property. A home, for example, may have a real estate office in it. This dwelling would then have a "business occupancy." Occupancy plays a very important part in computing rates and determining the acceptance or rejection of risks.

PERSONAL PROPERTY: This type of property is usually movable and easily transportable. On the other hand, real property generally is considered to be immovable such as land and things affixed to it. A rule of thumb definition for personal property is "everything other than real property."

PROPERTY DAMAGE COVERAGE: An agreement by an insurance carrier to protect an insured against legal liability for damage by his automobile to the property of another.

REPLACEMENT COST: The cost to repair or replace property at construction costs prevailing at time of loss; the cost to repair or rebuild property without considering depreciation. (See ACTUAL CASH VALUE.)

RIDER: Endorsement. Special provision added to an original policy contract.

TERM INSURANCE: Life or health insurance protection during a limited number of years but expiring without value if the insured survives the stated period.TOTAL

WORKER’S COMPENSATION: A system (established under state law) which provides payments to employees who are injured in the course of employment, irrespective of fault.