Insurance Terms

Act of God: An accident or event that is the result of natural causes, without human intervention or agency and one that could not have been prevented by reasonable foresight or care (e.g. floods, lightning, earthquakes).

Actual Cash Value: The amount of money required after a loss to replace or restore the property destroyed, less an allowance for wear and tear or depreciation for prior use.

All Risk: A form of insurance contract that covers loss caused by any or all perils except those specifically excluded in the policy.

Basic Policy Limits: Generally the minimum amounts of liability to be covered by insurance. It is customary to quote premiums in terms of these minimum amounts.

Binder: An agreement to provide immediate insurance that is issued during the period before the insurance contract is prepared; can be written or oral.

Burglary: Breaking and entering into another's premises, with felonious intent and visible signs of forced entry while the property is vacant.

Cancellation: Stopping coverage during the policy period.

Casualty Insurance: Insurance that primarily is concerned with legal liability of the insured for injury to persons or damage to property of others. It also encompasses plate glass, crime, power plant and aviation, among others.

Certificate of Insurance: Evidence of insurance issued by a company to an interested party other than the named insured.

Claim: A demand by a person or business that is seeking to recover for a loss. A claim may be made against an individual or against an insurance company.

Claims Adjuster: The person directly responsible for investigating and settling claims that might be covered by insurance.

Claimant: Anyone who presents a claim that might be recovered by insurance.

Contributory Negligence: Carelessness of the injured person that helped to cause the accident in which he/she was injured. Some states bar recovery to the plaintiff if there is contributory negligence.

Declaration Page: The page or pages of an insurance policy containing information, such as the insured's name and address, that the policyholder declared on the application for insurance.

Deductible: A portion of a covered loss that is not paid by insurance. The deductible is subtracted from the amount the insurer would otherwise be obligated to pay.

Endorsement: A document used to amend the coverage in an otherwise complete policy.

Hazard: Anything that increases the chance of an accident or increases the change that any accident that happens will be severe.

Larceny-Theft: The unlawful taking, carrying, leading or riding away of another person's property.

Liability Insurance: Liability insurance covers accidental losses resulting from injury to the body or damage to the property of someone else for which the insured is legally responsible.

Loss: The basis of which an insurance claim is submitted and/or paid.

Package Policy: A single insurance policy that includes several coverages (e.g. homeowners, automobile).

Peril: The cause of a loss insured against in a policy (e.g. fire, windstorm).

Premium: The money a policyholder pays an insurer for coverage.

Property Insurance: Covers accidental losses resulting from damage to property of the insured.

Rate: The rate is the cost of insurance for a unit of exposure. The rate multiplied by the number of units of exposure produces the premium.

Replacement Cost Insurance: Insurance providing for replacement of the damaged property without deduction for depreciation. It is primarily available for buildings.

Rider: Another name for an endorsement.

Risk: The chance of loss. Also used to refer to the insured or to property covered.

Robbery: The taking of property from a person by force or by threat of violence.

Salvage: The value of property after it has been partially damaged by fire or other perils. It also may be considered to be the property itself, which an insurance company secures after making payment of a claim.

Subrogation: The legal process by which an insurance company seeks from a third party, who has caused a loss, recovery of the amount paid to the policyholder.