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Auto Insurance
Health Insurance
Home Insurance
Life Insurance
Business Insurance

Auto Insurance

Bodily Injury Liability:

Physical injury or death to a third party for which the policyholder is legally liable. This coverage is commonly referred to as "BI" and is usually written together with Property Damage Liability (see definition below).

Collision:

This coverage pays for the damage and loss of use of the policyholder's vehicle resulting from an accident caused by collision with another vehicle or object, such as a sign.

Deductible:

The amount predetermined by the policyholder that must be paid out-of-pocket before the insurance company will pay toward a loss.

Gap Insurance:

An optional coverage that will pay the difference between the value of the vehicle at the time of a total loss and the amount remaining on the loan for the vehicle.

Insured:

Those persons covered by the automobile insurance policy. Examples of an insured are the policyholder (also called the "named insured"), resident relative and someone using the vehicle with permission.

Medical Payments:

This coverage pays for medical and funeral expenses resulting from an accident regardless of fault. Medical Payments coverage also will cover injuries to passengers in your car or someone else's car you are driving with permission as well as injuries sustained in an auto accident by you or a family member.

Other-than-collision:

Commonly known as "comprehensive," this coverage pays for the damage and loss of use of the policyholder's vehicle resulting from an accident caused by an event other than a collision or overturn. Such events may include theft, vandalism and fire.

Physical Damage:

A collective term commonly used to describe types of coverage that apply to damage to your vehicle. These types of coverage include collision and other-than-collision (a.k.a. "comprehensive")

Property Damage Liability:

Damage to someone's physical property, including loss of use, for which the policyholder is legally liable. This coverage is commonly referred to as "PD" and is usually written together with Bodily Injury Liability.

Rental Reimbursement:

An optional coverage that will reimburse the policyholder for the cost of a rental car if required due to a covered loss. This coverage may pay part or all the cost of a rental car.

Underinsured Motorist:

Similar to Uninsured Motorist, this coverage pays for bodily injury sustained by a covered person resulting from an accident with an at-fault driver who does not have enough insurance to pay for the injuries. 

Uninsured Motorist:

This coverage pays for bodily injury sustained by a covered person resulting from an accident with an at-fault driver who is uninsured or flees the scene of the accident.

Health Insurance

Coinsurance: The percentage of your medical costs you'll have to pay after satisfying any applicable deductibles.

Co-payment: If you're insured under an HMO plan, a co-payment is the amount you'll have to pay each time you visit a health insurance provider.

Deductible: If you're insured under an indemnity plan, the deductible is the amount you'll have to pay towards your medical expenses before the insurance company begins to cover your claims.

Disability insurance: A type of health insurance coverage that pays you when you are unable to work for an extended period because of an injury or other medical condition. Coverage can be either long-term or short-term.

Indemnity plan: A type of health insurance coverage that lets you choose your own doctors and pays for your medical expenses-either totally, in part, or up to a specified amount per day for a specified number of days. This is also known as a reimbursement plan.

Long-term care insurance: A type of health insurance that provides for skilled, intermediate, and custodial care in a private home, adult daycare setting, assisted-living facility, or nursing home.

Major medical insurance: A type of health insurance coverage that protects you against losses from catastrophic illness or injury. It provides extremely broad coverage with a very high maximum benefit.

Managed care: A type of health insurance coverage that includes health maintenance organizations (HMOs), preferred provider organizations (PPOs), and point of service (POS) plans. All of these involve an arrangement between the insurer and a selected network of doctors, hospitals, and other healthcare providers.

Preexisting condition: A medical condition that existed before your health insurance policy became effective. Most health insurance coverage plans require a waiting period of three months to one year before a preexisting condition will be covered.

Home Insurance

Actual Cash Value (ACV) – This term describes the amount needed to repair or replace damaged portions of your home after depreciation. For example, your insurance company will deduct for the age and condition of a 12-year-old roof with a 15-year life expectancy. Most insurance policies are written on an ACV basis unless another form of valuation is specified (see “Replacement Cost” below).

Claim – A request for reimbursement for a loss. In order to be paid, a claim must be the result of a loss that is covered by the policy. For example, a home insurance policy will not pay for flood damage if flood peril is not covered by the policy.

Deductible – This is the amount a policyholder must pay out-of-pocket for each claim or loss before the insurance company will begin paying. Deductibles may be a specific dollar amount (i.e., $1,000) or a percentage of the home’s value at the time of the loss.

Depreciation – This term describes the decrease in value of your home or personal property due to normal wear and tear from the time your home was built or the personal property was purchased.

Endorsement – Also known as a “rider,” this term describes a change added to the home insurance policy that modifies its original terms.   

Exclusion – A person, event, situation or condition specified in the home insurance policy to which coverage under the policy does not apply. A common example of an exclusion found in a standard home insurance policy is flood damage.

Liability – A legal obligation.

Loss of Use (a.k.a. “Additional Living Expense”) – This term describes coverage that pays for certain additional expenses – such as lodging and food – while your home is undergoing repair.

Medical Payments – Coverage for medical expenses up to a specified limit for persons accidentally injured at your home. It applies regardless of fault, but does not apply to injuries sustained by you or anyone living with you. Other exclusions usually apply.

Named-Perils Policy – Also known as a “Basic” or “Broad” form policy, this type of policy covers losses resulting from any peril that is specifically named as a covered peril in the policy.

Peril – The action, event or condition that causes a loss. Examples of perils include fire, wind and theft. The home insurance policy will specify which perils are covered.

Replacement Cost – This term describes the amount needed to repair or replace damaged property with materials of similar kind and quality without deducting for depreciation.

Special-Form Policy – A policy that covers losses resulting from any peril that is not specifically excluded from coverage.

Life Insurance

Beneficiary: A person other than a participant who may become eligible to receive, or is receiving, benefits under an insurance policy.

Cash surrender value: The amount payable to an insured who surrenders cash value life insurance, which terminates all insurance benefits.

Convertible term life insurance: A plan that permits you to exchange the term life insurance policy for a permanent one at some point.

Free look period: Under the laws of some states, a period (typically at least 10 days) during which time you may cancel the policy without penalty.

Insurable interest: A requirement that if you want to buy a life insurance policy on someone else's life, you must have an interest in that person remaining alive or expect emotional or financial loss from that person's death.

No-load policy: A type of policy that some insurers sell directly to consumers without having to pay commissions to agents and brokers.

What is a Death Benefit Plus Cash Value?

Permanent (cash value) life insurance: A type of life insurance that combines a death benefit with a cash value component that builds over time; offers lifetime protection.

Risk factors: Factors that the insurance company takes into consideration when calculating your premium for permanent or term life insurance; these include your age, your health, whether you use tobacco, your family health history, and the type and amount of life insurance you're buying.

Term life insurance: A type of life insurance that provides coverage for a specified period of time—generally one, 10, 20, or 30 years, or until the insured reaches 65 or 70 years of age.

Universal life insurance: A type of permanent life insurance in which the cash value varies with the purchaser’s payments and the insurer’s investment returns.

Variable life insurance: A type of permanent life insurance in which the cash value fluctuates depending on the investments purchased by the purchaser for his or her portfolio.

Whole life insurance: A type of permanent life insurance. Whole, universal, and variable life insurance each has their own provisions, but all cover you for the remainder of your life.

Business Insurance Common Terms

Following are definitions of several terms commonly used to describe different aspects of business insurance coverage:

Actual Cash Value (ACV) – Coverage for the dollar amount needed to repair or replace damaged property minus depreciation.

Blanket Insurance – Coverage for more than one type of property at a single location or similar types of properties at multiple locations.

Business Income (also called “Business Interruption”) Insurance – Coverage for lost net income and continuing expenses for a specified period of time, as a result of a cessation in normal business activities due to a covered loss.

Business Owner’s Policy (BOP) – A package policy that combines property, general liability, business income and other types of coverages into a single policy.

Coinsurance (for property insurance) – A clause in the property policy requiring the policyholder to carry an amount of insurance equal to a specified percentage of the value of the property. Compliance will result in full payment on a covered loss minus the deductible. Failure to comply will result in a penalty for underinsurance.

Deductible – A dollar amount, usually a predetermined figure (i.e., $1,000) or a percentage (i.e., 2% of the value of the property) for which the policyholder must pay before the insurance company will pay for a covered loss.

Endorsement – A provision attached to an insurance policy that amends the policy’s original terms.

Exclusion – A provision in a policy that eliminates coverage for certain losses, people, locations or conditions.

Liability Insurance – Coverage for covered claims of bodily injury or property damage for which the policyholder is legally liable.

Medical Payments – The specified amount for which the insurance company agrees to reimburse the policyholder for the medical expenses for bodily injury of a third-party. Medical expenses usually are paid regardless of fault.

Named-Peril Policy – An insurance policy that only covers losses resulting from perils specifically named in the policy.

Peril – An event or condition that causes a loss (e.g., fire, windstorm, theft, etc.).

Professional Liability Insurance – Coverage for professionals as determined by their respective industry's expected standard of care for claims of negligence, errors or omissions causing damages to a client.

Replacement Cost – Coverage for the dollar amount needed to repair or replace damaged property without deducting for depreciation.

Special (or “Open”) Peril policy – An insurance policy that covers losses resulting from any peril not specifically excluded in the policy.