A
Actual Cash Value (ACV) – The “Actual Cash Value” of your property is calculated by subtracting any depreciation from its current replacement cost.
Additional Living Expenses (ALE) – “ALE, or
Additional Living Expenses” (including but not limited to essentials
such as food and housing) may be reimbursed to the policyholder in an
amount up to 20% of the policy’s dwelling coverage if the home made
temporarily uninhabitable due to damage from a covered peril.
Adjuster – “Adjusters” are individuals employed by
insurers to help evaluate losses before settling claim. “Public
insurance adjusters” may be independently hired by homeowners, but the
policyholder must pay out of pocket for such appraisals.
Agent – Individuals who sell insurance policies are referred to as “agents”.
Application – Insurance companies require the
filling out of a form called an “application” to gather information
about you and your home. This information will be used to decide if they
will issue you a policy, and if so, on what terms.
Appraisal – An “appraisal” is conducted by an
authorized person who is qualified to determine property value and
damaged property value. Most insurance policies provide for an appraisal
process to settle claim disputes. The insurance company and the
homeowner both hire an independent appraiser, and the two appraisers
agree on the selection of a third appraiser to act as “umpire”, who is
paid half by the insurance company and half by the homeowner. The
appraisers review the claim and loss amount, and come to an agreement,
with the umpire settling any disputes between the appraisers. The
umpire’s decision is binding for the loss amount, and both the homeowner
and the insurance company must comply. Settlement of any dispute over
what is covered must be handled separately; the appraisal only covers
loss amounts.
B
Binder – After a policy has been tentatively
approved, a “binder” is presented to the homeowner. It contains
documents proving insurance coverage until the permanent policy is
finalized and delivered.
C
Cancellation – If an insurance policy is terminated by either the insured or the insurer before the renewal date, this is “cancellation”.
Claim – A “claim” is a request from the policyholder
for reimbursement from an insurance company for a loss to property,
according to the terms of their home insurance policy.
Claimant – The “claimant” is the person who files the insurance claim.
Company profile – A “company profile” is a
collection of summarized information about an insurance company. This
can include but is not limited to the company’s financial information,
license status, and history of complaints or regulatory actions.
Complaint – A “complaint” is a communication
(normally written) that expresses some form of grievance against an
agent or insurance company.
Complaint history – The “complaint history” of an
insurance company refers to the information collected or maintained by
the state regarding the number and disposition of complaints against the
insurer.
Contract – In the insurance field, an insurance
policy is considered to be a “contract” made between the policyholder
and the insurance company.
D
Declarations page – The “declarations page” of an
insurance policy denotes the time period the policy is in force, the
amount of coverage and premium, and the name and address of the insurer
and insured.
Deductible – The “deductible is the fixed amount or
percentage of a claim which must be covered by the insured before the
insurer pays out.
Depreciation – “Depreciation” is the reduction in value of property due to normal wear and tear or aging over time.
E
Earned premium – The “earned premium” is the portion
of a policy premium an insurance company has “earned” through coverage
provision. The “unearned premium” is the portion yet to be “earned. For
example, a six-month policy paid in advance, after two months, has 2
months earned and 4 months remaining unearned – which could be applied
to a different policy or an upgrade in policy if the policy is changed
midterm.
Effective date – The “effective date” is when an insurance policy takes effect.
Endorsement – An “endorsement”, also called a
“rider”, consists of a written agreement attached to a policy which
expands or limits the payable benefits described therein.
Escrow – Money held by a third party until specified conditions are met is referred to as being in “escrow”.
Exclusion – An “exclusion” is an insurance policy
provision that specifically denies coverage for certain perils, people,
property, or locations.
Expiration date – The “expiration date” is when an insurance policy expires.
F
File and Use – Residential property rates are
implemented under a system called “file and use.” This means that
insurance companies file their rates with state, but don’t need approval
in advance if they decide to implement new rates. If the state later
determines that the new rates are excessive, the company may be ordered
to pay refunds to overcharged policyholders, but these adverse rate
decisions may be appealed before payment.
First-party claim – A “first party claim” occurs when the primary insured files against his or her own insurance policy.
G
Grace period – The “grace period” is the number of
days (usually 31) that a policy remains in force after if a premium
comes due but not paid. The policy will lapse retroactively to the date
the premium was originally due unless the premium is paid before the end
of the grace period (or the insured dies.)
Group of companies – A “group of companies) refers to several insurance companies operating under common ownership (and often common management.)
H
I
Independent adjuster – An “independent adjuster” is a third party which charges a fee to adjust a claim.
Inflation protection – “Inflation protection” will
automatically adjust your policy limits to account for increased costs
of property repair or replacement.
Insurable interest – A financial or emotional interest in a property or person insured by a third party is called “insurable interest”.
Insured – The “insured” is the policyholder who is protected in case of a loss or claim.
Insurer – The insurance company is the “insurer.”
J
Justified complaint – A “justified complaint” is one
which exposes an apparent violation of a policy provision, contract
provision, rule, or statute. It may also show that a practice or service
could be regarded as below customary business standards.
K
L
Lapse – A “lapse” in regard to an insurance policy
means that the renewal premium was not paid by the end of the grace
period, causing insurance coverage to be terminated retroactively to the
premium due date.
Liability coverage – Losses for which an insured is
legally liable require “liability coverage” – this can protect you
against financial loss if you are found legally responsible for someone
else’s injury or property damage.
Loss – The “loss” is the amount of the claim as
determined by the adjuster; the insurance company will pay the loss less
the deductible.
Loss of use – A homeowners and renters insurance
policy may reimburse policyholders for “loss of use”, including housing,
food, and other essentials associated with having to live elsewhere if
their home has been subject to a disaster.
Loss history – The number of insurance claims previously filed by a policyholder makes up their “loss history”.
M
Market value – The current value of a home and land is the “market value”.
Material misrepresentation – A misstatement in an
application form that is significant and could have caused the insurer
to reject said application is called a “material misrepresentation.”
N
Non-renewal – A “non-renewal” decision by an insurance company is their prerogative to not renew a policy.
O
P
Peril – A “peril” refers to any of many and varied
risks or causes of loss such as a fire, windstorm, flood, or theft. A
named-peril policy will provide coverage only for the risks named in the
policy. An all-risk policy specifically excludes any perils not
covered, and covers all other causes of loss.
Personal property – All tangible, temporary or
movable property other than land is “personal property” (items such as
electronics, furniture, jewelry, etc.)
Policy – The “policy” refers to the contract between the insured and insurer.
Policy owner – The “policy owner” is person or party
who owns the policy; they usually pay the premiums and are the only one
allowed to make changes to the policy, whether they are the insured,
the beneficiary, or another person.
Policy period – The “policy period” is the effective dates of the policy from its initial approval to its expiration date.
Premium – The “premium” is the amount paid by an insured for their insurance policy.
Property damage – “Property damage” means any physical damage caused to property, normally resulting in its devaluation.
Public insurance adjuster – An “public insurance
adjuster” is a person employed by a policyholder to negotiate a claim
with the insurance company. Such adjusters must normally be specially
licensed by the state, and usually charge a percentage of the claim
settlement.
Q
R
Refund – A “refund” refers to an amount of money
returned to the policyholder (for case in which the insurance company
has not earned out the premium or the insured has been judged to have
overpaid their premium.)
Reinstatement – If an insurance policy lapses
because of nonpayment of renewal premiums, the company may be willing to
do a “reinstatement” upon payment of outstanding balances.
Renewal – A “renewal” is the continuation of a policy after its expiration date; this may be the same policy or changes may be made.
Renters insurance – “Renters insurance” covers a policyholder’s belongings against perils and also provides for personal liability coverage.
Replacement cost – The dollar amount needed replace a
structure or damaged personal property is the “replacement cost” –
depreciation is not considered.
Residual market – Some insurers exist to provide
coverage for the “residual market” – those in need of insurance who
cannot purchase it from traditional companies.
Return premium – The “return premium” is the amount
which may be returned to an insured for amending a policy or canceling
before the term is up.
Rider – A “rider” or “endorsement” is a written
agreement attached to the policy which can expand or limit benefits
otherwise payable under the policy.
S
Single interest insurance – “Single interest
insurance” may be taken out by a mortgage company or lender, and
provides protection only for the policy owner, not the homeowner.
Staff adjuster – A “staff adjuster” is a member of an insurance company’s claims department.
Subrogation – The
right held by most insurance carriers to legally pursue a third party
who caused an insurance loss. This allows recovery of the amount of the
claim paid by the insurance carrier to the insured for the loss, without
making the homeowner wait to have their claim handled by the third
party.
Surcharge – An “surcharge” can be any one of many potential extra charges added to your premium by an insurance company.
T
Third-party claim – A “third party claim” is filed against another person’s insurance policy.
U
Underwriter – The “underwriter” is responsible for
reviewing an application for insurance to decide if the applicant is
acceptable and to set a premium rate.
Underwriting – The “underwriting” process determines if an insurance company will accept or reject an application for a policy.
Unearned premium – The “unearned premium” is the
amount paid to the insurance company allocated to future monthly
coverage premiums. If an insurance policy were to be canceled, the
company would return this portion of paid funds.
V
W
X
Y
Z
