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Insurance Terms and Glossary

A

Accident – Enforceable and unexpected unfortunate event that may cause destruction of property, bodily injury, or death

Actual cash value (ACV) – Method of valuing a damaged property based on the amount by which it could be sold minus depreciation; used to determine how much the insurance company would pay to the policyholder after damage or loss

Actuary – Financial expert hired by an insurance company to analyze the cost of a future risk and suggest ways to minimize the impact of undesirable events

Additional living expenses (ALE) – Extra coverage which may be included in renters insurance to pay for extra expenses incurred in case the insured person is removed from his apartment due to fire or flood; may include allowance for meal, clothing, laundry, and temporary housing while the policyholder is living away

Agent – Person assigned in selling insurance and negotiating coverage with clients

Application – Form which the applicant needs to fill up when applying for insurance coverage; Insurance companies also use this to decide on the insurance rate

Appraisal – Evaluation done by a damage appraiser to determine the value of the damaged property when the insurance company and policyholder cannot agree on the amount of payable loss

At-fault accident – Any vehicular accident wherein the policyholder is found liable for the damage, loss, or bodily injury of the other party

Auto Insurance – Protection against damage or loss designed for road vehicles such as trucks, cars, and motorcycles; provides compensation for medical expenses, bodily injury, and property damage in case of vehicular accident

B

Beneficiary – Person authorized to receive insurance benefits in case the insured person has died in an accident or disaster; may include the living spouse and children of the policyholder

Bodily injury (BI) – Any physical harm or damage to a person caused by an accident

C

Carrier – Company that provides or sells health, home, or auto insurance coverage

Certificates of Coverage – Written proof that is granted by the insurance company to the person which contains the name of the insured person, the beneficiary, and benefits

Claim – Formal written request that a policyholder files to the insurance company asking for the payment of a covered loss or damage, including death benefits; can also be filed by third parties on behalf of the insured person

Claimant – Person who files a claim to receive benefits; the other party or innocent party who suffers injuries in an at-fault accident that the insured person needs to pay by virtue of his insurance

Claim history – Complete record of the number and complexity of claims filed for the past five years; can be accessed through the insurance company or online

Coinsurance – Policy provision wherein the company insures only a part of a covered loss or damage while the policyholder pays the other fraction; For instance, in a major medical policy, the company may agree to pay 80% of the insured expenses and the policy owner pays 20%

Comprehensive coverage – A type of insurance coverage for vehicles that provides protection other than collision, bodily injury, and property damage

Contract – A binding written agreement between the insurance provider and the policyholder. Insurance itself is a contract

Convertible – Type of term life insurance policy that can be converted into a permanent insurance when the policyholder desires at a later time

Copayment – Fixed amount which the policyholder or beneficiary needs to pay for a covered medical service at the time it is rendered; amount may vary depending on the type of health insurance

Coverage – Scope of protection provided to the insured person by virtue of the insurance policy; a list of perils under property insurance by which the policyholder is insured against such as fire, lightning, windstorm, windstorm, explosion, riot, aircraft, vehicles, smoke, vandalism, theft, and volcanic eruption

Credit history – Detailed report of a person’s past borrowing and repaying activities, which demonstrate the ability of a person to pay insurance dues; may include information such as the number of credit accounts, credit used, amount owed, and number of credit inquiries

D

Deductible – Dollar amount the insured must pay out-of-pocket before the insurance company pays the remainder of each covered loss under health insurance policy

Depreciation – Loss in value of a certain object or property; A value in dollars used to establish reimbursement or payment of a thing lost or damage under property insurance

Discount – Deduction from the original rate of insurance which a person may avail under certain circumstance such as being good driver, good student, anti-theft device, safety device, homeowners, and multiple-car

Dwelling Coverage – Coverage under homeowner’s insurance policy for attached structures such as carport or garage

E

Exclusion – Section of an insurance policy which lays down the person, perils, and objects that are not covered

F

Flood insurance – Separate coverage which can be taken from the National Flood Insurance Program

H

Hazard – Something that increases the chance of damage or loss of an insured property or object to be insured

Health Insurance – Type of coverage that secures the policyholder against medical expenses; reimburses the owner of the amount incurred in obtaining healthcare services or directly pays the hospital for the medical bills

Home Insurance – Form of property insurance intended to protect the dwelling, house, condo, or apartment from damage or loss; includes liability coverage for accidents that happen inside the house involving another person who is not a party to the insurance; six types of home insurance are HO-2, HO-3, HO-4, HO-5, HO-6, and HO-8

Homeowner’s policy – Personal multiline policy for homeowners which includes different forms for property and liability coverage

HO-2 – broad form home insurance that provides broad coverage for dwelling and personal property including breaking of glass and theft

HO-3 – Special form home insurance that provides coverage for all known perils including some that are not included under HO-2 but excludes coverage for flood, earthquake, war, and nuclear accident

HO-4 – A broad form of home insurance designed specifically for renters or people who lease apartments but do not basically own their residence; provides coverage only for personal properties of tenants but does not include their dwelling

HO-5 – Comprehensive form which is mostly preferred by homeowners with newer units and higher values; provides coverage for both dwelling and other structures, and personal property against special named perils with coverage for theft slightly broader than HO-3

HO-6 – Unit-owners form which provides coverage for personal property of condominium owners similar to HO-2, HO-3, and HO-4; includes limited coverage for dwelling such as the interior walls, panelling, floor, and built-in cabinets

HO-8 – Modified form designed for older homes which are exceedingly difficult to replace if destroyed; provides basic coverage for dwelling and personal property with extended coverage on the dwelling at actual cash value, but with restriction on the valuation of losses

I

Indemnity – An amount of money paid by the insurance company to compensate loss or damage of an insured person

Insurance – Security or protection against unexpected misfortunes given by an insurance company to a person, in a form of a contract; the policyholder pays a certain premium in return for coverage of health, home, or property

Insurer – Person or company who sells and provides coverage to another

Insurance provider network – Group of hospitals and physicians that provide health services under a certain health insurance plan; obtaining medical support from an in-network doctor entitles the policyholder a lower co-pay and co-insurance

Insuring clause – Section of an insurance policy that states the coverage limits and the list of perils that the policyholder is insured against

L

License – A permit or privileged issued to a person to drive

Limitation – Policy language which reduces coverage under certain circumstances or when specified condition applies

Learners permit – Privilege given to individuals under 15 years of age allowing them to drive. This may be required from young car owners in order to get a separate auto insurance

M

Market value – Price of property at the time of loss or damage which the insurance company needs to reimburse

Mobile Home – Also known as trailer home, a pre-manufactured structure which is transported according to the homeowners desired location for permanent installation

Mobile Home Insurance – A basic insurance intended for mobile home

N

Negligence – Lack of due care in doing something

Non-renewal – Not paying premium or discontinuing insurance after the current policy expires

P

Peril – Danger or event that makes a certain object or person susceptible to damage, loss, or death. Under property insurance, this includes a list of phenomenon by which property is insured against.

Period – A length of time

Personal property – Movable possessions of policyholders such as furniture and documents; insures materials owned by the insured person while it is anywhere in the world under home insurance policy Coverage C; may include things by other persons while in part of the residents at the time of loss or damage

Personal injury – Injury to the mind, emotion, and all psychological aspects of a person including bodily injury that arise out of accident or wrongful violation of a person’s right to property and as human

Policy – Standard contract between the insurance company and the policyholder, which lays down the things covered, rate and mode of payment, and the terms and condition of the insurance

Premium – Fixed amount paid by the policyholder to the insurer to keep the coverage

Proof of insurance – Documentation that tells a person is officially insured; A person may be asked to show proof of insurance in order to continue drive

Proof of Financial Responsibility – Documentary evidence that shows a person is responsible enough to handle monetary obligations arising from owning a vehicle

Q

Quote – An understanding of benefit packet that a person may qualify for, which can be obtained online or through an insurance agent

R

Rate – Fixed amount that a policyholder will pay to get insurance coverage

Renters Insurance – Common term for HO-4 form under homeowner’s policy which provides personal property coverage for people who live in apartments but does not include coverage for dwelling

Replacement Cost (RC) – Equivalent price of an item at a present time; value of property at the time of damage or loss which the insurance company needs to reimburse to the insured person

Risk – Probability of losing something of value

Robbery – Crime of intruding a private property with force and intimidation with the intent to take belongings of another person without consent

S

Seniors Discount – Discount under an auto insurance policy which people who are 60 years old and above can avail

Special coverage – Refers to all perils covered under HO3 and the HO5 home insurance form

T

Term Insurance – Type of life insurance policy that only provides coverage for a specific period of time. It is the least expensive option among people nearing 50s or 60s to obtain substantial death benefits

Towing and repair – Additional coverage under comprehensive auto insurance which the policyholder can avail to reimburse expenses incurred in repairing the car

W

Waiver – Voluntary relinquishment of right which can be written or verbal

Warranty – Written guarantee from the insurance company providing coverage for as specified under the insurance policy; breaching the warranty can void the policy


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