Coverage against loss due to inability to collect outstanding accounts receivable (or other transactions) because of damages to or destruction of records by an insured peril.

Actual cash value (ACV)

The value of any property that is lost or damaged at the time of the loss, in contrast to Replacement Cost Value (RCV).

Actuary

Business professionals that use mathematics, statistics, and financial theory to analyze the economic costs of risk and uncertainty. Actuaries often work with insurance companies to help set rates for insurance products.

Additional Insured Endorsement

An additional insured endorsement is the contract by which an additional insured (a person or entity, other than the named insured) is protected by a particular insurance policy.

Additional insured

Any person or party besides the policyholder who is added to a policy, so that they will also be covered by that policy.

Additional living expense (property)

Coverage that provides a specified amount per day for additional expenses in the event that you cannot live in your insured residence.

Adjuster

An adjuster is someone who investigates a claim, sometimes referred to as a 'claim examiner' or 'claim adjuster'. An adjuster determines if the loss is covered by the policy, estimates damages, and often writes a check to the insured.

Admitted Company

An insurance company authorized to do business in a specific state

After-market parts

Parts made by a company other than the manufacturer of the auto. See original equipment manufacturer.

Agent

An agent, or insurance agent, is someone who sells insurance policies for an insurance company or carrier. Their agency may be exclusive or non-exclusive, meaning they sell insurance for a single carrier, or a number of carriers.

Aggregate Limit

The maximum dollar amount of damages that the insurer will pay under the insurance contract, during the coverage period regardless of the number of claims for a particular coverage.

Agreed value policy

Coverage that will pay the full insured amount of the vehicle or other property in case of a covered total loss, in contrast to stated amount.

Appraisal

An estimate of property value, or of the extent of property damage, provided by an authorized person. Appraisals are performed to determine the value of property at the time of a loss.

Asset

A financial or economic benefit controlled by a person or entity.

Assured

This is an individual who has an insurance policy, and is another word for "insured" or "policyholder."

At-fault

In a situation such as an auto accident, "at-fault" refers to the person who is liable for the damages. In other words, this is the person who caused the accident, or is otherwise legally responsible for it.

Automobile Insurance

Coverage on the risks associated with driving or owning an automobile. It can include collision, liability, comprehensive, medical, and uninsured motorist coverages.

B

Binder

A temporary insurance contract issued either by an agent or a company, pending execution of the policy contract or endorsement. Unless specified, the terms of the binder are the same as the contract which intends to replace it. Sometimes called “advice” or “evidence” of coverage.

Blanket Limit

A property insurance limit, which covers several different buildings and contents under one total limit versus separate limits for each building or contents in the building.

Bodily injury liability coverage

Coverage for damages resulting in bodily injury or death sustained by others, including covered medical costs, that you become legally responsible for because of a covered auto accident.

Boiler and Machinery Insurance

Covers losses resulting from the malfunction of boilers and machinery. This coverage is usually excluded from property insurance creating the need for this separate product.

Broker

A licensed person or organization paid by you to look for insurance on your behalf.

Builder’s risk coverage

Insurance against loss to buildings in the course of construction, alteration or repair, including machinery, contractor’s equipment, and materials incidental to construction.

Building / additions / alterations coverage (tenant/condo only)

Pays for damages to additions, alterations, fixtures, improvements or installations that you make to your rented residence or condo.

Burglary

Coverage against loss as a result of forced entry into premises.

Business Interruption

Loss resulting from necessary interruption of business conducted by insured and caused by loss, damage or destruction by any covered peril to real and personal property.

C

Cancellation

Terminating an insurance contract before the specified end-date listed in the policy.

Carrier

This is another word for the insurance company that provides you with your policy.

Catastrophe

An event which causes a loss of extraordinary proportions (e.g., hurricanes, tornadoes, earthquakes, etc.)

Certificate of Insurance

Written verification from an insurance company that coverage exists. It usually includes the names of the insured, coverages, policy number, limits term, etc.

Claim

Notice to an insurer that under the terms of a policy, a loss maybe covered.

Claimant

A person requesting an amount for covered losses from the insurer.

Claims made coverage

A “coverage trigger” common in professional liability contracts whereby claims must be made (reported) during the coverage period in which they took place.

Claims management

Involves proper and timely notification and record keeping of specific claims and overall loss history for the organization.

Classic car insurance

A type of automobile insurance designed to provide specialized coverage for classic and antique vehicles that meet certain qualifications.

Co-insurance

An arrangement where an insurance policy is shared by multiple insurers.

Coastal area

A location near a body of water, including (but not limited to) an ocean, gulf, bay, harbor, inlet, sound, bayou or water that surrounds a barrier island.

Collision

In reference to auto insurance, "collision" refers to coverage that pays for damages to your vehicle after a collision (hence the name), either with another vehicle or an object.

Collision coverage

Coverage for damage to your vehicle resulting from collision with another vehicle or object (subject to deductible).

Commercial insurance

A line of insurance that covers businesses and organizations against unexpected loss.

Comprehensive coverage

Coverage for damage to your vehicle not caused by collision or upset (subject to deductible).

Conditions

Part of every insurance policy; qualify the various promises made by the insurance company.

Condominium owners policy

Insurance that protects the condominium and personal property of the policyholder and covers the condo owner’s personal liability for covered injuries or damage to others.

Construction type

Refers to the construction of a building, such as your residence. For example, frame or masonry.

Contents insurance

A line of insurance that covers consumers when their personal belongings are lost, stolen or damaged.

Continuous insurance

When a policyholder has been insured by one or more insurance companies, without any lapse in coverage, for a specified period of time.

Contractual liability

An obligation assumed by contract to pay damages for which another may be legally obligated to pay.

D

Damage

This term refers to any loss, destruction, or harm to a person or property, such as a vehicle or home.

Damages

Not to be confused with "damage," this refers to the actual money one individual or party is required legally to pay to another.

Declarations

Usually the first page of an insurance policy; summarizes key information specific to the policy; sometimes called a dec page.

Declarations page

A page in your policy – usually the front page – with basic information that identifies the policyholder, the property or vehicles covered, the coverages and the premium amounts.

Decline

The company refuses to accept the request for insurance coverage.

Deductible

The amount of the loss which the insured is responsible to pay before benefits from the insurance company are payable. You may choose a higher deductible to lower your premium.

Defendant

Individual or organization against whom a lawsuit has been brought.

Depreciation

A decrease in the value of property due to wear, age or other cause. Compare actual cash value.

Dwelling

Dwelling refers to the actual structure and often structures attached to your house, such as a deck or a garage. Dwelling is defined separately from other structures, like barns, workshops, or detached garages.

Dwelling fire policy

Coverage offered for property that is, at least partially, rented out to others.

Dwelling replacement cost plus/guarantee

An optional coverage that can provide additional protection above the amount a home is insured for. It is designed to protect against unforeseen increases in the cost of repairs.

E

Electronic Funds Transfer (EFT)

EFT is a method of payment where the insurance company electronically deposits the claim amount into your bank account.

Endorsement

An endorsement is an amendment attached to a base policy which adjusts the coverage.

Errors and Omissions coverage

E&O coverage is for losses due to alleged wrongful acts, errors and omission by officials, both elected and appointed, and employees in connection with their work.

Estimate

This refers to the amount of money required to repair or replace the covered property when damaged. This is usually provided by the claims adjuster following their inspection and evaluation.

Excess Liability Insurance

Provides coverage over and above primary insurance. The coverage is triggered when the amount of a loss exceeds (exhausts) an existing primary policy.

Exclusion

A provision in an insurance policy that excludes and/or limits certain coverages.

Expiration Date

The date on which the policy ends.

Exposure

The risk of possible loss arising. Insurers will try to mitigate exposure by discouraging risky behavior.

Extended Loss Reporting Period

This provision “extends” the coverage period during which an incident must be reported or a claim made after an insurance contract expires. Sometimes called “tail” coverage.

F

Fire Insurance

Coverage for loss of or damage to a building and/or contents due to fire.

First notice of loss (FNOL)

The moment at which a policyholder informs their insurer that they have cause to make a claim.

G

Garaging location

Coverage for loss to a customer’s automobile from an insured peril while under the care, custody and control of the insured and for which the insured is legally liable.

Gated community

A housing community with controlled entry access.

H

Hazard

A condition that creates or increases the chance that a loss will occur. For example, a wood-burning stove may increase the chance of a loss from a fire.

Homeowner Insurance

An elective combination of coverages for the risks of owning a home. Can include losses due to fire, burglary, vandalism, earthquake, and other perils.

I

Incurred But Not Reported (IBNR)

An actuarial term that refers to a claims cost estimated, for those claims not yet reported.

Indemnification Agreement

When one party (the indemnitor) assumes the liability of another (the indemnitee) in the event of a claim or loss. An example is a hold harmless agreement.

Insurable Interest

Any legal interest in property; real or personal, people or events of such a nature that occurrence of an event insured against would cause financial loss to the insured.

Insurance

A financial product that covers you against possible loss or damage in return for regular payments called premiums.

Insurance Policy

A legally binding contract that defines the obligations of both the insured and the insurer.

Insured

The person(s) or parties who are insured or protected by an insurance policy.

Insurer

The company that provides insurance coverage and services on a policy.

Insurtech

A company that provides a technological innovation for the insurance industry. This could involve back-end architecture or a front-end application that consumers can use.

J

Joint and Several Liability

A legal situation in which each wrongdoer is fully responsible for the consequences of the “wrong”, and each is responsible independently or separately from the others, regardless of the apportionment of fault.

K

L

Lapse

A period of time when someone goes without insurance coverage.

Lease

A contract granting use or occupation of property during a specified period, in exchange for a specified rent.

Leaseholder

An individual who possesses or has use of property through a lease.

Lessee

An individual to whom a lease is granted.

Liability coverage

Coverage for bodily injury or property damage to others for which you are held liable (as provided by your policy and state law).

Lien

A creditor’s claim against an owner's assets to secure an unpaid debt.

Lien holder

Any party who has a claim on property until the satisfaction of some debt or duty. For example, a bank is the lien holder of a car until the car loan is paid off by the owner.

Limit

Maximum amount a policy will pay either overall or under a particular coverage.

Limit of Liability

The maximum amount of coverage to be paid to an insured or on behalf of an insured by an insurance company in the event of a loss.

Lines

Different categorizations, or types, of insurance

Loss

Direct and accidental damage to an insured property or automobile, which is the basis for filing a claim.

Loss Ratio

The ratio between insurance losses incurred and premiums earned during a given period. The ratio is derived by dividing a member’s claims by the cost of that member’s premium during the period.

Loss history

A history of a person's automobile or property losses.

Loss of use (property)

Coverage that pays additional expenses when a policyholder has to move out of their residence while repairs are made, as a result of damage caused by a covered loss.

M

Market value

The value of property in terms of what it can be sold for in the open market.

Mitigation

Steps taken to prevent or reduce the amount or likelihood of loss.

Moratorium

A temporary suspension of insurance cover in relation to a specific risk.

Motor vehicle report (MVR)

The record of a person's driving history, including details of any accidents or violations, as reported to a state's department of motor vehicles.

Mutual insurer

An insurance company that is fully owned by its customers.

N

Named Peril Policy

This refers to a type of insurance policy that provides protection or coverage for certain perils explicitly outlined in the policy.

Named insured

The person or entity specifically identified as the named insured in an insurance policy. This person is also referred to as the policyholder.

Non-standard carrier

An auto insurance provider with underwriting standards that accept high-risk drivers.

O

Occasional driver

A driver who is not the usual or most frequent driver of the vehicle listed on an auto policy.

Occupancy

Number of people living in the property.

Occurrence

An accident, including continuous or repeated exposure to substantially the same general conditions that cause bodily injury or property damage.

Other Insurance Clause

A provision found in almost every insurance contract stating what is to be done at time of loss, in case any other contract of insurance protection covers the same exposures.

Other structure

A structure located on the residence premises that is not directly attached to the dwelling structure, such as a detached garage or gazebo. It may be insured under a homeowners policy.

Other than collision (OTC)

As the name suggests, OTC adds protection against things like hail, fire, vandalism, and more to your personal auto policy.

P

P&C insurance

A line of insurance that covers property and casualty.

Peril

The cause of a possible loss. For example, fire, theft, or hail.

Perils

The cause of a loss insured against in a property policy (e.g., fire, windstorm, explosion, etc.)

Personal injury (auto) coverage

Coverage for medical expenses to or for an insured in the event of an auto accident, regardless of who is at fault.

Personal injury (homeowners) coverage

Coverage for the personal injury to others, such as false arrest, libel (written), slander (verbal), or invasion of privacy.

Personal property

All other property not classified as real property, and which is easily moved. This includes furniture, clothing and household goods.

Personally Liable

Liability that an individual assumes when he/she is directly involved in the occurrence and cannot defer the liability to another person or entity.

Plaintiff

Individual or organization that initiates a lawsuit to obtain a remedy for an injury.

Policy

A written contract of insurance.

Policyholder

The person or entity specifically identified as the named insured in an insurance policy. This person is also referred to as the named insured.

Premium

The amount of money an insurance company charges for insurance coverage.

Proof of Loss

A formal written statement of a claim for payment of a loss made by an insured to an insurance company.

Property

Anything that has value. There are two types: real property and personal property.

Property Damage

Damage or destruction of tangible property, real, intellectual or personal.

Property Insurance

Insurance that covers direct damage to the member’s property and equipment including consequential losses (business income, loss of rents, extra expense) caused by an insured peril.

Q

Quote

An estimate of the cost of insurance, based on information supplied to the insurance company by the applicant.

R

Reinstatement

The restoring of a lapsed policy to full force and effect.

Reinsurance

A contractual agreement that transfers some or all of the exposures insured by one company (the primary insurer) to another company (the re-insurer or excess insurer). Reinsurance enables insurance companies and pools to provide higher limits of coverage to insureds.

Reinsurer

A company that insures upper layers of coverage for commercial carriers, risk retention groups, captive insurance companies and other insurance providers.

Relative Loss Ratio

A means of comparing a member’s loss ratio to that of the pool overall by dividing the member loss ratio by the pool loss ratio. A relative loss ratio of less than 1.0 is performing relatively better than the pool as a whole while a relative loss ratio of greater than 1.0 is not performing as well as the pool as a whole. It can be used in comparing the relative effectiveness of a member’s loss control efforts.

Renters Policy (also known as Tenants Policy)

An insurance policy that covers a tenant and some of their personal possessions.

Replacement Cost Value (RCV)

The actual cost of replacing damaged or destroyed property with new property, in contrast to Actual Cash Value (ACV).

Reserves

An amount of money set aside by insurers for unexpected expenses.

Retention

The financial burden assumed by an insured for part or all of the consequences of a particular loss exposure. For an example, with a deductible the insured retains a portion of the exposure and insures the rest.

Retroactive Date

Usually considered the inception date of the policy. Claims made policies contain a retroactive date, which is shown on the declaration page of the policy. Claims that occur prior to the retroactive date will not be honored by the insurer.

Rider

Usually known as an endorsement, a rider is an amendment to the policy used to add or delete coverage.

Risk

A measure of the possibility that the future may be surprisingly different from what we expect. Downside risk of loss and upside risk of gain.

Risk Assessment

A thorough examination of the exposures of the member, both insurable and uninsurable.

Risk Management

A discipline for dealing with the possibility that the future may be surprisingly different from what we expect.

Risk Retention

A method of funding loss using internal money.

Roadside Assistance

Optional coverage for when you need a tow, run out of gas or have a flat tire. Learn more.

S

Scheduled Personal Property

Additional optional insurance coverage for high-value appraised personal property that can be added to a homeowners, renters or condo policy. This can include jewelry, furs, or cameras.

Self Insurance

When an organization’s own resources (internal) are used to fund losses. A member may self-insure risks through a formally structured risk-financing program, such as a captive insurer, or by setting aside funds to pay for losses. A member can also be self-insured on an informal basis when it has made no arrangements to finance losses and must use operating funds when losses occur.

Special Endorsement

Written language appended to an insurance policy that changes the coverage in regards to special circumstances.

Specialty Auto Insurance (also known as Powersports)

Coverage available for other vehicles you own that are not automobiles, such as motorcycles, recreational vehicles, boats, snowmobiles, and all-terrain vehicles.

Specialty insurance

A line of insurance, usually for businesses, that covers unique or unusual activities not traditionally covered by other policies. Examples may include marine insurance, cyberattack insurance or insurance against identity theft.

Stop Loss

Any provision in a policy designed to cut off the insurer’s or insured’s loss at a given point. A stop loss may be an aggregate payable under the policy, maximum payable for any one occurrence, or the insured’s maximum retention for any one loss or policy year.

Subrogation

The right of an insurance company to seek recovery of the amount paid to the insured from a responsible third party who has caused a loss.

Surcharge

An extra charge applied by the insurer. For automobile insurance, a surcharge is usually for accidents or moving violations.

T

Term

Definition

Time Element

A phase used to describe a kind of insurance which reimburses the policyholder for the loss of use of property (i.e., business interruption, extra expense, or rental value).

Title Insurance

Coverage for losses if a land title is not free and clear of defects that were unknown when the title insurance was written.

U

Underinsured

A situation where a policyholder is insured for less than the value at risk.

Underwriting

The process of selecting applicants for insurance and classifying them according to their degrees of insurability so that the appropriate premium rates may be charged. The process includes rejection of unacceptable risks.

Uninsured Motorist Bodily Injury

Will pay you and your passengers for bodily injury cause by a negligent uninsured motorist, a hit-and-run driver, or by a driver whose insurer is insolvent.

Uninsured Motorist Property Damage

Will pay for damages to your automobile, set up to a limit, when caused by a negligent uninsured motorist.

V

Vehicle identification number (VIN)

Your vehicle's unique 17-character VIN can be found on the dashboard and driver's side door jamb. This unique serial number is also included on your vehicle's registration form and insurance card.

W

Waiting Period

A period of time set forth in a policy which must pass before some or all coverages begin.

Windstorm or hail coverage

Coverage for losses as a result of windstorm or hail. This coverage may be subject to special terms, conditions and deductibles. On some policies, these perils may be excluded entirely.

Wrongful Act

This term means any actual or alleged error, omission, misstatement, act of negligent or breach of duty including misfeasance, malfeasance or nonfeasance of an insured.