Actual Cash Value
A dollar amount determined by an insurance provider for lost, damaged, or stolen property. It equals Replacement Cost minus depreciation. Some policies can provide coverage for Replacement Cost rather than ACV. (See Replacement Cost)
Sometimes referred to as an interested party, is a person or organization with a financial interest in the property you're insuring. Additional interests are added to insurance policies and notified when changes to the policy are made.
Additional Living Expenses (property)
Coverage that provides a specified amount per day for additional expenses in the event that you cannot live in your insured residence.
Parts made by a manufacturer not by its original company.
A licensed transactor of insurance who represents the Insurance Company and helps insurance customers obtain coverage.
Coverage that will pay the full insured amount of the vehicle or other property in case of a covered total loss, in contrast to the stated amount.
An automobile or truck, at least 25 years old which has been substantially restored to original condition, and which is used exclusively for parades, shows, and occasional drives.
A process used to determine the replacement value of damaged, destroyed, or lost items or property. (See Arbitration)
Non-judicial resolution of a dispute. Arbitration usually (in auto insurance) concerns matters of at-fault parties in an accident, resulting in liability for injury and levels of such injury. Arbitration is conducted by a single neutral arbitrator. If the parties cannot agree on an arbitrator, then each shall select and the two so selected shall appoint the single neutral arbitrator. In Auto Insurance, if the dispute involves the value of the vehicle or the amount of damage the resolution may be accomplished by appraisal which is conducted by three vehicle appraisers. (See Appraisal)
Auto Damage Adjuster
The auto damage adjuster is responsible for writing the repair estimate for your vehicle. This adjuster will also answer your questions about the repair process, your rental vehicle, or your total loss settlement.
An entity (person or organization) having legal possession of one's property without having a title (right to sell) to such property. Bailees with regard to automobiles may be auto repair facilities, valet parking, car washes, etc.
The act of effecting coverage.
A temporary contract of insurance is used to provide coverage to a policyholder until a formal policy can be issued.
Bodily Injury refers to the physical injury caused to a third party by the insured. This includes sickness, disease, pain and suffering, emotional distress, loss of income, and even death. (See Third Party)
A licensed individual who can act as an agent and broker representing one or more insurance companies.
The fee for services rendered is charged by a Broker. Such a fee is in addition to or separate from any Commission. (See Broker, Commission)
Maintaining two or more insurance policies from the same insurance company. Policyholders usually bundle insurance policies to take advantage of discounts offered by the insurance company.
Business Owners Policy (BOP)
Consist of three different types of coverages bundled together and designed for small businesses. A BOP includes commercial property insurance, general liability insurance, and business income insurance.
The act, of either party in an insurance contract, of ending the contract prior to its expiration. Both parties are required to give written notice to the other party to effect such cancellation. The insurer is required to give at least ten days (10) notice prior to written warning of such cancellation.
A request by a policyholder to an insurance company to pay for something covered under your insurance policy. After a policyholder files a claim, the insurance company will either approve or deny the claim.
An automobile that has been substantially restored to original condition, the make and model of which the public has shown an unusual degree of interest (i.e. 1957 Ford Thunderbird, 1964 Chevrolet Impala S/S, Early Mustang Convertibles, etc.)
(a) Impact of an automobile with another object or person outside the vehicle or the upset (overturning) of such vehicle; (b) That coverage which pays for damage to the insured's vehicle, in the event of the above. This coverage is usually subject to a deductible. (See Deductible)
Collision Deductible Waiver (CDW)
That coverage which, in the event the insured's car is damaged in an accident which is the fault of an identified Uninsured Motorist, waives (or eliminates) the deductible requirement under the collision coverage when repairing the auto. (See Collision; Deductible)
Combined Single Limit (CSL)
A limits structure for Bodily Injury and Property Damage Liability or Uninsured Motorist Bodily Injury coverage provides one single limit, which is the maximum payable for all damages in any one occurrence. Most commercial auto insurance is written CSL. (See Split Limits)
Commercial Auto Insurance
A policy that covers injuries and damages for vehicles (owned, rented, or leased) that are used as part of business operations.
Compensation to the producing agent, broker, or agency for writing and servicing the policy from the insurance company. Generally a percentage of the Premium. (See Premium)
Coverage to help pay for direct and accidental damage to the insured's automobile, other than that caused by Collision. All losses not specifically excluded are covered and such coverage usually has a deductible.
Also referred to as Terms and Conditions. These are typically circumstances that must be present for the coverage to apply.
Condominium Owners Policy
Insurance protects the condominium and personal property of the policyholder and covers the condo owner’s personal liability for covered injuries or damage to others.
When a policyholder has been insured by one or more insurance companies, without any lapse in coverage, for a specified period of time.
A promise or series of promises that are enforceable under the law.
Also known as the "Dec Page", is a page of an insurance policy that describes the terms of the coverage. It contains the insured's name, address, description of the property insured, maximum amount that will be paid out under the policy, the premium, etc.
An amount of money which, in the event of a covered loss, the insured is required to pay prior to the insurer being liable for any damages. The purpose of a deductible is to eliminate the expense of processing small claims.
Coverage is provided in most liability policies, which pay for the cost of defending the insured in the event of a lawsuit regarding a covered loss. Defense cost, in the auto policy, is said to be " unlimited," in that the policy requires the insurer to pay whatever is necessary, however, it is actually limited in that the insurer can pay policy limits in damages and thereby avoid the defense requirement entirely.
A decrease in the value of property due to wear, age, or other cause. Compare actual cash value.
An amount of money (usually a percentage of the premium plus any fees) that the insured must pay in order for the coverage to be bound. (See Bind)
Dwelling Fire Policy
Coverage offered for property that is, at least partially, rented out to others.
The date and time (usually at 12:01 a.m.) in which the policy contract begins. Actual coverage may begin earlier than this due to a Binder. (See Binder Date)
Employment Practices Liability Insurance (EPLI)
This type of insurance protects the business against employee claims of discrimination, wrongful termination, harassment, breach of contract, and more.
A written agreement that adds or subtracts coverage or changes an insurance policy.
Errors and Omissions Insurance (E&O)
Also referred to as Professional Liability Insurance, provides liability coverage against claims alleging your advice or professional services resulted in an injury or personal loss. This insurance helps with legal defense, even if the claims are false or fraudulent.
Coverage that applies only after some other policy has paid its full policy limit. This may result from policy structure, such as in the case of an Excess Liability or Umbrella policy, or as a result of two policies applying to the same loss. (See Primary)
Excess Liability Coverage
Liability coverage is written to provide higher Limits than those available in the Primary policy. This policy is only liable after the Primary policy has paid its full Limits for a covered loss. It is used where higher Limits of liability are needed, but the primary insurance company is unwilling or unable to provide such Limits. The Primary policy may provide Limits of 15/30/5 and the Excess policy 85/270/45 to provide total Limits of 100/300/50.
Language in a policy (or which may be endorsed onto a policy) specifies that a given circumstance is not covered. An example would be the intentional acts of the insured. If an insured were to damage property or cause bodily injury on purpose, the policy will not provide coverage due to the intentional acts exclusion. Another example would be the Named Driver Exclusion, which states that if a designated person specified by name is driving the automobile at the time of loss, the policy will not provide coverage.
A FireLine score is an evaluation tool used to rate a home's risk factors (fuel, slope, and road access) and provides an overall hazard score. Its Wildfire Hazard Score also identifies properties exposed to embers carried by the wind. Other similar evaluation tools include RiskMeter.
The insured. A first-party loss is a loss that involves injury and/or damage to the property of the insured. (See Third Party)
A legal document filed if you are convicted of certain traffic violations or driving under the influence of alcohol or drugs. The state may require you to file an FR-44/SR-22 to verify that you maintain auto liability coverage. Both forms are official documents showing proof of financial responsibility, but use different titles based on your state of residence.
The address where a vehicle is usually parked or garaged. This may differ from the policyholder's primary residence or policy mailing address.
- Someone who has been continuously licensed for three or more years;
- Someone who has been continuously licensed in the U.S. or Canada for eighteen months or more; and
- Has less than two traffic violations or only one at-fault accident not involving bodily injuries in the last 36 months.
- Has not been convicted of a DUI or manslaughter on or after January 1, 1996 - California law states that any driver convicted of a DUI or manslaughter on or after 1/1/1996 will not be eligible for consideration as a good driver for ten years from the conviction date. Good drivers may not be refused insurance by any auto insurance company in the State of California and must be given a twenty percent (20%) discount over the insurance company's best rates.
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.
Homeowners Insurance Policy
Insurance that protects the dwelling and personal property of the policyholder and covers the homeowner's personal liability for covered injuries or damage to others.
Hold Harmless Agreement
Usually, in a written contract, this agreement holds a contracted third party liable if the agreed-upon work they perform causes a loss.
A consideration of value that is insured under a policy. A person with insurable interest will suffer a genuine hardship if a loss should occur to the person or property they've insured.
The contractual transfer of the financial consequences of loss.
Anyone named on the declarations page or driving the insured vehicle with the permission of an insured. (See Permissive User)
The company that provides insurance coverage and services on a policy.
A promise made by the insurance company, which outlines its duties. Exclusions, Conditions, and definitions that appear later in the policy modify this promise.
A type of automobile that is typically available as separate components by a manufacturer that are assembled by the buyer. Kit cars usually require specialized car insurance.
The legal responsibility for injury done by the insured to a Third Party, or damage done to their property. (See Third Party)
The maximum amount payable under a given coverage. May be per person, per occurrence, per day, or per year. (See Split Limits; Combined Single Limit)
In the event of a total loss, the insurer's actual cash value (ACV) payment may or may not be sufficient to pay off the loan or lease. With this coverage, the insurance company will pay additional funds needed to end the contract.
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.
Typically the finance company holds the title to a vehicle. A loss payee gets paid from a loss claim.
The value of property in terms of what it can be sold for in the open market.
Mechanical Breakdown Protection
Extends mechanical breakdown protection for auto repairs beyond the basic warranty term provided by the vehicle manufacturer. Subject to a per breakdown deductible, this coverage applies to the specific vehicle assemblies named in the policy
Optional auto coverage that pays for the medical expenses of the Named Insured, members of his/her family, and passengers of his/her car if injured in a Collision accident. The Named Insured and Relatives are also covered if struck as a pedestrian. This coverage is Excess to any other medical insurance. (See Excess)
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/Transportation.
That person so listed on the Declarations and his/her spouse if a resident of the same household.
An event, risk, or hazard that is listed on and covered by your policy.
A borrowed or rented automobile.
An event or series of events that causes Bodily Injury and/or Property Damage. This may include repeated or continuous exposure to the same injurious condition.
In auto insurance, that person is seated immediately behind the steering controls of the automobile and no other person.
An entity not listed on the policy that uses the insured's vehicle with permission. Depending on the particular policy, certain individuals may not be covered, even if given permission by the insured (See Exclusions).
Personal Injury Protection (PIP) Coverage
This type of coverage protects a business in the event that a third party suffers an injury (not bodily injury) due to false arrest, wrongful eviction, slander, and a whole host of other reasons.
A legal contract contains the agreement between the Insurer and the Named Insured. A Policy is made up of five (5) parts:
- The Declarations
- The Insuring Agreement(s)
- The Exclusions
- The Conditions
- The Definitions
A preprinted brochure that contains all policy language except that contained in the Declarations Page and Endorsements. In the Policy Jacket, you will find the Insuring Agreement(s), Exclusions, Conditions, and Definitions.
Consideration paid by the insured for the policy. The cost of the policy.
The party who must pay first in the event of a loss. This would be due to the wording of the policy as in the case of an Excess Liability policy or where two policies apply to the same loss. (See Excess)
Private Passenger Auto
A self-propelled motor vehicle, with neither more nor less than four wheels, designed for use on streets and highways and subject to motor vehicle registration under the laws of California.
Proof of Non-Fault/ No B/I
Documentation required by the insurer to support not charging for an accident or not assigning points for bodily injury in an accident. Acceptable forms include a police report, a letter from the previous insurer, or a letter from the insurance company of the other party in the accident. The insurer may accept a copy of the claims check stub if it contains sufficient information.
Damage or destruction including loss of use of a Third Party's property. Reduction in value is the measure of Property Damage.
This may be awarded in a civil lawsuit that seeks compensation for injury, negligence, libel, or breach of contract.
Punitive and Exemplary Damage
That form of damages, awarded by the court, is intended to punish the wrong-doer, not to compensate the injured party. This form of damage is generally not covered by a liability policy.
An estimate of the cost of insurance given to a prospective client. This estimate does not constitute an offer and therefore is not enforceable. It is literally an invitation to the prospective client to make an offer. The offer, which may be accepted or rejected, is the policy application.
Reinstate with Lapse
The act of re-activating a policy that has ceased to be valid due to expiration or cancellation. There is a period between the cessation of coverage and its reinstatement during which the insurance company provided no coverage. (See Cancel)
That optional coverage will reimburse the insured for the expense of renting a vehicle while his/her vehicle is in the shop due to a covered loss. Coverage is usually written with a per-day Limit and a maximum number of days per Occurrence (See Limit; Occurrence).
Repair or Replacement Cost
The cost of repairing or replacing the damaged property with new property of like kind and quality without deduction for depreciation (See Actual Cash Value).
Another method an insurance provider uses to determine how much to reimburse the policyholder. When a property is damaged and replaced with new property or something of the same quality, this is the amount it cost. Unlike Actual Cash Value, Replacement Cost does not factor depreciation.
Also called an endorsement, this is an additional document to a policy that alters or enhances the insurance policy’s terms.
Rideshare refers to the taxi-like service that people provide through companies that connect passengers to drivers via a smartphone app. Examples of these companies are, but are not limited to Uber, Lyft, Sidecar, etc.
A form filed by the insurance company with the California Department of Motor Vehicles (DMV) states that the insured has an auto insurance policy that meets California financial responsibility requirements and requires that the DMV be notified if such policy is canceled. The requirement to file such a form is usually due to an uninsured accident or due negligent operator suspension. (See SR22)
A form filed by the insurance company with the California Department of Motor Vehicles (DMV) which is one of three (3) types: a) Owners filing - States that the person named on the form is insured while driving any vehicle that he/she owns subject to usual policy exclusions. b) Operators filing - States that the person so named is insured while driving any vehicle not owned subject to usual policy exclusions. c) Broad Form Owner/Operator filing - States that the person so named is insured while driving any vehicle. This form requires that in the event of policy cancellation the DMV be notified. (See SR1P)
Extended coverage that goes beyond the standard personal property coverage in homeowners’, renters’, or Condo Insurance. The Personal properties that are protected under this coverage are typically uncommon items that have a higher value than what would be covered in standard personal property coverage. Items will be listed separately and given an appraised value at the start of the policy so that the full amount will be covered if/when a claim is made for that item. Examples of scheduled items are jewelry, fine art, firearms, collectibles, furs, silverware, personal computers, cameras/photography equipment, musical instruments/equipment, etc.
A limits structure for Bodily Injury and Property Damage Liability or Uninsured Motorist coverage provides for Bodily Injury, one limit per person, which is the maximum payable for all damages payable to any one injured person, a separate limit per Occurrence, which is the maximum payable for all Bodily Injury in any one occurrence, and a third limit which is the maximum payable for Property Damage in any one Occurrence. Most personal lines auto insurance is written Split Limits. (See Limit; Occurrence; Combined Single Limit)
Stated Value or Stated Amount
A term used to value property and commonly used in auto insurance. It means that in the event of a loss, the insurer will pay the actual cash value, the repair or replacement cost, or the amount stated on the declarations page, whichever is the least. This, in effect, places a "ceiling" on the amount to be paid in the event of a loss.
The transfer of the insured's legal right against an injured Third Party to the insurance company. (See Third Party)
Someone not protected by the Insurance Policy. Typically the other party in an auto accident. (See First Party)
The optional auto insurance coverage will reimburse the insured for the expense of towing or repairs at the place of disablement in the event the vehicle becomes disabled. Coverage is written with a per Occurrence Limit (See Occurrence; Limit).
Trailer Liability is always provided by the towing vehicle (See Liability).
The review process by an insurance company. They will determine potential risks and premiums.
A broad liability coverage form that provides another layer of liability coverage so the business can settle claims and cover the cost of legal judgments. The form also provides coverage for some exposures that are not covered by the underlying policies such as coverage for libel and slander (Personal Injury). (See Liability)
Uninsured Motorist Bodily Injury (UMBI)
In the event the insured is injured in an accident which is the fault of an Uninsured Motorist, covers the Bodily Injury expense of the Named Insured, Relatives, and passengers in his/her auto. The coverage is generally written with a per-person and occurrence limit. (See Occurrence, Limit; Named Insured)
Uninsured Motorist Property Damage (UMPD)
In the event the insured's car is damaged in an accident which is the fault of an Uninsured Motorist, pays the cost of repairing the auto. This coverage is only written when the policy does not cover collision and has a variable maximum Occurrence Limit. (See Collision Deductible Waiver)
Voluntary relinquishment of a certain right.
Water Backup Coverage
A type of insurance protection that covers damage caused by the sudden and accidental overflow of water from sewers, drains, and pumps.