A
Abandonment
1) In ocean marine insurance, the transfer by the insured to an insurer of all rights, title, and interest in and to the insured property, in return for the sum insured. It is effected by the insured's tender of such transfer (notice of abandonment) and the insurer's acceptance. A valid tender can be made only when the facts show that there has been a "constructive total loss" or "actual total loss" of the insured property through an insured cause of loss. In such case, however, the insured can recover the sum insured as for a total loss, even though the insurer has refused to accept the tender and there has been no abandonment.
2) The word also appears in "sue and labor" clauses of various inland marine policies by way of a stipulation that compliance with the requirements of the clause shall be without prejudice to either the insured or the insurer respecting waiver or acceptance of abandonment.
3) In property insurance, abandonment is relinquishing ownership of damaged property to an insurer to permit a total loss claim to be made; but most commercial property coverage forms, dwelling policies, and the homeowners policy prohibit such abandonment. Instead, these policies require the insured to protect damaged property from further loss.
Absolute Beneficiary
A provision in a life insurance policy stating that the beneficiary cannot be changed unless the insured obtains the beneficiary's consent.
Absolute Liability
Liability that exists and is imposed upon a party, even though no negligence or fault was committed by that party. Absolute liability is most often imposed when the circumstances of the operation, product, or activity are considered highly hazardous or dangerous.
Abutting Coverage
When you have two or more policies providing the same coverage at the same time.
Accelerated Death Benefits (ADB)
In a life insurance policy, this is when the benefits (or payoff) are paid before the death of the insured person in cases where that person is terminally ill and may need those benefits for medical and living expenses.
Accelerated Endowment
With respect to life insurance, some policies will offer an option to convert the policy into an endowment before its normal or set maturity date by using the accumulated policy dividends for this purpose.
Accelerated Option
With respect to life insurance, some policies will offer an option to convert the accumulated policy dividends and cash value to pay off the policy.
Accident
An event or occurrence that is unintended, unforeseen, and unexpected; something which could not be considered as a foreseeable occurrence and consequence of an undertaking; a casualty or mishap.
Accident Control
Inspection and engineering work done to help remove potential causes of loss. Loss prevention is also referred to as safety engineering, accident prevention, accident control, or loss prevention.
Accident Experience
1. A summary of claims activity, which details the insured's frequency of accident to a selected unit of measurement, thus making the loss experience more meaningful.
2. In workers compensation insurance, the rate of disabling injuries, number of lost work days due to accidents, or the number of first-aid cases are among items that may be considered in an accident experience.
Accident Prevention
All the ways and means used to avoid the occurrence of an accident or to reduce its consequences if it does occur, such as the control of personal performance, machine performance, and physical environment, including the training needed to reduce the number of accidents and cost of accidental injuries. Accident prevention is one of the less publicized functions of risk managers and insurers, many of which improve safety in industry, the home, and on the roads through safety engineering and research. Also called loss prevention, safety engineering, accident control, or loss prevention.
Accident Report
Either the report that is used to document the time, cause, results, injuries, parties, and other pertinent facts of an accident for insurance purposes or a similar type of report prepared by law enforcement persons as a result of an accident.
Accidental Death
Any death that results from causes other than natural causes or homicide.
Accidental Death and Dismemberment (AD&D)
A specific type of life insurance policy that pays benefits in the case of the death or dismemberment of the insured from accidental causes. If dismemberment occurs, benefits are paid on a periodic basis, such as weekly, bi-weekly or monthly for the injury. The amount of the benefit payment is based on the type and severity of the dismemberment.
Accidental Death Benefit
Some life insurance policies have provisions that provide for an additional benefit payment in the case of an accidental death.
Account Premium Modification Plan
Rating plans that have been developed for accounts and that apply to specified lines of business, most often property lines. Usually based on some combination of size and loss ratio with respect to that individual account. These rating plans can result either in credits or debits to the risk.
Accounts Receivable Coverage
This coverage provides protection for the following losses:
1. All sums due you from customers, providing you are unable to effect collection thereof as a direct result of loss or damage to records of accounts receivable.
2. Interest charges on any loan to offset impaired collections pending repayment of such sums made uncollectable by such loss or damage.
3. Collection expense in excess of normal collection cost made necessary because of such loss or damage.
4. Other expense, when reasonably incurred by you in re-establishing records of accounts receivable following loss or damage.
Accumulate at Interest Option
One of the dividend options of participating life insurance policies. Dividends paid by the insurer are left with the insurance company to accumulate interest.
Actual Cash Value (ACV)
The basis of loss settlement in property insurance policies, which takes into consideration factors such as replacement value less depreciation, market value, rental value, the use of the building, the area in which it is located, obsolescence, assessed valuation, and any other factor that would have an effect upon the value. A working rule-of-thumb definition, however, is "replacement cost new at the time of loss, less depreciation."
Click Here for a detailed comparison between Actual Cash Value and Replacement Cost.
Additional Insured
An individual or entity that is not automatically included as an insured under the policy of another, but for whom the named insured's policy provides a certain degree of protection. An endorsement is typically required to effect additional insured status. The named insured's impetus for providing additional insured status to others may be a desire to protect the other party because of a close relationship with that party (e.g., employees or members of an insured club) or to comply with a contractual agreement requiring the named insured to do so (e.g., customers or owners of property leased by the named insured).
Additional Living Expense Insurance
Insurance for the extra amount it costs an insured to live until repairs are made to the insured's dwelling.
Additional Named Insured
1. An individual or entity, other than the first named insured, identified as an insured in the policy declarations or an addendum to the policy declarations.
2. An individual or entity who is added to a policy with the status of named insured after the policy is written. Such an individual or entity would have the same rights and responsibilities as an individual or entity named as an insured in the policy declarations (other than those rights and responsibilities reserved to the first named insured). In this sense the term can be contrasted with additional insured, an individual or entity added to a policy as an insured but not as a named insured. The term additional named insured has not acquired a uniformly agreed-upon meaning within the insurance industry, and use of the term in the two different senses defined above often produces confusion in requests for additional insured status between contracting parties.
Additions and Alterations Coverage
Additions and Alterations coverage protects any additions, alterations, and improvements you make to your unit, for up to 10% of your contents limit. This coverage can be increased.
Adjuster
See Claim Adjuster
Advertising Injury Liability Coverage
"Advertising Injury" means injury rising out of an offense committed in the course of your advertising activities, if such injury rises out of libel, slander, defamation, violation of right of privacy, piracy, unfair competition or infringement of copyright, title or slogan.
Agent
An individual who acts as a representative for the company and sells insurance, usually on a commission basis. This individual could be an 'exclusive' or 'non-exclusive' agent.
Aggregate
A limit in an insurance policy stipulating the most it will pay for all covered losses sustained during a specified period of time, usually one year. Aggregate limits are commonly included in liability policies. While not often used in property insurance, aggregates are sometimes included with respect to certain catastrophic exposures, e.g., earthquake and flood.
The dollar amount of reinsurance coverage during one specified period, usually 12 months, for all reinsurance losses sustained under a treaty during such period.
Agreed Amount Endorsement
This endorsement is an agreement made by the insurance company wherein it waives the coinsurance clause on the specified property. As long as this endorsement is in effect, there would be no coinsurance penalty at the time of a claim.
By combining an Agreed Amount Endorsement with a Replacement Cost Endorsement (see separate explanation), you can obtain an unusually high quality of insurance coverage.
All-Risk Insurance
An insurance policy that covers everything not specifically excluded. Most often associated with property coverage. An All-Risk policy is the opposite of a Named Perils insurance policy.
Amendment
A change to the basic policy contract. An amendment alters the policy; an endorsement adds to it.
Anti-Theft Device
A device that deters auto theft. Autos equipped with these devices may entitle you to a discount on your insurance premiums.
Appraisal
Process that determines the value of property, or the extent of damage, usually performed by an impartial expert.
Appreciation
The amount by which property has increased in value.
Appurtenant Structures
Structures that are also on the property covered by an insurance policy. Examples might be a storage shed or barn. Most property policies have a limit they will pay for other structures based on a percentage of the main buildings value.
Arbitration
A process of settling a dispute through an impartial party. It is used as an alternative to litigation.
Assigned Risk
A method to provide insurance to those who cannot qualify for insurance in the regular market. In mandatory insurance states, everyone must have insurance regardless of their risk or record. These states require that each company writing insurance in their state must take a number of clients that they would not insure otherwise.
At-Fault
The party that is legally liable for the damages in an accident.
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.
Automobile Coverage
Any insurance pertaining to the use or ownership of a vehicle. Common coverages are liability, physical damage and personal injury.
B
Bailee Coverage
Inland marine coverage on property entrusted to the insured for storage, repair, or servicing. It is typically purchased by businesses such as dry cleaners, jewelers, repairers, furriers, etc.
Basic Limits
The minimum limits of liability as required by state or local law.
Beneficial Interest
Denotes someone who is not neccesarily the insured on a property policy but has a financial interest in the property (i.e. they would benefit from any insurance on the property).
Beneficiary
The person or persons named to receive the benefits (payout) from a life insurance policy.
Binder
A binder is a legal agreement that serves to effect insurance coverage for a specified period of time until the actual insurance policy can be issued. A binder can be issued by either an insurance agent or company and must provide the following information:
Name of insured
Type of insurance coverage
Limits of insurance
Covered perils
Name of insurance company
Blanket Coverage
For property insurance, a blanket sets a single limit (maximum payout) for multiple buildings or risks. For health insurance, a blanket covers an entire group for a list of coverages (i.e. medical, dental, etc.).
Blanket Insurance
Blanket insurance provides coverage under a single limit for the following:
Two or more items (e.g., Building and/or Contents)
Two or more locations (e.g., Location A and/or Location B)
A combination of items and/or locations
Block Policy
A block policy provides a form of inland marine insurance. It covers loss to the property of a merchant, wholesaler, or manufacturer including:
Property of others in the insured's care, custody, or control
Property on consignment
Property sold but not delivered
A block policy will cover loss caused by most perils (including transportation), subject to certain limitations as specified in the policy exclusions. Common block policies are jeweler's block and furrier's block policies.
Bobtail Coverage
Covers an empty truck returning from a dropoff (known as deadheading) when the contracting client's insurance may not be in effect.
Bodily Injury Coverage
"Bodily injury" is defined as meaning bodily harm, sickness, or disease, including required care, loss of services, and death that results.
Boiler and Machinery Coverage
This form of insurance provides mechanical breakdown coverage generally not available under any other insurance policy. A Boiler and Machinery policy can protect an insured against the effects of catastrophic property loss, such as steam boiler explosion or an expensive breakdown of machinery and equipment.
But it's not just the physical damage caused by the explosion or breakdown that's of concern. While repairs are being made, valuable time and profits are lost. Business Interruption coverage protects against this. Often Extra Expense coverage is required to keep the business in operation regardless of cost. Consequential Damage and Refrigeration Interruption insurance protect against spoilage as the result of a breakdown. Many times these business interruption, extra expense and spoilage losses can be much more extensive than the damage to the equipment itself.
Equally important is the very valuable inspection service that Boiler and Machinery insurance can provide. Not only does this service satisfy most jurisdictional inspection requirements, but it also can benefit the insured by providing sound loss control recommendations that can help assure efficient operation and longer equipment life.
Virtually every commercial business has some type of Boiler and Machinery insurance exposure. Keep in mind that mechanical breakdown coverage encompasses much more than just boilers and pressure vessels. It also can include refrigeration equipment, air conditioning equipment, various types of piping, turbines, engines, pumps, compressors, blowers, gearing, shafting, electric motors, generators, transformers and assorted other types of mechanical and electrical equipment. In fact, many policies are written for insureds who do not own or operate boilers or pressure vessels, but yet have sizable mechanical and electrical exposures.
Bond
A three part contract in which one party guarantees the performance, act or behavior of another party for a third party. The two most common types of bonds are Surety and Fidelity.
Builders Risk Coverage
Indemnifies for loss of or damage to a building under construction. Insurance is normally written for a specified amount on the building and applies only in the course of construction. Coverage customarily includes fire and extended coverage and vandalism and malicious mischief. Builders risk coverage can be extended to a "special" form as well. The builders risk policy also may include coverage for items in transit to the construction site (up to a certain percentage of value) and items stored at the site.
Business Auto Coverage
Designed to provide a standard method of insuring vehicles other than private passenger automobiles.
Business Interruption Coverage
This form of insurance provides loss of income coverage (i.e. "disability income") for your business by replacing your operating income during the period when damage to the premises or other property prevents income from being earned.
It is by means of your operating income that your business meets its expenses of payroll, light, heat, advertising, telephone service, etc., and from which your profit is derived. If you suffer a business interruption and have to close for several months or operate at a reduced pace because of fire or other perils covered by your Earnings insurance, this income will cease or be reduced.
For the purpose of this insurance coverage, "earnings" are defined as the actual loss sustained by the insured as a direct result of business interruption necessitated by damage or destruction of real or personal property. The damage or loss must be caused by the insured perils.
Furthermore, "business income" is defined as the sum of total net profit, payroll expense, taxes, interest, rents, and all other operating expenses earned by the business.
The amount of coverage your Earnings insurance provides is established on the basis of either amount of insurance or actual loss sustained for each 30-day period of necessary business interruption caused by damage or loss from covered perils. There are several ways to set up Business Interruption depending upon your particular business. Monthly limitations, coinsurance, maximum time period to be paid, etc.
In addition to Buisness Interruption insurance, it is also advisable to carry Extra Expense insurance (see separate coverage explanation).
Businessowners Policy (BOP)
A single insurance policy which provides many types of coverages such as business auto, liability and property. BOPs are created and available for small to medium sized businesses and specifically for many specialized industries.
C
Cancellation
The end of an insurance policy. Usually applied to the premature ending of the policy for nonpayment but may be used to describe the ending of any insurance policy.
Captive Insurance Company
A captive insurance company is an insurance company that has been set up to provide coverage at a lower cost than available by going through the general insurance market. The company's stock is controlled by one interest or a group of related interests so as to provide coverage for their business operations. A captive insurance company may be a nonadmitted, nonresident, or foreign insurer. Sometimes it may provide reinsurance to a self-insure or a domestic company.
Care, Custody or Control
Most liability policies have provisions that exclude coverage for physical damage or loss to property while it is in the care, custody or control of the insured. Two methods are available to buy back some or all of the care, custody or control coverage: either endorsements to the liability policy, such as the broad form property damage endorsement or its company-specific equivalent which will provide limited coverage, or the purchase of inland marine coverages such as bailees' forms.
Cargo Insurance
Cargo insurance is another name for inland marine insurance which covers loss to moving or moveable property and is an outgrowth of ocean marine insurance. Historically, ocean marine insurance held the transporter responsible for property loss before, during, and after the completion of the voyage. In the 1800's, the non-ocean portion of the journey grew as cargoes were transferred to barge, etc., and the term "inland marine" was coined. Inland marine policies became known as "floaters" since the property to which coverage was originally extended was essentially "floating."
Carrier
1) The insurance company which provides the protection for a particular risk.
2) A transporter of goods, a form of bailee for which insurance is provided. A common carrier is one which is available to the public for the transport of any goods. A private carrier transports only the goods of its owner.
Casualty Insurance
Insurance concerned with legal liability for personal injuries or damage to property of others, including many other types of insurance, such as workers compensation, plate glass, burglary, boiler and machinery, aviation, etc. "Casualty" is generally accepted to cover all classes outside the definition of "property insurance," so that a property and casualty company would tend to handle all forms of insurance other than life.
Catastrophe
A severe loss, usually involving many risks, or having substantial financial impact.
Cause of loss
Previously called "peril," this is the actual type of event that causes the loss. Examples are: theft, collision, earthquake, flood, fire or mischief.
Causes of loss forms
Forms that may be added to the Commercial Property Coverage Part. They describe the perils (basic, broad or special) and exclusions that apply to the covered property.
Cemetery Professional Liability Insurance
Liability coverage specifically designed to meet the needs and exposures of owners or operators of a cemetery to protect for damages suffered by third parties, as a result of the rendering or failing to render professional services as the owner, operator, management or staff of a cemetery.
Certificate Holder
The individual or business that requests and receives written verification of insurance coverage on an individual or business. The insurance company issues the certificate of insurance.
Certificate of Insurance
A short-form documentation of an insurance policy.
Certified Act of Terrorism
Any terrorist act that is described as an action that qualifies for coverage under the Terrorism Risk Insurance Act (TRIA) of 2002. Specifically, terrorist acts are certified when the U.S. secretary of the treasury, secretary of state and attorney general makes the determination. Any such act must involve an attempt to coerce the behavior of the targeted populace (civil or governmental), must exceed a certain dollar amount (five million dollars) in total damages, and must occur at the direction of a foreign party.
CIC--Certified Insurance Counselor
Certified Insurance Counselor designation sponsored by the Society of Certified Insurance Counselors. Headquarters: Austin, TX.
CGL--commercial general liability policy
The commercial general liability policy provides comprehensive general liability coverage for commercial risks covering all liability exposures for all locations and causes of loss except those specifically excluded or limited either within the coverage form or by endorsement. Protection may be provided on either an occurrence type of policy or on a claims-made basis.
Claim
1) The formal request by a policyholder or a claimant for payment of loss under an insurance policy.
2) The final amount made in payment of a covered loss.
Claims-made
A liability insurance method covering losses from claims asserted against the insured during the policy period, regardless of whether the liability-imposing causes occurred during or prior to the policy period. (However, many underwriters may not cover liability-imposing causes occurring prior to the policy period.) The coverage trigger is based on the retroactive date stated in the Declarations.
Claims-made Trigger
In order to trigger coverage in a claims-made liability policy, a claim must be made against the insured during the policy period and the injury or damage alleged in the claim must not have occurred prior to the retroactive date specified in the policy Declarations.
Class Rate
Rates developed for a line of property/casualty business based on the concept of what is average for that particular class. For example: the class rate for fire on a frame grocery store would be based on the average statistics for all frame grocery stores and would be applied to all frame grocery stores unless otherwise specifically rated. Rates are then deviated for other factors such as the public protection class and, when applicable, individual risk characteristics.
Clergy Professional Liability
Professional liability for clergy members for claims that might arise out of rendering or failing to render services related to their professional duties, including counseling.
CLUE® Report
Stands for Comprehensive Loss Underwriting Exchange. CLUE reports provide information on a given person's loss history, generally under an auto or homeowners policy. Insurers typically use these reports to assist in determining whether an applicant's request for coverage is accepted.
COBRA--Consolidated Omnibus Budget Reconciliation Act of 1985
A federal act making provision for the continuation of an employee's health insurance coverage, as well as the coverage for dependents, should the employee terminate his or her employment. This act is in effect whether or not the termination was voluntary. Further, it applies to employer-sponsored group health plans with 20 or more employees.
Coinsurance
In health insurance, the coinsurance clause specifies the percentage of medical expenses which the company will pay and the percentage which the insured will bear (e.g., 80/20, 75/25, 50/50). Coinsurance usually applies after the insured has met his/her deductible.
- Example: Your health insurance policy lists your coinsurance at 80/20. This means that after the deductible has been met, the health insurance company will cover 80% of your covered medical costs and the insured is responsible for 20% of the costs, until the out-of-pocket maximum limit is reached.
In property insurance, a condition of the policy requiring the insured to maintain insurance at least equal to a stipulated percentage (80%, 90%, 100%, etc.) of value in order to collect partial losses in full. At the time of a loss, the insurance company will conduct a full inventory and appraisal of the property. If the insurance is less than the minimum required, a penalty is applied to the amount of the loss based on a proportionate formula of the amount of insurance carried divided by the amount of loss required to be carried.
- Example: A recent appraisal has estimated the replacement cost of your building to be $1,000,000. Your property insurance policy contains a coinsurance clause requiring 80% coinsurance. Therefore, you are required to insure the building to at least 80% of its value, or $800,000. As long as you maintain coverage of at least 80% of the building's value, then you would be able to collect full reimbursement for a claim up to the policy limit of $800,000.
- However, if you do not meet the requirements of the coinsurance clause, then you would be subject to a coinsurance penalty in the event of a loss.
- Example: The replacement cost value of your building at the time a loss is still $1,000,000 with an 80% coinsurance clause. However, you only have the building insured for $400,000, instead of the required $800,000. A fire causes $200,000 worth of damage to your building. When you file a claim for the damages, the insurance company informs you that you are in violation of the coinsurance clause and cannot collect the full amount of the claim. The amount of your payment is determined by the following formula:
- (Amt of Insurance Carried / Amt of Insurance Should Carry) x Loss Amount = Payment
- Therefore, in our example the insured would be paid:
- ($400,000 / $800,000) x $200,000 = $100,000 - which is only 50% of the total claim.
Collision Insurance
Auto insurance coverage that pays for damage to your covered vehicle (up to its actual cash value), less the deductible amount, for losses caused by collision with a physical object, such as another vehicle or structure.
Combined Single Limit
Insurance policy limits under a liability policy that indicate a single dollar amount that applies to either/or bodily injury and property damage that may occur during an eligible occurrence.
Commercial Auto
Coverage designed to provide a "standard" form for insuring commercial vehicles (other than private passenger cars).
Commercial Crime Policy
This ISO crime policy incorporates most commercial crime coverages into one policy. It is an ala carte policy that starts with eight insuring agreements but can be expanded to include up to eleven additional insuring agreements. The insured can choose one or more insuring agreements.
Commercial General Liability Policy (CGL)
The commercial general liability policy provides comprehensive general liability coverage for commercial risks covering all liability exposures for all locations and causes of loss except those specifically excluded or limited either within the coverage form or by endorsement. Protection may be provided on either an occurrence type of policy or on a claims-made basis.
Commercial Lines
Types of insurance written for businesses instead of individuals (for which the term personal lines applies)
Commercial Package Policy (CPP)
A package policy designed for commercial insureds that can provide in one policy several lines of insurance business as needed by that commercial venture. Lines of business which may be included in the CPP are property/glass, general liability, inland marine, crime, boiler and machinery insurance, and commercial automobile.
Commercial Property Policy
Commercial property policy provides coverage for real and personal property that is used in a business.
Commercial Umbrella
A form of liability insurance protecting policyholders for claims in excess of the limits of their primary automobile, general liability and workers compensation policies, and for some (few) claims excluded by their primary policies which are subject to a deductible, which may range from $250 for a personal umbrella to a minimum of $10,000 for a commercial umbrella.
Completed Operations Coverage
Protection for a business which sells service instead of products against liability claims arising out of work completed away from the business premises. Differs from products liability coverage, which protects against products liability claims.
Composition Roof
A roof made of asphalt shingles, asbestos shingles or tar paper roofing, or the usual forms of roofing materials. It does not refer to slate roofs, tile roofs, or metal roofs, which are not combustible, nor does it refer to wood shingle roofs, which are usually so designated.
Comprehensive Coverage, "Comp", Other Than Collision Coverage
Auto insurance coverage that pays for damage to your covered vehicle (up to its actual cash value), less the deductible amount, resulting from incidents other than collision, such as damage caused by: fire, theft, glass breakage, riot, windstorm, hail, and contact with an animal.
Construction Bond
A surety bond designed to protect the owner of property on which a building or structure is being built should the contractor not complete the job. If the contractor fails to fulfill the construction contract, the insurer must then make sure the work is finished.
Continuing Expenses
A term used in commercial time element coverage to indicate those expenses that will continue during the restoration period after a business is closed because of a loss. These expenses may include such items as taxes, certain executive and key person payroll, loan payments, utilities, and other expenses the insured may be contractually obligated to continue.
Contract Bond
In general terms, a surety bond guaranteeing the performance of a contract, usually associated with construction work, but possible for almost any kind of contract. Sometimes called a performance bond.
Contractors' Equipment
Equipment used by contractors in their business operations. Examples may be anything from concrete forms, asphalt plants, bulldozers, cherrypickers, and scaffolding, to small hand tools. This equipment is most often protected by inland marine insurance coverages due to its mobile nature.
Contractors Protective Liability
A policy which provides liability coverage for the insured for the negligent acts of contractors and subcontractors hired by the insured. May also cover for their own negligent supervision of the work performed.
Contractual Liability Insurance
Insurance coverage to provide protection for the additional liability exposure an insured has assumed in a contract. Only specified contractual liability exposures are covered in standard liability policies for items such as leases and related types of contracts because the assumption of such liability in a contract is not only voluntary, but may be extensive. When contractual liability insurance is purchased, the contracts covered must be individually evaluated for the type and amount of exposure posed.
Contributory Negligence
A common law defense in which the plaintiff must be entirely free from fault in order to recover from a negligent defendant. If the plaintiff has in any way been guilty of neglect, the plaintiff cannot recover from the defendant. This principle has been modified in some states by legislation and interpretation by the courts.
Copayment
A flat, preset fee paid by an insured for office visits, drugs, and other medical services as member of an HMO or preferred provider service. These copayments are normally a small fraction of the overall cost and act much like a service charge or handling fee.
Crop-hail Insurance
Insurance against hail damage to growing crops. Although hail is the basic peril in these policies, cover is often granted for crop damage resulting from additional perils such as fire, windstorm, lightning, drought, frost, excessive heat, snow, sleet, etc.
D
DEATH BENEFIT
(1) For a life insurance contract, the amount of money paid by an insurer to a beneficiary when a person insured under the life insurance policy dies.
(2) For an annuity contract, the amount of money paid to a beneficiary if the contract owner dies before the annuity payments begin.
Depreciation
The reduction in value of tangible property caused by physical deterioration or obsolescence.
(See appreciation.)
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L
Lessee
The party that is granted or that assumes a lease obligation and who also assumes the companion rights to use the property. Under an insurance contract, a lessee acquires a separate insurable interest in the property.
Lessor
The party who grants permission to another party to take possession of and to use property. The lessor typically also determines how the property may be used and, under insurance contracts, retains an insurable interest in the property.
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Out-of-pocket Maximum
The total payments that must be paid by a covered person (i.e., deductibles and coinsurance) as defined by the contract. Once this limit is reached, covered health services are paid at 100% for health services received during the rest of that calendar year.
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R
Replacement Cost
Replacement cost is the amount it would take to replace the property with like property of the same quality and construction. No deduction is made for depreciation or obsolescence. Click Here for a detailed comparison between Actual Cash Value and Replacement Cost.
Replacement Cost Coverage
This form of insurance coverage pays the dollar amount needed to replace damaged personal property or dwelling property without deducting for depreciation but limited by the maximum dollar amount shown on the declarations page of the policy.
(See actual cash value)
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Confusing
insurance jargon
If you cannot find the answer to your question here, then please give us a call and let an agent help you translate.
Get the coverage you need
Are you unsure about the specific exposures and risks you face? Or the protection you need? Our insurance needs analysis tool is a good place to start. It will help you to identify your potential exposures to loss and list the coverages that may be appropriate for you. Click the link below to access our free individual risk analysis tool.
