Insurance Terms

Terms Commonly Used in Private Passenger Automobile Policies

Actual Cash Value (ACV) - Unless otherwise defined in the policy, Actual Cash Value is defined in California as fair market value.  The fair market value of an item is the amount at which a knowledgeable buyer (under no unusual pressure) would be willing to buy, and a knowledgeable seller (under no unusual pressure) would be willing to sell.

Adjuster - A person who evaluates the damage caused by an accident or other covered loss and determines the amount to be paid.

Agent - A person authorized, by and on behalf of an insurer, to sell and service insurance policies.

Assigned Risk - A risk which is not ordinarily acceptable to insurers and is, assigned to an insurer participating in an assigned risk pool or plan.  Each participating company agrees to accept its share of these risks.

Automobile Insurance - A type of insurance which protects the insured against losses involving automobiles.  Different coverages can be purchased depending on the needs and wants of the insured, e.g., the liability coverages of Bodily Injury Liability, Property Damage Liability, and Medical Payments; and the physical damage coverages of Comprehensive and Collision.

Binder - A temporary or preliminary agreement which provides coverage until a policy can be issued/delivered.

Broker - A person who for payment of a fee (paid by you) procures insurance on your behalf.

Cancellation - The termination of an insurance policy before its normal expiration date.

Commission - That portion of the premium paid to the agent as compensation for his or her services.

Collision - Pays for damage to your car caused by a collision with another vehicle or with any other object, regardless who was at fault.

Commissioner of Insurance - The title of the head of most state insurance departments.  In some states, the Director or Superintendent of Insurance is used instead.

Comparative Negligence - The percentage of fault shared by each driver in an accident in which both contribute to causing the collision.

Comprehensive Coverage - Pays for damage to your car caused by reason other than collision, such as fire, theft, windstorm, flood, etc.

Claim - Notice to an insurer of a loss that under the terms and conditions of a policy may be covered.

The Declarations (Dec) Page - The front page of your policy is called the Declarations page. It contains useful information such as:

• the exact name of your insurance company
• the policy number
• your coverages and premiums
• your deductibles, if applicable
• the vehicles insured, their identification numbers, and the classifications for rating purposes.

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

Exclusion - A contractual provision in an insurance policy that denies coverage for certain perils, persons, property, or locations.

Insured - The person(s) entitled to coverage in case of an accident or loss.

Insurer - The insurance company providing the insurance.

Liability Insurance - Coverage for a policyholder's legal liability resulting from injuries to other persons or damage to their property.

Limits - The maximum amount of benefits the insurance company agrees to pay in the event of a loss.

Medical Payments Coverage - Covers the medical costs (up to the specified limit you choose) resulting from an auto accident for you, your family, and others in your car. It pays regardless of fault.

Nonrenewal - The termination of an insurance policy at its normal expiration date.

Policy - Written contract of insurance.

Premium - The money paid for an insurance policy based upon the coverage provided.

Premium Finance Company - A lending institution that finances insurance premiums for a fee.

Private Passenger Automobile - Four-wheeled motor vehicles of the private passenger, station wagon, or van type.  Private passenger automobiles are designed for use on public highways and subject to motor vehicle registration.

Producer - A term applied to an agent, solicitor or other person who sells insurance.

Quote - An estimate of the cost of insurance based on information supplied to the insurance company.

Replacement Cost - Replacement cost is the cost of replacing lost or damaged property with new property of like kind and quality, at current market prices.

Salvage - Property taken over by an insurer to reduce its loss.

Subrogation - The process in which an insurance company, after paying a loss to its insured, recovers the amount of the loss for damages (plus the insured's deductible) from the legally liable party.

Surcharge - An extra charge applied to the premium by the insurer, usually for at fault accidents or moving violations. 

Underinsured Motorist Coverage - Pays for bodily injury or wrongful death caused by an underinsured motor vehicle (that is, a vehicle which is insured, but at an amount that is less than your uninsured motorist bodily injury (UMBI) limits).

Uninsured Motorist Coverage (UMC) - Provides coverage for a policyholder involved in a collision with a driver who does not have liability insurance. UMC comes in two parts:

• UMBI and uninsured motorist property damage (UMPD). UMBI coverage pays for injuries to you or any person in your car when there is a collision with an uninsured driver.
  
• UMPD coverage pays for the property damage to your car when there is a collision with an identified uninsured driver.

Disclaimer

We are required by law to disclose the following:

1. This brochure is for informational purposes only.
2. The actual terms of an insurance policy and related law prevail over the information provided in this brochure.
3. In the case of a dispute, the insurance policy is controlling and a court of law will rely on the policy as it is written to resolve the dispute.
4. The policy is the only document that describes what the insurance company will pay.
5. The information contained in this brochure does not create rights or obligations on the part of the insured, the insurer, the agent, the broker, or the state.
6. This brochure is not intended to be a substitute for the actual insurance policy.
   

Glossary of Homeowners Insurance Terms

Actual Cash Value (ACV) - Unless otherwise defined in the policy, actual cash value in California means fair market value. The fair market value of an item is the dollar amount that a knowledgeable buyer (under no unusual pressure) is willing to pay, and a knowledgeable seller (under no unusual pressure) is willing to accept.

Agent - A licensed individual or organization authorized to sell and service insurance policies for an insurance company.

Binder - A short-term agreement that provides temporary insurance coverage until the policy can be issued or delivered.

Broker - A licensed individual or organization who transacts insurance on your behalf.

Claim - Notice to an insurance company that a loss has occurred that may be covered under the terms and conditions of the policy.

Declarations - Usually the first page of an insurance policy that contains the full legal name of your insurance company, your name and address, the policy number, effective and expiration dates, premium payable, the limits of insurance, covered property, deductibles, and any applicable lienholder information.

Deductible - The amount of loss that the policyholder is responsible to pay up-front before covered benefits from the insurance company are payable.

Depreciation - A decrease in value due to age, wear and tear, or obsolescence.

Endorsement - A written agreement that changes the terms of an insurance policy by adding or subtracting coverage.

Exclusion - A contractual provision in an insurance policy that denies or restricts coverage for certain perils, persons, property, or locations.

Insured - The policyholder who is entitled to covered benefits in case of an accident or loss.

Insurer - The insurance company that issues the insurance policy, and agrees to pay for losses and provide covered benefits.

Premium - The price of insurance paid to the insurance company for a policy.

Quote - An estimate of the cost of insurance based on information supplied to the agent, broker or insurance company.

Replacement Cost - The amount that it costs to replace lost or damaged property with new property of like kind and quality in the local market.