A
ACCIDENT: An unforeseeable event which may produce injury or property damage.
ACCIDENT DATE: Date (month/date/year) when the accident occurred.
ACCIDENT FREQUENCY: A method of measuring the safety performance of a policyholder for a specified period by multiplying the number of injuries by one million and dividing by the total number of workhours worked; or when the actual workhours are unknown, the measurement may be in terms of number of accidents for each $100,000 or payroll. With automobile policyholders the exposure may be either number of miles or number of vehicles.
ACCIDENT RELATED: Specific damage sustained to a vehicle that is generally believed to be related to, or resulting from, the incident that caused the primary damage. Also May be termed “loss” related. May include one-time use parts or related repair procedures (08/2018)
ACCIDENT YEAR: The year during which an accident takes place without regard to the year in which it is reported.
ACTUAL CASH VALUE: An amount equal to the replacement cost of lost or damaged property at the time of loss, less depreciation.
ACTUAL DAMAGES: Damage that really exists as distinguished from potential or possible damage.
ACTUARY: A highly specialized mathematician professionally trained in the risk aspects of insurance, whose functions include the calculations involved in determining proper insurance rates, evaluating reserves, and in various aspects of insurance research.
ADJUDICATION: The process of deciding whether to pay, pend, or reject a claim based upon the information submitted, the eligibility of the recipient, and the available benefits.
ADJUSTER: A person who investigates and settles losses for an insurance carrier.
AGENCY SYSTEM: Insurance distribution system utilizing licensed agents.
AGENT: Laws of all states require all insurance agents to be licensed by the state to sell insurance.
ALL RISK INSURANCE: Property and liability coverage for all perils except those specifically excluded in the policy,
ALTERNATE DISTRIBUTION SYSTEM: Any insurance distribution system that does not utilize person-to-person contact.
AMOUNT OF LOSS: The extent of loss, expressed monetarily.
APPRAISAL: A survey by an impartial expert estimating quantity, quality or value of property to determine its insurability or the amount of loss sustained.
ARBITRATION: Determination by impartial experts of the value of property or the extent of damage. Many insurance policies provide for appraisals where the company and the insured cannot agree on the amount or the extent of a loss.
ARSON: The willful and malicious burning of property.
ASSIGNED RISK: A risk that is assigned to a pool of participating insurers who agree to accept either the profit or loss associated with the risk.
ASSURED: Synonymous with “insured”. One who has an insurance policy with an insurance carrier.
AUTOMOBILE PHYSICAL DAMAGE INSURANCE: Covers damage or loss to automobile of policy holder.
AUTOMOTIVE INSURANCE, COMPREHENSIVE: Insurance against any physical loss to an automobile except by collision or upset.
B
BASIC POLICY: Standard contract for a given policy type before the inclusion of specific riders, endorsements, exclusions or conditions.
BENEFIT: Amount of money provided by an insurance policy to be paid for losses covered under the terms of the policy.
BINDER: A written or oral contract issued temporarily to place insurance in force immediately prior to issuance of a new policy or endorsement of an existing one. A binder is subject to payment of the premium and provides coverage under the terms of the policy to be issued, unless otherwise specified.
BLANKET COVERAGE: A Blanket form is one under which property is insured under a single amount applying to several different pieces of property rather than a specific amount of insurance on each property.
BODILY INJURY (BI): Injury to the body of a person. In insurance, also refers to the coverage afforded for financial protection against bodily injury of a person resulting from an accident.
BROKER: One who is a solicitor of insurance on behalf of his or her clients. Most states require that brokers be licensed as agents.
C
CLAIM: A request for payment for a loss that may come under the terms of an insurance contract. There are two types of claims. A first party claim is one made by the policyholder for reimbursement by his or her company. A third party claim is one by a person against a policyholder of another company and the payment, if any, will be made by that company.
CLAIMANT: One who makes a claim against another’ insurance company.
CLAIMS REPRESENTATIVE (CR): Technical position of investigating and bringing to disposition minor claims via the telephone.
COLLISION INSURANCE: Insurance covering loss to the insured’s vehicle caused by its collision with another vehicle or object but not covering personal injury or property damage.
COMMISSIONER OF INSURANCE: Title of the head of the state insurance department who is responsible for the enforcement of insurance laws and for promulgating regulations dealing with the insurance industry.
COMPREHENSIVE COVERAGE: In automobile insurance it is protection against any loss or damage to an automobile except by collision or by upset. In other types of policies it is insurance that covers under one insuring agreement all hazards within the general scope of the contract except those specifically excluded.
CONCEALMENT: Normally means the willful withholding of material fact which could affect an insurer’s issuance of a policy or processing of a claim.
CONDITIONS: Provisions of an insurance policy that specify
CONSERVATION: Activities intended to keep in force policies from lapsing or from being surrendered.
CONTRACT: The agreement between an insurance company and an insured. It states the legally enforceable obligations of the insurance company in return for the premiums it receives.
COVERAGE: Specific protection provided under an insurance contract.
D
DAMAGE: Loss or harm resulting from injury to a person, property, or to one’s reputation.
DAMAGES: The monetary amount an insurance company is legally obligated to pay for losses incurred.
DECLARATION: That part of the policy describing the names insured, address, effective date, term of the policy, applicable coverages, the amount of insurance and the premium.
DEDUCTIBLE: A dollar amount, specified in most insurance policies, beyond which insurance protection begins. The insured assumes the loss up to the limit of the deductible amount then the insurance company pays any amount over the deductible, up to the policy limit.
DEPENDENT: One who relies on another for economic support. In insurance, those covered under the policy of the person providing that support.
DEPRECIATION: A decrease in the value of property due to age, wear and tear.
DIMINISHED VALUE (DV): From submitter – Considered the loss in market value of a property (chattel) due to it having a history of
damage. Note: some states may have specific diminished vehicle regulations, insurance code or language. (08/2018)
DOLLAR THRESHOLD: In no-fault auto insurance states with the dollar threshold, it prevents individuals from suing in tort to recover for pain and suffering unless their medical expenses exceed a certain dollar amount.
DOMESTIC CARRIER: An insurance company organized in a given state is referred to in that state as a domestic carrier.
DRIVE-IN CLAIMS SERVICE: Automobile insurer’s facility to which an insured may bring a damaged auto in order to facilitate the adjusting of claims and the settlement of damages.
E
ENDORSEMENT: A written amendment attached to a policy modifying the terms of the insurance contract.
EXPIRATION DATE: The date and hour on which a policy ceases to protect the insured.
F
FINANCIAL RESPONSIBILITY LAWS: State laws that serve to encourage, or require all motorists to purchase liability coverage.
FLEET: Five or more cars owned by one insured covered under one automobile insurance policy.
FLEET POLICY: Insurance contract covering a number of vehicles owned by the same insured.
G
GLASS INSURANCE: Coverage for accidental or malicious breakage or chemical damage to glass.
GRACE PERIOD: The period of time following the premium due date in which the premium may be paid. The policy remains in force during the grace period.
H
HIRED CAR COVERAGE: Protection for insured against liability incurred while using hired automobiles from another organization.
I
INDEPENDENT ADJUSTOR: Independent contractor for hire to insurance companies and other organizations to investigate and settle claims.
INSURANCE: The contractual relationship which exists when one party, in consideration of the payment of a premium, agrees to assume the risk of loss of the other party for loss caused by designated contingencies.
INSURANCE COMMISSIONER: A public officer of a state or other territory whose duty it is to enforce laws applicable to insurance.
INSURANCE POLICY: A contract in which the insurance company, for a designated premium, agrees to pay the insured for loss covered by the policy when such loss occurs.
INSURED: The person(s) or corporation whose insurable interest is protected by the policy. Also called Assured.
INSURER: The insurance company that issues a policy to a policyholder. The party to the insurance contract that promises to pay losses or render service.
L
LIABILITY: Legal obligation, usually financial, for a loss, debt, penalty or the like.
LIABILITY INSURANCE: All forms of coverage which protect an insured who becomes obligated to pay because of bodily injury, property damage, or other wrongs to which the insurance policy applies.
LIABILITY LIMITS: The sum or sums beyond which a liability insurance company does not protect the insured on a particular policy. The majority of policies covering liability for bodily injury have two limits: a limit of liability to any one person and, subject to the personal limit, another and usually higher limit for any single accident where more than one person in involved.
LIEN: A claim on another’s property as a security for a debt or charge.
LIFETIME MAXIMUM: The maximum amount that major medical will pay toward an insured’s claims in a lifetime.
LOSS: Value reduction in an insured’s property caused by an insured peril. Amount sought in a claim. Amount paid on behalf of an insured under an insurance contract.
M
McCARRAN-FERGUSON ACT: 1945 Federal legislation in which the Congress declared that the states may continue to regulate the insurance industry.
MECHANIC’S LIEN: Protection given to laborers and suppliers in the form of a lien on the property that has been improved or repaired.
N
NEGLIGENCE: Failure to do the correct and prudent thing, whether by omission or commission, in a particular situation.
NET LOSS: The amount of loss sustained by an insurer after deducting all applicable reinsurance, salvage and subrogation recoveries.
NO-FAULT INSURANCE: Permits automobile accident victims to be directly reimbursed for medical and hospital expenses and loss of income by their own insurance company regardless of who was at fault. Massachusetts included property damage.
NOTICE OF LOSS: Notification to an insurance company by an insured or claimant that a loss has occurred. Written notice may be required, although many companies accept notice by telephone.
O
OCCUPATIONAL SAFETY AND HEALTH ACT: 1970 legislation that set Federal standards for work place safety and imposed fines for failure to meet them.
OMNIBUS CLAUSE: Policy extending coverage to others using a particular automobile without specifically naming them in the policy.
OPEN: The status of a claim that is pending settlement.
P
PARTIAL LOSS: A loss, covered under an insurance policy, which does not completely destroy the property.
PARTY: An individual or other legal entity who enters into a contract or other legal proceeding.
POLICY: A printed document issued to the insured by the company stating the terms of the insurance contract.
POLICY TERMS: The length of time an insurance policy is in force, contingent upon payment of contractual premiums.
POLICY YEAR: The 365 or 366 days between annual premium dates; the year commencing with the effective date of the policy or with an anniversary of that date.
POLICYHOLDER: The individual or organization in whose name a policy is written; synonymous with Insured, Assured or Risk.
PRE-ACCIDENT CONDITION: Condition of vehicle prior to the accident
PREMIUM: The amount of money charged a policyholder for an insurance policy.
PREMIUM RATE: The price per unit of insurance.
PRINCIPAL: In suretyship, the party whose honesty or performance is guaranteed.
PROOF OF LOSS: Policy owner’s formal report of a loss, containing information so the insurer can determine the extent of its liability.
S
SALVAGE: Proceeds of sold property secured after the loss to reduce the loss sustained, such as the sale of a totaled automobile.
SELECTION OF RISK: The process of identifying and classifying the potential degree of risk represented by a proposed insured.
T
TORT: In general a civil wrong, other than breach of contract, for which a court will provide a remedy in the form of a suit for damages.
TORT SYSTEM: Legal system providing that civil action can be brought to redress wrongful injury or damage.
TOTAL LOSS: Loss to the insured of the entire value of goods or other property insured, or a loss entailing the payment of the full face amount of an insurance contract.
TOWING: Insures against charges for towing and road service at the place of disablement, with a maximum amount stipulated for each occurrence.
U
UMPIRE: An impartial third party selected in an arbitration to make a decision. Any decision made by two of the three people is binding.
UMPIRE CLAUSE: Part of some insurance contracts providing that in the event of an individual or company filing a claim and the insuring company cannot agree on the settlement of a loss, each party may select an arbitrator and the two arbitrators select an umpire. The insured and the insurance company agree to abide by the decision of the majority vote of the arbitrators and umpire.
UNDERINSURED MOTORIST COVERAGE: Coverage is intended to cover you and passengers in your car for losses unpaid because sufficient bodily liability limits are not available from the policy of an at-fault driver. How and under what circumstances the coverage becomes operative varies in different states.
UNDERWRITER: Person who studies risks, determines rates and coverages, and decides if the risk is acceptable.
UNDERWRITING: A process which evaluates an applicant against pre-established criteria for insurability to determine whether the applicant will be rejected or accepted for coverage and whether at standard or modified rates.
W
WARRANTY: Promises made by the insured, which if not kept or untrue, will void the policy.
Y
YOUTHFUL INSURED: An insured (male or female) under 25 years of age.
Z
ZONE EXAMINATIONS: Triennial examination of insurance companies as established by the National Association of Insurance Commissioners.
