Understanding Insurance Terms

Insurance Terms 101

You Need Insurance Terms 101 to better understand all the insurance solutions out there. To assist, we have complied a list of phrases coming from AM Best and CA Department of Insurance

Adjuster – A representative of the insurer who seeks to determine the extent of the insurer’s liability for loss when a claim is submitted.

Agent-A licensed person or organization authorized to sell insurance by or on behalf of an insurance company.

Bodily Injury-Any physical injury to a person. The purpose of liability insurance is to cover bodily injury to a third party resulting from the negligent or unintentional acts of an insured.

Broker – Insurance salesperson that searches the marketplace in the interest of clients, not insurance companies.

Cancellation
-The termination of insurance coverage during the policy period. Flat cancellation is the cancellation of a policy as of its effective date, without any premium charge.

Casualty Insurance – That type of insurance that is primarily concerned with losses caused by injuries to persons and legal liability imposed upon the insured for such injury or for damage to property of others. It also includes such diverse forms as plate glass, insurance against crime, such as robbery, burglary and forgery, boiler and machinery insurance and Aviation insurance. Many casualty companies also write surety business.

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

Collision (Auto)-
Reimburses you for damage to your automobile sustained in a collision with another car or with any other object, movable or fixed, (for example, you accidentally backed into another object while pulling out from a parking stall and causing damage to the bumper and fender of your covered automobile)

Comprehensive (Auto)-
Provides coverage for any direct and accidental loss of, or damage to, your covered automobile and its normal equipment, to include but not limited to fire, theft or malicious mischief.

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.

Floater – A separate policy available to cover the value of goods beyond the coverage of a standard renters insurance policy including movable property such as jewelry or sports equipment

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.

Liability (Auto)
-Coverage for a policyholder’s legal liability resulting from injuries to other persons or damage to their property as a result of an auto accident.

Liability Insurance
Coverage for all sums that the insured becomes legally obligated to pay because of bodily injury or property damage, and sometimes other wrongs, to which an insurance policy applies.

Medical Payments
-Will pay reasonable expenses incurred for necessary medical and /or funeral services because of bodily injury caused by accident and sustained byyou or any other person while occupying a covered automobile.

Replacement Cost-The cost to repair or replace an insured item. Some insurance only pays the actual cash or market value of the item at the time of the loss, not what it would cost to fix or replace it. If you have personal property replacement cost coverage, your insurance will pay the full cost to repair an item or buy a new one once the repairs or purchases have been made.

Replacement Value-The full cost to repair or replace the damaged property with no deduction for depreciation, subject to policy limits and contract provisions.

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.

CLICK HERE for more information from the California Department Of Insurance

You can also refer to AM Best and there Glossary of terms at http://www.ambest.com/resource/glossary.html 



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