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Terms in this set (80)
An unforeseen, unintended event.
Act of God
A legal term used for events outside of human control: sudden natural disasters...no one can be held responsible.
Actual Cash Value (ACV)
The cost of replacing damaged or destroyed property with comparable new property, minus the depreciation and obsolescence. Ex: 10yr old sofa won't be replaced at current full value because of a decade of depreciation.
Additional Living Expenses (ALE)
Reimburses the policyholder for the cost of temporary housing, food, and other essential living expenses, if the home is damaged by a covered peril that makes the home temporarily uninhabitable. Policies cap the ALE payable to 20% of the policy's dwelling coverage.
Person employed by an insurer to evaluate losses and settle policyholder claims. (Also see Public Insurance Adjuster)
Person who sells and services insurance policies in either of two classifications:
1. Independent Agent: represents at least 2 insurance companies and (at least in theory) services clients by searching the market for the best price for the most coverage. The agents commission is a % of each premium paid and includes a fee for servicing the insured's policy.
2. Direct or Career Agent: represents only 1 company and sells only its policies. This agent is paid on a commission basis similar as the independent agent.
A form filled out with personal information that an insurance company will use to decide whether to issue a policy and how much to charge.
An evaluation of a home insurance property claim by an authorized person to determine property value or damaged property value. Many policies provide an "appraisal" process, to resolve claim disputes. In this process, you and the insurance company hire separate damage appraisers. These 2 appraisers choose a 3rd appraiser to act as an "umpire." The appraisers then review your claim, and the umpire rules on any disagreements. The umpires decision is binding on you and the insurance company, but only for the loss amount. If there is a dispute over what is covered, you can still pursue a settlement of the coverage issue after the appraisal takes place. You are required to pay for your appraiser and half of the umpire's costs.
The felony crime of intentionally burning a house or other building.....in hopes of getting insurance money.
The transfer of all or part of a policy owner's legal title and the rights to a policy to another person. It is possible to change this type of transfer at a later date.
A temporary insurance contract that provides proof of coverage until a permanent policy is issued.
Bodily Injury (BI)
Physical injury to a person, including death.
An insurance policy held by a company, which protects against losses resulting from circumstances such as bankruptcy or misconduct by employees.
Termination of an insurance policy by the company or insured before the renewal date.
A person who makes an insurance claim.
(Physical damage other than collision): Pays for damage to or loss of your vehicle from causes other than accidents. These include hails, vandalism, flood, fire and theft.
Pays for damage to a car without regard to who caused an accident. The company must pay for the repair or up to the actual cash value of the vehicle, minus the deductible. Covers physical damage to the insured's car (other than that covered under comprehensive insurance) resulting from contact with another inanimate object.
Continuing Education Requirement
A required minimum amount of insurance related education that license holders must complete to renew their licenses. Enforced by the state.
In most cases, an insurance policy. A policy is considered to be a contract between the insurance company and the policyholder.
The page in a policy that shows the name and address of the insurer, the period of time a policy is in force, the amount of the premium, and the amount of coverage
The amount the insured must pay in a loss before any payment is due from the company. The amount of loss the insured pays before the insurance kicks in.
A decrease in the value of property over time due to use or wear and tear.
A written agreement attached to a policy expanding or limiting the benefits otherwise payable under the policy. Also called a "rider."
Items or conditions that are not covered by the general insurance contract.
The date on which an insurance policy expires.
Measure of vulnerability to loss, usually expressed in dollars or units.
First Party Loss
Type of insurance policy which an insured (the 1st party) is paid by his/her insurer (the 2nd party) in the event of an accident, injury or loss whether caused by itself or someone else (3rd party).
The crime of using dishonest methods to take something valuable from another person.
Rules established by major property and liability trade associations for the adjustment of losses, particularly with respect to how losses should be apportioned between insurance companies under certain circumstances. Any principles or precepts that guide an organization throughout its life an all circumstances, irrespective of changes in its goals, strategies, type of work or the type of management.
An organization in a subdivision, planned community or condominium that makes and enforces rules for the properties in its jurisdiction. HOAs also collect monthly or annual dues to pay for upkeep of common areas like parks, tennis courts, elevators and swimming pools and can levy special assessments on homeowners when the association lacks sufficient reserves to pay for unexpected repairs.
Policies provide replacement cost coverage for most types of damage, except those specifically excluded in the policy. The HO-B is a standardized Texas policy.
A circumstance that increases the likelihood or probable severity of a loss. Ex: the storing of explosives in a home basement is a hazard.
Is a cost that a person or business owes when receiving goods or services. In business, it typically refers to costs "incurred" that have not bee paid.
To compensate (someone) for harm or loss.
A person who charges a fee to an insurance company to adjust the company's claim.
A practice or arrangement by which a company or government agency provides a guarantee of compensation for specified loss, damage, illness or death in return for payment of a premium.
The person or organization covered by an insurance policy.
The insurance company.
Responsibility to another for one's negligence that results in injury or damage.
The max amount your liability policy will pay. Your policy must pay at least $30k for each injured person, up to a total of $60k/accident, and $25k for property damage/accident. This basic coverage is called "30/60/25" coverage.
The amount an insurance company pays on a claim.
Refers to the number of insurance claims previously filed by a policyholder. A company will consider loss history when underwriting a new policy or considering a renewal of an existing policy. Companies view loss history as an indication of the likelihood that an insured will file a claim in the future.
In the event of payment being made under the policy in relation to the insured risk, payment will be made to a 3rd party rather than to the insured beneficiary of the policy.
The ratio of incurred losses and loss-adjustment expenses to net premiums earned. This ratio measures the company's underlying profitability, or loss experience, on its total book of business.
A significant misstatement on an application form. If a company had access to the correct information at the time of application, the company might not have agreed to accept the application.
Medical Payments & Personal Injury Protection (PIP)
Both auto insurance coverages pay limited medical and funeral expenses if the policyholder, a family member, or a passenger in the car is injured or killed in a car accident. PIP also pays lost income benefits.
Lack of incentive to guard against risk where one is protected from its consequences, e.g. by insurance.
A decision by an insurance company not to renew a policy.
Notice of Loss
Notice sent to an insurer informing them that a loss has occurred. How and when this notice must take place is usually specified in the policy.
An event that results in an insured loss.
A proposal to buy or sell or buy a specific product or service under specific conditions.
Overhead & Profit
Two different kinds of costs, but they're almost always paired under the label "O & P" and stated a 2 separate numbers. Ex: "10 & 10". Overhead: are operating expenses for necessary equipment facilities. Profit: is what allows the GC to earn their living.
The cause of a possible loss. A specific risk or cause of loss covered by a property insurance policy, such as fire, windstorm, flood or theft. A "named-peril policy" covers the policyholder only for the risks named in the policy. An "all-risk policy" covers all causes of loss except those specifically excluded.
Insurance for individuals and families, such as private passenger auto and homeowners insurance.
The contract issued by the insurance company to the insured.
The period a policy is in force, from the beginning or effective date to the expiration date.
The amount paid by an insured to an insurance company to obtain or maintain an insurance policy.
An individual employed by a policyholder to negotiate a claim with the insurance company in exchange for a % of the claim settlement...Public Adjusters must be licensed by TDI.
Insurance coverage that pays the dollar amount needed to replace the structure or damaged personal property without deducting for depreciation but limited by the policy's maximum dollar amount.
An amount representing actual or potential liabilities kept by an insurer to cover debts to policyholders. A reserve is usually treated as a liability.
The act of saving anything from fire, danger, etc...
The fact or condition of being severe.
An employee of the insurance company's claims department.
The right of an insurer who has taken over another's loss also to take over the other persons right to pursue remedies against a 3rd party.
An extra charge added to a premium by an insurance company. For auto insurance a surcharge is usually added if a policyholder has at-fault accidents.
Is a contractual agreement between a project owner or business guaranteeing that the project will be completed or regulations will be followed.
Third Party Loss
A claim filed against another person's insurance policy.
A private wrong, independent of contract and committed against an individual, which gives rise to a legal liability and is adjudicated in a civil court. A tort can be either intentional or unintentional, and liability insurance is mainly purchased to cover unintentional torts.
Is a contentious political issue in the U.S. This advocates propose, among other things, procedural limits on the ability to file claims and capping the awards of damages.
A loss of sufficient size that it can be said no value is left. The complete destruction of the property. Also means a loss requiring the max amount a policy will pay.
Towing & Labor Coverage
Auto insurance coverage that pays for towing charges when a car can't be driven. Also pays labor charges, such as changing a flat tire at the place where the car broke down.
One having authority to decide finally a controversy or question between parties as: 1) One appointed to decide between arbitrators who have disagreed. 2) An impartial 3rd party chosen to arbitrate disputes arising under the terms of a labor agreement.
The process an insurance company uses to decide whether to accept or reject an application for a policy.
The amount of pre-paid premium that has not yet been used to buy coverage. Ex: if a policyholder paid in advance for a 6 month premium, but then canceled the policy after 2 months, the company must refund the remaining 4 months of "unearned" premium.
Uninsured/Uninsured Motorist Coverage
Auto insurance coverage that pays the policyholders injuries & property damage caused by a hit and run driver or a motorist without liability insurance. It will also pay when medical & car repair bills are higher than the other drivers liability insurance. (UM/UIM)
Action involving deliberate destruction of or damage to public or private property.
The voluntary surrender of a known right, conduct supporting an inference that a particular right has been relinquished.
A system whereby an employer must pay, or provide insurance to pay, the lost wages and medical expenses of an employee who is injured on the job.
All Risk Insurance
Means that any risk that the contract does not specifically omit is automatically covered.
Is a form of insurance protection that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. It usually insures a business for losses caused by the dishonest acts of its employees.
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