In this article, we will discuss insurance terms and their meanings. So let’s get started, shall we?
Actual Cash Value (ACV) is the cost of purchasing a comparable item in the same condition today. Original cost, actual cash value, and replacement value are the three fundamental values of anything. Your couch in the living room, for instance, might only be worth $175 in actual currency if you initially paid $400 for it. However, if it is destroyed in a fire, you will have to pay $800 to replace it.
An individual or business that has been designated as an Additional Interest Insured under the policy and who may be held responsible for an accident involving an insured or an insured vehicle is known as an Additional Interest Insured.
Adjuster – An individual who, on the company’s behalf, investigates a loss and bargains a settlement with the claimant.
All Perils is an add-on insurance option that protects your car against all types of losses, barring those that are expressly covered by your insurance.
The most comprehensive form of insurance you can choose to safeguard your own car against loss or damage is “all perils” coverage. This policy is optional, subject to a deductible, and may be obtained in addition to the legally mandated coverage.
Binder: A temporary or preliminary agreement known as a “binder” offers protection while a policy is being created or delivered.
Bodily Injury: In Auto and Casualty plans, the term “Bodily Injury” refers to physical harm. This includes sickness, disease, mental harm, shock, or even death.
Insurance Terms and Meanings Continues
Bodily Injury Liability: Pays when an insured person is held legally responsible for bodily harm or death brought on by your car or by your operation of the majority of non-owned vehicles. In the event that you are sued, this coverage will also pay for your defense.
Broad Form: Any commercial or personal lines property form that offers coverage based on named dangers. Vandalism and malicious mischief coverage, as well as extended coverage, are typically added using this form. Usually, this form is used to describe the coverage under a homeowner’s policy.
Broker: A broker is an independent individual or business that negotiates contracts with insurance companies on behalf of the insured. Although they are in charge of collecting premiums, they lack the power to provide insurance on the insurance company’s behalf without that company’s express permission. Commission-based pay is the norm.
Claim – A notification to an insurer that a loss might be covered by a policy, depending on its terms.
Clause: A term for a specific section of a statement of policy or support. In property insurance, a clause known as coinsurance allows the insured to share in losses. That is, to the extent that they were underinsured at the time of the loss.
Declarations (Dec Sheet)
In insurance, it is the portion of the contract containing information such as the insured’s name and address. Also, the property is insured, its location and description. Additionally, the policy period, the amount of insurance coverage, applicable premiums, and supplemental representations by the insured are described.
The coverage types you’ve chosen – the limit for each coverage – the cost for each coverage. Also, the specified vehicles covered by the policy – the types of coverage for each vehicle covered by the policy. Other pertinent policy information.
Deductible – The amount of a loss that you must cover before your insurance policy kicks in. You can lower your bodily damage premiums by using deductibles. For instance, if you had a $200 deductible on your policy and incurred a covered loss of $1,000, you would be responsible for the first $200 while the insurance provider would cover the remaining $800. Even a $200 loss would require the full payment from you.
Lapse – Policy cancellation due to non-payment of premiums
Lessee: The party to whom a lease is granted, sometimes known as the tenant, is the lessee.
Market Value: The price at which an item would be sold. This is particularly true of the value of specific asset classes like stocks and bonds. It is based on the price at which they would sell in the current market. Common stock market value, for instance, would represent the stock’s price on a particular date.
Named perils: Named perils, such as fire, windstorm, and hail, are covered in a homeowner’s insurance policy. These are the precise risks that a policy protects you against. The policy “names” or lists these risks.
Policyholder
The person (or persons) whose risk of financial loss from an insured peril is covered by the policy is known as a policyholder.
Premium: The amount of money an insurance company charges for insurance coverage.
Proof of loss: A formal statement of a loss that the insured makes to the insurance company is known as “proof of loss.” The objective of the proof of loss is to provide the firm with adequate details about the loss so that it may assess its obligation under the policy.
Protection: When referring to the insurance provided by the terms of a policy, the term “protection” is sometimes used interchangeably with the word “coverage.” The phrase is also used to denote the presence of firefighting resources in an area that is considered to be a “protected” area.
Quote – An estimate of the cost of insurance based on data provided by the applicant to the insurance company.
A contract of indemnity against liability known as a “reinsurance” entails the insurance company obtaining a second insurance to protect it against loss or responsibility arising from the first policy.
Reinsurance
Insurance is the transfer of all or a portion of a risk taken on by one insurance company to another insurance company, with the latter agreeing to pay the insurance company back for the portion of the claim reinsured.
The “ceding insurance company” is the insurance company that obtains the reinsurance, while the “reinsurer” is the insurance company that issues the reinsurance. The technique of “retrocession” allows a reinsurer to seek reinsurance on a portion of the risk it has reinsured.
Waiver: A rider who waives (excludes) culpability for an accident’s or (particularly) illness’s declared cause. A clause or rider that states you’ll agree to forgo paying your premium while you’re disabled.
The renunciation or surrender of a known right or advantage. The agent, adjuster, insurance company employee, or authority may carry it out verbally or in writing.