Actual Cash Value (ACV)
"Actual Cash Value" is the replacement cost of property damaged or destroyed at the time of loss, with deduction for depreciation. ACV cannot exceed the applicable limit of liability shown in the declarations of the policy, nor the amount it would cost to repair or replace such property with material of like kind and quality within a reasonable amount of time after a loss.

Adjuster
The person who handles the settlement of claims on behalf of an insurance company, either as an employee of the company or an independent engaged by contract. Also called a claims representative.

Agent
The representative of an insurance company responsible for selling and servicing policies. Can be an employee representing only one company (sometimes called a "captive agent" or a "direct writer" or an "independent agent" who, through contractual agreements, may represent several different companies without being an employee of any of them.

Applicant
A person who signs and submits a written application for insurance coverage.

Arson
The willful, unlawful burning of property. If it is proved the policyholder was responsible for the arson, the insurance company will not pay for the loss.

Auto Medical Payments
Optional automobile coverage that pays for medical expenses incurred by the insured driver or his or her passengers, without regard to who is responsible for the accident.

Automobile Insurance
Contractual protection against losses resulting from the ownership and use of an automobile. Coverages common in auto policies include FIRE, THEFT, COMPREHENSIVE, COLLISION, PROPERTY DAMAGE and BODILY INJURY LIABILITY and UNINSURED MOTORIST.

Benefit
The money to be paid by an insurance company under the terms of the insurance policy.

Beneficiary
The person(s) named in the policy to receive the life insurance proceeds upon the death of the insured.

Binder
A legal agreement between an insurance buyer and an insurance company or its agent. it provides temporary insurance coverage until a policy is either issued or refused.

Blanket Policy
A policy that covers a group of people ( such employees of the same company) or several properties of exposures (kinds of possible losses) under a single contract.

Bodily Injury
Injury to the body of a person as specifically defined in an insurance policy. Bodily injury liability is the legal responsibility for medical and related cost that may result from injury to the life or health of another person.

Cancellation
The termination of an insurance policy either by the insured party or the insurance company, before its normal expiration date. A cancelable policy includes a provisions the the contract can be terminated by either party upon notice to the other. By contrast, a non-cancelable policy cannot be canceled by the insurance company during its specified term (unless non-payment of premium).

Carrier
A trade term for an insurance company.

Cash (Surrender) Value
The amount that is available in cash for loans and that may be available for withdrawals. Accessing Cash Surrender Value may reduce the death benefit and may increase the risk of lapse.

Claim
A demand for payment by a policyholder to an insurance company, or by an injured party to the policyholder, for recovery of a loss.

Clause
A section of a policy which deals with a particular subject, such as coinsurance clause.

Collision Coverage
Insurance against a loss resulting from damage to the covered auto through collision with another object or upset of the auto.

Comprehensive Coverage
Covers damage to the auto not resulting from collision. For example: an auto is parked near a building being painted and becomes splattered with paint. Most claims paid under this coverage are for fire, theft and windshield breakage.

Conditions
The part of an insurance policy that spells out the responsibilities of the policyholder and the insurance company.

Convertible Term Insurance
Term insurance which can be exchanged (converted), at the option of the policyowner and without evidence of insurability, for a permanent insurance policy.

Coverage
The guarantee to pay if specific losses occur, according to the terms of the insurance policy.

Debris Removal Clause
This clause extends insurance coverage to include the cost of debris removal resulting from damage caused by a covered loss up to a specified limit of loss. The clause is an additional property insurance coverage.

Demolition Coverage
An optional coverage with some fire policies that provides for the cost of demolishing portions of a building still intact after a fire or explosion. Such demolition is sometimes required by ordinance for safety reasons or by the building code in connection with rebuilding.

Declaration
Normally the first page of a policy (Also referred to as the Dec Page), it includes the insured's name, how long the coverage applies, and how much insurance is being provided.

Dividend
A return of part of the premium on participating insurance that is based on the insurer's investment, mortality, and expense experience. Dividends are not guaranteed.

Exclusions
Provisions of an insurance policy that state what the company will NOT pay for.

Face Amount
The amount stated on the face of the policy that will be paid in case of death. It does not include additional amounts payable under accidental death or other special provisions, or acquired through the application of policy dividends.

Fraud
Deception or action intended to cheat. In insurance, ordinarily involves intentional misrepresentation or concealment.

Insurance
A contractual agreement that calls for one party, in exchange for a consideration, to reimburse anther party for certain specified losses. The insurance contract is call a policy. The consideration is called a premium.

Insurability
Acceptability to the company of an applicant for insurance.

Insured or Insured Life
The person on whose life the policy is issued.

Lapse
Expiration or cancellation of an insurance policy by nonpayment of premium.

Larceny
The unlawful taking of money or property belonging to another.

Level Premium(Life Insurance)
Life insurance for which the premium remains the same from year to year. The premium is normally more than the actual cost of protection during the earlier years of the policy and less than the actual cost in the later years. The building of a reserve is a natural result of level premiums. The payments in the early years, together with the interest that is to be earned, serves to balance out the underpayment of the later years.

Liability
A condition of being bound by law to do something, enforceable in the courts. For insurance purposes it most often involve the payment of damages.

Libel
Publication of defamatory information. This CAN be covered by liability insurance.

Lien
A hold or claim one party has on the property of another, usually as security for the debt or other obligation. For example:, a home mortgage or loan on a car.

Limits
The largest total amount the insurance company will pay for covered losses. Many policies have multiple limits - a certain amount per person, another amount per accident and sometimes, an aggregate limit on all losses paid during the policy term.
ie.... 100/300/100. In this example, the first 100 represents $100,000 bodily injury coverage PER PERSON. The 300 represents $300,00 per accident for bodily injury. The last 100 represents $100,000 limit for property damage.

Loan (Policy Loan)
A loan made by a life insurance company from its general funds to a policyowner on the security of the cash value of a policy.

Loss of Use
In the event you could not live in your home after an insured peril occurs, the homeowners policy offers payment of temporary living quarters while you are waiting for repair work to be completed. You would also have additional expenses such as food and laundry paid for as well.

Ordinance or Law Coverage
(1) Coverage for Loss to the Undamaged Portion of the Building.
Pays for the loss of value of an undamaged portion of the existing building which must be demolished and/or removed to conform with municipal ordinance, code, etc.
(2) Demolition Cost Pays for the cost of demolition of the undamaged portions of the building necessitated by the enforcement of building, zoning or land use ordinance or law.
(3) Increased Cost of Construction Pays for any increased expenses incurred to replace the building with one conforming to building laws or ordinances, or to repair the damaged building so that it meets the specifications of current building laws or ordinances.

Paid-up Insurance
Insurance that will remain in force with no need to pay additional premiums.

Participating Policy
A life insurance policy that is eligible for the payment of dividends by the insurer (see also Dividend).

Permanent (Life Insurance)
Any form of life insurance except term; generally insurance that builds up a cash value, such as whole life.

Physical Damage
Normally refers to the comprehensive and collision coverages of an auto policy.

Policyowner
The person who owns a life insurance policy. This is usually the insured person, but it may also be a relative of the insured, a partnership or a corporation.

Premiums
Payments to the insurance company to buy a policy and to keep it in force.

Replacement Cost Coverage
Unlike other types of insurance, replacement cost insurance does not depreciate your property of contents values. Every covered item that needs to be replaced will be treated as if it were brand new.

Renewable Term Insurance
Term insurance which can be renewed at the end of the term, at the option of the policyowner and without evidence of insurability, for a limited number of successive terms. The rates generally increase at each renewal as the age of the insured increases.

Term Insurance
Life insurance that does not build up cash value and where the premium normally increases as the insured gets older.

Towing and Labor Costs Coverage
This endorsement is used to extend your Automobile policy to reimburse you, up to a predetermined limit per disablement, for towing charges or other specified costs when your auto is disabled by a covered period.

Uninsured/underinsured Motorist Coverage
Optional coverage that pays the policyholder in the event an accident is caused by a driver who has no liability insurance or whose insurance is not adequate to cover the full amount of damages for Bodily Injury Losses.

Universal Life Insurance
A flexible premium life insurance policy under which the policyowner may change the death benefit from time to time (with satisfactory evidence of insurability for increases) and vary the amount or timing of premium payments. Premiums (less expense charges) are credited to a policy account from which mortality charges are deducted and to which interest is credited at rates which may change from time to time.

Whole Life Insurance
A basic type of permanent life insurance which can provide lifetime protection at a level premium. Premiums must generally be paid for as long as the policy is in force.