Information Center

Welcome to the Information Resource Center. You will find an index to inform you and educate dozens of insurance terms. We've separated these articles into helpful categories and we update them on a regular basis. This comprehensive Information Resource Center of commonly used insurance terms is a companion to the articles and FAQ'S contained in this site. If you've run across a confusing term, you'll probably find it - and a simple definition - list. Just click on the first letter for the term you have a question on.

A - B - C - D - E - F - G - H - I - J - K - L - M - N - O - P - Q - R - S - T - U - W - X - Y - Z

Actual Cash Value
The value of property at the time it was stolen or destroyed, arrived at by subtracting depreciation from the replacement cost of the item.

All-Peril Deductible This is a stated dollar amount that you choose to deduct losses paid on the policy coverages. For example, a $100 deductible applied to a $500 loss would result in reimbursement to you of $400. "All Peril" applies to most risks covered by the policy. Other coverages may apply a separate deductible for certain risks. In some cases, you may have two deductibles - the All-Peril Deductible of your choice and a specific coverage deductible.

B
Bodily Injury Liability Coverage
Pays for medical expenses, legal expenses, and judgments when the policy holder’s car is involved in an accident that causes property damage and/or the injury or death of another person.

Brick Veneer
This is a facing of brick, stone or masonry laid against the frame.

Brick, Stone or Masonry
This is construction using solid brick, stone or masonry.

C
California Earthquake Authority (CEA)
A state-sponsored partnership between private companies and the government offering earthquake insurance policies in the state.

Cancellation
When an insurer discontinues an auto policy because a driver fails to pay the premium, loses driving privileges, or has not accurately reported the facts relating to his level of risk. A cancellation may make it difficult to get insurance for a long time to come.

Claim
A request to an insurer for compensation for a loss.

Collision Coverage
Covers the damage to a policy holder’s vehicle resulting from a collision, regardless of who is responsible. Collision coverage typically requires the payment of a deductible by the policyholder.

Comprehensive Physical Damage Coverage
Pays for damage to a policy holders car that is not the result of an auto accident, such as theft, vandalism, fire, hail, natural disasters and hitting a deer. Comprehensive coverage requires a deductible, and will only pay as much as the car was worth before sustaining the damage.

D
Damage Depreciation
Commonly used in aviation policies to describe the inherent loss of value to an aircraft that has been damaged and repaired. An identical aircraft that had never been damaged would be worth more in a sale than one that has been repaired, even if the repair work was exemplary.

Deductible
The amount of a claim that the insured must pay before the insurance company will cover the rest.

Depreciation
The loss of an asset’s value over time.

Dwelling Coverage This typically provides protection for a covered sudden and accidental direct, physical loss to the dwelling, including attached structures.

E
Earthquake Insurance
A specific policy covering home repair and the replacement of personal property lost to seismic activity.

Endorsement
An agreement added to a policy to change the amount of coverage offered by that policy. Once attached, an endorsement supersedes the original terms of the policy.

Estimated Replacement Value
For purposes of determining an appropriate Dwelling Protection Coverage Limit, Replacement Cost is: the cost to construct or replace, at one time, an entire building of equal quality and utility. The value of the land is not part of this valuation process.

Estimated Market Value
This is the approximate current price for which your home could be sold.

F

Fire Resistive
This is a building with all exterior walls, floors, roof and interior supports of brick or other non-combustible materials.

First-Party Claim
Request to an insurance company by one of its policy holders for compensation for a loss.

Floater
A separate policy designed to extend the coverage of the basic insurance policy for an item or collection of items. It's called a floater because sometimes the asset may “float” from location to location with the owner’s use.

Flood Zone
Area in which the likelihood of a flood is much higher than average.

Flood Insurance Rate Map (FIRM)
A map developed by the National Flood Insurance Program showing base flood elevations, risk zones, and floodplain boundaries; used in determining flood insurance premiums.

Flood Insurance
A private or government-sponsored policy covering home repair and the replacement of personal property damaged by a flood. Normally not included in basic homeowners policies.

Frame-Wood, Metal, Plastic or Aluminum
This is frame construction using wood, metal, plastic or aluminum material.

G

Gap Insurance
Covers the difference between a cars actual cash value and the amount still owed on a loan or lease

H

Hull Insurance
Portion of an aircraft or a yacht policy that covers physical damage to the insured craft.

Homeowner's Insurance
An insurance policy that covers a home and its contents against loss, and protects the insured from liability claims.

I

Intentional Misconduct
Willful damage to property or injury to others; distinct from negligence.

J

Joint Venture:
A business relationship when two or more persons join their labor or property for a business undertaking and share profits

K

L
Lien Holders Interest Endorsement
Also called “breach of warranty” optional

Loss Of Use
Pays any increase in living expenses required to maintain the household’s normal standard of living when an insured residence is rendered uninhabitable due to a covered loss until the repairs are completed or the household is relocated to another permanent residence.

Log
This is construction using logs

M

Medical Payments
This typically provides coverage for covered reasonable and necessary medical expenses incurred when a third party sustains bodily injury while on your insured premises, or off these premises under specified circumstances.

Modular or Pre-Fabricated
This includes units of construction which are prefabricated and can be fitted together with a minimum of adjustments. Modular units include complete window walls and wall panels. Units are usually designed in such a way that they will fit functionally into a variety of dwelling sizes and plan types.

N

National Flood Insurance Program (NFIP)
Coverage against flooding for personal and business property under the National Flood Insurance Act of 1968 provided by a partnership of private insurers and the government.

Negligence
Failure to exercise care, resulting in injury to others or damage to property.

No-Fault Laws
Regulations in some states that require each person involved in an auto accident to pay his or her own medical expenses and lost wages. Stricter versions disallow certain pain-and-suffering lawsuits.

Non-Renewal
Means only that a company does not want to offer the driver a policy any longer, possibly because of the driving or claims record over the last three to five years. More than likely, other insurers will provide insurance at a higher price.

O

Open Pilot Clause
Minimum competency required by an aviation policy for a pilot to be covered under the policy.

Other Structures Protection
This typically provides protection for a covered sudden and accidental direct, physical loss to a structure that is not physically attached to the dwelling, such as a fence, barn, storage shed, unattached garage, in-ground/concrete pool, or gazebo, to name a few examples.

P

Peril
A specific cause of loss, such as fire or vandalism. There are 17 named perils in most homeowners policies.

Personal Liability This typically provides protection for covered damages an insured person becomes legally obligated to pay because of accidental bodily injury or property damage to a third person.

Personal Injury Protection (PIP)
Auto insurance required in many no-fault states, which pays extensive medical expenses, lost wages, and a small death benefit for the driver and all passengers. PIP usually comes with a 20 percent deductible.

Personal Property Protection This typically provides protection against covered loss to your movable property like a stereo, bicycle, furniture or clothing. Allstate will only provide protection for losses that are named in the policy.

Personal Watercraft
A small but powerful motorized watercraft sold under brand names such as Jet Ski or Wave Runner (distinct from a boat or yacht).

Policyholder
Person who buys and maintains an insurance policy; also called the "insured".

Premium
Payment required to initiate and continue an insurance policy.

Property and Indemnity Coverage
Common name for liability portion of a yacht insurance policy.

Property Damage Liability Coverage
Pays for damages to the property of others caused by the policyholder in his or her vehicle.

Q

R

Replacement Cost
The cost of replacing a lost or destroyed item; does not factor in depreciation or market value.

Renter's Insurance
Policies available to those who rent a dwelling; usually covers personal possessions and liability, but not the dwelling itself.

Rent-Loss Provision
Portion of a policy that would reimburse an owner for rent that is lost while repairs are being made to rental property.

Rental Reimbursement Coverage
Pays a set amount per day for transportation expenses or car rental while the insureds car is being repaired due to a covered loss.

Rider
A provision attached to a policy that adds or changes coverage.

Risk
Potential for loss or injury.

S

Special Flood Hazard Areas (SFHA)
A categorization of the different risk areas associated with floods, used in determining premiums for flood insurance. “V” is the most hazardous.

T

Third-Party Claim
Claim made to an insurance company for damage or injury caused by one of its policyholders.

Total, Totaled
Classification for a vehicle in need of repairs that will cost more than the vehicles actual value.

Total Square Footage
You can obtain your total square footage by multiplying your homes footage length by the footage width. Measurement can be taken from the exterior of the home at ground level. For example, measure one side of your home and then measure across the front of your home. Then multiply the number of feet from the side by the number of feet across the front. If the home has a second story or more, then use the same procedure to add the square footage for each story to the total square footage. The square footage of a basement is not included in the total. This figure is used to help determine the cost of reconstruction for your home. Construction type, the building material type, that comprises 2/3 or more of your house.

Towing and Labor Coverage
Provides emergency road service and pays for towing charges. This coverage is not limited just to accidents, but can be used any time the insured’s car breaks down.

U

Umbrella Liability Policy
An extra protection against liability that covers the amount above the maximum limits of homeowners and auto policies.

Unearned Premium
Portion of a premium that may be returned to the policyholder if a claim resulting in a total loss takes place before the end of the policy term and eliminates the need for continued coverage.

Uninsured/Underinsured Motorist (UM/UIM) Coverage
Covers the costs associated with damage or injury caused by an uninsured, underinsured, or hit-and-run driver.

W

Workers' Compensation:
Protection which provides benefits to employees for injury or contracted disease arising out of and in the course of employment. Most states have laws which require such protection for workers and prescribe the length and amount of such benefits provided

X

Y

Yacht
Recreational watercraft that is 26 feet or more in length (distinct from a boat or a personal watercraft).