Brush up on your lingo! We provide the answers to some of the most commonly-asked insurance questions below.
What is actual cash value (ACV)?
Cost to repair or replace damaged property with materials of like kind and quality, less depreciation.
What is a binder?
A temporary insurance policy that expires at the end of a specific time period or when a permanent policy is written. A binder is given to an applicant for insurance during the time it takes the insurance company to complete the policy paperwork.
What is a bond?
A written agreement in which one party, the surety, guarantees the performance or honesty of a second party, the principal (obligor), to the third party (obligee) to whom the performance or debt is owed.
What is a business auto policy?
This is an auto policy for businesses that includes auto liability and auto physical damage coverages.
What is a certificate of insurance?
A document providing evidence that insurance has been purchased.
What is coinsurance provision?
An insurance provision for property coverages in which the policyholder must carry an amount of insurance that is at least equal to a set percentage of the value of the property in order to receive full payment of a loss.
What is a contract?
An agreement between two or more parties with characteristics of mutual assent, competent parties, a valid consideration and legal subject.
What is a deductible?
The amount of loss which is paid or absorbed by the insured prior to determining the insurance company’s liability.
What is a deposit premium?
The amount of premium required at the beginning of a policy prior to the actual premium being determined.
What is an earned premium?
The amount of premium that has been used for certain periods of time.
What is a policy effective date?
The date on which an insurance binder or policy goes into effect.
What is an endorsement?
A document attached to an insurance policy that changes the original policy provisions.
What is insurability?
The condition of the individual wishing to be insured, including their health, susceptibility to injury and life expectancy.
What is evidence of insurability?
Any statement or proof of a person’s physical condition, occupation, etc., affecting acceptance of the applicant for InsuranceNet.
What is excess/surplus line insurance?
Coverage that is provided by insurers not licensed in the states where the risk is located.
What are exclusions?
Specified hazards listed in a policy for which benefits will not be paid.
What is general liability insurance?
Insurance protecting businesses from most liability exposures other than automobile and professional liability.
What is insurance to value?
Insurance written in an amount equal to the value of the property of which meets coinsurance requirements.
What is the definition of "insured"?
The party who is being insured. In life insurance, it is the person because of his or her death the insurance would pay out a death benefit to a designated beneficiary.
What is lapse?
Termination of a policy due to the policy owner’s failure to pay the premium within the grace period.
What is liability?
The legal obligation to pay a monetary award for injury or damage caused by one’s negligent or statutorily prohibited action.
What is loss control?
A technique that is put in place to reduce the possibility that a loss will occur or reduce the severity of those that do occur.
What is package policy?
A policy providing several different coverages combined into one policy. Refers to a policy providing both general liability insurance and property insurance.
What is peril?
Cause of loss such as fire, windstorm, collision, etc.
What is personal injury protection (PIP)?
An automobile insurance coverage mandated by law in some states. The statutes typically require insurers to provide or offer to provide first-party benefits for medical expenses, loss of income, funeral expenses and similar expenses without regard to fault.
What is a primary policy?
The insurance policy that pays first when you have a loss that’s covered by more than one policy.
What is professional liability?
Coverage designed to protect professionals such as physicians and real estate brokers against liability incurred as a result of errors and omissions in performing professional services.
What is reinstatement?
Putting a lapsed policy back in force by producing satisfactory evidence of insurability and paying and past-due premiums required.
What is term insurance?
Protection during limited number of years; expiring without value if the insured survives the stated period, which may be one or more years but usually is five to twenty years, because such periods usually cover the needs for temporary protection.
What is underinsured motorist cover?
Proved coverage for bodily injury, and in some states property damage, for losses incurred by an insured when an accident is caused by a motorist who does not have sufficient insurance limits.
What is worker's 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.