Actual Cash
Value
An amount equivalent
to the fair market value of the stolen or damaged property immediately preceding
the loss. For real property, this amount can be based on a determination of the
fair market value of the property before and after the loss. For vehicles, this
amount can be determined by local area private party sales and dealer quotations
for comparable vehicles.
Agent
A licensed person or
organization authorized to sell insurance by or on behalf of an insurance
company.
Binder
A temporary or
preliminary agreement which provides coverage until a policy can be written or
delivered.
Broker
A licensed person or
organization paid by you to look for insurance on your behalf.
Cancellation
The termination of
insurance coverage during the policy period. Flat cancellation is the cancellation
of a policy as of its effective date, without any premium charge.
Claim
Notice to an insurer
that under the terms of a policy, a loss maybe covered.
Claimant
The first or third
party. That is any person who asserts right of recovery.
Decline
The company refuses
to accept the request for insurance coverage.
Deductible
The amount of the
loss which the insured is responsible to pay before benefits from the insurance
company are payable. You may choose a higher deductible to lower your
premium.
Disability
Insurance
Health insurance that
provides income payments to the insured wage earner when income is interrupted or
terminated because of illness, sickness, or accident.
Endorsement
Amendment to the
policy used to add or delete coverage. Also referred to as a "rider."
Exclusion
Certain causes and
conditions, listed in the policy, which are not covered.
Expiration
Date
The date on which the
policy ends.
Face
Amount
The dollar amount to
be paid to the beneficiary when the insured dies. It does not include other
amounts that may be paid from insurance purchased with dividends or any policy
riders.
Grace
Period
A specified period
immediately following the premium due date during which a payment can be made to
continue a policy in force without interruption. This applies only to Life and
Health policies. Check your policy to be sure that a grace period is offered and
how many days, if any, are allowed.
Guaranteed
Insurability
An option that
permits the policy holder to buy additional stated amounts of life insurance at
stated times in the future without evidence of insurability.
Health
Insurance
A policy that will
pay specifies sums for medical expenses or treatments. Health policies can offer
many options and vary in their approaches to coverage.
Insured
The policyholder -
the person(s) protected in case of a loss or claim.
Insurer
The insurance
company.
Life
Insurance
A policy that will
pay a specified sum to beneficiaries upon the death of the insured.
Limit
Maximum amount a
policy will pay either overall or under a particular coverage.
Loan
Value
The amount which can
be borrowed at a specified rate of interest from the issuing company by the
policyholder, using the value of the policy as collateral. In the event the
policyholder dies with the debt partially or fully unpaid, then the amount
borrowed plus any interest is deducted from the amount payable.
Material
Misrepresentation
The policyholder /
applicant makes a false statement of any material (important) fact on his/her
application. For instance, the policyholder provides false information regarding
the location where the vehicle is garaged.
Misquote
An incorrect estimate
of the insurance premium.
Peril
The cause of a
possible loss. For example, fire, theft, or hail.
Policy
The written contract
of insurance.
Policy
Limit
The maximum amount a
policy will pay, either overall or under a particular coverage.
Premium
The amount of money
an insurance company charges for insurance coverage.
Pro-Rata
Cancellation
When the policy is
terminated midterm by the insurance company, the earned premium is calculated only
for the period coverage was provided. For example: an annual policy with premium
of $1,000 is canceled after 40 days of coverage at the company's election. The
earned premium would be calculated as follows: 40/365 days X $1,000=.110 X
$1,000=$110.
Quote
An estimate of the
cost of insurance, based on information supplied to the insurance company by the
applicant.
Reinstatement
The restoring of a
lapsed policy to full force and effect. The reinstatement may be effective after
the cancellation date, creating a lapse of coverage. Some companies require
evidence of insurability and payment of past due premiums plus interest.
Rider
Usually known as an
endorsement, a rider is an amendment to the policy used to add or delete
coverage.
Short-Rate
Cancellation
When the policy is
terminated prior to the expiration date at the policyholder's request. Earned
premium charged would be more than the pro-rata earned premium. Generally, the
return premium would be approximately 90 percent of the pro-rata return premium.
However, the company may also establish its own short-rate schedule.
Solicitor
A licensed employee
of a fire and casualty agent or broker who may act for the agent or broker in some
circumstances.
Surcharge
An extra charge
applied by the insurer. For automobile insurance, a surcharge is usually for
accidents or moving violations.
Surrender
To terminate or
cancel a life insurance policy before the maturity date. In the case of a cash
value policy, the policyholder may exercise one of the non-forfeiture options at
the time of surrender.
Underwriting
The process of
selecting applicants for insurance and classifying them according to their degrees
of insurability so that the appropriate premium rates may be charged. The process
includes rejection of unacceptable risks.
Waiting
Period
A period of time set
forth in a policy which must pass before some or all coverages begin.
