Insurance Terminology - RAM Mutual Insurance Company

Absolute Liability

A

The full legal responsibility for damage or for an injury without the need for proof and regardless of the degree of negligence or fault.

Accident

A

A sudden, unexpected, and unforeseen event, not under the control of an insured, that results in a loss.

Act of God

A

Natural occurrences beyond human control, including hurricanes, earthquakes, and floods.

Actual Cash Value (ACV)

A

The value of property based on the current cost to replace it minus depreciation.

Additional Insured

A

A person other than the named insured who is covered under the named insured's insurance policy.

Additional Living Expense

A

Extra Expenses caused by the loss of use of a premises.

Appraisal

A

Process that determines the value of property or extent of damage when an insurer and insured can not agree on the value of the loss.

Appurtenant Structures

A

Unattached structures used to service a residence, i.e. a garage.

At-Fault

A

The party legally liable for damages.

Bailee

B

Someone with possession of another person's property, i.e. an auto repair shop, a laundry, a jeweler, etc.

Binder

B

Insurance binders are contracts of temporary insurance pending the issuance of a formal policy or the proper rejection of the application by the insurer.

Bodily Injury

B

Injury sustained by a person.

Cancellation

C

Termination of an insurance contract before the end of the policy period, either by the insured or the insurer.

Claim

C

A request for payment due to damage or injury covered under the terms of an insurance policy.

Claim Adjuster

C

An individual who investigates and settles a claim.

Claimant

C

The individual and/or entity presenting a claim.

Coinsurance Clause

C

A requirement in property policies that requires an insured to maintain a certain insurance to value or, at a time of loss, the insurer will reduce payment proportionate to the coverage actually carried.

Comprehensive Coverage (non-collision)

C

Pays to repair or replace your covered vehicle when damaged by something other than another vehicle, including vandalism, hail, or hitting an animal.

Concealment

C

The act of an individual to knowingly withhold material information that an insurance carrier may use in the underwriting and acceptance of an insurance policy.

Conditions

C

Provisions in an insurance policy that place obligations or restrictions on either the insurer or the policyholder that refer to compliance of the policy.

Consideration

C

The exchange of value (money) by the insured for the promise of an insurer to pay the insured if a loss occurs.

Coverage

C

Protection and benefits provided in an insurance contract.

Damage

D

Loss or harm to a person or property.

Damages

D

Money that one party is legally obligated to pay to another party.

Declarations Page

D

Typically, the first page of a policy comprised of pertinent information about the insured, location of the risk, and includes coverages, deductibles, and coverage limits.

Deductible

D

An amount an insured has agreed to retain (indicated on the declarations) that the insurer will deduct from a loss prior to the final settlement payment on a loss.

Depreciation

D

The decrease in value of any property due to use, wear and tear, or obsolescence.

Earned Premium

E

The portion of premium that an insurer had provided protection for and would not refund if the policy were cancelled.

Effective Date

E

The date that coverage begins on an insurance policy.

Electronic Funds Transfer (EFT)

E

This is an electronic payment method that allows an insured to pay premiums with automatic deductions from the insured's checking account.

Emergency Roadside Assistance

E

A coverage that can assist with services (not related to an accident) such as flat tires, running out of fuel, lockouts, etc., which are not typically handled by your automobile insurance.

Endorsements

E

Special provisions added to a policy that add, remove, or otherwise alter coverage.

Exclusions

E

Property, perils, persons or situations which are not covered under an insurance policy.

Exposure

E

The possibility of a loss occurring. Insurance companies set rates based upon exposure.

Field Adjuster

F

Insurance adjusters who primarily work outside of an office and conduct face-to-face meetings, negotiations with claimants, scene investigations, and inspect damaged property.

Flood Insurance

F

This is insurance to pay for flood damage and is excluded as a peril under most property insurance policies. Flood insurance typically can be obtained from the federal government or a specialty market.

Fraud

F

Any act carried out with the intention of deceiving an insurer in order to receive improper payment.

Hazard

H

Anything that increases the chance of an accident occurring.

ID Card

I

A card issued by an insurer containing basic information about the insured and the automobile insurance policy. Some states require the ID card be kept in the insured vehicle.

Improvements and Betterments

I

Property coverage for damage to work and materials installed in a non-owned building by a tenant.

Inception Date

I

The date that coverage begins on an insurance policy.

Independent Adjuster

I

An individual who estimates losses on behalf of an insurance company, but who is not an employee of that company.

Insurable Interest

I

In property insurance, a person must have ownership or a connection to property which, at the time of a loss to that property, would cause financial harm to the individual.

Insurance

I

A contract that transfers all or some of potential loss to property from one party to another in exchange for money.

Lapse in Coverage

L

The period of time when no insurance is in effect after a policy has cancelled and before a new policy is in effect.

Liability

L

Any legally enforceable obligation or responsibility for the injury or damage suffered by another person.

Liability Insurance

L

Protects your assets when you are at fault in an accident that results in physical injury to other people and/or damage to their property.

Lien holder

L

A person or organization with a financial interest in property up to the amount of money borrowed or still owed on the property.

Limit

L

The maximum amount of protection purchased by the insured for a specific coverage.

Limits of Liability

L

The maximum amount of insurance a liability insurance company agrees to pay as a result of an accident or inury to a person or persons.

Loss

L

Any measurable dollar cost of damage and/or injury suffered by a person.

Loss Payee

L

A person or entity with a legally secured, insurable interest in another's property.

Motor Vehicle Record (MVR)

M

A report listing motor vehicle accidents and violations.

Named Insured

N

Any person, firm, or corporation designated by name as the insured person(s) in a policy.

Negligence

N

Failure to use reasonable care in day to day activities that can result in damage or injury to another.

No-Fault Insurance

N

A type of insurance coverage where the insured party is indemnified by their own insurance company for loss, regardless of the cause of the loss.

Non-Renewal

N

When an insurer decides not to renew a policy at the end of its policy period.

Peril

P

The original cause of a loss such as fire, wind, or hail.

Personal Injury

P

Damage caused by events such as false arrest, detention, wrongful entry, libel, slander, violation of property, etc.

Personal Property

P

Property that is not land or connected to land (real estate), such as furniture or jewelry.

Policy

P

Written documents of a contract for insurance between the insurance company and the insured. Such documents include forms, endorsements, riders and attachments.

Policy Limit

P

The maximum amount an insurance carrier would pay based on what a particular insurance policy covers.

Policy Period

P

The period of time in which a policy is in effect.

Premium

P

The price of insurance an insured pays for a specified risk for a specified period of time.

Proof of Loss

P

A statement made regarding the extent of a claim. A proof of loss may be requested in accordance with the conditions of the policy.

Proximate Cause

P

The original cause of a loss.

Punitive Damages

P

Monetary awards for other than actual physical damage or bodily injury that has been caused. This is usually used as a punishment for allowing the loss to occur.

Reinsurance

R

A form of insurance that insurance companies purchase for their own protection.

Renewal Date

R

The date your insurance policy expires and the date your renewed policy will begin.

Replacement Cost

R

Coverage that pays the actual cost to replace damaged property at today's cost, regardless of the original price or depreciated value (actual cash value) of the property.

Salvage

S

Property that has been damaged and is then sold by the insurer to recover part of the value of the settlement for damages paid for by the insurer.

Salvage Title

S

An official indication that a motor vehicle has been damaged and has been deemed a total loss by an insurance company.

Subrogation

S

Transferring of the right of recovery from the insured to the insurer after payment of a loss. The insurer may then pursue a possible recovery from a third party who may have caused the loss.

Total Loss

T

Condition of property when damage is so extensive that repair costs would exceed the value of the property.

Umbrella Insurance

U

A policy that can provide limits in excess of the limits on an underlying policy.

Underinsured

U

The result of the policyholder's failure to buy sufficient insurance. An underinsured policyholder may only receive part of the cost of replacing or repairing damaged items covered in the policy.

Underwriting

U

The process an insurance company goes through to decide whether to accept or reject an application for a policy.

Unearned Premium

U

The portion of premium that would be refunded to an insured in case of cancellation.

Vehicle Identification Number (VIN)

V

Identification number assigned to each vehicle manufactured in the US after 1980. The 17-digit number is visible on the dashboard when viewed from the outside.

Warranty

W

A written guarantee of the integrity of a product and of the manufacturer's responsibility for the repair or replacement of defective parts.