Actual Cash Value (ACV) - The cost to replace an item of property at the time of loss, less an allowance for depreciation. Often used to determine the amount of reimbursement for a loss.

Additional Insured - An individual or company, in addition to the insured, who is listed in the Declarations. An example is a mortgage company that has an insurable interest in the property insured.

Aggregate Limit - Type of policy limit found in Liability policies that limits coverage to a specified total amount for all losses occurring within the policy period.

A.M Best Company - Organization that rates the financial stability of insurance companies doing business in the United States.

Annuity - A contract that pays an income for life or for a specified period.

Beneficiary - A person who may become eligible to receive, or is receiving, benefits under an insurance plan, other than as an insured.

Bodily Injury (BI) - Defined in most policies to include injury, sickness, disease, and death resulting from any of these at any time.

Broad Theft Coverage Endorsement - Dwelling policy endorsement that covers theft, attempted theft and vandalism and malicious mischief resulting from theft. Property is covered while it is on or off the premises.

Businessowners Policy (BOP) - Package policy designed to provide broad Property and Liability coverage for small businesses. The insured can choose one of two property forms, but there is only one liability form. Eligibility requirements are more strict than the CPP's.

Casualty Insurance - Line of insurance that includes a wide variety of unrelated coverages, including Liability, Auto, Workers Compensation, Aviation, Crime, and Surety Bonds.

Causes of Loss Form - Separate form used with the Commercial Property coverage part of the commercial Package policy that lists covered perils and exclusions. Several different versions provide increasingly broader coverage from basic to broad to special. An earthquake form is also available. A Causes Of Loss form takes the place of the policy's "perils insured against" provisions.

Coinsurance - Policy condition that requires an insured to pay part of a loss if the amount of insurance carried on property is less than the specified percentage of the value of the property at the time of loss.

Collision Coverage - In Auto insurance, a type of Physical Damage coverage that covers loss that occurs when the insured auto strikes another object or vehicle. May also include upset or overturn of the insured auto.

Commercial Lines - Insurance designed for businesses, institutions or organizations.

Commercial Package Policy (CPP) - Package policy for businesses developed by ISO. Insureds can select two or more of the following coverages to include in the policy: Commercial General Liability, Commercial Property, Commercial Inland Marine, Commercial Crime, Boiler and Machinery, Farm, and Commercial Auto. Most commercial risks are eligible for the CPP.

Completion Bond - Type of Surety bond that guarantees that when contractors borrow money to fund construction projects, the project will be carried out and the work will be delivered free and clear of liens or encumbrances.

Comprehensive Coverage - In Auto Insurance, a broad Physical Damage coverage that covers all property losses except collision and those perils or property that are specifically excluded. Also called Other Than Collision Coverage (OTC)

Consideration - A characteristic of a legal contract; the thing of value exchanged for the performance promised in the contract. With insured contracts, the consideration that the insured gives is the premium payment. The consideration that the insurer gives is the promise to pay for certain losses suffered by the insured.

Copayment - Under Medicare, any amount, other than deductibles, the recipient must pay in order to Medicare to pay the greater share. In an HMO, any nominal use charge the subscriber is required to pay for services in addition to the prepaid amounts. Also called coinsurance.

Declaration Page - The portion of an insurance policy containing the information regarding the risk.

Deductible - Dollar amount the insured must pay on each loss to which the deductible applies. The insurance company pays the remainder of each covered loss, up to the policy limits.

Disability Benefit - The benefit payable for disability under a disability income policy or provision.

Disability Income Insurance - Line of insurance that protects the insured against loss of income resulting from injury or sickness.

Dividend - The return of part of the premium paid for a participating policy.

Eligibility Period - The period following the probationary period during which the employee is eligible to enroll in a group insurance plan without providing evidence of insurability.

Elimination Period - A period of time between the onset of a disability and the date benefits begin. Also known as the waiting period.

Estate Plan - A plan describing the manner in which property will be disposed of at death.

Exclusions - Stated exceptions to prior provisions in a policy. Common exclusions in health policies include preexisting conditions, suicide, self-inflicted injuries, and many others. In life policies, common exclusions are death through flying in a private airplane, riot, or state of war.

Fair Credit Reporting Act - Federal law that allows consumers who are denied insurance because of information contained in a credit report to be notified and allowed to obtain the information used in the report from the reporting agency.

First Named Insured - First person listed in the Declarations as an insured. The first named insured may have a higher level of duties or rights under the policy.

Fraud - A deliberate misrepresentation that causes harm; an all-out effort by one part to deceive and cheat the other. Also an intentional misrepresentation made by a person with the intent to gain an advantage and relied upon by a second party which suffers a loss as a result.

Grace Period - A period of time after the premium due date during which a policy remains in force without penalty even though the premium due has not been paid. Commonly 30 or 31 days in life insurance policies; seven, 10, or 31 days in various health insurance policies.

Guaranteed Issue - A requirement that a health insurer must provide health insurance to all applicants without considering preexisting conditions or other risk factors like age or medical background.

Health Insurance - Line of insurance that protects the insured against financial loss due to medical bills.

Health Maintenance Organization (HMO) - An organization that provides health services to individuals known as subscribers or members. The HMO generally contracts with a group of doctors and other medical practitioners to provide services at agreed-upon costs, prepaid on behalf of the members. Members must rely exclusively on the HMO for all their medical needs in order to qualify for payment.

Hired And Nonowned Auto Liability Endorsement - Businessowners policy endorsement used to cover hired or nonowned autos used by the business.

Homeowners Policy - Personal multi-line policy for homeowners that includes both Property and Liability coverages. There are different forms that provide varying degrees of property coverage. Liability coverage is the same in all forms.

Inland Marine Insurance - Form of insurance originally designed as an extension of Ocean Marine coverage to insure transportation of goods over land. Today it covers a variety of portable property, in addition to goods in transit. Available as personal or commercial insurance. Commercial Inland Marine insurance can be included in the Commercial Package Policy.

Insurability - The condition of the proposed insured as to age, occupation, physical condition, medical history, moral fitness, financial condition and other factors that makes the individual an acceptable risk to an insurance company.

Insurance Age - An age upon which current premium rates may be established. It is commonly based on age at last birthday, age next birthday, or age at nearest birthday.

Insurance Commissioner - Head official of a state insurance department. May also be called an Insurance Director or Insurance Superintendent.

Liability Insurance - Type of insurance that protects an insured from financial loss arising out of liability claims by transferring the burden of financial loss from the insured to the insurance company.

Life Insurance - Insurance that pays a stipulated sum to the designated beneficiary upon the death of the insured. Protects the insured's beneficiary against the financial consequences of the insured's premature death.

Major Medical Insurance - A type of health insurance that provides benefits for most types of medical expenses incurred up to a high maximum limit or providing unlimited lifetime benefits. Such contracts may contain internal limits and a coinsurance or percentage participation provision and a deductible. Pays expenses incurred both in and out of the hospital.

Medical Savings Accounts - A system that provides incentives for employers to replace high cost, low-deductible health policies with affordable, high deductible catastrophic coverage for each employee. The premium savings would be used to fund a tax-preferred medical savings account that employees could use to pay for qualified medical care and expenses, including deductibles and coinsurance.

Medicare Supplement - Refers to a variety of health insurance plans designed to cover expenses not covered by Medicare. Also called Medigap.

Permanent Insurance - Life Insurance with some type of cash value accumulation.

Personal Auto Policy - Auto policy that provides Property and Liability coverage for both owned and nonowned autos used, maintained or operated by the insured and his or her family members.

Policy Limit - Maximum amount the insurance company will pay for a particular loss, or for losses sustained during a period of time. Also called limit of coverage, limit of insurance and limit of liability.

Policy Period - The date and time specified in the Declarations for when coverage begins and ends.

Preferred Provider Organization (PPO) - A select group of hospitals and medical practitioners in a given area who have a contract with an insurer to provide services at a prearranged cost.

Primary Care Physician (PCP) - In a Health Maintenance Organization (HMO) gatekeeper system, the physician selected to provide or authorize all care for a particular member of the HMO.

Professional Liability - Liability arising out of rendering or failing to render services of a professional nature.

Property Insurance - Line of insurance that includes many types of coverages designed to handle the risk that a person will suffer financial loss because something he or she owns is damaged or destroyed.

Reinsurance - Acceptance by an insurer, called a reinsurer, of all or part of the risk of loss of another insurer.

Replacement Cost - The cost to replace a damaged or destroyed item of property, without deduction for depreciation. May be the basis of reimbursement for some losses.

Reinsurance - Agreement between insurance companies under which one accepts all or part of the risk of loss of the other.

Renewable Term - Term insurance that can be renewed without proof of the insured's insurability.

Rider - An amendment attached to a policy that modifies the conditions of the policy by expanding or decreasing its benefits or excluding certain conditions from coverage.

Scheduled Coverage - Property that is specifically listed in the Declarations and covered for a specific amount. Also called specific insurance

Social Security Disability Benefits - Benefits paid under the U.S. Social Security program to qualifying individuals.

Standard & Poor - Organization that rates the financial stability of insurance companies doing business in the United States.

Suicide Clause - In a life insurance policy, states that if the insured commits suicide within a specified period of time, the policy will be voided. Paid premiums are usually refunded. The time limit is generally one or two years.

Surety Bond - Bond that guarantees that someone will perform faithfully whatever he or she agrees to do, or that someone will make an agreed-upon payment to another party.

Term Insurance - Life insurance that normally does not have cash accumulations and is issued to remain in force for a specified period of time, following which it is subject to renewal or termination.

Umbrella Policy - Type of policy that provides broad coverage for in insured's liability over and above liability covered by an underlying contract. May also cover losses that are excluded by the underlying policy. Available as personal or commercial insurance.

Underinsured Motorists Coverage - Auto coverage that pays the difference between the insured's actual damages for bodily injury and the amount of Liability insurance carried by the at-fault driver. May be added to the Personal or Commercial Auto policy by endorsement.

Underwriting - Insurance company function that involves researching and evaluating insurance applicants to decide which ones are acceptable to the company as insureds.

Uninsured Motorists Coverage - Automobile coverage designed to provide protection for the insured if he or she is involved in an accident in which an uninsured motorist is at fault. Uninsured motorists include those who do not carry insurance, motorists whose insurance does not meet the state's minimum financial responsibility laws, drivers whose insurance companies are insolvent, and hit-and-run drivers who cannot be identified.

Waiver of Premium Provision - When included, provides that premiums are waived and the policy remains in force if the insured becomes totally and permanently disabled.

Whole Life - Permanent life insurance on which premiums are paid for the entire life of the insured.

Workers Compensation (WC) - (1) A Schedule of benefits payable to an employee for injury, disability, dismemberment, or death as a result of occupational hazard. The payments are a liability of the employer. (2) Insurance agreeing to pay the Workers Compensation Benefits required by law on behalf of the employer.

Workers Compensation And Employers Liability Policy - Insurance that covers and employer's obligations under Workers compensation laws, which make the employer responsible for stated damages in the event of a work-related injury or illness. Also covers the insured's liability for work-related injuries under common law.

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