General coverage terms
Actual Cash Value
An amount equivalent to the replacement cost of stolen or damaged property at the time of the loss, less depreciation. For vehicles, this is typically determined by local private-party sales and dealer quotations; Kelley Blue Book is used only as a guide, not the final word.
Admitted Company
An insurance company authorized to do business in Florida.
Agent
A licensed person or organization authorized to sell insurance by or on behalf of an insurance company.
Binder
A temporary or preliminary agreement that 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.
Captive Agent
A representative of a single insurer (or fleet of insurers) who is obliged to submit business only to that company, or at minimum to give that company first refusal on a sale. In exchange, the insurer usually provides office-expense allowances and employee benefits.
Claim
Notice to an insurer that, under the terms of a policy, a loss may be covered.
Claimant
Any person who asserts a right of recovery, the first or third party.
Contents-Only Coverage
In personal-property insurance, coverage for movable personal property not attached to the building’s structure: such as televisions, clothing, and household goods. Animals, automobiles, and boats are not included.
Decline
When the company refuses to accept a request for insurance coverage.
Deductible
The portion of a loss the insured is responsible to pay before the insurance company’s benefits are payable. Choosing a higher deductible generally lowers your premium.
Depreciation
A decrease in value due to age, wear and tear, and similar factors.
Direct Writer
A method of selling insurance directly to insureds through a company’s own employees, the mail, the internet, or other direct channels.
Endorsement
An amendment to a policy used to add or delete coverage. Also called a rider.
Exclusion
Certain causes and conditions, listed in the policy, that are not covered.
Expiration Date
The date on which the policy ends.
Face Amount
The dollar amount paid to the beneficiary when the insured dies. It does not include other amounts that may be paid from insurance purchased with dividends or from policy riders.
Fire Insurance
Coverage for loss of or damage to a building and/or its contents due to fire.
Grace Period
A period (usually 31 days) after the premium due date during which an overdue premium may be paid without penalty. The policy remains in force throughout this period.
Guaranteed Insurability
An option that lets the policyholder buy additional stated amounts of life insurance at stated future times without further evidence of insurability.
Health Insurance
A policy that pays specified sums for medical expenses or treatments. Health policies offer many options and vary in their approaches to coverage.
Homeowner Insurance
An elective combination of coverages for the risks of owning a home, which can include losses from fire, burglary, vandalism, earthquake, and other perils.
Incontestable Clause
A provision in which the company agrees not to contest the validity of the contract after it has been in force for a certain period, usually two years.
Independent Agent
A contractor who represents different insurance companies and searches the market to help find coverage suited to a client’s insurance needs.
Insured
The policyholder, the person(s) protected in case of a loss or claim.
Insurer
The insurance company.
Life Insurance
A policy that pays a specified sum to beneficiaries upon the death of the insured.
Limit
The maximum amount a policy will pay, either overall or under a particular coverage.
Loan Value
The amount that can be borrowed at a specified interest rate from the issuing company, using the value of the policy as collateral. If the policyholder dies with the debt unpaid, the amount borrowed plus interest is deducted from the amount payable.
Material Misrepresentation
When a policyholder or applicant makes a false statement of a material (important) fact on their application, for example, giving false information about where a 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 coverage.
Premium Financing
An arrangement where a policyholder contracts with a lender to pay the insurance premium on their behalf, then repays the lender for the premium plus interest and fees.
Pro-Rata Cancellation
When a policy is terminated mid-term by the insurance company, the earned premium is calculated only for the period coverage was provided. Example: an annual policy with a $1,000 premium cancelled after 40 days would earn 40/365 Ă— $1,000 = $110.
Quote
An estimate of the cost of insurance based on information supplied to the insurer by the applicant.
Rate
The cost per unit of insurance. When used to calculate a premium, it must be adequate to cover expected losses, reasonable so insurers don’t earn excessive profit, and not discriminatory.
Replacement Cost
The cost to repair or replace an insured item. Some coverage pays only the actual cash (market) value at the time of loss; with replacement-cost coverage, your insurer pays the full cost to repair or replace the item once the repair or purchase is made.
Replacement Value
The full cost to repair or replace damaged property with no deduction for depreciation, subject to policy limits and contract provisions.
Reinstatement
Restoring a lapsed policy to full force and effect. Reinstatement may take effect after the cancellation date, creating a lapse in coverage; some companies require evidence of insurability and payment of past-due premiums plus interest.
Rider
Usually known as an endorsement, an amendment to a policy used to add or delete coverage.
Short-Rate Cancellation
When a policy is terminated before its expiration date at the policyholder’s request. The earned premium charged is more than the pro-rata amount; generally the return premium is about 90% of the pro-rata return premium, though a company may set 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 certain circumstances.
Surcharge
An extra charge applied by the insurer. For auto insurance, a surcharge is usually for accidents or moving violations.
Surrender
To terminate or cancel a life insurance policy before its maturity date. With a cash-value policy, the policyholder may exercise one of the nonforfeiture options at surrender.
Underwriting
The process of selecting applicants for insurance and classifying them by their degrees of insurability so the appropriate premium rates may be charged. It includes the rejection of unacceptable risks.
Waiting Period
A period of time set out in a policy that must pass before some or all coverages begin.
Auto insurance terms
Additional Interest Insured
A company or person named as an additional interest on a policy who can be affected by an accident involving an insured person or vehicle, for example, a lienholder.
Anti-Theft Device
There are two broad types: passive devices arm themselves automatically when the vehicle is turned off or a door is shut, and active devices require an action such as pushing a button. Having an anti-theft device may qualify you for a discount.
Bodily Injury Liability Coverage (BI)
If an insured person is legally liable for an accident, BI coverage pays for injuries or death to people other than the insured driver, and also pays legal-defense costs if you are sued. Certain exclusions may apply, refer to your policy.
Comprehensive Coverage
Pays for damage to your insured vehicle from an event other than a collision, including fire, theft, windstorm, flood, and vandalism. If your vehicle is stolen, Comprehensive may cover transportation and loss-of-use expenses where applicable.
Collision Coverage
Pays for damage to your vehicle when it overturns or collides with another object. Collision coverage may also extend to a non-owned or rented car in your custody that you are operating. Certain exclusions may apply, refer to your policy.