Learn the terminology, you will be one step ahead.
- Admitted Company
An insurance company authorized to do business in California.
A licensed person or organization authorized to sell insurance by or on behalf of an insurance company.
A temporary or preliminary agreement which provides coverage until a policy can be written or delivered.
A licensed person or organization paid by you to look for insurance on your behalf.
Coverage against loss as a result of forced entry into premises.
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.
Notice to an insurer that under the terms of a policy, a loss maybe covered.
The first or third party. That is any person who asserts right of recovery.
The company refuses to accept the request for insurance coverage.
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.
A decrease in value due to age, wear and tear, etc.
Amendment to the policy used to add or delete coverage. Also referred to as a “rider.”
Certain causes and conditions, listed in the policy, which are not covered.
- Expiration Date
The date on which the policy ends.
- Fire Insurance
Coverage for loss of or damage to a building and/or contents due to fire.
- Homeowner Insurance
An elective combination of coverages for the risks of owning a home. Can include losses due to fire, burglary, vandalism, earthquake, and other perils.
- Incontestable Clause
A policy provision in which the company agrees not to contest the validity of the contract after it has been in force for a certain period of time, usually two years.
The policyholder – the person(s) protected in case of a loss or claim.
The insurance company.
- Liability Insurance
Coverage for all sums that the insured becomes legally obligated to pay because of bodily injury or property damage, and sometimes other wrongs, to which an insurance policy applies.
Maximum amount a policy will pay either overall or under a particular coverage.
- 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.
An incorrect estimate of the insurance premium.
- Mortgage Insurance
Life insurance that pays the balance of a mortgage if the mortgagor (insured) dies.
The written contract of insurance.
- Policy Limit
The maximum amount a policy will pay, either overall or under a particular coverage.
The amount of money an insurance company charges for insurance coverage.
- Premium Financing
A a policyholder contracts with a lender to pay the insurance premium on his/her behalf. The policyholder agrees to repay the lender for the cost of the premium, plus interest and fees.
- 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.
- Property Damage
Damage to another person’s property. The purpose of liability insurance is to cover property damage to a third party resulting from the negligent or intentional acts of an insured.
An estimate of the cost of insurance, based on information supplied to the insurance company by the applicant.
- Replacement Cost
The cost to repair or replace an insured item. Some insurance only pays the actual cash or market value of the item at the time of the loss, not what it would cost to fix or replace it. If you have personal property replacement cost coverage, your insurance will pay the full cost to repair an item or buy a new one once the repairs or purchases have been made.
- Replacement Value
The full cost to repair or replace the damaged property with no deduction for depreciation, subject to policy limits and contract provisions.
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.
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.
A licensed employee of a fire and casualty agent or broker who may act for the agent or broker in some circumstances.
- Sprinkler Insurance
Coverage for property damage caused by untimely discharge from an automatic sprinkler system.
- Title Insurance
Coverage for losses if a land title is not free and clear of defects that were unknown when the title insurance was written.
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.