Insurance Terms Glossary
INSURANCE TERMS
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Whether you are navigating through your first insurance claim or have experienced several in the past, it is crucial to have a glossary of insurance terms ready and handy for use. We hope that policyholders with questions, and those looking to communicate better and sharpen their insurance rapport with insurance companies and public adjusters, will find this property insurance glossary useful.
The Louis Law Group Blog also serves as a valuable resource for learning more about insurance claims and other related insurance information.
ACTUAL CASH VALUE:
Popularly referred to as just “ACV,” Actual Cash Value is a method of calculating the cost of a lost or damaged property by an insurance company. This value is arrived at by ascertaining the replacement cost of the property minus depreciation. However, ACV is somewhat subjective, as the insurance company tends to set the valuation of the property to be replaced. Thus, you must pay attention to how the ACV is being calculated.
ANY OCCUPATION DISABILITY INSURANCE:
In this insurance policy, the insured is qualified to receive benefits as long as he/she is prevented from partaking in any work that they are eligible for, and the work type is not restricted to any precise occupation.
APPLICATION MISREPRESENTATION:
Negligent, fraudulent, or unintentional misstatement or lack of correct or adequate information on an insurance policy is termed an application misinterpretation. Furthermore, the insurance company can deny a claim based on these grounds. However, this is not true for all cases, as some level of incorrect information may still make you eligible to file a claim.
APPRAISAL:
A process in some insurance policies where there is a dispute over the severity of the loss. Some policies have varying jurisdictions and controlling language for various processes.
ASSISTED LIVING:
Housing specially built for senior citizens who require help with their daily routines but are not in any urgent need of intensive care. In some insurance policies, this will be differentiated from a nursing home.
BAD FAITH:
Bad Faith can be defined as an intent to deceive. In insurance, this can mean failure to honor a prior agreed-upon duty to the policyholder. Here, the insurance company may try to take advantage of the insured. Bad faith may also occur where the adjusters are unprofessional.
BENEFICIARY:
Any individual that is eligible to receive payment due to a retirement plan, will, trust, life insurance policy or any other agreed-upon contract.
BENEFITS (HOSPITAL AND MEDICAL EXPENSES):
All health care costs covered by an insurance company.
BUSINESS OWNER’S POLICY:
A special kind of insurance policy – such as business interruption coverage, liability and property – geared towards certain businesses.
CATASTROPHIC LOSS:
A devastating loss, especially where there was next to no chance of predicting it.
CLAIM:
An official request from a policyholder to an insurance company demanding payment owing to damage or loss that has been incurred by a property listed under the policy.
INSURANCE ADJUSTER:
When an official request for a claim is filed, the insurance company sends an adjuster to ascertain the amount of compensation required for the policyholder.
CONDITIONS:
Conditions are a set of rules or conditions that must be met for a claim to be valid.
DECLARATIONS:
Declarations are commonly referred to as the “dec pages.” These are forms under an insurance policy that give in-depth information on the demographic information of the insured, insurable interests, and other details of the insured property.
DIRECT LOSS:
Property damage or loss that arises directly from a specific event or a series of consecutive events that are covered under the insurance policy.
EXAMINATION UNDER OATH (EUO):
A formal procedure, in the presence of a court, where the attorney for the insurance company or insurance representative questions the insured. Claimants are advised to retain an attorney for this procedure, as it is a formal testimony regarding your claim and loss. In this case, the attorney for the insurance company does not represent you or your interests.
EXPOSURE:
Where the policyholder’s property is subject to damage or loss due to a hazard or contingency.
HAZARD:
A situation that can potentially heighten the chances or magnitude of a loss.
INDEPENDENT ADJUSTER:
Neither a public adjuster or policyholder adjuster, independent adjusters are often freelance adjusters hired by insurance companies to assess the level of loss on their behalf. These adjusters can work for numerous insurance companies on various kinds of claims.
INSURED:
The entity or person (policyholder) covered under an insurance policy.
INSURER:
The company or person that has the authority to write property and/or casualty insurance based on the law that bounds a certain locale (insurance company).
IRREVOCABLE BENEFICIARY:
A beneficiary under a life insurance policy whose compensation cannot be altered without prior consent.
LOSS PAYMENT CLAUSE:
This is a relatively standard provision that grants the policyholder an advantage and should be adhered to when funds are being paid.
NEGLIGENCE:
Failure to exercise caution/reasonable care that causes damage or loss to oneself or others.
NURSING HOME:
A private health institution that is often for the elderly and provides healthcare and residential accommodation.
OWN OCCUPATION DISABILITY INSURANCE:
This insurance policy offers coverage if a person is unable to carry on with their career. This policy refers to just the policyholder’s career and job, and not any random employment.
PACKAGE POLICY:
A policy that often comprises of two or more policies combined.
POLICY:
An official and written contract outlining the insurance terms and conditions of agreement.
PREMIUM:
The cost paid yearly, monthly, or quarterly for insurance coverage.
PRIMARY INSURANCE:
The superior policy that takes precedence when two or more policies cover the same loss.
PROOF OF LOSS:
A formal statement issued to the insurer by the insured outlining grounds for a claim (commonly in property insurance) to enable the insurer to ascertain its liability under the policy. Any proof of loss request must be handled urgently. Thus, policyholders must be aware of the deadlines for submission, since adherence to the time limit is crucial to the payment of the claim.
PROVISIONS:
Specific information highlighted in several sections of an insurance policy.
PROXIMATE CAUSE:
An event that is affiliated with a legally recognized injury and is termed the reason for an injury under an insurance coverage.
PUBLIC ADJUSTER:
Public adjusters work solely for policyholders and are often trained and licensed to adjust insurance claims on behalf of a commercial property, homeowner, or business.
REPLACEMENT COST VALUE:
The cost to replace a damage or loss owing to normal wear and tear, without taking the depreciation value into account.
SALVAGE:
Remaining value after a damage or loss.
TERM:
The timeframe in which an insurance policy is valid.
THIRD PARTY:
Anybody apart from the insurer or policyholder that is eligible for compensation or has incurred a loss due to the actions of the insured.
UMPIRE:
The appraisal process for an insurance claim comprises two appraisers and, if required, an umpire, usually chosen amicably. All agreements made by any two of the three is considered valid. The umpire is generally a professional in the field of repair or replacement required, such as an architect or engineer.
NOTE: These insurance definitions are general and meant to help you better understand various insurance terms; for a more specific meanings of these definitions, check your insurance policy.
