PROPERTY INSURANCE CHECKLIST OF TERMS

HOMEOWNERS & RENTERS

Actual cash value (market value) - A clause that states the insurer pays the current value of the loss, less depreciation, on the property insured, provided the loss does not exceed the face value of the policy limits. This traditionally applies to personal property which experiences "wear-and-tear". Depreciation of the property can reduce the coverage where the insured receives little, if any money for the loss. Additional living expenses - A coverage in the policy which allows for payment of "loss-of-use" of the residence while repairs are underway due to a loss from a covered peril. It is typical to pro-rate monthly the maximum allowed in the policy. What expenses are covered depends on where the insured lives during this period. Appurtenant structures/detached structures - Buildings not attached to the residence that have coverage in case of a financial loss from a covered peril. It could be a garage, a shed, a bathhouse, or a gazebo on the property. Coinsurance - A feature in a policy that assesses a penalty if the insured does not maintain adequate insurance on the residence, typically 80% of replacement cost. If the insured is "underinsured" than the company and the insured share the payment of the loss. Depreciation - The expense allowance on personal property that is subject to "wear-and-tear". The life expectancy of the personal property is determined and then an annual percentage for the property's depreciation is determined. This depreciation reduces the payment for the loss item due to it's actual market value. Endorsement - A special coverage attached to a policy to provide additional coverage or modify policy cover. Premiums increase when endorsements are added to the contract. Floater (Personal articles floater) - An endorsement in a property policy for items that are moved from location to location. Typically, a floater is purchased to cover jewelry, furs, and other items whose full value is not fully covered by a standard homeowners/renters policy. Also called a rider. Homeowners policy - An insurance policy protecting a homeowner against property and casualty perils. Various types of coverage are allowed under state law where the property is located. Lenders who hold mortgages of the property require coverage in case of financial loss. Leasehold clause - A clause that allows a landlord to hold or use a tenant's property typically for a breach of the rental contract. Liability insurance - Insurance that protects the insured in the event of losses resulting from damage to property, accidental bodily injury to another, or damages awarded in the event of a claim. It is designed to protect against negligent acts that occur due to "unreasonable" conduct. Courts typically decide what is "unreasonable". Negligent action - Acts that would not be performed by a reasonable person. Liability insurance provides coverage for such behavior. Named peril policy - A policy that provides coverage for one peril rather than several perils. Fire is the common named peril policy that landlords or owners carry for property they do not occupy.
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Other insurance clause - A clause that allows for a prorated payment if more than one insurance policy provides coverage. The proportional coverage is determined by each policy's share of the total coverage of all policies. Rating territories - Areas in the state that denote locations that are subject to various insurance coverage rates determined by the risks associated with the territories. Risks used to establish premium rates are population size and perils associated with the location such as theft and weather conditions. Replacement value (cost) - The cost to replace the damaged or lost property whether it is personal property or the residence and other buildings. Depreciation is not used to determine the loss. The insurance company can replace the property or reimburse the insured for the dollar value of the property. To determine the replacement cost of a home, the current building cost per square foot to rebuild the home is calculated according to the size of the home.

AUTO INSURANCE
Accidental death/disability - A provision added to a policy that provides the payment of additional benefits in case of death by accidental means or disability. Automobile insurance plan (assigned risk plan) - Plans developed by states to provide insurance coverage for those who are unable to obtain liability coverage on their own due to rating requirements by companies. This plan allows higher risk drivers to purchase state-required coverage, usually at a higher premium cost. Bodily injury liability losses (BI) - Coverage for medical expenses for others (not the insured or their household members) involved in an accident when the insured is at fault. Collision coverage - Pays for car repair or replacement for any car covered by the policy, caused by collision with another object and for upset of the car. The policy only pays for the amount in excess of the deductible stated in the policy, up to the market value of the car. Comprehensive coverage (other than collision) - Pays for loss of or damage to the insured's car(s) for everything except collision or upset. Perils included are fire, hailstorm, theft, or other non-collision events (malicious mischief, glass breakage, vandalism, and collision with birds or animals. A small deductible is common in the coverage, thus the policy pays the damage minus the insured's deductible. Financial responsibility laws - Legal requirements by states that require drivers to show they can pay for accidents they cause. Most drivers purchase auto insurance to meet or exceed the minimum coverage set by each state. Texas requires BIPD of 20/40/15. To certify current coverage the insurance company issues a proof-of-insurance card. Medical payments - Coverage for medical, hospital and funeral expenses resulting from an accident whether the insured is liable or not. The coverage primarily protects the insured, the insured's family, and any passengers in the insured's car. Coverage is provided to insureds involved in a motor vehicle accident as a pedestrian or a bicyclist. No-fault insurance - A policy concept whereby the parties involved are not required to prove blame in an action. The accident victim collects directly from his/her own insurance company for bodily injury expenses. No-fault statutes vary from state to state. Personal auto policy (PAP) - Insurance contract where coverage is selected from several types of common coverages. Personal injury protection (PIP) - A type of no-fault coverage that provides coverage identical to Medical Payments
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coverage plus a benefit for loss of income for wage earners and the cost of hiring someone to do the household and caregiver responsibilities of an injured person. Lost wages are limited to 80% of lost income. Property damage liability losses (PD) - Coverage for property damage of other's property (not the insured or their household members) involved in an accident when the insured is at fault. Subrogation - A process where a third party (insurance company) seeks redress/repayment for benefits paid to the insured. The insured must ask if the insurance company plans to "subrogate" to receive any return of out-of-pocket costs (deductible) paid by the insured. The insurance company is not required to automatically return any funds received from the at-fault party. Umbrella personal liability policy - A liability insurance policy providing excess coverage beyond regular liability policies. An umbrella policy will begin to pay claims only after the underlying liability policy's coverage limits have been exceeded. These policies are purchased to protect the insured against the possibility of a large jury award in a lawsuit. High limits are required for comprehensive personal liability (homeowners / renters policy) and bodily injury / property damage liability (auto policy). Slander and libel are covered under this policy, but not professional liability for the insured's occupation. Underinsured / uninsured motorist coverage - Coverage for the insured in the event the driver at-fault in an accident has insufficient or no insurance to cover the insured's property damage and medical costs. Coverage is also provided to the insured for damage from a hit-and-run driver. Property damage has a deductible, but not medical benefits.