Glossary

ABBREVIATIONS
A.C.V. - Actual Cash Value
APR - Annual Percentage Rate
A/R - Assigned Risk (CAARP)
AVP - Assistant Vice President
B.F. - Broker Fee
BI - Bodily Injury
C.A.A.R.P. - California Automobile Assigned Risk Plan
C and C - Comprehensive and Collision
C.C.'S - Cubic Centimeters
CDW - Collision Deductible Waiver
CIGA - California Insurance Guarantee Act
CPI - Cars of Particular Interest
CSL - Combined Single Limits
DMV - Department of Motor Vehicles
D.O.C. - Drive Other Car
D.O.I. - Department of Insurance
DUI - Driving Under the Influence
F.R. - Financial Responsibility
F.T.A. - Failure To Appear
G.A. - General Agent
G.I. - Gross Income
I.S.O. - Insurance Service Office
KBB - Kelly Blue Book
MBI - Mechanical Breakdown Insurance
M.C. - Motor Club
MED. - Medical Coverage
MVR - Motor Vehicle Report
N.O.P. - Named Operator Program
PD - Property Damage
P.F. - Policy Fee
P.P.O. - Preferred Provider Organization
ACTUAL CASH VALUE
An amount equivalent to the replacement cost of stolen or damaged property at the time of the loss, less depreciation.
ACTUARY
  1. A man or woman whose job is figuring out premium rates for insurance companies.
  2. A mathematician who works with the statistical data used by insurance companies, e.g., the number of accidents in a certain area or which cars are in accidents most often are data of interest to an Actuary.
ADDITIONAL INSURED
A person or company other than the named insured protected under the terms of the contract of insurance. This is not a second or third driver. It is almost always a company such as a leasing company. For example, you lease the car from Ford. Ford Leasing Company is the Additional Insured.
AGENT
A person or organization licensed by a state authorized to sell insurance on behalf of an insurance company.
AGREEMENT (Insuring Agreement)
An Insuring Agreement is a part of an insurance policy describing coverage. Elsewhere in the policy there may be sections that restrict or exclude coverages.
A.M. BEST RATING
A.M. Best rates the financial strength of insurance companies. A Best's Rating gives an indication of how an insurance company may be expected to perform in the future. A Best's Rating is an independent third-party evaluation that subjects all insurers to the same rigorous criteria, providing a standard for comparing insurers, regardless of the country where they are located.
ANNUAL PERCENTAGE RATE (APR)
Cost of credit that consumers pay, expressed as a simple annual percentage. This is not the same as interest. According to the TRUTH IN LENDING ACT, every consumer loan agreement must disclose the APR in large bold type.
APPLICATION
(Insurance) A form showing the rating information, the coverage and the premiums for a specific risk. It is a request that a policy be issued. The information, once verified, becomes a part of your insurance policy.
ARTISAN
A person manually skilled in making a particular product; a craftsman. For insurance purposes, if you were a plumber who used a pickup to get back and forth to work you would be classified as an Artisan. A skilled craftsman employed by someone else who travels from job site to job site. He does not carry any materials. He may carry the tools of his trade.
ASSIGNED RISK PLAN
See CAARP (California Automobile Assign Risk Program)
AUTOMOBILE EXCESS MEDICAL PAYMENTS
  • An optional coverage under an automobile liability policy that pays the medical expenses of the policyholder and any of the passengers injured in the insured's automobile, regardless of who was responsible for the accident.
  • In addition, it pays the medical expenses of the policyholder and members of the immediate family injured while they are passengers in any other automobile, or as a pedestrian, if they are struck by an automobile.
  • This is paid only over and above all other coverages or medical programs the parties may have or any other applicable insurance.
Example: You hit someone and you were at fault. It takes all your coverage to pay the other guy's expenses. If you have no other coverage such as an HMO, PPO coverage and you did have Excess Medical Coverage, it would pay for the costs not covered by your regular policy.
AUTOMOBILE LIABILITY EXCESS POLICY
An insurance policy that provides coverage in excess of the basic limits of liability coverage. It provides bodily injury and property damage liability for persons who are unable to secure more than the minimum limits under their basic automobile liability insurance. The excess insurance policy always states that the basic liability policy must be kept in force, if not the Excess cannot be used.
AUTOMOBILE LIABILITY INSURANCE
You damage someone else or their car. Liability insurance covers this. It covers the harm you do to other people and their property.
AUTOMOBILE PHYSICAL DAMAGE INSURANCE
Insurance covering loss or damage to the policyholder's automobile. (Also known as Comprehensive and Collision Insurance)
BASE RATE
The Base Rate is the Premium charged by insurance companies for an average (Standard Risk) driver. Preferred and Non-Standard risks are calculated from the company's base rate by surcharges (an increase of base rates) or discounts (a decrease in base rate).
BASIC LIMITS (Minimum Limits)
  1. The lowest limits of liability insurance that are written by insurance companies.
  2. In California, the state legal minimum limits of automobile liability insurance. (15/30/5: Bodily Injury coverage $15,000 per person per accident, $30,000 total per accident and Property Damage coverage of $5,000)
BINDER
A legal agreement issued either by an agent or a company to provide temporary insurance until a policy can be issued. It should contain a definite time limit. It should be in writing (although a verbal binder you're covered can be legally upheld) and should clearly state who is the company through which the risk is bound, what are the amount of coverages, what are the perils and of course the type of insurance.
BODILY INJURY LIABILITY INSURANCE
The portion of Automobile Liability Insurance that is protection covering the insured's legal liability (responsibility) for bodily injury to others caused by the insured's ownership of a car. (Also known as Bodily Injury or BI) Even if your car is being driven by your child and is involved in an accident (not necessarily your child's fault) it's still your car so you are liable.
BROKER
  1. A person or organization licensed by a state and paid by you to look for insurance for you.
  2. An insurance broker is independent rather than appointed by any one insurance company. The Broker represents the client rather than the insurance company. The broker, in representing their client, is able to shop around with various insurance companies to secure the best coverage and the best products available. An insurance broker does Not have the authority to bind coverage.
BROKER AGREEMENT
The agreement signed by the insured that appoints InsureSuite as the broker and gives Survival Insurance Limited Power of Attorney. It also specifies the amount of the broker fee.
BROKERAGE
The business of a broker that may employ sales agents to conduct business. A Brokerage Fee may be charged for the services delivered to the client. Survival Insurance is an Insurance Brokerage.
CALIFORNIA AUTOMOBILE ASSIGNED RISK PLAN (CAARP)
The California Automobile Assigned Risk Plan is for insurance risks not ordinarily acceptable to insurers. Insurers who participate in the plan are assigned such people (risks) and must provide them with insurance coverage.
CANCELLATION
This is the ending of an insurance policy. When cancelled the policy is no longer in effect. The policy can be canceled either at the insured or the insurance company for specific causes. Examples of reasons for cancellation would be non-payment of premium or fraudulent information on the application.
CANCELLATION NOTICE
This is a written notice sent to the insured's (and other parties insured under the contract) showing the date the insurance contract will be terminated.
CASUALTY INSURANCE
That type of insurance that is primarily concerned with the legal liability for losses caused by injury to persons or damage to the property of others.
CLAIM
A demand made by the insured, or third parties (someone injured as a passenger in your car), or the insured's beneficiary, for payment of the benefits provided by your policy.
CLAIMANT
A claimant is a person making a demand for payment.
CLAUSE
  1. A clause is a distinct provision in a document.
  2. For example, it is an addition to an insurance policy that describes coverage for special audio equipment.
COLLISION COVERAGE
A form of automobile insurance that covers loss to the insured's own vehicle caused by collision with another vehicle or object or upset (overturning of the vehicle).
COLLISION DEDUCTIBLE WAIVER
A clause that provides payment for collision deductible in the event the insured has an accident where an uninsured driver's vehicle was at fault. It is a replacement for Uninsured Motorist Property Damage. It is sold only when Liability and Uninsured Motorist Bodily Injury and Collision are written on the same policy.
COMBINED SINGLE LIMIT (CSL)
In liability insurance the combining of both bodily injury liability and property damage liability insurance under a single limit. The insurance company would pay up to the stated limit on a third party claim regardless of whether the claim was for bodily injury or property damage or both.
Example: A $50,000 CSL policy would pay up to $50,000 for bodily injury or property damage regardless of the number of persons injured or the value of the property damaged.
COMMISSION
The amount of money paid to the brokerage by the Insurance Company for finding the clients, filling out the applications and accepting money for insurance coverage. It is a percentage of the Premium.
COMPREHENSIVE INSURANCE
Traditional name for physical damage coverage for losses by fire, theft, vandalism, and/or falling objects.
CONTRACT
The legal agreement between an insurer and an insured. It states that the insurer is legally required to make payments for coverages for which it has received premiums.
COVERAGE
The amount of insurance protection provided by a policy of insurance. In insurance practice the word coverage is used to mean the same thing as insurance or protection.
CUSTOMER SERVICE REPRESENTATIVE (CSR)
In the insurance business, a person licensed by the state to do insurance business on behalf of an agent, broker or insurance company. Example: Agents normally employ CSR's to process endorsements to your policy.
DAMAGE
Harm to the usefulness or value of person or property. This is the dollar amount payable under the insurance contract for a particular claim. It is the measure of the insurance company's legal responsibility to the insured/injured party.
DECLARATION PAGE
Also known as the Dec page (pronounced deck). This is the portion of the insured's contract that gives the who, what, and how much of what is being insured as stated in the application.
DEDUCTIBLE
The deductible is the amount that the insured is responsible to pay under comprehensive and collision before the insurance company will pay. This is a pre-stated amount, for example, $500 deductible. This amount is selected by the insured, you.
EARNED PREMIUM
When a policy is canceled during its term, there is a portion of the premium that the insurance company is entitled to keep or get because they were insuring the risk during that period of time. This is the part of the premium that they retain or request when a policy is canceled.
ENDORSEMENT
An endorsement is a written agreement attached to a policy to add or subtract insurance coverages. Once attached, the endorsement takes priority over the original provisions of the policy.
EXCESS INSURANCE
Excess Insurance is property, liability, or health coverage above the primary amount of insurance. For example, the primary coverage is $100,000 and the Excess Insurance is $1,000,000. If losses exceed $100,000, the excess insurance will pay for the losses up to a total of $1,000,000
EXCLUSION
  1. An item not covered by a policy, for instance a person might be specifically excluded or an item such as a stereo could be excluded. Also, certain situations could be excluded from coverage, for example unlocked vehicles.
  2. A form used to specifically exclude something from a policy in writing. For example, a father might want to exclude his son from his policy. He would fill out a form called an exclusion.
EXPIRATION
The date when a valid policy will cease to be in effect.
EXPIRATION NOTICE
This is a written notice sent to the insured showing the date that the insurance contract will terminate/expire.
EXPOSURE
  1. The state of being subject to the possibility of loss.
  2. From an insurance company's viewpoint the value of everything the policy insures.
  3. The condition of being responsible for paying for damages through contract or carelessness. Insurance companies take on exposure when they enter into insurance contracts.
FINANCIAL RESPONSIBILITY
All states require you to be financially responsible when driving a car. State law often requires that you purchase at least a minimum amount of auto insurance.
FINANCIAL RESPONSIBILITY FILING
An SR-22 form required by the Department of Motor Vehicles (DMV). It shows that you have purchased an automobile liability insurance policy.
FRAUD
A deception deliberately practiced in order to secure unfair or unlawful gain.
GENERAL AGENT
An agent who represents one or more insurance company(s) and who acts on behalf of the insurance company(s) in the areas of approving or denying applications, issuing policies, handling claims and collecting premium payments.
GOOD DRIVER
A good driver is defined by the Insurance Code as a person licensed to drive
HAZARD
A condition that can create an increased probability/possibility of a loss caused by a covered peril.
INDEMNIFICATION
The actual payment being made on a claim. The process of making a payment against a claim by an insurance company.
INDEMNIFY
Restoration to the victim of a loss by payment, repair or replacement.
INDEMNITY
Insurance is a contract of indemnity. The basic principle is that an individual should be restored to the same financial condition that existed prior to the loss that happened. The insured has the right to payment following a loss in the amount of the financial loss that occurred.
INSURANCE
A system whereby individuals and companies that are concerned about potential hazards pay premiums to an insurance company which pays them in the event of a loss. Insurance transfers risk from individuals to a larger group that is better able to pay for losses.
INSURANCE APPLICATIONS
A written form requesting insurance coverages for specific property, perils: For example, liability, comprehensive and collision. It is completed by or on behalf or an individual or company.
INSURE
The act of placing a contract of insurance in effect.
INSURED
The person or thing upon which a contract of insurance is placed. This is you or perhaps your house, for example.
INSURER
An insurance company offering insurance protection.
LAPSE
The termination of a right or privilege through disuse, a death or other failure. A policy will lapse if you do not make an installment payment or you do not renew.
LIABILITY INSURANCE
  1. Insurance covering the policyholder's legal liability resulting from injuries to other persons or damage to their property.
  2. Any form of coverage where the insured is protected against the claims of other people.
LIENHOLDER
The bank that financed your car is a lienholder. This means they have the right to take and hold or sell your car as security or payment for your debt to them. If you don't make payments the bank can take your car and sell it to pay your debt.
LIMITS OF LIABILITY
This is the maximum amount the insurer (insurance company) will pay in the event of a loss that is covered by the policy.

LOSS
  1. Any decrease in quantity, quality or value of property, including injury to person.
  2. The amount the Insurance Company is required to pay on a claim.
LOSS PAYABLE CLAUSE
A Loss Payable Clause is part of the physical damage section of an auto insurance policy. This clause authorizes payment be made to the organization or person (other than the insured) that has an insurable interest in the automobile. e.g. A bank or loan company. For example: You buy a car through your bank. It costs $40,000. You have paid $10,000 at the time of an accident that totals the car. The bank wants its $30,000. To ensure that the bank gets its 30k, it requires the insured to have a Loss Payable Clause in their Contract of Insurance.
MOTOR VEHICLE REPORT (MVR)
The record provided by the Dept of Motor Vehicles (DMV), of an automobile driver's accidents and/or traffic violations. It also shows the status of the driver's license.
NAMED INSURED
This is the person or organization named on a property or liability insurance policy. It's the person or organization covered.
NO-FAULT AUTOMOBILE INSURANCE
Type of coverage in which an insured's own policy provides indemnity for bodily injury and/or property damage without regard to fault. In many instances it is difficult if not impossible to determine the original cause-such as who is at fault in a chain car collision. In states with no-fault liability insurance, an insured cannot sue for general damages until special damages including medical expenses exceed a minimum amount. This is an effort to eliminate groundless suits for general damages.
NON-STANDARD
An insured with a combination of factors which statistically results in greater risk than normal. (Example: More than one ticket, an accident, drunk driving, no prior insurance or newly licensed, etc.).
OTHER INSUREDS
Other individuals or organizations covered by the insurance policy other than the named insured.
PERIL
The cause of a loss. For example, accident, fire, flood, liability, burglary and explosion are perils.
PERSONAL LINES
Insurance for private passenger vehicles that are used for personal, not commercial use.
PHYSICAL DAMAGE
A phrase indicating damage from such perils as comprehensive, and collision.
POLICY
A Policy is a formal written contract of insurance comprised of the Application, Dec Sheet, Endorsement Forms, and the Policy Jacket.
POLICYHOLDER
The Policyholder is an individual or a company that owns an insurance policy.
POWER OF ATTORNEY
A Power of Attorney is a legal document that allows one person to act for another person. Example: You could give a Broker a Power of Attorney to act on your behalf with regard to all insurance matters.
PREFERRED RISK
A Preferred Risk is one that is considered by insurance companies to be less likely to have an accident. Example: Many years with no tickets or accidents and more than two or three years of continuous prior insurance.
PREMIUM
The amount of money an insurance company charges to provide coverage.
PREMIUM FINANCING
Premium financing is a loan made by a lender's bank to pay an insurance premium. The lender's bank pays the premium to the insurance company in full. You then make payments to the lender's bank. If you do not make a payment to the lender's bank, they will send a request to the insurnace company to cancel your policy. If the insurance company cancels your policy if you later make a payment. The insurance agency or brokerage selling the policy can arrange Premium Financing.
PRIMARY CARRIER
The insurance carrier that has the basic limits of coverage, the one who will have to pay first in the event of a loss. (See also Excess)
PRODUCER
The agency or brokerage responsible for producing (writing) an application for insurance.
PROHIBITIONS
  1. There are two basic categories of prohibitions: Unacceptable Vehicles and Unacceptable Drivers. For example some companies will not accept Porsches. That would be a prohibited vehicle. Another example would be some companies will not accept male drivers under 20 years of age. That would be a prohibited driver.
  2. A Prohibition is a type of risk that is unconditionally unacceptable. In other words under no conditions will the Insurance Company accept that risk.
PROPERTY DAMAGE LIABILITY INSURANCE
This is protection against liability for damage to the property of another, including loss of the use of the property, as different from liability for bodily injury to another. In the majority of cases it is written along with Bodily Injury Liability protection
RATE
The word means the same as premium, it's the amount charged to insure the risk.
RATING
The process of applying an insurance companys's rules and their rate chart to a particular risk to determine the premium to be charged.
REPRESENTATIONS
Representations are statements by an insurance applicant concerning personal health, family health history, occupation, and hobbies. These statements are required to be substantially correct; this means the applicant must answer the questions to the best of their ability.
RESTRICTIONS
Restrictions are similar to prohibitions in
RISK
  1. A Risk is the uncertainty of financial loss.
  2. An insured (person) or a peril that is insured against.
  3. The insured or property covered by the policy.
ROADSIDE ASSISTANCE PROGRAM (RAP)
There are 2 plans that cover towing and car rental in the event your car is not driveable after an accident. As with every policy, be sure to check the policy booklet for the full details of available coverages.
SOLICITOR
A person licensed to transact insurance for a licensed insurance agent or broker.
SPLIT LIMIT
In automobile liability insurance, the separation of bodily injury and property damage coverages with each having its own stated limit. The insurance company would pay a third party claim for bodily injury only to the stated limit and likewise for property damage. Example: Coverage of 15/30/5 is a Split Limit that provides $15,000 per person for bodily injury coverage and a maximum of $30,000 per accident for bodily injury coverage, and $5000 maximum for property damage.
STANDARD RISK
A Standard Risk is one that is regarded by insurance companies as normal and insurable risks at the company' basic rate. Preferred and Non-Standard risks are calculated from the company's base rate by surcharges (an increase of base rates) or discounts (a decrease in base rate).
SURCHARGE
An additional charge added to the base rate charged for insurance. Example: A person having two tickets might result in a %20 increase in that persons base rate for insurance.
TERM
The period of time for which a policy or bond is issued.
THIRD PARTY INSURANCE
A phrase that means the same as Liability Insurance. Liability insurance always involves a third party, the one who has suffered a loss.
UNDERWRITER
A person trained in evaluating risks and assigning rates based on insurance company rules.
UNDERWRITING
The process of selecting risks and classifying them according to their degrees of insurability so that the appropriate rates may be assigned.
UNDERWRITING GUIDELINES
The rules, regulations, and rate charts of an insurance program used for working out insurance rates (premiums).
UNINSURED MOTORIST BODILY INJURY COVERAGE
A coverage in an Automobile Insurance policy under which the company will pay losses to the insured for UMPD for which another motorist is unable to pay because he is uninsured. This coverage applies to Bodily Injury losses only. By law, in California, insurance companies must offer this coverage. If you do not want this coverage you must specifically reject it.
UNINSURED MOTORIST PROPERTY DAMAGE COVERAGE
A coverage in an Automobile Insurance policy under which the company will pay losses to the insured for UMPD for which another motorist is unable to pay because he is uninsured. This coverage applies to property damage losses only. By law, in California, insurance companies must offer this coverage. If you do not want this coverage you must specifically reject it.
VIN#
A seventeen digit alphanumeric designation used by automobile manufacturers to identify a motor vehicle. The last six numbers are the vehicle's serial number.
WAIVE
The act of intentionally giving up something to which one has a right. For example, UM coverage can be waived.
WAIVER
A written form stating that something has been given up and signed by the one giving it up.

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