Sumner Insurance Glossary
 

 
  Actual cash value. The value of property at the time it was stolen or destroyed, arrived at by subtracting depreciation from the replacement cost of the item.
   
  Bodily injury liability coverage. Pays for medical expenses, legal expenses, and judgments when the policyholder’s car is involved in an accident that causes property damage and/or the injury or death of another person.
   
  California Earthquake Authority (CEA). A state-sponsored partnership between private companies and the government offering earthquake insurance policies in the state.
   
  Cancellation. When an insurer discontinues an auto policy because a driver fails to pay the premium, loses driving privileges, or has not accurately reported the facts relating to his level of risk. A cancellation may make it difficult to get insurance for a long time to come.
   
  Claim. A request to an insurer for compensation for a loss.
   
  Collision coverage. Covers the damage to a policyholder’s vehicle resulting from a collision, regardless of who is responsible. Collision coverage typically requires the payment of a deductible by the policyholder.
   
  Comprehensive physical damage coverage. Pays for damage to a policyholder’s car that is not the result of an auto accident, such as theft, vandalism, fire, hail, natural disasters, hitting a deer. Comprehensive coverage requires a deductible, and will only pay as much as the car was worth before sustaining the damage.Top
   
  Damage depreciation. Commonly used in aviation policies to describe the inherent loss of value to an aircraft that has been damaged and repaired. An identical aircraft that had never been damaged would be worth more in a sale than one that has been repaired, even if the repair work was exemplary. Top
   
  Deductible. The amount of a claim that the insured must pay before the insurance company will cover the rest. Top
   
  Depreciation. The loss of an asset’s value over time. Top
   
  Earthquake insurance. A specific policy covering home repair and the replacement of personal property lost to seismic activity. Top
   
  Endorsement. An agreement added to a policy to change the amount of coverage offered by that policy. Once attached, an endorsement supersedes the original terms of the policy. Top
   
  First-party claim. Request to an insurance company by one of its policyholders for compensation for a loss. Top
   
  Floater. A separate policy designed to extend the coverage of the basic insurance policy for an item or collection of items. It's called a floater because sometimes the asset may “float” from location to location with the owner’s use. Top
   
  Flood insurance. A private or government-sponsored policy covering home repair and the replacement of personal property damaged by a flood. Normally not included in basic homeowner's policies. Top
   
  Flood insurance rate map (FIRM). A map developed by the National Flood Insurance Program showing base flood elevations, risk zones, and floodplain boundaries; used in determining flood insurance premiums. Top
   
  Flood zone. Area in which the likelihood of a flood is much higher than average. Top
   
  Homeowner's insurance. An insurance policy that covers a home and its contents against loss, and protects the insured from liability claims. Top
   
  Hull insurance. Portion of an aircraft or a yacht policy that covers physical damage to the insured craft. Top
   
  Intentional misconduct. Willful damage to property or injury to others; distinct from negligence. Top
   
  Lienholders interest endorsement. Also called “breach of warranty”; optional coverage in an aviation policy that pays a lienholder the balance of a loan in the event the aircraft is damaged in a manner that also voids the policy; favors the lienholder, not the policyholder. Top
   
  Loan/lease gap insurance. Covers the difference between a car’s actual cash value and the amount still owed on a loan or lease. Top
   
  Medical payments coverage. Covers the medical bills incurred by policyholders and their passengers after an auto accident, regardless of who is at fault. Top
   
  National Flood Insurance Program (NFIP). Coverage against flooding for personal and business property under the National Flood Insurance Act of 1968, provided by a partnership of private insurers and the government.Top
   
  Negligence. Failure to exercise care, resulting in injury to others or damage to property.Top
   
  No-fault laws. Regulations in some states that require each person involved in an auto accident to pay his or her own medical expenses and lost wages. Stricter versions disallow certain pain-and-suffering lawsuits. Top
   
  Non-renewal. Means only that a company does not want to offer the driver a policy any longer, possibly because of the driving or claims record over the last three to five years. More than likely, other insurers will provide insurance at a higher price. Top
   
  Open pilot clause. Minimum competency required by an aviation policy for a pilot to be covered under the policy. Top
   
  Peril. A specific cause of loss, such as fire or vandalism. There are 17 named perils in most homeowner's policies. Top
   
  Personal injury protection (PIP). Auto insurance required in many no-fault states, which pays extensive medical expenses, lost wages, and a small death benefit for the driver and all passengers. PIP usually comes with a 20 percent deductible. Top
   
  Personal liability insurance. The part of a homeowner's policy that covers the insured from legal expenses and claims for compensation should the insured accidentally injure others or damage their property. Top
   
  Personal property. In regards to homeowner's insurance, the possessions of the insured. Top
   
  Personal watercraft. A small but powerful motorized watercraft sold under brand names such as Jet Ski or Wave Runner. Distinct from a boat or yacht. Top
   
  Policyholder. Person who buys and maintains an insurance policy; also called the "insured". Top
   
  Premium. Payment required to initiate and continue an insurance policy. Top
   
  Property and indemnity coverage. Common name for liability portion of a yacht insurance policy. Top
   
  Property damage liability coverage. Pays for damages to the property of others caused by the policyholder in his or her vehicle. Top
   
  Rent-loss provision. Portion of a policy that would reimburse an owner for rent that is lost while repairs are being made to rental property. Top
   
  Rental reimbursement coverage. Pays a set amount per day for transportation expenses or car rental while the insured’s car is being repaired due to a covered loss. Top
   
  Renter's insurance. Policies available to those who rent a dwelling; usually covers personal possessions and liability, but not the dwelling itself. Top
   
  Replacement cost. The cost of replacing a lost or destroyed item; does not factor in depreciation or market value. Top
   
  Rider. A provision attached to a policy that adds or changes coverage. Top
   
  Risk. Potential for loss or injury. Top
   
  Special flood hazard areas (SFHA). A categorization of the different risk areas associated with floods, used in determining premiums for flood insurance. “V” is the most hazardous. Top
   
  Third-party claim. Claim made to an insurance company for damage or injury caused by one of its policyholders. Top
   
  Total, totaled. Classification for a vehicle in need of repairs that will cost more than the vehicle’s actual value. Top
   
  Towing and labor coverage. Provides emergency road service and pays for towing charges. This coverage is not limited just to accidents, but can be used any time the insured’s car breaks down. Top
   
  Umbrella liability policy. An extra protection against liability that covers the amount above the maximum limits of homeowner's and auto policies. Top
   
  Unearned premium. Portion of a premium that may be returned to the policyholder if a claim resulting in a total loss takes place before the end of the policy term and eliminates the need for continued coverage. Top
   
  Uninsured/underinsured motorist (UM/UIM) coverage. Covers the costs associated with damage or injury caused by an uninsured, underinsured, or hit-and-run driver. Top
   
  Yacht. Typically, a recreational watercraft that is 26 feet or more in length; distinct from a boat or a personal watercraft. Top
 
 
 
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