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 judgements when the policy holder's car is involved in an accident that causes property damage and/or the injury or death of another person.

Cancellation
When an insurer discontinues an auto policy because a driver fails to pay the premium, loses driving priviledges, 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.

Collision Coverage
Covers the damage to a policy holder's vehicle resulting from a collision, regardless of who is responsible. Collision coverage typically requires the payment of a deductible by the policiy holder.

Damage Depreciation
Commonly used in avaition policies to describe the inherent loss of value to an aircraft that has been damaged and repaired. An indentical aircraft that had never been damaged would be worth the more in the sale than one that has been repaired, even if the prior work was exemplary.

Depreciation
The loss of asset's value over time

Earthquake Insurance
A specific policy covering home repair and the replacement of personal property lost to seismic activity.

First-Party Claim
Request to an insurance company by one of its policy holders for pompensation for a loss.

Floater
A separate policy designed to extend the coverage of the basic insureance 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.

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.

No-Fault Law
Regulation 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.

Personal Liability Insurance
The part of a homeowner's policy that covers the insured from legal expenses and claims for compensation should the insured accidentially injure others or damage their property.

Policy Holder
Person who buys and maintains an insurance policy, also called the "insured".

Premium
Payment required to initiate and continue an insurance policy.

Rider
A provision attached to a policy that adds or changes coverage.

Risk
Potential for loss or injury

Third-party Claim
Claim made to an insurance company for damage or injury caused by one of its policyholders.

Total, Totaled
Classification for a vehicle in need of repairs that will cost more than the vehicle's actual value.

Umbrella Liability Policy
An extra protection against liability that covers the amount above the maximum limits of homeowner's and auto policies.