This is a running list of car and home insurance terms that you may have questions about.  Disclaimer:  these are meant to be general definitions and don’t override any language in your actual insurance policy.

 

As this page becomes longer and longer, just use your browser’s “search” function (find on page) to locate the term you are looking for.  Don’t see a term?  Just post a comment below with your question.

 

Liability – something for which you can become legally responsible

 

Indemnity – pays you back

 

Insured – the owner of the insurance policy

 

Bodily Injury Liability Coverage – coverage that indemnifies you if you cause injuries to someone else

 

Property Damage Liability Coverage – coverage that indemnifies you if you cause damage to someone else’s property

 

Comprehensive Coverage (also called Other than Collision Coverage) – provides coverage for your vehicle for damage not caused by collision with another object (except wildlife)

 

Collision Coverage – provides coverage for your vehicle for damage caused by collision with another object or upset (rollover)

 

Full Coverage Policy – usually refers to an auto insurance policy that includes liability protection coverage as well as comprehensive and collision coverage.  May also include additional coverages for towing, rental, etc.

 

Deductible – the amount of any covered loss that the insured must pay him or herself, usually expressed in terms of a dollar amount

 

Co-insurance – a percentage of coverage  that the insured self-insures.  Unlike a deductible, though, under coinsurance provisions, the insurer and the insured share in the loss from dollar one (unless, of course, there is a deductible that applies, too!).  For example, the insurer would pay nothing on a $100 loss if there was a $100 deductible.  With a 20% coinsurance provision, the insurer would pay $80 and the insured would absorb the remaining $20.

 

Dwelling Coverage – coverage to cover the cost of repairing or rebuilding your house due to damage from a covered loss

 

Other Structures Coverage – coverage for structures not attached to your house.  examples include sheds, barns, detached garages, fences, etc.

 

Loss of Use Coverage – reimburses you for alternate living or rental car expenses incurred when your auto or house isn’t usable because of a covered loss on your policy

 

Actual Cash Value – this is a method of valuing claims based on fair market value to repair or replace an item with one of similar quality and condition (i.e. cost new minus depreciation)

 

Replacement Cost – this is a method of valuing claims based on the cost to replace an item with a new item of similar quality

 

Guaranteed Replacement Cost – refers to a home insurance policy that will pay for the replacement of a house in the event of total loss regardless of the cost to rebuild (rare nowadays)

 

Agreed Value – means that the insured and insurer agree on the value of something to be insured at the time insurance is placed rather than waiting for a loss to occur and then trying to determine the appropriate market value. Agreed value is typically used in specialty insurance like boat, historic home, and collector car insurance where the value of the insured item may be difficult to determine using standard cost guides.

This entry was posted on Wednesday, July 29th, 2009 at 4:07 pm and is filed under Insurance Glossary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.