Top Insurance Questions
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Here are three questions that we often hear:
- If I rent a car or a moving van, will my auto policy cover me?
- When my daughter leaves for college, are her belongings covered under my homeowner's policy?
- Is my neighbor covered while driving my car?
What are the answers?
With these questions and many more, the answers depend on your policy. Insurance is regulated differently in every state, and so these questions don't have simple solutions. But we can provide you with personalized answers based on your situation and your policy. Contact us, and we’ll be happy to help.
Insurance Definitions
'A'
Abandonment
A term that applies to property and signifies both a relinquishing of it and the letting go of all legal rights to it, as well, with the intent to claim a total loss. Abandonment of property to an insurance company is something insureds are expressly prohibited from doing in most property polices.
Abandonment clause
A property policy provision that stipulates that the insurer need not accept any damaged property that the insured chooses to relinquish.A property policy provision that stipulates that the insurer need not accept any damaged property that the insured chooses to relinquish.
Absolute liability
The performance of an act so dangerous as to be sufficient to trigger liability regardless of the degree of negligence. Triggering explosives is often used as an example. Sending workers aloft for construction or repair at elevated heights is another. 'Strict liability' is another term that is sometimes used.
Accident
An unforeseen, unintended, and unexpected event, which occurs suddenly and at a definite place. See Occurrence.
Accident frequency
The rate of occurrence of accidents. Along with accident severity, it is taken into account in ratemaking.
Accident severity
The measure of the seriousness of a claim, measured in, for example, dollars. Along with frequency, it is taken into account in ratemaking.
Accident year experience
Measures premiums and losses relating to accidents which occurred during a 12-month period.
Accommodation line
Normally unacceptable risks that are written as an accommodation to an agent or broker who has an overall profitable relationship with the insurer. For example: a personal auto risk with a teenage driver of a sports car might be written if the other lines of insurance which it carries for the customer were profitable; or if the agency has had a good and profitable relationship with the insurer.
Accounts receivable insurance
Pays for the cost of reconstructing accounts receivable records that have been damaged or destroyed by a covered peril. Even more important, it covers any payments that cannot be collected because records cannot be reconstructed.
Active malfunction
In products insurance, a defect or malfunction in a product that damages the property of the user.
Actual authority
Authority that an insurer intentionally gives to the agent. See express authority and implied authority.
ACTUAL CASH VALUE
Loss settlement is based on the replacement cost of an item at the time of the loss, less depreciation.
Actual cash value (ACV)
A method for placing value on property as of the time of its loss or damage. ACV may be determined as replacement cost, new, less depreciation. The market value of an item may be used to help determine actual cash value. Contrast with replacement cost.
Actual cash value appraisal
An appraisal to determine the actual cash value of a building and related personal property.
Actuary
A person highly trained in mathematics and statistics who calculates rates and dividends, and provides other statistical information for an insurance company. Additional insured - One who qualifies as insured under the terms of a policy even though not named as insured. Officers of a corporation may be included as insureds under the terms of a policy written in the name of the corporation.
Adhesion contract
A standardized set of agreements offered by one (usually the stronger) party to another on a 'take it or leave it' basis. An insurance policy is an example of such a contract. The insurer offers a personal auto policy, for example, that an individual may 'adhere to' (or not) but in any case the individual may not change any of its terms. Because it has the stronger position, the insurance company has the burden to spell out its terms precisely. Such contracts are interpreted strictly against the author of the contract. Not to be confused with aleatory contract.
Adjuster
A person who may act either on behalf of the insurance company or the insured in the settling a claim. Employee adjusters work for an insurer; independent adjusters represent the insurance company on a fee basis; and public adjusters represent the insured on a fee basis.
Admitted assets
The highly liquid assets of an insurer permitted by the state to be taken into account when reporting financial condition.
Admitted company
An insurance company that is licensed (admitted) to conduct business within a given state.
Admitted market
The range of insurance available through admitted companies.
Advance premium
Also called 'deposit premium' an advance premium is a downpayment on what will be the final premium, in policies where the final premium is subject to audit.
Adverse selection
The tendency of poorer than average risks to buy and maintain insurance. Adverse selection occurs when insureds select only those coverages that are most likely to have losses.
Adverse underwriting decision
Any decision made by an underwriter that is not favorable to the insured. Such decisions involve: termination, declination, higher rates, or reduction in coverage. Another example is the placing of a risk in a residual market or with an unauthorized insurer.
Advertising injury
Claim arising out of slander, libel, copyright infringement, or misappropriation of advertising ideas. Coverage is provided as part of coverage B of the commercial general liability policy.
ADVERTISING INJURY LIABILITY
Provides coverage for your liability arising from personal injury, violation of the right of privacy, infringement of copyright, title or slogan occurring as a result of your advertising activities.
ADVERTISING INJURY LIABILITY
Provides coverage for your liability arising from personal injury, violation of the right of privacy, infringement of copyright, title or slogan occurring as a result of your advertising activities.
Affinity marketing
Targeting marketing efforts toward one group or category of client. Examples include: grocery stores; all the employees of one company; or employees in one industry. Group business is a type of affinity marketing.
Age of Insured Discount
Kattan Ferretti offers Policyholders age 46 and older a discount on their homeowners insurance. The discount increases as you age (not available in N.C. and N.Y.)
Agency company
An insurance company that produces business through an agency network. See direct writer.
Agency contract
The legal agreement between an insurance agency and the insurer detailing the terms of representation.
Agency plant
The total force of agents representing an insurer.
Agent
One who solicits, negotiates or effects contracts of insurance on behalf of an insurer. His right to exercise various functions, his authority, and his obligations and the obligations of the insurer to the agent are subject to the terms of the agency contract with the insurer, to statutory law, and to common law.
Agents errors and omissions insurance
Insurance obtained by the insurance agent to guard against loss caused by an unintentional failure to properly insure (or recommend insurance to) a client.
Aggregate deductible
A deductible provision in some property insurance contracts where all covered losses during a year are figured together and an insurer pays only when the aggregate deductible amount is exceeded.
Aggregate excess reinsurance
A type of excess reinsurance treaty that sometimes is called stop loss or excess of loss ratio reinsurance. The retention in this type of agreement is calculated based on all losses over the period of time that is stated in the treaty. The reinsurer is responsible for the amount of losses between the retention and the limit on the treaty.
Aggregate limit
The maximum amount an insurer will pay under a policy in any one policy period.
AGGREGATE LIMIT OF LIABILITY
The maximum amount of insurance The ERIE will pay for a series of losses in a given year.
AGGREGATE LIMIT OF LIABILITY
The maximum amount of insurance The ERIE will pay for a series of losses in a given year.
Agreed amount clause
An agreement between underwriter and insured whereby, in exchange for the purchase of coverage in an amount specified by the underwriter, the insured is protected from a coinsurance penalty.
AGREED VALUE
This endorsement waives the coinsurance clause, thus eliminating any potential penalties for purchasing inadequate amounts of insurance. An agreed liability limit is the basis for monetary reimbursements and payments.
AGREED VALUE
This endorsement waives the coinsurance clause, thus eliminating any potential penalties for purchasing inadequate amounts of insurance. An agreed liability limit is the basis for monetary reimbursements and payments.
AGREED VALUE
This endorsement suspends and replaces the coinsurance clause if the insured carries a limit of insurance equal to or greater than the agreed value. The replacement requirement is an agreement to cover any loss in the same proportion as the limit bears to the stated agreed value. For example, if the agreed value of an item is $250,000 and the limit is $250,000, then a loss is covered at 100%.
Agreed value clause
Though rare, some policies cover for a value agreed upon at the time of writing; if the property is lost because of an insured peril, the amount stated in the policy will be paid. Fine arts insured under a personal articles floater or homeowners scheduled personal property endorsement are examples.
Aircraft coverages
Though aircraft have long been an important element in the lives of most Americans, insurance of aircraft exposures has remained outside the mainstream of property and liability insurance markets. Aircraft hull and liability insurance is the counterpart of personal or commercial auto policies coverage. Aircraft products insurance is the counterpart of products liability cover. Air cargo insurance is mirrored in motor truck cargo. Hangarkeepers liability is akin to garagekeepers coverage. As with any specialty line of insurance, the absence of standardized forms limits practice to specialists in the line.
Aleatory contract
A contract in which the number of dollars to be given up by each party is not equal. Insurance contracts are of this type, as the policyholder pays a premium and may collect nothing from the insurer or may collect a great deal more than the amount of the premium if a loss occurs. Not to be confused with contract of adhesion.
Alien insurer
An insurance company formed under the laws of a country other than the one it is doing business in.
Alienated premises
Property that has been sold by an insured.
ALL RISK INSURANCE
Protection from loss arising out of any accidental cause other than those perils or causes specifically excluded. This is in contrast to other policies which name the peril or perils insured against.
All risks
A property policy expression now out of fashion. It was used to designate contracts that promised coverage against 'all risks of direct physical loss' in contrast to forms that covered for specific, named perils. The word 'all' came to be perceived as open to broader interpretation than insurers intended and it was dropped in favor of the promise to cover 'risks of physical loss'. See Named perils and also Open perils.
Allied lines
Lines of insurance that cover for perils other than fire, that are usually sold with fire insurance, e.g., fire and allied lines.
Alternative dispute resolution (ADR)
Methods other than lawsuits that are designed to resolve legal disputes. Examples are arbitration and mediation. Ambiguity - A standard policy provision that proves to be ambiguous may be interpreted in the light most favorable to the insured.
Ambiguity
A standard policy provision that proves to be ambiguous may be interpreted in the light most favorable to the insured.
American Agency System
The system of selling insurance through agents who receive commissions in lieu of salary.
American Association of Insurance Services (AAIS)
An association of insurance companies providing filing and various technical services on behalf of its member companies.
American College, The
An educational institute conferring the Chartered Life Underwriter (CLU) designation.
Americans with Disabilities Act (ADA)
Passed by Congress in 1990, this act requires that 'reasonable accommodation' be made in public accommodations, including the workplace, for those with physical or mental disability.
Anniversary date
The anniversary of the original date of issue of a policy as shown in the declarations.
Annual aggregate deductible
A deductible applied annually to the total amount paid in claims during a policy period. Claims are generally subject to a per occurrence deductible; the aggregate is the limit beyond which no further deductibles are applied.
Anti-coercion laws
Usually contained in a section of the state code entitled 'Unfair Trade Practices', these provisions define the use of coercion as an unfair practice and, hence, a violation of the state law.
Apparent authority
The perceived ability of an agent to bind an insurance contract to an insurance company. If an agent or agency holds themselves out as representing a particular company it is reasonable for the public to assume that such authority is established contractually, even if it is not.
Apportionment
The method of dividing a loss between multiple insurers that cover the same loss.
Appraisal
A determination of the value of property for the purposes of determining the proper amount of insurance to be bought or in adjusting a loss.
Appurtenant structure
Another structure on the same premises as the principal structure. A detached garage on a dwelling premises is 'appurtenant' to the dwelling. Older homeowners forms refer to the 'other structures' protected under the HO Coverage B as 'appurtenant structures'.
Arbitration clause
The clause in an insurance policy that spells out how disagreements over a claim are settled.
Arson
The intentional setting afire of property.
Assigned risk plan
see Auto insurance plan.
Association captive
A captive insurer owned by the members of a sponsoring organization or group, such as a trade association.
Assumed liability
Liability assumed under contract or agreement. More commonly known as contractual liability.
Assured
A party who is a potential beneficiary of an insurance contract. The synonym 'insured' is more commonly used.
Attorney-in-fact
An individual who is given authority to execute legal documents, including bonds; or the manager of a reciprocal exchange, which is an insurance arrangement whereby risk is transferred to other members. The attorney-in-fact need not be a lawyer.
Attractive nuisance
Condition that can attract and injure children. The occupants of land on which such a condition exists are liable for injuries to children. Examples of attractive nuisance: swimming pools; earth moving equipment; playground equipment.
AUDIT
An annual survey of your financial records to determine exposures, limits, and premiums.
Authorized insurer
An insurer granted permission by a state to sell specific lines of insurance within that state.
Auto physical damage insurance
A program in which all automobile insurers in each state make coverage available to car owners who are unable to obtain auto insurance in the voluntary market.
AUTOMATIC ANNUAL ADJUSTMENT
To help assure you of an adequate amount of insurance for your buildings, ERIE will make an automatic annual adjustment to your building amount to reflect change in construction costs.
Automobile liability insurance
Insurance in which the insurer agrees to pay all sums for which the insured is legally obligated because of bodily injury or property damage arising from the ownership, maintenance, or use of an auto.
Automobile medical payments
Insurance applying to the medical, hospital, or funeral expenses of anyone injured while on or in an insured automobile. The coverage is not dependent on liability, being triggered simply by an accident. It may be included in either the Business Auto Policy or the Personal Auto Policy. See also Premises medical payments.