Glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

Accidental Death or Dismemberment

This policy pays a fixed amount in the event of your death, much like a life insurance policy, but only if your death is accidental. It also pays a lower scaled amount if you are dismembered, depending on the severity. These policies are generally very inexpensive because they will only trigger coverage in certain named accidental situations.

Actual Cash Value (ACV)

A policy that pays on an actual cash value basis means the carrier will determine what it would cost to replace the item minus depreciation.

Additional Living Expenses

If your home is damaged due to an insured peril and you are forced to find temporary shelter while repairs are being made, this pays for those expenses over and above your normal living expenses.

Adjuster

Someone hired or employed by the insurance company to settle claims.

Admitted Company

An insurance company licensed and authorized by the state of Florida to do business in the state. These companies are also typically backed by the Florida Insurance Guaranty Association.

Annuity

A life insurance product that pays monthly or annual income benefits for a specified period of time or over the course of the annuitant’s lifetime. There are two basic types of annuities: deferred and immediate. Deferred annuities allow assets to grow tax-deferred over time before being converted to payments to you. Immediate annuities can begin payment in about a year.

Arbitration

Procedure in which an insurance company and the insured or a vendor agree to settle a claim dispute by accepting a decision made by a third party.

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B

Beneficiary

The person or entity an insured individual names to receive their insurance benefits.

Binder

Temporary evidence of insurance coverage issued prior to receiving the actual policy.

Bodily Injury Liability (BI)

Bodily Injury Liability pays for injury to others when you are at-fault. Bodily Injury Liability pays the amount you are legally obligated to pay (up to the limit of coverage you have purchased) for a person(s) injured or killed in an accident when you are at-fault.

Bond

Different from insurance, a bond can be purchased to protect a third party in the event a job is not completed properly. The bonding company would then pay the third party expenses to hire another company to complete the job correctly. A bond also protects against employee dishonesty.

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C

Catastrophic Ground Cover Collapse

Instead of sinkhole coverage, which can be very costly in most Florida counties, companies offer catastrophic ground cover collapse. Catastrophic ground cover collapse is defined as geological activity that results in all of the following:

  • The abrupt collapse of the ground cover;
  • A depression in the ground cover clearly visible to the naked eye;
  • Structural damage to the building including the foundation; and
  • The insured structure being condemned and ordered to be vacated by the government agency authorized by law to issue such an order for that structure.’

This means that if your home is damaged by sinkhole activity, but does not meet all four criteria for catastrophic ground cover collapse ‘ for instance, you may have foundation cracks, but the home is still livable ‘ your insurance may not pay for the damage if you do not have sinkhole coverage.

COBRA

Short for Consolidated Omnibus Budget Reconciliation Act. A federal law under which group health plans sponsored by employers with 20 or more employees must offer continuation of coverage to employees who leave their jobs and their dependents. The employee must pay the entire premium. Coverage can be extended up to 18 months. Surviving dependents can receive longer coverage. In Florida, there is also a Mini COBRA for employers that have less than 20 employees.

Coinsurance

In property insurance, requires the policyholder to carry insurance equal to a specified percentage of the value of property to receive full payment on a loss. For health insurance, it is a percentage of each claim above the deductible paid by the policyholder. For a 20 percent health insurance coinsurance clause, the policyholder pays for the deductible plus 20 percent of his covered losses. After paying 80 percent of losses up to a specified ceiling, the insurer starts paying 100 percent of losses.

Collision Coverage (COLL)

Collision Coverage pays for repairs to your own insured vehicle when it is damaged due to a collision with another vehicle or object. Collision usually reimburses you the amount to repair or replace your damaged vehicle, minus your deductible, on an actual cash value basis.

Comprehensive Coverage (COMP)

Comprehensive Coverage pays for repairs to your own insured vehicle caused by something other than collision. This may include damage from vandalism, fire, windstorm, hail or some other peril. As with collision coverage, comprehensive coverage will have a deductible and is also paid on an actual cash value basis.

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D

Declaration

Part of a property or liability insurance policy that states the name and address of policyholder, property insured, its location and description, the policy period, premiums and supplemental information. Referred to as the ‘dec page.’

Deductible (DED)

Deductible is the dollar amount of the loss you must pay before claims are paid. Each time you make a claim, you will pay the deductible amount of the loss. Choosing a higher deductible reduces the cost of your insurance.

Directors and Officers Liability Insurance (D&O)

Directors and officers liability insurance (D&O) covers directors and officers of a company for negligent acts or omissions and for misleading statements that result in suits against the company. There are a variety of D&O coverages. Corporate reimbursement coverage indemnifies directors and officers of the organization. Side-A coverage provides D&O coverage for personal liability when directors and officers are not indemnified by the firm. Entity coverage, for claims made specifically against the company, is also available. D&O policies may be broadened to include coverage for employment practices liability.

Disability Income

A type of health insurance designed to compensate an insured person for a portion of the income lost because of a disabling injury or illness. Benefit payments are made either weekly or monthly for a specified period during the continuance of an insured’s disability.

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E

Endorsement

A written form attached to an insurance policy that alters the policy’s coverage, terms, or conditions. Sometimes called a rider.

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F

Fair Rental Value

In the event you suffer a covered loss on a rental property, Fair Rental Value pays for the loss of rents, should the home become uninhabitable.

Flood Insurance

Coverage for flood damage is available from the federal government under the National Flood Insurance Program but is sold by licensed insurance agents. Flood coverage is excluded under homeowners policies and many commercial property policies. However, flood damage is covered under the comprehensive portion of an auto insurance policy.

Florida Insurance Guaranty Association (FIGA)

The Florida Insurance Guaranty Association establishes and maintains a service-oriented operation for processing covered claims of insolvent members. FIGA is a nonprofit corporation created by the Florida Legislature in 1970. FIGA services pending claims by or against Florida policyholders of member insurance companies which become insolvent and are ordered liquidated. FIGA’s membership is composed of all Florida licensed direct writers of property or casualty insurance.

  • If your insurance company has been declared insolvent, covered claims will be paid by FIGA. The maximum amount FIGA will cover is $300,000 with special limits applying to (1) damages to structure and contents on homeowners’ claims and (2) on condominium and homeowners’ association claims. For damages to structure and contents on homeowners’ claims the FIGA cap is an additional $200,000. For condominium and homeowners’ association claims the cap will be the lessor of policy limits or $100,000 multiplied by the number of units in the association. No claim will be paid in excess of this cap. All claims are subject to a $100 FIGA deductible in addition to any deductible identified in your policy. You may file a claim against the assets of the insurance company estate for the $100 deductible and for amounts over the cap. The Receiver will send proof of claim forms and instructions for filing a claim.

Force Placed Coverage

Insurance purchased by a bank or creditor on an uninsured debtor’s behalf so if the property is damaged, funding is available to repair it.

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G

Gap Coverage

An automobile insurance option, available in some states, that covers the difference between a car’s actual cash value when it is stolen or wrecked and the amount the consumer owes the leasing or finance company.

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H

Hurricane Deductible

A percentage deductible added to a homeowners insurance. It is based on the total amount the home is insured for. If your home is insured for $200,000, and you have a 2% deductible, you will pay the first $4,000 for damage due to hurricane.

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I

Insurance

A system to make large financial losses more affordable by pooling the risks of many individuals and business entities and transferring them to an insurance company or other large group in return for a premium.

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J

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K

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L

Lapse

The termination of an insurance policy when a renewal premium is not paid.

Long Term Care

Pays for in home or nursing home care for individuals unable to perform certain daily activities without assistance.

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M

Mediation

When a third party tries to resolve a conflict between an insured and an insurance company.

Medical Payments Coverage (MP)

Medical Payments Coverage pays the medical expenses for you and the occupants of your insured vehicle if you are injured in an automobile accident. You are able to choose the amount of medical payments coverage for you and your family. In a home insurance policy this limit applies to guests only, not residence.

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N

No-Fault

Auto insurance coverage that pays for each driver’s own injuries, regardless of who caused the accident. Such policies are designed to promote faster reimbursement and to reduce litigation.

Non-Admitted Insurer

Insurers licensed in some states, but not others. States where an insurer is not licensed call that insurer non-admitted. They sell coverage that is unavailable from licensed insurers within the state.

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O

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P

Peril

A specific risk or cause of loss covered by an insurance policy, such as a fire, windstorm, flood, or theft. A named-peril policy covers the policyholder only for the risks named in the policy in contrast to an all-risk policy, which covers all causes of loss except those specifically excluded.

Personal Injury Protection (PIP)

Portion of an auto insurance policy that covers the treatment of injuries to the driver and passengers of the policyholder’s car. Also see No-Fault.

Policy

A written contract for insurance between an insurance company and policyholder stating details of coverage.

Property Damage Liability (PD)

Property Damage Liability pays for damage you cause to other peoples’ property.

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Q

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R

Reinstatement

The process by which an insurer puts back into force an insurance policy that has either been terminated for nonpayment of premiums or as issued from the carrier.

Reinsurance

Insurance bought by insurers.

Rental Reimbursement Coverage (RR)

Rental Reimbursement Coverage is usually offered in conjunction with collision and comprehensive coverages. RR reimburses you for transportation expenses, such as a rental car, when an insured vehicle is not operational due to a loss covered by the policy.

Replacement Cost Value (RCV)

A policy that pays on a replacement cost value basis means the carrier will determine what it would cost to replace the item with like kind and model.

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S

Sinkhole

Florida law defines a sinkhole as ‘a land form created by subsidence of soil, sediment, or rock as underlying strata are dissolved by groundwater. A sinkhole may form by collapse into subterranean voids created by dissolution (the dissolving) of limestone or dolostone or by the subsidence as these strata are dissolved”. Sinkhole offers a pretty broad base of coverage for this. Also see Catastrophic Ground Collapse Coverage.

Subrogation

The legal process by which an insurance company, after paying a loss, seeks to recover the amount of the loss from another party who is legally liable for it.

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T

Term Life Insurance

Life insurance that is purchased to cover you for a certain period of time. Often written for 1, 5, 10, 20, and 30 year terms.

Towing and Labor Coverage (TL)

Towing and Labor Coverage covers towing and on-site labor charges when your insured vehicle is disabled. On-site labor refers to labor performed at the site of disablement (i.e., fix a flat tire so the vehicle can be towed).

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U

Umbrella Insurance

Additional coverage that can be purchased to increase the amount of liability protection you carry on your underlying policies, such as homeowners, auto, or business. Typically an umbrella would provide an additional $1,000,000 or more of protection above your auto, home, or business liability limits.

Underwriting

Examining, accepting, or rejecting insurance risks and classifying the ones that are accepted, in order to charge appropriate premiums for them.

Uninsured Motorists – Underinsured Motorist Coverage (UM-UIM)

Uninsured Motorists/Underinsured Motorist Coverage protects you in an accident with a motorist who has no insurance or has too little insurance to cover your injuries or damages. The other driver must be at-fault. In some states and policies, Underinsured Motorist Coverage is separate from Uninsured Motorist Coverage.

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V

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W

Workers Compensation

Insurance that pays for medical care and physical rehabilitation of injured workers and helps to replace lost wages while they are unable to work. Florida law dictates the amount of benefits paid and other compensation provisions.

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X

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Y

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Z

Source: Insurance Information Institute

 

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