The following are terms you may hear used in connection with
your insurance policy. See your policy for an exact definition of the meaning of
the term in your policy.
Accident
An unexpected, unintended event that caused bodily injury or property damage.
Act of God
An event that is caused by the forces of nature, without human intervention, and
that could not be prevented by reasonable care.
Actual Cash Value (ACV)
The fair and reasonable cash price which the property could be sold in the market
in the ordinary course of business and not at a forced sale.
Adjuster
A person who settles (adjusts) claims.
Adjustment
The process of determining the amount of a loss. Safety offers three different payment
options. Your Safety agent can help you select the one that best meets your needs.
Agent
A person who represents an insurance company and sells insurance on a commission
basis. Frequently referred to as the Producer.
Appraisal
The determination of the value of property, or of the extent of damage.
Appreciation
Rise in value or price. Increase in worth or value.
Bad Faith
Breach of faith, willful failure to respond to plain, well understood statutory
or contractual obligations; not prompted by an honest mistake as to one's rights
or duties, but by some interested or sinister motive.
Binder
Memorandum of an agreement for insurance which gives temporary protection, pending
investigation of the risk and issuance of a formal policy. A verbal contract of
insurance, temporary in nature, but binding on both parties.
Blue Book
One of two catalogs (the other is the Red Book) used by insurance companies to assist
in determining the book values of automobiles.
Claim
The right, real or alleged, of an individual or corporation to recover for a loss
which may come within an insured's policy contract.
Claimant
One who claims or asserts a right, demand, or claim. The person making a claim.
Coinsurance
Coinsurance is a clause that applies to building and personal property coverages.
The coinsurance clause protects an insurance company when a property is underinsured.
If a policy has a coinsurance clause, a coinsurance percentage will appear on the
Declarations page of the policy. The insurance company uses this percentage in a
formula to determine how much to pay for the property in the event of a loss. The
insurance company will not pay the full amount of the loss if, at the time of loss,
the value of the covered property times the coinsurance percentage exceeds the limit
of insurance for the property.
The coinsurance clause also reduces the insured's premium, however, in the event
of a loss, the insured must rely on other insurance or absorb the remainder of the
loss him or herself. Not all property insurance policies contain a coinsurance clause.
Compulsory Insurance
Any form of insurance which is required by law.
Conditions
That portion of the insurance contract which outlines the duties and responsibilities
of both the insured and the insurer.
Contributory Negligence
The doctrine of negligence which implies that the claimant's conduct contributed
to the injury or damage as a result of the claimant's failure to use the degree
of care necessary for his or her own protection. Under this doctrine, an individual
cannot recover for his or her damages, if it is found that the claimant contributed
to his or her loss by as little as one percent.
Coverage
The guarantee against specific losses provided under the terms of a policy of insurance.
Coverage Selection Page
That part of the policy which shows the critical information about the insured,
operator, vehicle, coverage amounts, premiums, etc. Frequently referred to as the
"policy."
Deductible
A certain dollar amount specified in some insurance policies beyond which insurance
protection begins. The insured assumes the loss up to the limit of the deductible
amount, then the company pays over that amount.
Endorsement
A supplemental agreement attached to an insurance policy for the purpose of changing
its conditions or altering its coverage.
Exclusion
Something not covered by the policy and specifically so stated in the policy contract.
Indemnification
A principle of insurance which states that the individual should be restored to
the approximate financial position he or she was in prior to the loss.
Insurance
A social device where many share the losses of a few by transferring a portion of
the risk of loss to the insurance company in exchange for a certain cost.
Insured
The person purchasing the insurance policy from the insurance company.
Liability
Any legally enforceable obligation to do or refrain from doing something; a duty
which eventually must be performed; an obligation to pay money.
Limits
The amounts of protection provided in each specific coverage of an insurance policy.
The amount is usually expressed in dollar amounts, but also can be determined at
the time of loss.
Policy
The document issued to the insured by the company. The policy states terms of the
insurance contract.
Premium
An amount of money paid to an insurance company in return for insurance protection.
Red Book
One of two catalogs used in determining the book value of automobiles. The other
is the "Blue Book."
Renewal
Continuation of an insurance contract beyond the original date of expiration, by
endorsement, certificate, or new contract.
Salvage
The property in which an insurance company secures an ownership interest as a result
of paying a claim for total loss or damage based on the actual cash value of the
property in its undamaged state or before the loss occurred.
S.D.I.P (Safe Driver Insurance Plan)
The point system used by all insurance companies in Massachusetts to adjust the
premium a policy holder pays for automobile insurance based on the policyholder's
driving record.
Total Loss Property
Property that has been damaged to the extent that the cost of repairs exceeds the
actual cash value of the property.
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