California Insurance Agency – Glossary

Agent

An individual who represents any insurance company and sells insurance policies, usually on a commission basis.

Agreed Price

The price or cost of repairs agreed to by the auto damage adjuster or independent appraiser and the body shop representative.

Appraisal

The value of property determined under the term appraisal, or process of finding the extent of damage, usually performed by an impartial expert.

Actual cash value

The fair market value of property at the time it was stolen or damaged arrived at by deducting depreciation from the replacement cost.

Adverse Carrier

This term refers to the other party's insurance company.

Arbitration

A process of settling a dispute through an impartial party. It is used as an alternative to litigation.

Amendment

A change into the basic policy given by the company. An amendment alters the policy; an endorsement adds to it.

Bodily injury liability coverage

It covers legal expenses, medical expenses, & judgments when the policyholder´s car or property damage and/or the injury or death of another person is involved in an accident.

Cancellation

If an insurer terminates an insurance contract before the end of the policy period then it is called cancellation.

Comprehensive physical damage coverage

It covers damage to an insured car that is not the result of an auto accident, such vandalism, fire, natural disasters etc. This coverage is subject to the terms, limits and conditions of your policy contract.

Coverage

Protection and benefits provided in an insurance contract.

Claim

A demand or request for payment under the terms for compensation of the insurance policy.

Collision coverage

Covers the damage to an insured vehicle resulting from a collision, regardless of who is responsible. This coverage is subject to the terms, limits and conditions of your policy contract.

Depreciation

The decrease in value of any property due to wear, tear and/or time

Discount

A reduction in your premium by insurance company, if you or your car meets certain conditions that are likely to reduce the insurer's losses or expenses.

Damage

Loss or harm to a person or property.

Deductible

The portion of a claim paid out from your pocket. If higher deductible is there then it will lower your insurance premiums. Endorsement

It is an addition given by insurance company to the basic policy contract. An endorsement adds to the policy contract; an amendment alters it.

Estimate

A calculative assessment of the cost to repair your damaged property

Floater

An independent insurance policy made to extend the coverage of the basic insurance policy for an item. It's called a floater because sometimes the asset may “float” from location to location with the owner´s use.

Flood zone

An area where the probability of a flood is much higher than average.

First-party claim

It is a request made by insured to an insurance company for compensation for a loss.

Homeowner's insurance

An insurance policy that protects homeowners from losses to their homes, personal property and other damages.

Indemnity

Compensation for a loss intended to restore an individual or entity to the approximate financial position prior to the loss.

Inspection

A verification of a vehicle's physical condition

Loan/lease gap insurance

It covers the difference between actual cash value of a car´s & the amount still owed on a loan or lease.

Medical payments coverage

It covers policyholder´s medical bills incurred by their passengers after an auto accident, regardless of who is at fault.

Misrepresentation

To make untrue/ misleading written or verbal statements.

Negligence

Failure to exercise care, resulting in injury to others or damage to property.

Non-Renewal

A decision made by an insurer not to renew a policy at the end of its policy period.

Occurrence

An event or repeated exposure to conditions, which suddenly causes damage during the policy period.

Original Equipment Manufacturer Parts

Auto parts obtained from the original manufacturer of the car or the supplier of the original part.

Policyholder

Person, who buys and maintains an insurance policy; also called the \"insured\".

Premium

The price of the insurance policy that the insured person pays in exchange for insurance coverage

Property damage liability coverage

It covers damages to the property of others caused by the policyholder in his or her vehicle.

Peril

A specific cause of loss due to fire or vandalism. There are 17 named perils in most homeowner's policies.

Personal property

In regards to homeowner's insurance, the possessions of the insured.

Quote

A statement of the premium that will be charged for insurance coverage based on specific information provided by the person requesting the quote including drivers, vehicles, and driving record.

Rental reimbursement coverage

It is the set amount paid per day for transportation expenses while the insured´s car is being repaired due to a covered loss.

Renter´s insurance

The insurance policies available to those who rent a dwelling; usually covers personal possessions and liability, but not the dwelling itself.

Replacement cost

The cost which is required at the time of replacing a lost or destroyed item; does not factor in depreciation or market value.

Risk

Potential for loss or injury.

Supplement/Supplemental Estimate

This covers damages not included in the original estimate.

Salvage

Damaged property which is taken over by the insurance company after payment of a claim.

Third-party claim

Claim made by policyholders to an insurance company for damage or injury.

Towing and Labor Coverage

This coverage provides insurance if your auto needs to be towed or requires roadside assistance.

Umbrella liability policy

It is extra protection coverage against liability that covers the amount above the maximum limits of homeowner's and auto policies.

Unearned premium

It is the portion of a premium that may be returned to the policyholder if a claim provided due to total loss before the end of the policy term eliminates the need for continued coverage.

Vandalism

Destruction or defacement of property

Vehicle Identification Number (VIN)

A 17-digit number used for identification purposes assigned to each vehicle manufactured in the United States is visible on the dashboard when viewed from the outside of the vehicle.

Warranty

A written guarantee of the integrity of a product and of the manufacturer's responsibility for the repair or replacement of defective parts.