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WHITEHEAD INSURANCE
Solving Insurance Problems Since 1955 Insurance
Glossary |
Actual Cash Value- Replacement Cost minus depreciation. The cost of a new item of similar make and model, less depreciation. (See Replacement Cost)
Additional Insured- In auto insurance, a person (other than the Named Insured) or organization protected by the policy through endorsement. This is typically (on an auto policy) an auto leasing company or may be an employer such as a real estate agency.
Agent- A licensed transactor of insurance who always represents the Insurance Company. Within the title of Agent may be the authority to Bind coverage (see Broker).
Appraisal- A written estimate of value of property completed by an individual trained to render such estimate.
Antique Auto- An automobile or truck, at least 25 years old which has been substantially restored to original condition, and which is used exclusively for parades, shows, and occasional drives. Arbitration Non-judicial resolution of dispute.
Arbitration- usually (in auto insurance) concerns matters of at fault parties in an accident, resulting liability for injury and levels of such injury. Arbitration is conducted by a single neutral arbitrator. If the parties cannot agree on an arbitrator, then each shall select and the two so selected shall appoint the single neutral arbitrator. (See Appraisal)
Bailee- An entity (person or organization) having legal possession of one's property without having title (right to sell) to such property. The best example of a Bailee is a dry cleaner. They have legal possession of garments without having the right to sell such garments. Bailees with regard to automobiles may be auto repair facilities, valet parking, car washes, etc.
Bind- The act of effecting coverage.
Binder- A temporary contract of insurance.
Binder Date- The date and time that coverage is bound or put into effect. (See Bind)
Bodily Injury- Physical injury to the person of a Third Party. This includes sickness, disease, pain and suffering, emotional distress, loss of income and even death. (See Third Party)
Broad Form Named Driver-With the "Broad Form Named Driver Endorsement" YOU (and only you) are covered for liability while driving all cars you own without having to list them on your policy and without having to pay a separate premium on each one. YOU are also covered for liability while driving cars you don not own.
Broker- A licensed transactor of insurance who represents the client. (See Agent)
Broker Fee- The fee for services rendered that is sometimes charged by a Broker, in addition to or separate from the Commissions, which is payable by the Insured. (See Broker)
Cancel- The act, of either party in an insurance contract, of ending the contract prior to its expiration. Both parties are required to give written notice to the other party to effect such cancellation. The insurer is required to give at least ten- (10) days notice prior written warning of such cancellation, if it is due to nonpayment of premium, or twenty (20) days for all other reasons.
Classic Auto- An automobile which has been substantially restored to original condition, the make and model of which the public has shown an unusual degree of interest (i.e. 1957 Ford Thunderbird, 1964 Chevrolet Impala S/S, Early Mustang Convertibles, etc.)
Collision- (a) Impact of an automobile with another object or person outside the vehicle or the upset (overturning) of such vehicle; (b) That coverage which pays for damage to our insured's vehicle, in the event of the above. This coverage is usually subject to a deductible. (See Deductible)
Collision Deductible Waiver (CDW)- That coverage which, in the event our insured's car is damaged in an accident which is the fault of an identified Uninsured Motorist, waives (or eliminates) the deductible requirement under the collision coverage when repairing the auto. (See Collision; Deductible)
Combined Single Limit (CSL)- A limits structure for Bodily Injury and Property Damage Liability or Uninsured Motorist Bodily Injury coverage which provides one single limit, which is the maximum payable for all damages in any one occurrence. Most commercial auto insurance is written CSL. (See Split Limits)
Commissions- Compensation, usually a percent of the Premium charged for a Policy, received by and Agent from the Insurer. If there is a Broker involved in the transaction, generally the Broker will obtain a portion of the Agent's commissions.
Comprehensive- That coverage which pays for direct and accidental damage to the insured's automobile, other than that caused by Collision. All losses not specifically excluded are covered and such coverage usually has a deductible.
Conditions- Also referred to as Terms and Conditions. These are typically circumstances that must be present for the coverage to apply.
Contract- A promise or series of promises that are enforceable under the law.
Declarations- Also known as the "Dec Page" or merely the "Dec." That section of the insurance policy that distinguishes one policy from all others. It contains the insured's name, address, a description of the property insured, the premium, etc.
Deductible- An amount of money which, in the event of a covered loss, the insured is required to pay out of any damages. The purpose of a deductible is to eliminate the expense of processing small claims.
Defense- Coverage provided in most liability policies, which pays for the cost of defending the insured in the event of lawsuit regarding a covered loss. Defense cost, in the auto policy, is said to be "unlimited," in that the policy requires the insurer to pay whatever is necessary to defend the Insured.
Down Payment- An amount of money (usually a percentage of the premium plus any fees) which the insured must be paid in order for the coverage to be bound. (See Bind)
Effective Date- The date and time (usually at 12:01 a.m.) in which the policy contract begins.
Excess- Coverage that applies only after some other policy has paid its full policy Limit. This may result from policy structure, such as in the case of an Excess Liability or Umbrella policy, or as a result of two policies applying to the same loss. (See Primary)
Excess Liability Coverage- Liability coverage that is written to provide higher Limits than those available in the Primary policy. This policy is only liable after the Primary policy has paid its full Limits for a covered loss. It is used where higher Limits of liability are needed, but the primary carrier is unwilling or unable to provide such Limits. The Primary policy may provide Limits of 15/30/5 and the Excess policy 85/270/45 to provide total Limits of 100/300/50.
Exclusion- Language in a policy (or which may be endorsed onto a policy) which specifies that a given circumstance is not covered. An example would be intentional acts of the insured. If an insured were to damage property or cause bodily injury on purpose, the policy will not provide coverage due to the intentional acts exclusion. Another example would be the Named Driver Exclusion, which states that unless a designated person specified by name is driving the automobile at the time of loss, the policy will not provide coverage.
First Party- The insured. A first party loss is a loss that involves injury and/or damage to the property of our insured. (See Third Party)
Good Driver- As defined, a Good Driver is: a) Someone who has been continuously licensed for three or more years; b) Someone who has been continuously licensed in the U.S. or Canada for eighteen months or more; and c) Has less that two traffic violations or only one at-fault accident not involving bodily injuries in the last 36 months. d) Has not been convicted of a DUI or manslaughter on or after January 1, 1996 - The law often states that any driver convicted of a DUI or manslaughter on or after 1/1/1996 will not be eligible for consideration as a good driver for seven years from the conviction date. Good drivers may not be refused insurance by any auto carrier in many states and must often be given a twenty percent (20%) discount over the carrier's best rates.
Gray Market- A vehicle which was built for sale outside the U.S. These vehicles (usually built by Porsche, Mercedes, or BMW) do not meet U.S. standards regarding emission control, safety glass, lighting, etc.
Insurance- The contractual transfer of the financial consequences of loss.
Insured- Anyone named on the declarations page or driving the insured vehicle with the permission of an insured. (See Permissive User)
Insuring Agreement- Promise made by the insurance company, which outlines its duties. Exclusions, Conditions and definitions that appear later in the policy modify this promise.
Liability- The legal responsibility for injury done by the insured to a Third Party, or damage done to their property. (See Third Party)
Limits- Maximum amounts payable under a given coverage. May be per person, per occurrence, per day or per year. (See Split Limits; Combined Single Limit)
Loss Payee- Typically the finance company holding title to the owned auto.
Medical Payments- An optional auto coverage which pays for the medical expenses of the Named Insured, members of his/her family, and passengers of his/her car if injured in a Collision accident. The Named Insured and Relatives are also covered if struck as a pedestrian. This coverage is Excess to any other medical insurance. (See Excess)
Named Insured- That person so listed on the Declarations and his/her spouse if a resident of the same household.
Non-Owned Auto- A borrowed or rented automobile.
Occurrence- An event or series of events which causes Bodily Injury and/or Property Damage. May include repeated or continuous exposure to the same injurious condition.
Operator- In auto insurance, that person seated immediately behind the steering controls of the automobile and no other person.
Peril- A situation or occurrence that causes loss, i.e., fire, collision, theft, etc.
Permissive User- An entity not listed on the policy, using the insured's vehicle with permission. Depending on the particular policy, certain individuals may not be covered, even if given is permission by the insured. (See Exclusions)
Policy Jacket- A preprinted brochure which contains all policy language except that contained in the Declarations Page and Endorsements. In the Policy Jacket you will find the Insuring Agreement(s), Exclusions, Conditions and Definitions.
Policy- A legal Contract with contains the agreement between the Insurer and the Named Insured. A Policy is made up of five (5) parts: a) The Declarations b) The Insuring Agreement(s) c) The Exclusions d) The Conditions e) The Definitions f) Endorsement or riders
Premium- Consideration paid by the insured for the policy. The cost of the policy.
Primary- That policy which must pay first in the event of loss. This would be due to the wording of the policy as in the case of an Excess Liability policy or where two policies apply to the same loss. (See Excess)
Private Passenger Auto- A self propelled motor vehicle, with neither more nor less than four wheels, designed for use upon streets and highways and subject to motor vehicle registration under the laws of the State.
Producer- A fire and casualty licensee who, for compensation, acts or aids in any manner of soliciting, negotiating, or procuring the making of any insurance contract on behalf of the insured.
Producer Fee- The fee charged by the producer for services, which is in addition to the premium.
Proof of Non-Fault/No B/I- Documentation required by the insurer to support not charging for an accident or not assigning points for bodily injury in an accident. Acceptable forms are limited to a police report, a letter from the previous insurer or a letter from the carrier of the other party in the accident. The insurer may accept a copy of the claims check stub if it contains sufficient information.
Property Damage- Damage or destruction including loss of use of a Third Party's property. Reduction in value is the measure of Property Damage.
Punitive and Exemplary Damage- That form of damages, awarded by the court, which is intended to punish the wrong-doer, not to compensate the injured party. This form of damages is generally not covered by any auto liability policy.
Quote- An estimate of the cost of insurance given to a prospective client, which is only enforceable if accepted by the Insured, usually by means of paying the Premium.
Reinstate with Lapse- The act of re-activating a policy which has ceased to be valid due to expiration or cancellation. There is a period between the cessation of coverage and its reinstatement during which the carrier provided no coverage. (See Cancel)
Rental Reimbursement- That optional coverage which will reimburse the insured for the expense of renting a vehicle while his/her vehicle is in the shop due to a covered loss. Coverage is usually written with a per day Limit and a maximum number of days per Occurrence. (See Limit; Occurrence)
Replacement Cost- The cost of replacing the damaged property with new property of like kind and quality without deduction for depreciation. (See Actual Cash Value)
Salvage- In auto insurance: a) The remainder or residue of the damaged property usually claimed by the insurer after said property has been declared a total loss. b) A vehicle which has been previously declared a total loss by an insurer.
Split Limits- A limits structure for Bodily Injury and Property Damage Liability or Uninsured Motorist coverage which provides, for Bodily Injury, one limit per person, which is the maximum payable for all damages payable to any one injured person, a separate limit per Occurrence, which is the maximum payable for all Bodily Injury in any one occurrence, and a third limit which is the maximum payable for Property Damage in any one Occurrence. Most personal lines auto insurance is written Split Limits. (See Limit; Occurrence; Combined Single Limit)
SR1P- A form filed by the insurance company with the Department of Motor Vehicles (DMV) which states that the insured has an auto insurance policy that meets state financial responsibility requirements and requires that the DMV be notified if such policy is cancelled. The requirement to file such form is usually due to an uninsured accident or due a negligent operator suspension. (See SR22)
SR22- A form filed by the insurance company with the Department of Motor Vehicles (DMV) which is one of three (3) types: a) Owners filing - States that the person named on the form is insured while driving any vehicle that he/she owns subject to usual policy exclusions. b) Operators filing - States that the person so named is insured while driving any vehicle not owned subject to usual policy exclusions. c) Broad Form Owner/Operator filing - States that the person so named is insured while driving any vehicle. This form requires that in the event of policy cancellation the DMV be notified. (See SR1P)
Subrogation- The transfer of the insured's legal right against an injuring Third Party to the insurance carrier. (See Third Party)
Third Party- Someone not named as an Insured party by the Insurance Policy. Typically the other party in an auto accident. (See First Party)
Towing- The optional auto insurance coverage which will reimburse the insured for the expense of towing or repairs at the place of disablement in the event the vehicle becomes disabled. Coverage is written with a per Occurrence Limit. (See Occurrence; Limit)
Trailer Liability- Trailer Liability is always provided by the towing vehicle. (See Liability)
Umbrella- A broad liability coverage form that provides another layer of liability coverage over all covered personal lines exposures, (i.e., the auto policy, the homeowner liability coverage, the boatowners policy, etc.). The form also provides coverage for some exposures that are not covered by the underlying policies such as coverage for libel and slander (Personal Injury). (See Liability)
Uninsured Motorist Bodily Injury (UMBI)- That coverage which, in the event our insured is injured in an accident which is the fault of an Uninsured Motorist, covers the Bodily Injury expense of the Named Insured, Relatives and passengers in his/her auto. The coverage is generally written with a per person and per Occurrence limit. (See Occurrence, Limit; Named Insured)
Uninsured Motorist Property Damage (UMPD)- That coverage which, in the event our insured's car is damaged in an accident which is the fault of an Uninsured Motorist, pays the cost of repairing the auto. This coverage is only written when the policy does not cover collision and has a variable maximum Occurrence Limit. (See Collision Deductible Waiver)
Warranty- A statement that is a fact. Q: "How many tickets have you received in the last year?" A: "None." The statement is a Warranty and purports to be a fact.
Yakima, Wa.
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