Glossary of Terms

Actual Cash Value:

When your insurance company considers depreciation on your property in settling a claim.


The person at the insurance company who settles claims.

Agreed Value:

Under this clause, the insured and the insurer agree upon a value that will be paid by the insurer in the event of a total loss. There is no depreciation deduction.


A person hired by your insurance company to estimate the damage to your vehicle.


When your insurance company pays your auto claim and takes depreciation on parts.

Blanket Insurance:

Commercial property coverage for multiple properties at the same or different locations.

Coinsurance Clause:

A clause in Commercial Property policies under which you agree to share in the loss to the extent that you are underinsured at the time of the loss. For example, if you owned a building worth $100,000 with a 90% coinsurance clause, your required insurance would be $90,000. If you chose to insure your property for $60,000, you would only receive 2/3 of the loss amount.

Collision Coverage:

Pays for damage to your car as a result of an impact with another vehicle, house, pole, etc. Hit and Run damages are also paid under collision coverage.

Comprehensive Coverage:

Pays for damage or loss to your car resulting from fire, theft, vandalism, and striking an animal.

Debris Removal Clause:

A provision which may be included in a property policy to pay for removing debris caused by a covered cause of loss (for example, fire).


The dollar portion of a claim that you are responsible for paying. The insurance company will subtract your deductible from its claim payment.

Drive Other Car Coverage:

An addition to a Commercial Auto policy that covers named individuals while they are driving borrowed or rented vehicles. This coverage is necessary if the listed driver does not have a Personal Auto policy or is not listed as a driver on another policy.

Hired Auto Liability:

Covers your business when cars are rented in the business name.

Homeowners Insurance:

Property insurance policy that covers your building, contents, detached structures, and loss of use.

Mortgage Insurance:

A life, credit life, or disability insurance policy designed to pay off the balance due or make the monthly payments on a mortgage, if the insured should be injured, become ill, or die.

Non-Owned Auto Liability:

Covers your business when cars that are not owned by the business are used for business purposes. For example, when employees use their own cars for business.


A cause of loss that is covered by a policy, such as fire, wind, or smoke.

Replacement Cost:

When your insurance company pays your property claim for the amount required to replace your property, rather than the depreciated value of the item. This will be specified in the terms of your policy.

Safe Driver Insurance Plan (SDIP):

A program mandated by state law that encourages safe driving. The plan provides a premium discount to drivers who have not caused an accident or had traffic violations. The plan also ensures that high-risk drivers pay a greater share of insurance costs. The SDIP premium adjustment is given after all other discounts and rating factors have been applied.


The insurance company’s right to recover payment from a negligent party.

Term Insurance:

A type of life insurance policy that covers only a specified period of time, rather than the whole or remainder of the insured’s life. Often that period of time is a set number of years, such as 5, 10, 15, 20 or 30. At other times, the policy is written for a term that expires at a specified age, for example when the insured turns 65.

Total loss:

When cost of repairs to a damaged property is more than the property is worth.

Universal Life Insurance:

A combination of monthly term life insurance and possible savings in an arrangement that provides limited flexibility as to death benefits and premium payment.

Variable Life Insurance:

A Variable Life insurance policy provides both a death benefit and an investment component called a cash value. The owner of the policy invests the cash value in sub accounts selected by the insurer. The policyholder may accumulate significant cash value over the years and “borrow” the appreciated funds without paying taxes on the borrowed gains (taxes may be required if policy is surrendered). As long as the policy stays in force the borrowed funds do not need to be repaid, but interest may be charged to your cash value account.

Whole Life Insurance:

A common type of life insurance coverage that provides a face-value death benefit for the entire or whole life of the insured, unless the insured should cancel or not pay premiums.