Insurance Glossary




Cancellation - Termination of policy during the policy term.

Claim - A request for reimbursement for a loss covered by a policy. For example, a claim for items stolen from the policyholder's recreational vehicle.

Deductible - An amount that an individual must pay for covered services before the insurance company will begin to make payments.

Depreciation - A decrease in the value of a property due to wear and tear or obsolescence.

Endorsement - Addition to the insurance policy that changes or adds to the provisions or coverage of the insurance policy.

Exclusion -Certain causes and conditions listed in the policy that are not covered.

Independent Producer -A producer who represents more than one insurer.

Inflation Protection - A policy option that provides for increases in benefit levels to help pay for expected increases in the costs of property repairs.

Lapse -Termination of a policy when a renewal premium is not paid.

Market Value -A term that describes what the current value of your boat would be if you were to sell it.

Non-Renew - Insurance company action to not extend coverage beyond the current policy term. Companies may only non-renew coverage after making appropriate notices to policyholders.

Personal Property - All tangible property not permanently attached to real property. The boat, like your automobile, and everything attached to it are considered personal property.

Policy - A written contract for insurance between an insurance company and a policyholder.

Premium - The amount of money an insurance company charges, based on a given rate, to provide the coverage described in the policy for a specified period of time, generally one year.

Property Coverage - Protection against the loss or damage to real or personal property caused by specific perils covered in the insurance policy or contract.

Replacement Cost Coverage - Coverage for the cost to completely replace your boat or any part of it.

Underwriting - The process of examining, accepting or rejecting insurance risks, and classifying those selected, in order to charge the proper premium for each.

Beneficiary - The person named in the policy to receive the insurance proceeds at the death of the insured. Anyone can be named as a beneficiary.

Cash Surrender Value - The amount available in cash upon voluntary termination of a policy by its owner before it becomes payable by death or maturity. The amount is the cash value stated in the policy minus a surrender charge and any outstanding loans and any interest thereon.

FreeLookProvision - A certain amount of time provided (usually between 10-30 days) to an insured in order to examine the insurance policy and if not satisfied, to return it to the company for a full refund.

Insurable Interest - For persons related by blood, a substantial interest established through love and affection, and for all other persons, a lawful and substantial economic interest in having the life of the insured continue. An insurable interest is required when purchasing life insurance on another person.

Life Expectancy - The probability of an individual living to a certain age according to a particular mortality table.

Non-Forfeiture - One of the choices available if the policy owner discontinues premium payments on a policy with a cash value. Options available are to take the cash value in cash or to use it to purchase extended term insurance or reduced paid-up insurance.

Non-Participating - A life insurance policy in which the company does not distribute to policy owners any part of its surplus.

Participating Policy - A life insurance policy under which the company agrees to distribute to policy owners the part of its surplus that its Board of Directors determines is not needed at the end of the business year. The distribution serves to reduce the premium the policyowners had paid.

Rating - The basis for an additional charge to the standard premium because the person insured is classified as a greater than normal risk usually resulting from impaired health or a hazardous occupation.

Reduced Paid up Insurance - A form of insurance available as a non-forfeiture option. It provides for continuation of the original insurance plan, but for a reduced amount, without further premiums.

Reinstatement - Restoring a lapsed policy to its original premium paying status, upon payment by the policy owner, with interest, of all unpaid premiums and policy loans, and presentation of satisfactory evidence of insurability by the insured.

Rider - An endorsement to an insurance policy that modifies clauses and provisions of the policy, including or excluding coverage.

Underwriter - The person who reviews the application for insurance and decides if the applicant is acceptable and at what premium rate.

Accident - An unlooked for mishap or an untoward event which is not expected or designed

Break-In - A comprehensive policy that has expired and the customer propose to seek insurance for the same vehicle is a break-in policy.

Claim - This is a written request, by the insured, to the insurance company, to cover an incurred loss, usually submitted on the company’s standard form. Comprehensive policy - This form of a policy covers both the “Act” liability as well as Own Damage losses.

Compulsory Deductible/ Compulsory excess - Compulsory excess is the amount of loss that has to be borne by the insured compulsorily for each and every claim.

Cover Note - The document issued by insurers in non-life insurance, giving temporary cover till the issue of a formal policy.

Grace Period - Period of time, after the due date of a premium, during which the premium can be paid, and the policy prevented from lapsing. There’s a grace period of one month on the yearly, half-yearly and quarterly modes of premium payments, and 15 days on the monthly mode.

Hypothecation - To pledge as security without delivery of title or possession usually in consideration of loan.

Insured's Declared Value–IDV- The amount for which a vehicle is insured. It is the depreciated value of the vehicle, based on the manufacturer’s selling price and model, and its accessories.

Insured - The policyholder.

Insurer -The insurance company.

Lag - The period that has elapsed between when claims actually occurred and when actually paid.

Liability - Liability means legal responsibility for one's acts or omissions, legally enforceable obligation.

Liability only policy (also called Act only policy) - This covers Third Party Liability for bodily injury and/ or death and Property Damage arising out of use of the vehicle under insurance . Personal Accident Cover for Owner-Driver is also included and is compulsory.

Market Value -The monetary value an object or property will fetch if sold in the market today.

No-Claim Bonus - A discount given on renewal of cover in select non-life insurance categories (usually, vehicle, health and house) to policyholders for not making a claim in the preceding year.

No Claim Refund - Portion of premium agreed under the policy to be refunded to the insured in the event of no claim being reported or paid during the entire policy period. It is customary for the insurance companies to link this. with the renewal of the policy to ensure renewal with them without fail.

Own Damage - Under comprehensive motor policy, the Own Damage section covers you against any loss or damage caused to your vehicle or its accessories due to natural and manmade calamities as defined in the scope of coverage besides the third party damages.

Packagepolicy - form of a policy covers both the “Act” liability as well as Own Damage losses.

Portability - Under Portability the insurance customer can switch from one insurer to another insurer, the credit on continuity of the coverage would be passed on from the previous insurance policy to the new insurance policy.

TPA -Third party administrator. A TPA is a contractor that adjusts and ad-ministers insurance claims.

TPPD -TPPD means Third Party Property Damage.