Below is a glossary of insurance terms and definitions that are commonly used in the insurance industry. It's important to note that this page is currently under construction. Not all definitions may be visible.
IMPORTANT: Definitions in this glossary are created by Jones Insurance and sourced from various resources. These definitions are not legal definitions, and should not be used in any legal manner.
(Click on the letter to view terms beginning with that alphabet.)
An incident that happens unexpectedly and unintentionally, usually resulting in damage or injury.
Act of God
An act of nature that was not foreseen and/or prevented such as a flood or an earthquake.
The time wherein the client must incur qualifying medical expenses equal to or more than the deductible amount in order to create a benefit period within a major medical expense or comprehensive medical expense policy.
Actual Cash Value
The present cost of replacing an item with a similar one in the same condition.
An individual who looks into claims and recommends settlement options predicated on damage estimates and current insurance policies.
After a policy has been processed; Advanced Premiums are the premium's paid for prior to the effective date of the policy.
An agent is a person who offers, manages, or negotiates insurance policies either independently or on behalf of an Insurance Company.
All perils coverage is the most complete coverage you can get in terms of loss or damage to your vehicle. This coverage is optional and can be purchased in addition to mandatory coverage.
The coverage pertaining to the loss or damage from all items other than those specifically excluded.
The form of which an expected client responds to requested of information by the insurance company that the insurance company uses to decide whether or not to accept the risk, change the coverage offered, or decline the risk.
The power or right to represent another person.
The estimated value for real estate or personal property determined by a taxing entity.
Expected future economic benefits obtained or controlled by a specific entity as a result of past transactions or events. An asset has three essential characteristics: It embodies a expected future benefit that involves a capacity, singly or in combination with other assets, to contribute directly or indirectly to future net cash inflows; A specific entity can obtain the benefit and control others' access to it; and The transaction or other event-giving rise to the entity's right to or control of the benefit has already occurred.
Coverage that protects against financial loss due to legal liability for motor vehicle related injuries (bodily injury and medical payments) or damage to the property of others created by accidents arising out of ownership, maintenance or use of a motor vehicle (including recreational vehicles). Commercial is defined as all motor vehicle policies that include vehicles that are used primarily in connection with business, commercial establishments, activity, employment, or activities carried on for gain or profit.
Auto Physical Damage
Motor vehicle insurance coverage (including collision, vandalism, fire and theft) that protects you against material damage to your vehicle. Commercial is defined as all motor vehicle policies that include vehicles that are used in connection with business, commercial establishments, activity, employment, or activities carried on for gain or profit.
Coverage for bodily injury and property damage created through the ownership or operation of a vehicle.
An accounting statement that shows the financial state of a company.
BCEGS - Building Code Effectiveness Grading Schedule
A classification system regarding the assessment of building codes according to their geographic region with specific emphasis on mitigation of losses from natural disasters.
An individual who may become eligible to receive payment due to will, life insurance policy, retirement plan, annuity, trust, or other contract.
Benefits (Medical & Hospital Expenses)
Total expenses for health care services paid to or on behalf of an individual receiving benefits.
Coverage for property and liability that extends to more than one location, class of property, or employee.
Boat-owners / Personal Watercraft Coverage
The coverage that applies to the damage to pleasure crafts, motors, trailers, boating equipment and personal watercraft as well as bodily injury and property damage liability extended to others.
Physical injury coverage that includes illness and disease.
Boiler & Machinery or Equipment Breakdown & Machinery
The coverage for the failure of boilers, machinery and other electrical equipment.
A form of debt security when the debt holder has a creditor stake in the company.
The original cost, including capitalized acquisition costs and accumulated depreciation, un-amortized premium and discount, deferred origination and commitment fees, direct write-downs, and increase/decrease by adjustment.
An individual who receives commissions from the sale and service of insurance policies. These individuals work on behalf of the customer and are not restricted to selling policies for a specific company but commissions are paid by the company with which the sale was made.
Builders' Risk Policies*
Typically written on a reporting or completed value form, this coverage insures against loss to buildings in the course of construction. The coverage also includes machinery and equipment used in the course of construction and to materials incidental to construction.
Burglary and Theft
Coverage for property taken or destroyed by breaking and entering your premises, burglary or theft, forgery or counterfeiting, fraud, kidnap and ransom, and off-premises exposure.
Coverage for motor vehicles, other than those in the garage business, engaged in commerce. Business auto filings include singularly or in any combination coverage such as the following: Auto Liability, PIP, MP, Uninsured Motorist and/or Under-insured Motorists (UM/UIM); Specified Causes of Loss, Comprehensive, and Collision.
A loss of income as a result of property damage to a business location.
Business Owners Policy
Business insurance usually for property, liability and business interruption coverage.
Capital and Surplus Requirements
A requirement that orders companies to maintain a capital and surplus at a level equal to or above a certain amount to help ensure the health of a company by providing a financial buffer against expected loss.
The termination of insurance coverage during the policy period voluntarily by either the insurance company or the insured.
A massive loss with little ability to foresee.
The liability to other motorists, pedestrians and property owners that you take responsibility for when operating your vehicle on public roadways.
The optional coverage created to give you protection for your vehicle when damage occurs as a consequence of a collision with another vehicle or object. This optional coverage may be purchased in addition to the mandatory coverage required by law, and is subject to a deductible.
Any form of insurance which is required by law.
Capital and Surplus
A business's assets minus its liabilities.
Capital Gains (Loss)
The excess (deficiency) of the sales price of an asset over its book value. Calculated on the basis of original cost adjusted, as appropriate, for accrual of discount or amortization of premium and for depreciation.
A form of liability insurance that provides coverage for negligent acts and omissions such as workers compensation, errors and omissions, fidelity, crime, glass, boiler, and various malpractice coverage'.
An insurance claim is a request made by a policyholder to an insurance company for coverage and/or compensation regarding a covered loss or policy event.
A type of liability insurance form for when coverage only applies if both events that cause (triggers) the claim and the actual claim itself are submitted to during the policy term.
A method of finding rates for all applicants within a given set of characteristics such as demographic and location.
Claims Adjustment Expenses***
The date when an organization first became liable for any insurance risk via the issuance of policies and/or entering into a reinsurance agreement.
The coverage for motor vehicles owned by a business engaged in commerce that protects the client against financial loss because of legal liability for motor vehicle related injuries, or damage to the property of others caused by accidents arising out of the ownership, maintenance, use, or care-custody & control of a motor vehicle. This includes Commercial Auto Combinations of Business Auto, Garage, Truckers and/or Other Commercial Auto.
Commercial Farm & Ranch***
Commercial policy for farming and ranching risks that includes both property and liability coverage. Coverage includes barns, stables, other farm structures and farm inland marine, such as mobile equipment and livestock.
Commercial General Liability***
Flexible & broad commercial liability coverage with two major sub-lines: premises/operations sub-line and products/completed operations sub-line.
Property insurance coverage that covers the client in the event of claims made against commercial property owned by the client.
Comprehensive General Liability
Coverage of all business liabilities unless specifically excluded in the policy contract.
Comprehensive Personal Liability
Personal liability insurance, also known as “comprehensive personal liability (CPL) insurance,” is a component of a homeowners insurance policy that protects you and your family members against claims resulting from injuries and damage to other people or their property.
Requirements specified in the insurance contract that are required to be followed by the client in order to qualify for indemnification.
Coverage for Cyber Commerce that includes violation of privacy, copyright infringement, and libel.
An attempt by a hacker or multiple hackers to compromise or destroy a computer network/system, or in order to get something of value, ie. money, data, etc.
Liability coverage for a client who has assumed the legal liability of another party by verbal or written contract. This includes a policy regarding contractual liability providing coverage for all obligations and liabilities created by a service contract provider under the terms of service contracts issued by the provider.
Credit risk is a metric that measures the possibility of a loss resulting from a borrower's failure to repay a loan or meet contractual obligations.
Crop Hail Insurance
Coverage for crop damage due to weather phenomenon such as hail, fire or lightning.
Data of Issue
The date when an insurance company issues a policy.
Policy statements regarding the applicant and property covered such as demographic and occupational information, property specifications and expected mileage per year.
A portion of the insured loss (in dollars) paid by the policy holder.
Direct Incurred Loss
A loss whereby the proximate cause is equivalent to the insured peril.
The damage to covered real or personal property caused by a covered peril.
The decrease in the value of property over a period of time due to use, wear, tear, and obsolescence. For example, if you paid $500 for a television set five years ago, its current value minus depreciation might be only $125, for example.
Directors and Officers Liability
Liability coverage protecting directors or officers of a corporation from liability arising out of the performance of their professional duties on behalf of the corporation.
A special form of package policy composed of dwelling fire and/or allied lines, and personal liability insurance.
Driving Frequency and Distance
The distance you drive per year and whether you use your car to travel to and from work will affect your insurance premium. Statistics tell us that the more you use your vehicle, the greater the likelihood you'll be involved in a collision.
Driving History for Others
Other drivers using your automobile may affect your insurance premium. For example, all licensed drivers living in the same household who use your car must be listed on your insurance policy as additional drivers. Their driving record and claims history may affect your rating and increase your insurance premium.
The industry looks at past driving experience when determining premiums. You may pay a higher premium if you have been involved in an accident that was determined to be your fault, or if you have traffic convictions.