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Act of God: An event beyond human origin or control (lightning, windstorms and earthquakes are examples), the damage from which would not be the responsibility of an insured. Acts of God are excluded under certain liability insurance policies.

Actual Cash Value (ACV): When used in property insurance contracts one method to determine the value of an item after a loss, usually arrived at by finding the cost to replace the item and then subtracting a depreciated amount due to the age of the item. 

Additional Insured: A person, other than the named insured, who is protected by the terms of the policy. Usually a specified individual such as a spouse or a member of the insured's family but sometimes, as in automobile insurance, any person, provided that person is driving the insured vehicle with the insured's permission.

Auto Liability: Protection for loss incurred through legal liability for bodily injury and damage to property of others caused by accidents arising out of ownership, maintenance or use of an automobile.


  1. The formal request by a policyholder or a claimant for payment of loss under an insurance policy.
  2. The final amount made in payment of a covered loss.

COBRA — Consolidated Omnibus Budget Reconciliation Act of 1985: A federal act making provision for the continuation of an employee's health insurance coverage, as well as the coverage for dependents, should the employee terminate his or her employment. This act is in effect whether or not the termination was voluntary. Further, it applies to employer-sponsored group health plans with 20 or more employees.


  1. In property insurance, a condition of the policy requiring the insured to maintain insurance at least equal to a stipulated percentage of value in order to collect partial losses in full. If the insurance is less than the minimum required, a penalty is applied to the amount of loss based on a proportionate formula of the amount of insurance carried divided by the amount of loss required to be carried.
  2. In major medical insurance, the clause that specifies the percentage of a loss which the company will pay and the percentage which the insured will bear (e.g., 80/20, 75/25).

Collision: Damage to a motor vehicle which is caused by its impact with another vehicle or object, or by the vehicle's overturn.

Comprehensive Automobile Coverage: An "all-risk" type of physical damage protection for automobiles including theft but excluding loss by collision or upset (which may be added).

Deductible: In a policy providing a deductible clause, the amount which must first be subtracted from the total damage incurred before determining the insurance company's liability. Of several types used, the straight deductible establishes the insurer's liability above the deductible but not below it; the franchise deductible establishes the insurer's liability for the entire amount of damage once the deductible amount is exceeded in a loss; and the disappearing deductible establishes the insurer's liability for an increasing proportion of the loss, as the total damage rises above the deductible, until the deductible finally "disappears." Then the insurer is liable for the entire amount. The deductible may be in the form of an amount of dollars, a percent of the loss, a percent of the value of the insured property, or a period of time, as in health insurance.

Dwelling:  A house in which people live as distinguished from a store, a factory or any other building

Endorsement: A document with language attached to and becoming part of the basic policy for the purpose of modifying the policy, either at inception or mid-term. 

Flood: Overflow of water from its natural boundaries. More specifically defined by the National Flood Act of 1968 as "a general and temporary condition of partial or complete inundation of normally dry land areas from the overflow of inland or tidal waters, or the unusual and rapid accumulation or runoff of surface waters from any source."

Flood Insurance: Coverage against damage done by the rising or overflowing of bodies of water

Homeowners Policy: A package policy for dwelling and contents risks combining fire and allied line coverage with comprehensive personal liability and theft insurance for homeowners and tenants. This policy carries an indivisible premium in that the premium is not separately stated or broken down for the various hazards insured against. There are different homeowners forms, varying in extent of coverage and cost from the broad cause of loss policy (HO2), to the special cause of loss policy (HO3), to the renter's policy (HO6). 

Limit of Liability: According to the terms of a given policy, the most an insurer will pay for any one loss. 

Medical Payments (Med Pay): Protection to pay the cost of medical care to an injured party regardless of whether the policyholder is liable. Written in conjunction with general and personal liability policies. A similar coverage, automobile medical payments insurance, is available in automobile liability policies.

Personal Articles Floater: Worldwide coverage on an "all-risk" basis for scheduled, valuable personal property.

Personal Auto Policy: Coverage designed to replace both the family auto policy and the special package auto policy as the "standard" form for insuring private passenger autos and certain types of nonbusiness trucks.

Personal Property (Contents): Personal property that is usually contained in a building or other structure.

Personal Liability: Coverage for damages, plus the cost of any defense, that are related to a claim or suit brought against the insured resulting from bodily injury or property damage caused by an occurrence covered under the policy

Renter’s Insurance Policy: In personal lines insurance, it is a package of property and liability coverages designed to protect apartment or dwelling renters. Although renters do not own the building, physical damage losses could occur to owned contents, and liability coverage is needed for personal and premises exposures. It is a self-contained package with endorsements available to add or increase coverages, much the same as a homeowners policy.

Replacement Cost: When used in property insurance contracts, this is the amount it would take to replace the property with like property of the same quality and construction. No deduction is made for depreciation or obsolescence. 

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