GLOSSARY OF COMMON INSURANCE TERMS
MARKET VALUATION: A valuation of how much your home is worth in today’s current market. Insurance carriers will insure your home for the replacement cost of your home rather than the market value. MEDICAL PAYMENT COVERAGE: If a person, other than you or a resident of your household, is injured on the insured premises, this coverage will pay medical expenses subject to the limits on the policy. PERSONAL LIABILITY COVERAGE: A policy that provides protection if you or an insured resident are unintentionally but legally liable for causing bodily injury to another person or cause damage to another person’s property. REPLACEMENT COST: The amount it costs to replace your damaged or destroyed property, subject to the limits shown in your declaration page and policy. ADDITIONAL DWELLING REPLACEMENT COST ENDORSEMENT: An added layer of protection if it costs more to rebuild your home than what it’s insured for. Coverage options may vary. PERSONAL PROPERTY REPLACEMENT COST ENDORSEMENT: Insurance that pays the dollar amount needed to replace damaged personal property with items of like kind or quality without deduction for depreciation. UMBRELLA COVERAGE: A policy that provides additional liability coverage over your auto and other personal lines’ liability policies. It acts as a safety net providing extra coverage once your underlying liability limits have been exhausted. Umbrella coverage is sold as a separate policy. You don't need to be a millionaire to require an extra million dollars in liability coverage. UNINSURED AND UNDERINSURED MOTORIST COVERAGE: A policy that pays for your injuries and damaged property if you're hit by a driver with little or no car insurance.
AUTO LIABILITY COVERAGE: A policy that pays for property damage and injuries you cause to others while driving. It also covers court and attorney costs.
COLLISION COVERAGE: A policy that pays for damages to your vehicle if you're in an accident, regardless of fault.
COMPREHENSIVE COVERAGE: A policy that repairs or replaces your vehicle if it's damaged due to theft, vandalism, hitting an animal, fire, or acts of nature. You're also covered for any glass damage. EXCLUSION: Insurance policies may exclude coverage for specific situations, conditions or circumstances that are listed in the insurance policy contract. The insurance company will not pay the repair or replacement in the event it falls under the specific situation, condition or circumstance as outlined in your policy as being excluded.
INFLATION PROTECTION: This annually adjusts your policy limits to compensate for inflation.
INSURANCE CLAIM: Your formal request for the insurance company to reimburse you for damages.
INSURANCE DEDUCTIBLE: What you pay out of pocket after your claim is approved.
INSURANCE POLICY RIDER: Riders are optional coverages that are available to enhance your homeowners policy. Possible riders are jewelry riders, replacement cost coverage on your home, replacement cost coverage on contents, water/sewer backup, etc. For example, homeowners purchase riders when the valuables they wish to insure are excluded from the standard policy or when the standard policy will only cover a portion of the item’s value. INSURANCE PREMIUM: The amount of money you pay (usually over the course of a year) for your insurance policy. You’ll pay a higher or lower premium depending on how large your deductible is, what you are insuring and a variety of other factors.
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