GLOSSARY OF INSURANCE TERMS

ACTUAL CASH VALUE:
An amount, which limits the company's payment to the actual cash value of an item at the time of loss or damage. Usually includes a deduction for depreciation.

APPLICANT:
A person who fills out and signs a written application for insurance. Insurable interest is required.

APPLICATION:
A questionnaire providing space for information to be used to determine the insurance coverage required, as well as the acceptability of the insurance risk and the amount of premium. A questionnaire, which must be filled in, when required by the person seeking insurance. It gives the company full information about the proposed subject of insurance and the person to be insured, for the purpose of determining whether the company will issue this policy. In some types of insurance, it becomes part of the policy.

APPRAISAL:
Determination of the value of property, or of the extent of damage, usually by impartial experts. Provided for by a clause in some types of insurance contracts.

ARSON:
The willful and malicious burning of, or attempt to burn, any structure or other property, often with criminal or fraudulent intent.

BASIC PERILS:
The perils of fire, extended coverage, vandalism and malicious mischief.

COASTAL PROPERTY INSURANCE POOL PLAN:
Property Insurance Plan specifically formed which offers coverage for personal and commercial properties located close to the coast. (Refer to The Plans In Detail for additional information.)

BROAD FORM PERILS:
Additional causes of loss beyond Fire, Extended Coverage and Vandalism. These additional causes of loss including breakage of glass, falling objects, weight of snow, ice or sleet, water damage and freezing of plumbing (refer to the policy for full details on each peril)

BURGLARY:
"Burglary" or "Burglary and larceny incident thereto" means the felonious abstraction of insured property from within the premises by a person making felonious entry.

CANCELLATION:
Termination of an insurance contract before the end of the policy period, by the insured or insurer, usually in accordance with provisions in the contract.

CATASTROPHE: A sudden event, which causes a loss of an extraordinary amount. Most often associated with natural disasters, the term usually is used when there is concentrated or widespread damage.

CLAIM:
A demand by an individual or corporation to recover under a policy of insurance for loss arising out of events covered by the policy. Claims are referred to the insurance company for handling on behalf of the insured in accordance with the contract terms. A demand for payment under an insurance contract or bond. The estimated or actual amount of a loss.

COASTAL TERRITORY:
All areas of the state of North Carolina comprising the following counties: Beaufort, Brunswick, Camden, Carteret, Chowan, Craven, Currituck, Dare, Hyde, Jones, New Hanover, Onslow, Pamlico, Pasquotank, Pender, Perquimans, Tyrrell and Washington. "Coastal Area" does not include the portions of these counties that lie within the beach area. This territory is part of the Coastal Property Insurance Pool Plan for Wind and Hail policies. Fire policies are written in the FAIR Plan for this territory.

COINSURANCE:
A clause contained in some fire and burglary policies, requiring the insured to carry insurance equal to a stated percentage of the value of the insured property in order to collect the losses in full, up to the limits of the policy.

CONDITIONS:
That portion of the insurance contract, which outlines the duties and responsibilities of both the insured and the insurer.

CONTRACT:
A legal agreement between two parties, for consideration. Insurance policies are contracts.

DECLARATIONS PAGE:
That portion of the insurance contract which contains such information as: name and address of the insured, description of the property, coverage and premium amounts.

DEDUCTABLE:
An amount of a loss a policyholder agrees to pay, per claim or per accident, before an insurance policy provides coverage. The deductible amount can either be a fixed dollar, percentage value or combination of both, i.e., fixed for all perils except for a hurricane loss where a percentage deductible applies. The insurance provider normally reserves the right to decide the appropriate deductible for a particular risk.

DRAFT:
An instrument having the external characteristics of a check, but differing in that the bank is authorized to transfer check funds on presentation of the instrument. They may transfer draft funds only when the draft has been accepted by the drawer and acknowledged by acceptance of the instrument as valid.

ENDORSEMENT:
(Amendatory Endorsement) An amendment in writing (including printing stamping) added to and made a part of the insurance contract for the purpose of changing the original terms - to either restrict or expand coverage.

ESSENTIAL PROPERTY CARRIER:
A Member Company which writes coverage for all perils except wind. That policy is also called a wraparound policy since it participates or wraps around the Coastal Property Insurance Pool Plan's Windstorm or Hail policy. Non-admitted companies cannot be the wraparound carriers.

ESSENTIAL PROPERTY INSURANCE:
Insurance against direct loss to a property as defined in the standard fire policy and extended coverage, vandalism and malicious mischief endorsements thereon, or their successor forms of coverage, as approved by the Commissioner.

EXPIRATION:
The date on which the insurance protection on a policy will end, e.g., coverage will cease on an annual policy at the end of 12 months from the effective date.

FIRE INSURANCE:
Coverage for losses caused by fire, lightning and the removal of property from endangered premises; in addition resultant damages caused by smoke and water.

FRAUD:
Deception or strategy used to deceive or cheat including misrepresentation or concealment. Proof of willful fraud is grounds for voiding of policy.

HURRICANE:
A tropical storm marked by extremely low barometric pressure and circular winds with a velocity of 75 miles an hour or more. The hurricane's path begins in the ocean as a violent whirlwind with hurricane-force winds which cover thousands of square miles and moves over the warm water toward land.

INSPECTION:
The investigation of certain risks, which may be made by independent inspection firms or by a company before issuance or during the term of a policy.

INSURABLE INTEREST:
Relationship or condition such that loss or destruction of property would cause financial loss. In the case of property insurance, such interest must exist at the time of the loss.

INSURING AGREEMENTS:
That portion of the insurance contract that states those perils insured against by the coverage afforded in the policy.

INVESTIGATION:
The adjuster's activity in checking the manner in which the damage occurred, securing the facts in connection with the damaged property.

MANUAL OF RULES & PROCEDURES:
A book published for the guidance of its users. In it are specifications and rules governing the subjects covered.

MINIMUM PREMIUM:
The lowest amount of premium required to issue certain policies. Anything less than the minimum would not even cover the expense of handling the policy.

MISREPRESENTATION:
To make written or verbal statements that are untrue or misleading.

NON-ADMITTED COMPANY:
A Non-Admitted Company is an excess-surplus lines carrier not admitted in North Carolina. Non-members of either Association cannot provide Wrap-Around Coverage for Windstorm and Hail policies in the Coastal Property Insurance Pool Plan. If on the North Carolina Department of Insurance's "NON-ADMITTED COMPANY LIST" of Non-Admitted Companies eligible for the placement of Surplus Lines Business, these companies can write Excess Insurance over either Association's Primary Commercial Coverage's.

PERIL:
The potential cause of a loss. Perils include causes such as fire, wind, lightning, vandalism, smoke, etc.

POLICY:
A written contract of insurance between an insurer and the policyholder.

POLICYHOLDER:
A person who pays a premium to an insurance company in exchange for the insurance protection provided by a policy of insurance.

POWER OF ATTORNEY:
The written instrument by which the authority of one person to act in the place and stead of another as attorney in fact is set forth. Authority given a person or corporation called an attorney in fact, to act for and obligate another to a specified extent.

PREMIUM:
A sum of money paid for an insurance policy; the amount of money an insurer charges to provide coverage.

PRIMARY INSURANCE:
Provides the first layer of coverage. Excess insurance is written as an additional layer. The Association provides primary coverage for commercial property when the insured values exceed our maximum limits and an approved company will write the excess. Available for Basic, Broad or Windstorm and Hail Only policies.

PROOF OF LOSS:
A statement signed by the policyholder making a claim against the company for damage to or loss of the property insured.

RATING BUREAU:
An organization, supported by insurers, which provides advisory, rating, statistical and other services. The bureau may also act as a collection point for actuarial data and to survey individual risks.

REINSTATEMENT:
Putting coverage back into effect after a lapse has occurred.

REPLACEMENT COST:
Coverage of household destruction up to the policy face value, with no deduction for depreciation.

RESIDUAL MARKET:
A type of insurance mechanism designed to assume risks that are generally unacceptable to the voluntary insurance market. Examples include assigned risk plans, property insurance plans and government insurance programs.

RESCISSION:
The rescinding of a Notice of Cancellation.

ROBBERY:
"Robbery" or "robbery, including observed theft" means the taking of insured property (1) by violence inflicted on an insured; (2) by putting him in fear of violence; (3) by any other overt felonious act committed in his presence and of which he was actually cognizant, provided such other act is not committed by an insured; or (4) from the person or direct care and custody of an insured who has been killed or rendered unconscious.

SUBROGATION:
The substitution of one person in place of another with reference to a lawful claim. demand or right. In the case of insurance, this principle of law has been incorporated in all policies. The insurance company, upon payment of a loss to the insured, is entitled to the insured's legal and equitable rights against third parties. These rights are only those related to the loss and the company is only entitled to the extent of the loss payment.

TERM:
A period of time for which a policy is issued.

UNDERWRITING:
The process of selecting risks for insurance and determining in what amounts and on what terms the insurance company will accept the risk.

VOIDING COVERAGE ABINITO:
Policy coverage and conditions are made invalid back to the policy's inception date. This action normally occurs when a material misrepresentation or concealment of important facts has occurred.

VOLUNTARY MARKET:
When a person seeking insurance selects an insurer and the insurer's underwriters decide to accept the application without the state's or residual markets involvement, the business is said to be written in the voluntary market.

WRAPAROUND POLICY:
A policy of insurance which excludes windstorm and has damages. It "wraps around" the Coastal Property Insurance Pool Plan's Windstorm and Hail Policy. That policy must be written by an admitted carrier, which is a Member Company of the Association and participates in its profits and losses.

 

Contact Woodland Insurance Group LLC

P.O. Box 1298
Wilmington, NC 28402
T: 910-833-8978
F: 910-833-8979
nicole@woodlandinsurancegroup.com

 
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