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Auto Insurance Terms

Bodily Injury Liability:

Physical injury or death to a third party for which the policyholder is legally liable. This coverage is commonly referred to as "BI" and is usually written together with Property Damage Liability (see definition below).

Collision Coverage:

This coverage pays for the damage and loss of use of the policyholder's vehicle resulting from an accident caused by collision with another vehicle or object, such as a sign.

Comprehensive Coverage :

Pays for damage to or the loss of your vehicle from causes other than collision (for example: hail, vandalism, flood, fire and theft, etc.) Your lender may require this coverage if you have a loan on your vehicle.


The amount predetermined by the policyholder that must be paid out-of-pocket before the insurance company will pay toward a loss.

Gap Insurance:

An optional coverage that will pay the difference between the value of the vehicle at the time of a total loss and the amount remaining on the loan for the vehicle.


Those persons covered by the automobile insurance policy. Examples of an insured are the policyholder (also called the "named insured"), resident relative and someone using the vehicle with permission.

Medical Payments:

This coverage pays for medical and funeral expenses resulting from an accident regardless of fault. Medical Payments coverage also will cover injuries to passengers in your car or someone else's car you are driving with permission as well as injuries sustained in an auto accident by you or a family member.


Commonly known as "comprehensive," this coverage pays for the damage and loss of use of the policyholder's vehicle resulting from an accident caused by an event other than a collision or overturn. Such events may include theft, vandalism and fire.

Physical Damage:

A collective term commonly used to describe types of coverage that apply to damage to your vehicle. These types of coverage include collision and other-than-collision (a.k.a. "comprehensive")

Property Damage Liability:

Damage to someone's physical property, including loss of use, for which the policyholder is legally liable. This coverage is commonly referred to as "PD" and is usually written together with Bodily Injury Liability.

Rental Reimbursement:

An optional coverage that will reimburse the policyholder for the cost of a rental car if required due to a covered loss. This coverage may pay part or all the cost of a rental car.

Underinsured Motorist:

Similar to Uninsured Motorist, this coverage pays for bodily injury sustained by a covered person resulting from an accident with an at-fault driver who does not have enough insurance to pay for the injuries.

Uninsured Motorist:

This coverage pays for bodily injury sustained by a covered person resulting from an accident with an at-fault driver who is uninsured or flees the scene of the accident.

Custom/Non-factory Equipment Coverage:

Covers customized features, such as those found on conversion vans, as well as non-factory items such CD players, cellular phones and CB radios.

Towing and Labor Coverage:

Reimburses you for towing expenses when your vehicle must be towed to a repair shop or to another location because it is not drivable or is damaged.

Liability Coverage:

This coverage pays others for damages from an auto accident that you cause. It also pays for a lawyer to defend you if you are sued for damages that you cause. There are two kinds of liability coverage:

Bodily Injury and Property Damage

Bodily Injury Liability Coverage - Pays for claims and lawsuits by people who are injured or die as a result of an accident you cause. It compensates others for pain, suffering and economic damages, such as lost wages.

Property Damage Liability Coverage - Pays for claims and lawsuits by people whose property is damaged as a result of an auto accident you caused.

Umbrella Liability Insurance:

A policy that "floats" above your other coverages. You must have a certain amount of liability coverage, such as auto and homeowners, before you can buy an umbrella policy. This coverage kicks in if you are sued for an amount that is more than the liability coverage of your auto policy.

Emergency Roadside Service :

Almost all insurance companies offer emergency roadside service. Sometimes they fall under different names such as a motor club or roadside assistance. Basically, these plans can give you help for a variety of roadside problems. Basic roadside emergency services usually include: lock-out services, towing, trip interruption coverage and other travel planning benefits, with varying cost limits.

Home Insurance Terms and Glossary

Home insurance policies can read like a foreign language. Don't get discouraged. Here are definitions of basic home insurance coverage terms that will help you understand important piece of your financial safety net:

Actual Cash Value (ACV)

- This term describes the amount needed to repair or replace damaged portions of your home after depreciation. For example, your insurance company will deduct for the age and condition of a 12-year-old roof with a 15-year life expectancy. Most insurance policies are written on an ACV basis unless another form of valuation is specified (see "Replacement Cost" below).


- A request for reimbursement for a loss. In order to be paid, a claim must be the result of a loss that is covered by the policy. For example, a home insurance policy will not pay for flood damage if flood peril is not covered by the policy.


- This is the amount a policyholder must pay out-of-pocket for each claim or loss before the insurance company will begin paying. Deductibles may be a specific dollar amount (i.e., $1,000) or a percentage of the home's value at the time of the loss.


- This term describes the decrease in value of your home or personal property due to normal wear and tear from the time your home was built or the personal property was purchased.


- Also known as a "rider," this term describes a change added to the home insurance policy that modifies its original terms.


- A person, event, situation or condition specified in the home insurance policy to which coverage under the policy does not apply. A common example of an exclusion found in a standard home insurance policy is flood damage.


- A legal obligation. Loss of Use (a.k.a. "Additional Living Expense") - This term describes coverage that pays for certain additional expenses - such as lodging and food - while your home is undergoing repair.

Medical Payments

- Coverage for medical expenses up to a specified limit for persons accidentally injured at your home. It applies regardless of fault, but does not apply to injuries sustained by you or anyone living with you. Other exclusions usually apply.

Named-Perils Policy

- Also known as a "Basic" or "Broad" form policy, this type of policy covers losses resulting from any peril that is specifically named as a covered peril in the policy.


- The action, event or condition that causes a loss. Examples of perils include fire, wind and theft. The home insurance policy will specify which perils are covered.

Replacement Cost

- This term describes the amount needed to repair or replace damaged property with materials of similar kind and quality without deducting for depreciation.

Special-Form Policy

- A policy that covers losses resulting from any peril that is not specifically excluded from coverage.

Health Insurance Glossary


-Included services to which the policyholder is entitled.


-A bill submitted to a health insurance company or provider for payment.


-The amount of money, usually a percentage, that a policyholder pays for services and care.  The remaining percentage or amount is the responsibility of the health insurance company.


-The amount of money paid by the policyholder at each visit for certain medical services.


-The amount of money that will be paid out-of-pocket by the policyholder before the health insurance plan will pay. The deductible is usually an annual amount.

Disability insurance

- A type of health insurance coverage that pays you when you are unable to work for an extended period because of an injury or other medical condition. Coverage can be either long-term or short-term.

Group Health Insurance

-Health coverage offered through a group, usually an employer or organization, to a group of people. Group plans spread the cost among the members of the group, enabling such plans to typically cost less per person and offer broader coverage than individual health insurance plans.

Health Savings Account (HSA)

-a Health Savings Account was introduced recently, this is a high-deductible health plan coupled with a personal savings account that is used to accumulate funds for qualified medical expenses.

High Deductible Health Plan

-Commonly called "catastrophic health insurance," this is a plan with a very high deductible designed to cover medical expenses above the normal parameters of basic health insurance.

Indemnity plan:

A type of health insurance coverage that lets you choose your own doctors and pays for your medical expenses-either totally, in part, or up to a specified amount per day for a specified number of days. This is also known as a reimbursement plan.

Individual Health Insurance

-Health coverage purchased on an individual basis rather than through a group.

Long-term care insurance

-A type of health insurance that provides for skilled, intermediate, and custodial care in a private home, adult daycare setting, assisted-living facility, or nursing home.

Major medical insurance

- A type of health insurance coverage that protects you against losses from catastrophic illness or injury. It provides extremely broad coverage with a very high maximum benefit.

Managed Care

-Comprehensive health insurance plans provided to participating members of a health care organization. Managed care plans are organized into a network of providers, including physicians and hospitals. Common types of managed care plans are health maintenance organizations (HMOs), preferred provider organizations (PPOs), and point of service (POS) plans.


-A group of doctors and providers that work for or with a group health care organization.

Pre-existing condition

-A medical condition that existed before applying for a health insurance plan. These conditions may not be covered by a plan or only covered after a certain period of time has lapsed.


-The amount of money paid for a health insurance policy.


-A hospital, doctor or other facility that provides medical care.

Life Insurance Terms - Your Life Insurance Glossary

Here are a few common terms you'll want to be familiar with when you shop for permanent or term life insurance coverage:


A person other than a participant who may become eligible to receive, or is receiving, benefits under an insurance policy.

Cash surrender value:

The amount payable to an insured who surrenders cash value life insurance, which terminates all insurance benefits.

Convertible term life insurance: A plan that permits you to exchange the term life insurance policy for a permanent one at some point.

Free look period:

Under the laws of some states, a period (typically at least 10 days) during which time you may cancel the policy without penalty.

Insurable interest:

A requirement that if you want to buy a life insurance policy on someone else's life, you must have an interest in that person remaining alive or expect emotional or financial loss from that person's death.

No-load policy:

A type of policy that some insurers sell directly to consumers without having to pay commissions to agents and brokers.

What is a Death Benefit Plus Cash Value?

Permanent (cash value) life insurance:

A type of life insurance that combines a death benefit with a cash value component that builds over time; offers lifetime protection.

Risk factors:

Factors that the insurance company takes into consideration when calculating your premium for permanent or term life insurance; these include your age, your health, whether you use tobacco, your family health history, and the type and amount of life insurance you're buying.

Term life insurance:

A type of life insurance that provides coverage for a specified period of time-generally one, 10, 20, or 30 years, or until the insured reaches 65 or 70 years of age.

Universal life insurance:

A type of permanent life insurance in which the cash value varies with the purchaser's payments and the insurer's investment returns.

Variable life insurance:

A type of permanent life insurance in which the cash value fluctuates depending on the investments purchased by the purchaser for his or her portfolio.

Whole life insurance:

A type of permanent life insurance. Whole, universal, and variable life insurance each has their own provisions, but all cover you for the remainder of your life.