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La Pine Insurance Center – Glossary of Insurance Terms

La Pine Insurance Center – Glossary of Terms

Please utilize this glossary of insurance terms to keep yourself informed as you read through our site.

ACCIDENTAL DEATH BENEFIT
Additional benefit to the beneficiary, should death occur as the result of an accident. Double indemnity, for example, means twice the face value of the policy will be paid to the beneficiary.

ACT OF GOD
A direct, violent sudden act of nature that could not have been foreseen such as floods or earthquakes.

ACTUAL CASH VALUE
An amount equivalent to the replacement cost of a stolen or damaged property at the time of the loss, less depreciation. For vehicles, this amount would be determined by local area private party sales and/or dealer quotations.

ADDITIONAL INTEREST INSURED
Another person or company who may be liable for an accident involving an insured or an insured vehicle and who has been named as an Additional Interest Insured under the policy.

ADDITIONAL LIVING EXPENSE INSURANCE
Coverage under a Homeowners, Condominium, or Renters policy, that reimburses costs of residing in a temporary location until the insured’s home can be made whole again. It usually provides living expenses from 10%-20% of the structural coverage on the home.

ADMITTED COMPANY
An insurance company authorized to do business in a given state and subject to regulation by that state’s Department of Insurance.

AGENT
An insurance agent is one who contracts with one or more insurance companies to sell their insurance policies to the public and is paid a commission on or receives compensation for such business. See also Broker.

AMOUNT OF INSURANCE
The limit of payment for which an insurer is liable under a policy.

ANTI-THEFT DEVICE
Select Recovery Device if the system has a device that is capable of tracking (homing) and recovering the vehicle. These systems must automatically contact a response center where the process of vehicle recovery begins. This does not include alarms which do not have contact with a center or vehicle tracking. To receive an anti-theft discount, comprehensive and collision coverage must be present on your policy.

APPLICANT
Prospective insured who completes and signs a written form containing personal statements about him in an effort to obtain insurance.

APPLICATION
Written statements on a form by a prospective insured about himself. These statements and any additional information, such as a medical report, are used by the insurance company to decide whether or not a risk is insurable.

APPRAISAL 
A valuation or an estimation of the value of property usually done by an expert in that field who has no personal interest in the property.

APPRAISAL CLAUSE 
A clause in an insurance policy that gives the insurer the right to demand an appraisal on the damaged property. It gives both the insurer and insured a means of settling disputes over the value of lost or damaged property.

APPRAISER 
A Person that determines the real value of property or damage to covered property.

ARBITRATION
Reference of a dispute to one or more impartial persons chosen by the parties to the dispute to determine their rights and/or obligations. The parties agree in advance to abide by the arbitrament. Each party has a chance to be heard.

ARSON
The deliberate and intentional burning of property by its owner or by another person.

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BENEFICIARY
At the option of the policy owner, the person, group or entity to whom the proceeds are to be paid upon the insured’s death. Anyone can be named a beneficiary (relative, non-relative, pet, charity, corporation, trustee, partnership, etc.)

BINDER
A temporary insurance contract providing coverage until a permanent policy is issued.

BODILY INJURY
Pays medical costs of others and your legal defense costs if your car injures or kills someone. The limits or maximum the company will pay are stated on the declarations page. Typically the limit is per person and total per accident.

BRICK VENEER CONSTRUCTION
Frame construction with a single course of brick as an outside covering.

BROKER
A broker-agent acting in the capacity of an insurance broker is an independent insurance sales person who searches the marketplace in the interest of clients, not insurance companies, and may place coverage with any admitted insurance company.

BUILDING CODES
Rules and regulations of governmental bodies defining standards that construction in that jurisdiction must meet.

BURGLAR ALARMS 
Devices of various types which give warning of entry into premises by unauthorized persons.

BUSINESS USE
Using a private passenger vehicle owned or leased by the applicant in the course of his or her business or profession. Acceptable business use classifications vary by company.

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CANCELLATION
The termination of insurance coverage during the policy period.

CAR ACCIDENT
An unexpected and unintended event from the standpoint of you or a permissive user that causes bodily injury or property damage and arises out of the ownership, maintenance or use of a car or other motor vehicle.

CAR OR AUTO
A 4-wheel motor vehicle licensed for use on public roads.

CARE, CUSTODY AND CONTROL
A term used primarily in liability coverage which refers to property belonging to another but which is legally in the insured’s possession or under his control.

CARGO 
Goods being transported, such as the load of a truck or the goods being carried by a ship. The cargo of a ship does not include the equipment needed to operate the ship.

CASH ACCUMULATION 
Some life insurance policies accumulate cash values over time. Term Life policies do not accumulate cash; benefits are only paid in the event of death within the designated term of coverage.

CASH SURRENDER VALUE
Upon surrendering a life insurance policy with a cash value, the policy owner is entitled to receive that money less any surrender fees from the insurance company. Term Life policies do not have cash values, therefore, they have no cash surrender value.

CIVIL COMMOTION 
Disturbance involving a large number of individuals. An uprising of people creating a prolonged disturbance.

CLAIM
A person’s request for payment by an insurer for a loss covered under a policy. Your claims to your company are first party claims. Claims made by one person against another person’s company are known as third party claims.

CLAIMANT 
The person making a claim.

CLAIMS EXAMINER/ADJUSTER
An employee of an insurer who handles and is responsible for handling claims.

CLAUSE 
Words in a policy which describe certain specifications, limitations or modifications.

COLLISION COVERAGE
Optional insurance which pays (subject to a deductible) for damage to your car caused by contact with another car or object, or by rolling the car over. This coverage is usually required if you have a car loan.

COMPREHENSIVE COVERAGE
Optional insurance which pays (subject to a deductible) for damage to your auto caused by incidents other than collision or rolling the car over, such as fire, theft, vandalism, flood, or hail. This coverage is usually required if you have a car loan. This coverage is sometimes referred to as Other Than Collision coverage or OTC coverage.

CONDITIONS
The general terms or requirements upon which the insurance is based. For the mutual understanding of the parties the conditions will commonly state such matters as how the policy can be cancelled or renewed, provisions with respect to change of the insured’s interest, provisions as to what an insured should do in the event of a loss, and conditions as to what he should do subsequent to a loss etc. The insured, for example, is required to give notice of a claim and fulfill certain other obligations as a condition precedent to his receiving a settlement.

CONDITIONS OF THE CONTRACT 
Articles in contract defining or describing terms, responsibilities of owner and contractor, performance and payment schedules, and the like.

CONDOMINIUM 
Is the individual ownership of a single unit in a multiple unit building or group of buildings, together with a percentage interest in that part of the total property owned jointly by all unit owners. In an apartment building, each apartment would be a unit and the stairways, pathways and parking areas would be in common ownership. Condominium property requires special insurance treatment.

CONSEQUENTIAL LOSS
The word “consequential” means something following as an effect or result. It is an indirect result of the occurrence that causes the loss.

CONSIDERATION 
The inducement to a contract; the cause, motive or price which induces a contracting party to enter into an agreement, act or forbearance or promise thereof. It is an essential part of a binding contract. Consideration is either expressed or implied. The money, or whatever is being used in substitution of money, paid for the article or contract is “the consideration.”

CONTINUOUSLY INSURED
Insurance coverage was in effect from an insurer or more than one insurer at all times, without a break or lapse in coverage for any reason.

CONTRACT
An agreement made between two or more persons, which is intended to be enforceable at law, and is constituted by the acceptance by one party of an offer made to him by the other party, to do or to abstain from doing some act. The offer and acceptance may either be expressed or inferred by indication in the conduct of the parties.

CONTRACT DOCUMENTS
Agreement, addenda, supporting documents, general conditions, supplementary conditions, specifications and drawings and modifications to an agreement.

CONTRIBUTORY NEGLIGENCE
Many accidents are the fault of both parties who are involved in the occurrence. The plaintiff who sues another party for damages also may be guilty of some negligence, which is a concurrent cause of the damage.

CONVERSION PERIOD
Many term life insurance policies can be converted to whole life policies at the insured’s attained age, with no physical exam required.

CONVERTIBLE TERM INSURANCE
Term-life coverage that can be converted into permanent insurance regardless of an insured’s physical condition and without a medical examination. The individual cannot be denied coverage or charged an additional premium for any health problems once the policy has been issued.

COVERAGE
The nature of protection afforded by a particular policy. Can be used at times interchangeably with “insurance” or “protection” as “fire coverage” or “fire protection” or “fire insurance.”

CREDIT REPORT 
A report provided by a commercial credit reporting company which provides details on the reputation and financial strength of an individual or corporation.

CUSTODY
Immediate control that an authority exercises over property or people.

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DAMAGES
The cost of compensating those who suffer bodily injury or property damage from a car accident. These damages may be payable up to the limits of liability as shown on the declarations page.

DEATH BENEFIT
Amount payable to the beneficiary or beneficiaries upon the death of the insured. Concerning Term Life policies, this is the face value of the policy plus any riders.

DEBRIS REMOVAL
A provision in an insurance policy most commonly found in fire insurance providing indemnification for the cost of removal of the debris after a fire.

DECLARATION PAGE
Statement, signed by the insured, warranting that information given by insured is true. Typically includes specified coverage, premium and other information applicable to the policy.

DECLINE
The company refuses to accept the request for insurance coverage.

DEDUCTIBLE
The amount which you agree to pay, per claim or per accident on comprehensive or collision coverage. This is subtracted from the total amount paid by your insurer. If the claim is $1500 and your deductible is $500, you pay $500 and the insurance company will pay the remaining $1000. Typical deductibles are $50, $100, $250, $500, and $1000. The higher the deductible, the lower your premium will be.

DEDUCTIBLE CLAUSE 
A clause defining the amount of loss for which insured is liable; defines insurers and insured’s contributions to cover losses.

DEPRECIATION (ACV) 
A decrease in value due to age, wear and tear, etc.

DIRECT BILLING
A system for the collection of premiums whereby the insurance company “directly bills” the insured for the premium in lieu of the conventional collection of premiums by the agent or broker. The insurer sends a statement to the agent (usually monthly) recording the premiums collected directly and credits the agent with the commission on those items.

DISCLOSURE 
Act of making known something known.

DRIVER IMPROVEMENT COURSE (not available in all states)
A voluntary refresher course available for drivers age fifty-five (55) and older to enhance their driving skills. Participants are eligible for a discount if they can provide a certificate to their carrier as proof of completion. The course must have been completed within three (3) years of the date the policy is to begin.

DRIVER STATUS
Provides information concerning whether the driver has been rated or listed on the policy.

DWELLING 
The living quarters occupied, or intended for occupancy, by a household.

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EARNED PREMIUM 
A portion of premium earned or charged for the period of time a policy remained effective.

EARTHQUAKE INSURANCE
Insurance against damage by earthquake.

EDUCATION FUNDING
Coverage sufficient to provide for a child’s education expenses in the event of the insured’s death.

EFFECTIVE DATE
The date of inception of an insurance policy, or the date additional coverage become effective.

ENCUMBRANCE
Mortgage, lien or other charge against a property.

ENDORSEMENT
Basically, it is an amendment or change to a policy that adds or subtracts insurance coverage. (For example: A request that you make to your broker to add drivers or delete coverage results in an endorsement to your policy).

ESTATE
The net worth of an individual’s assets.

ESTIMATE
Costs a contractor anticipates for a project.

ESTIMATED PREMIUM 
A tentative premium set in the anticipation of being approximately correct but which may be increased or decreased when the final premium calculation is made.

EVIDENCE OF INSURABILITY
Documentation that an insured’s physical condition meets the insurance company’s standards. Usually this takes the form of a medical examination.

EXCLUSION
Certain causes and conditions, listed in the policy, which are not covered.

EXPIRATION DATE
The date on which the policy ends.

EXPOSURE
The hazard threatening a risk because of external or internal physical conditions.

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FACE AMOUNT 
Sum of insurance provided by a policy at death.

FACE BRICK
Brick, chosen for its visual rather than its structural characteristics, used on wall’s exposed surface.

FAIR MARKET VALUE
Price at which a buyer and seller, under no compulsion to buy or sell, will trade.

FAMILY HISTORY 
Background information used to determine the probability of the occurrence of a hereditary disease. This helps underwriters determine what premium accurately reflects the applicant’s risk of a shortened life expectancy.

FIRE DAMAGE
Damage caused by fire.

FIRE RESISTANT
A fire resistant building or article is generally designed to resist certain higher heat temperatures for a certain period of time. It has a lesser degree of resistance to fire and ranks slightly more hazardous than “fireproof.”

FIXTURES
Anything that is attached to real property is known as a “fixture.” Fixtures when permanently attached to real property become part of the real property. Tenant’s fixtures are fixtures of a removable nature and are the responsibility of the tenant for insurance purposes. Whether a fixture is a tenant’s fixture and movable or a landlord’s fixture and immovable is frequently determined by the purpose of the fixture.

FLAT CANCELLATION
The cancellation of a policy as of the effective date with all paid premium refunded.

FLAMMABLE
Easily set on fire.

FLOATER POLICY 
A policy covering the same risk at a number of perhaps unspecified locations possibly over a wide area (even world-wide); usually includes goods being frequently moved from one location to another, e.g., Fur Floater, Jewelry Floater, etc.

FRAME
Refers to the construction of a building built using lumber.

FRAUD
Methods used to deceive to cause unwarranted favorable decision for one’s own benefit. Deliberate misrepresentation/misstatement to conceal facts that should have been made known.

FRAUDULENT
Dishonest; based on or obtained by fraud.

FRAUDULENT MISREPRESENTATION 
A false statement made knowing it to be false and intending another to act on it to his detriment, or made carelessly or recklessly without regard to whether it is true or false.

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GARAGING LOCATION
The ZIP code where your vehicle is parked when not in use and usually corresponds to your primary residence.

GOOD FAITH
Most ordinary contracts are good faith contracts. Insurance contracts are agreements made in the utmost good faith. This implies a standard of honesty greater than that usually required in most ordinary commercial contracts.

GUARANTEED INSURABILITY RIDER
With this provision an insured may purchase additional coverage without having to take an additional medical exam or show proof of insurability.

GUARANTEED LEVEL PREMIUM
The premium rate shall not change for the term of the policy, regardless of any changes in the insured’s risk profile.

GUARANTEED RENEWABLE 
Insurance policy renewable at the option of the insured for a specified number of years or to a stated age. The insurance company cannot refuse to renew the policy or change any of its provisions except the premium rate. Should the insurance company change the premium, it must do so for the entire policyholder class, not just for one or a few members.

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HABITATION
Dwelling place; residence.

HAZARD
A condition which increases the chances of a loss.

HOMEOWNER INSURANCE
An elective combination of coverage for the risks of owning a home. Can include losses due to fire, burglary, vandalism, earthquake, and other perils.

HOMEOWNERS POLICY
A multi-peril insurance policy for dwelling risks, combining coverage for fire, and extended coverage including theft, and liability.

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IMPROVEMENTS AND BETTERMENTS
Additions or changes to a rented premises by a tenant at his own expense. Also called Tenant’s Improvements.

IN FORCE
Insurance policy which is in effect, and has not expired or been cancelled.

INCEPTION
The date and time on which coverage under an insurance policy takes effect.

INDEMNIFY 
To provide compensation for loss or expenses incurred.

INDEMNITY
A contract, expressed or implied, to repay in the event of a loss. Insured neither gains nor loses.

INDEMNITY PERIOD
The policy period.

INDEPENDENT ADJUSTER
One who adjusts losses on behalf of insurance companies, but is not employed by any one insurance company.

INITIAL PERIOD
Period for which the premium and corresponding benefits are guaranteed to remain the same.

INSURED
Person or party covered by an insurance policy. The insured does not need to be the policy owner.

INSURABLE INTEREST
Owner of property has an insurable interest because of the expectations of monetary loss if that property is damaged or destroyed.

INSURABLE RISK
The applicant’s risk profile meets an insurance company’s standards.

INSURANCE
A contract in which one party, the insurer, for monetary consideration agrees to reimburse another, the insured, for loss or liability for a loss on a defined subject caused by specified hazards or perils.

INSURANCE COMPANY
A company which, in exchange for a fee (known as a premium), agrees to pay all legitimate claims that may arise under your policy.

INSURANCE POLICY
A written contract of insurance.

INSURED
The policyholder – the person (s) protected in case of a loss or claim.

INSURER
The company providing the insurance coverage.

INSURING CLAUSE
Describes the intent of the policy, the insurance coverage and limits provided by the policy.

INTERMEDIARY
The agent/broker negotiating insurance contracts for another or any party representing another party, in negotiation with a third party.

INVENTORY 
Itemized list of goods and property on hand.

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JUDGMENT
An order given by a Court.

JURY 
A body of persons selected from the general population sworn to hear evidence in a law case and to make a decision according to their findings.

KEY PERSON
Life insurance on major employees, with benefits payable to the business.

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LAPSE
An insurance policy which, having reached its expiration date is not renewed or extended is said to have lapsed.

LATENT DEFECT
A defect which is not apparent. A hidden defect.

LEASE
A contract by which one party, called the lessor, conveys to another, called the lessee, real estate, equipment or facilities for a specified term and for a specified rent.

LEGAL LIABILITY
Liability imposed by law on individuals or corporations to pay for harm done to others. Such law may be the common law, statute law or customs which over a period of time have taken on the same status as law. Legal liability may also be assumed under the terms of a contract.

LESSEE
One that holds real or personal property under a lease, e.g., a tenant of rented premises.

LESSOR
One that conveys property by lease, e.g., a landlord of rented premises.

LEVEL PREMIUM
Premium that remains the same over time, regardless of any change in the insured’s risk profile.

LIABILITY INSURANCE
Insurance which agrees to indemnify the insured for sums he may be required by law to pay to third parties as damages for bodily injury or damage to property.

LIABILITY LIMITS
The maximum amount of insurance provided under a policy of liability insurance. There may be different limits for bodily injury and property damage, or, more commonly, a single amount for all claims for bodily injury or property damage arising from one accident or occurrence. Claims handling and adjusting expenses, costs of legal defense and prejudgment interest are normally payable in addition to the liability limits stated in the policy.

LIEN
A charge upon real or personal property as security for some debt or duty. Also, the security interest created by a mortgage. The conditions of an insurance policy require the disclosure to the insurer of any existing lien on the insured property.

LIABILITY COVERAGE
A promise from an insurance company to pay for damages (within the limits stated on the policy) for bodily injury or property damage which the law holds the policyholder responsible because of an accident involving an insured car. In Oregon, the minimum requirements are $25,000 per person, $50,000 per accident and $10,000 in property damage.

LIMITS 
The maximum amount a policy will pay either overall or under for a specific coverage. You may choose the limit which meets your needs. Most states have laws that specify the minimum limits you must purchase.

LIMIT OF LIABILITY
The maximum amount, as stated in the policy, which an insurer is bound to pay in case of a loss. See also Liability Limits.

LIVING BENEFIT
Benefits available to an insured, while still alive. Disability Income and Waiver of Premium are examples of living benefits available with some term life policies.

LOAN/LEASE PAYOFF COVERAGE
Loan/lease payoff coverage, sometimes called “gap” coverage, pays the difference between what you owe on your vehicle and what your insurance pays if your vehicle is damaged beyond repair (totaled) or stolen and not recovered.

LOSS
A word often used in place of the word “claim.” It refers to the amount an insurer must pay because one of the possibilities of loss insured against under a policy has happened.

LOSS OF USE INSURANCE
Cover against expenses incurred as a result of damage to the property insured resulting in the need to replace the property on a temporary basis. In automobile insurance this might refer to the cost of a rental car while the insured vehicle is under repair as the result of an accident. In a homeowner’s policy it might refer to additional living expense when the insured premises are rendered uninhabitable by an insured peril.

LOSS PAYABLE CLAUSE
A policy clause providing, at the direction of the insured, that in the event of a loss, payment shall be made to an interested party other than the insured, e.g., a mortgagee.

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MALICIOUS MISCHIEF 
Injury to the rights or property of another person or property with intent.

MARKET VALUE
The value of an asset based on a current market valuation, e.g., the amount for which the item could be sold on the open market.

MASONRY CONSTRUCTION
A form of construction identified by self-supporting walls of masonry, e.g., brick, stone or hollow concrete block, but with floors and roofs which may be constructed of combustible materials, usually wood.

MATERIAL FACT
Something affecting a contract of insurance important enough to change the agreement between the company and the policyholder. Material facts must be disclosed if asked about. Failure to do so may result in a voiding of the policy involved.

MATERIAL MISREPRESENTATION
The policyholder or applicant makes a false statement of any material (important) fact on their application. For instance, the policyholder provides false information regarding the location where the vehicle is garaged or makes a false statement about the annual miles driven.

MEDICAL EXAM
Physical exam required of applicants for life insurance to ascertain if the applicant is an insurable risk and, if so, how they should be classified. Physicals are administered by medical personnel provided by the insurance company.

MEDICAL EXPENSES
An insurance company’s promise to pay medical expenses for your bodily injury, sickness, disease or death suffered in car accident while occupying a car or from having been struck by a motor vehicle.

MEDICAL PAYMENTS INSURANCE
A provision in an insurance policy to pay certain specified medical expenses of others irrespective of the insured’s legal liability.

MINOR
A person under the age of being legally capable of transacting business on his own behalf.

MISREPRESENTATION
An incorrect statement made about a material fact. Misrepresentation can be innocent, e.g., arising from an oversight; fraudulent (in other words, a deliberate untruth with intent to deceive) or the result of extreme carelessness where a statement is made without regard to whether it is true or false. When a misrepresentation is discovered, the insurer may either continue the contract or treat the contract as void with a full return of any premiums paid. In order for the insurer to successfully treat a policy as void, the misrepresented fact must be material to the risk.

MORAL HAZARD
Danger of loss arising from the nature of the insured rather than from the physical nature of the risk. This would encompass those instances where the chance of loss is increased by an insured’s carelessness, incompetence, recklessness, indifference to loss or an insured’s fraudulent nature.

MORTGAGE CLAUSE 
A clause in an insurance policy which stipulates the rights and obligations of the insurer and the mortgagee. The main characteristics of this clause are that the mortgagee is granted protection in the event a loss is denied due to the actions of the insured (provided that the mortgagee was not aware of the insured’s wrongful action) and, in return, the mortgagee accepts responsibility to advise the insurer of any misrepresentation or change in risk of which the mortgagee is aware.

MORTGAGE PROTECTION
Life insurance that pays the balance of the mortgage if the mortgagor (insured) dies.

MOTORIST PROTECTION: 
Reimbursement for towing up to specified coverage limit each time a covered auto is disabled. This coverage does not apply to towing of a covered auto due to a parking violation. Also included in motorist protection is emergency transportation. The company will reimburse an insured up to the specified coverage limit for the costs of emergency transportation from the place of a covered accident arising out of the operation, maintenance or use of a covered auto to:

· Such place as the emergency may require.
· The intended destination.
· The insured’s residence.


MULTIPERIL POLICY

A policy which is a combination of fire and casualty (or fire, casualty and inland marine coverage) in a single contract such as the Homeowner’s Policy.

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NAMED INSURED
The person or party designated in the policy as the insured, as opposed to someone who may be covered by the policy, but is not specifically named. The first person in whose name the insurance policy is issued.

NAMED PERIL POLICY
A policy in which the perils insured against are listed, as opposed to one which insures against “all risks.”

NATURAL DISASTER
A disaster caused by the elements such as flood, earthquake, tornado, lightning, etc.

NEGLIGENCE
Failure to use the degree of care expected from a reasonable and prudent person.

NON-DISCLOSURE
A contract of insurance is based on utmost good faith. An applicant for insurance is required to disclose to the company all material facts which are necessary to underwrite a policy. If the applicant does not disclose all these facts, he/ she is guilty of non-disclosure and may risk having coverage voided from inception.

NON-INSURABLE RISK
A risk for which no insurance can be written. The chance of loss is very high or cannot be accurately measured.

NON-OWNERS POLICY
This coverage may be issued to someone who does not own/lease an automobile or have a vehicle furnished for their regular use. This policy will not provide coverage for use of a family member’s vehicle. This insurance covers the named insured as a driver only. A non-owners policy does not provide any physical damage coverage on the car the insured is driving.

NOTICE OF LOSS
The conditions of the insurance policy require that any person sustaining a loss insured by the policy shall immediately give notice to the agent/company of such loss.

NOTICE OF TERMINATION
The conditions of insurance policies stipulate how a policy may be terminated during its term. For example, a policy may be terminated by the insured at any time or by the insurer who must give the insured a certain number of days’ notice of termination by registered mail or a certain lesser number of days’ written notice of termination personally delivered.

NULL AND VOID
Of no legal or binding force; invalid.

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OCCASIONAL DRIVER
The person who is not the primary or principal driver of the vehicle.

OCCUPANCY
Occupancy is the act of holding possession of property or premises. The term implies the use of the building for the purposes described in the policy, and no other. An occupied building has furnishings and/or people in it.

OCCURRENCE
A happening or event. Liability policies are usually written on either an accident or occurrence basis. For coverage on an accident basis, the loss or damage must be due to accident, whereas on an occurrence basis all that is required is the happening or the continual or repeated exposure to an unfavorable situation, neither intended nor expected to cause injury or damage. In reinsurance and insurance, it is also the grouping of related losses into a single loss situation.

OTHER INSURANCE
Normally an insured must disclose to an insurance company from whom he is purchasing insurance, information about what insurance he already carries on the property.

OUT OF STATE INSURANCE
If the policy provides liability coverage and you’re traveling in a state which has mandatory motor vehicle insurance requirements the insurance company will automatically provide the minimum limits of liability as required by the applicable state law.

OWNER’S, LANDLORD’S AND TENANT’S LIABILITY
Liability insurance coverage which gives protection because of liability arising out of ownership, use or occupancy; operation or maintenance of buildings or premises.

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PAID UP INSURANCE
Life insurance policy with all premiums having been paid for the life of the policy. Term life policies do not behave in this manner because they do not accumulate a cash value. When the policy owner stops paying premium, the coverage is no longer in effect.

PARTIAL LOSS
A loss covered by an insurance policy where the property or the premises are not completely destroyed or rendered completely worthless.

PARTICIPATING POLICY
Policy that pays a dividend to its owner. Term Life policies are not participating policies.

PERIL
The event that caused a loss covered by the policy, e.g., fire windstorm.

PERJURY
Giving false evidence or information while under oath.

PERSONAL EFFECTS FLOATER
A policy covering personal effects usually to cover jewelry, furs, etc.

PERSONAL INJURY LIABILITY
Injury other than bodily injury arising out of defined causes which usually include false arrest or detention, malicious prosecution, wrongful entry or eviction, libel or slander or violation of a person’s right to privacy other than in the course of advertising, broadcasting, television, publishing.

PERSONAL INJURY PROTECTION (PIP) 
Coverage to pay basic expenses, in the event of an accident, for an insured and his or her family in states with No Fault Automobile Insurance (Oregon is a no fault state).

PERSONAL PROPERTY
Legally, any property of an insured other than real property. More often used to refer to the personal property of family members insured under a Homeowner’s policy.

PERSONAL PROPERTY FLOATER (P.P.F.) 
A Broad Form policy covering all personal property worldwide including at the insured’s home, usually on an all risks basis.

POLICY
The written contract of insurance.

POLICY CONDITIONS
Provisions which state the rights and duties of the insured or insurer.

POLICY EXPIRATION DATE
The date when your current insurance policy expires. This date can be found on your current policy, Declaration (or “DEC”) page, insurance identification card or recent cancellation notice. This date is not to be confused with the date of your next payment or when your renewal payment is due.

POLICY LIMIT
The maximum that the insurance company is obligated to pay in actual claims under an insurance policy. Certain additional costs may also need to be paid.

POLICY OWNER
Individual or entity that owns and pays premium for an insurance policy.

POLICY PROVISIONS
Statements contained in an insurance policy which explain the benefits, conditions and other features of the insurance contract.

POLICY TERM
The length of time that the policy is in force.

POLICY YEAR
Period between anniversary dates.

POLICYHOLDER
Individual or other entity who owns an insurance policy. The Insured.

POWER OF ATTORNEY
Authority given one person or organization to act for and obligate another to the extent of the instrument creating the power.

PREMIUM
The amount of money an insurance company charges for insurance coverage.

PREMIUM FINANCING
A policyholder contracts with a lender to pay the insurance premium on their behalf. The policyholder agrees to repay the lender for the cost of the premium, plus additional interest and fees.

PRIMARY RESIDENCE

The place where you will reside for the majority of your policy term. If you are a homeowner who does not reside in the home you own, please choose the “rent” or “other” option.

PRIMARY USE

How your vehicle is mainly used:
· To/from work – If you use your vehicle to commute to and from your work and/or school.
· Business – If your vehicle is used to make sales calls, for business trips, to bank or post
office, picking up supplies, going to different locations owned or leased by a partnership or
corporation that have a business listed as and additional interest on the car.
· Farm – If your vehicle is used primarily on a farm, ranch or orchard.
· Artisan – If your vehicle is operated by you in a trade or business where the vehicle is
owned or leased by an individual operated solely by the named insured or other resident
relatives used to transport tools or other materials where such transport is incidental to the
insured’s trade or business.

PROOF OF LOSS
A formal statement made by a policy owner to an insurer regarding a loss. It is intended to give information to the insurer to enable it to determine the extent of its liability.

PROPERTY DAMAGE
This insurance covers property damage that results from a car accident. Property damage means damage to or destruction of physical property, including the loss of use of that property. The maximum that will be paid by an insurance company for any one accident is stated on the declarations page.

PROPERTY DAMAGE LIABILITY INSURANCE
Protection against liability for damage to the property of another including loss of the use of the property.

PROPERTY INSURANCE
Covers an insured’s property against damage, destruction or loss by a covered peril.

PRO RATA CANCELLATION
Cancellation of an insurance policy or bond with the return premium credit being the full proportion of premium for the unexpired term of the policy.

PROXIMATE CAUSE
Cause of loss or damage. Unbroken chain of cause and effect between the occurrence of an insured peril and damage to property.

PUNITIVE DAMAGES
Damages in excess of those required to compensate the plaintiff for the wrong done, which are imposed in order to punish the defendant because of the particularly wanton or willful character of his wrongdoing.

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QUOTE
An estimate of the cost of insurance, based on information supplied to the insurance company by the applicant.

RATE
The rate is the premium for a specified amount of insurance for a specified time period.

RATE CLASS 
Group of insureds with the same characteristics; used to determine rates for unique risk groups.

REFUND
A return to the policyholder of part of the paid premium, because of cancellation, suspension, reduction in insurance coverage, or because of rate reduction.

REINSTATEMENT
The restoring of a lapsed policy to full force and effect. The reinstatement may be effective after the cancellation date, creating a lapse of coverage. Some companies require evidence of insurability and payment of past due premiums plus interest.

RELEASE
A discharge from obligation or responsibility. To let go of, or give up a legal claim. The most common types in insurance are: First Party Release – between the insured and the insurance company. Third Party Release – between the insured and a third party. Indemnifying Release – between the insured and a guardian for a minor or other person not legally competent.

REMOVAL
The standard fire insurance policy insures against damage done in removing the insured property from the path of the fire or other insured peril (if loss is mitigated).

RENEWAL
A certificate which attests to the fact that an insurance policy has been extended for another term.

RENEWAL PREMIUM
The premium for the new term of the policy.

REPAIRS
Generally an insurance policy will set out the conditions for an insured to effect repairs to insured property.

REPLACEMENT
Most policies of insurance of property give the company the right to substitute other property of like kind and quality for insured property which has been damaged or destroyed. This is making replacement.

REPLACEMENT COST CLAUSE
Applies generally to some fire insurance policies where a special cover may be purchased so that in the event of fire, repairs or replacement will be made with material of like kind without cost to the insured for depreciation or betterment.

REPLACEMENT VALUES
The cash value representing what it would cost to replace the particular article which is the subject of the insurance.

RIDER
Insurance policy endorsements that modify clauses or provisions of the policy, including or excluding coverage. Riders often are added for an additional fee.

RISK
The chance of loss. Specifically the possible loss or destruction of property or the possible incurring of a liability. Sometimes refers to the subject of an insurance contract.

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SALVAGED VEHICLE
A salvaged vehicle is a vehicle which has been wrecked, destroyed or damaged, to such extent that the insurance company considers it uneconomical to make repairs to the vehicle and the vehicle is not repaired by or for the person who owned the vehicle when the damage occurred. The title will often note SALVAGED VEHICLE when issued by the department of motor vehicles. Many companies will only accept salvaged vehicles for liability coverage.

SCHEDULE
A comprehensive list accompanying a policy to detail the property, locations and amounts insured, and the applicable conditions.

SCHEDULED PROPERTY FLOATER
An inland marine form of policy specifically insuring various individual items. Articles of unusual value, provided they are movable, may normally be written this way and insured against many hazards, often against “all risks.”

SEASONAL RISK
A risk occupied only part of the year, such as a summer dwelling.

SETTLEMENT
An agreement between concerned parties. In insurance, the agreement is usually on the money changing hands to discharge an insurance claim.

SHORT-RATE CANCELLATION
When the policy is terminated prior to the expiration date at the policyholder’s request, the earned premium charged would be more than the pro-rata earned premium. Generally, the return premium would be approximately 90 percent of the pro-rata return premium. However, the company may also establish its own short-rate schedule.

SLANDER
The oral utterance or spreading of falsehood harmful to another’s reputation. Libel is written; slander is spoken.

SMOKE DAMAGES
Essentially, the devaluation by smoke, not fire, of merchandise and property. Such damage is covered by the fire policy.

STATEMENT OF CLAIM
A written statement by a plaintiff detailing the facts which support the claim against the defendant and the relief sought.

STATUTE
An act of the legislature. Common law is made up of the various court decisions over the years. Case law may be altered by statute.

STATUTE OF LIMITATIONS
Law determining the period within which a specific legal action must be taken.

STORAGE
A term applied to articles or substances held for safekeeping. If storing of such articles is prohibited by a policy, the policy will be voided if loss consequently occurs, unless the company’s permission and consent has been specially granted.

SUBCONTRACTOR
A trade contractor such as a roofer who usually subcontracts with a general contractor.

SUBROGATION
Once a company has paid a loss for which someone other than the policyholder is responsible, it may have the right to recover this loss from the guilty party. This right is called subrogation.

SUIT 
A legal proceeding brought by one person against another.

SURCHARGE
An extra charge applied by the insurer. For automobile insurance, a surcharge is usually for accidents, moving violations or a sports type vehicle.

SURRENDER 
Cancellation of a policy before its normal expiration by mutual consent of insured and insurer.

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TENANT’S POLICY
A package policy specially designed to meet the normal insurance requirements of a private tenant covering personal belongings and liabilities.

TERM
The period of time from the inception to the termination of an insurance policy or bond.

TERM LIFE
In term-life insurance, a benefit is only paid if death occurs during the term. Once the term expires, there are no remaining cash values or benefit obligations.

THIRD PARTY
A claimant under a liability policy, so called because he is not one of the two parties (insured and insurer) who have entered into the insurance contract which pays his claim.

THIRD PARTY INSURANCE
A fire policy insures the policyholder against loss or damage to his own property. When a policy insures a person against the liability he may incur to another for damages, it is “Third Party Insurance.” The insured is indemnified with respect to any loss which he might suffer as a result of his legal liability to others arising out of the peril against which insurance is written.

TITLE
The right to ownership of property. The owner of real property having just possession of his property.

TOTAL LOSS 
Loss of all the insured property. Also a loss involving the maximum amount for which a policy is liable.

TOWING AND RENTAL COVERAGE
This is optional coverage that pays on a reimbursement basis for towing or a rental car in the event of a covered claim. The reimbursement is subject to the limits as stated on the policy.

TRESPASS
An illegal act against another person’s rights or property.

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UMBRELLA POLICY 
A special form of liability policy designed to protect the insured for certain unknown contingencies over and above coverage and to provide excess insurance.

UMPIRE
A third person appointed to decide arbitration.

UNACCEPTABLE BUSINESS USE
Any delivery use including pizza, fast food and newspaper is unacceptable. Any vehicle used to carry equipment, deliver supplies or transport people for a fee is unacceptable. Examples of unacceptable business use would be buses, livery, carpenters, electricians, gardeners, plumbers and vehicles in a business name. For more specific questions regarding what is acceptable or unacceptable business use, contact your Underwriter for further assistance.

UNDERWRITE
To insure. More commonly, to scrutinize a risk and decide on its eligibility for insurance.

UNDERWRITER
The individual within an insurance company whose responsibility it is to accept or reject business in the particular line in which he/she specializes and in this way chooses risks his/her principals are prepared to underwrite.

UNDERWRITING
The process of selecting applicants for insurance and classifying them according to their degrees of insurability so that the appropriate premium rates may be charged. The process includes rejection of risks that do not fit within the guidelines of the company.

UNINSURED MOTORIST PROPERTY DAMAGE
If you have an accident with an uninsured driver, this coverage will pay for direct loss or damage to your car described under the policy, subject to the limits stated on the policy.

UNINSURED/UNDERINSURED MOTORIST BODILY INJURY COVERAGE
This is a coverage under which your insurance company will pay you for damages you’re legally entitled to receive from the owner or operator of an uninsured or underinsured motor vehicle because of bodily injury in a covered claim.

UNOCCUPIED
Where the premises contain contents but no human beings, such persons being temporarily away from the premises, on vacation for example, the premises are said to be unoccupied. This is distinguishable from Vacant in that in vacancy, the contents have been moved out leaving nothing but the building.

UNPROTECTED
A property located in an area not regularly serviced by a fire department.

UTMOST GOOD FAITH 
A phrase in a legal document calling for the highest standards of integrity on the part of the insured and the insurer.

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VACANT BUILDING 
A building with no occupants or furnishings. See also Unoccupied.

VICARIOUS LIABILITY 
Liability imposed upon a person even though not a party to a particular occurrence, e.g., the owner of a motor vehicle is vicariously responsible for injuries even though he is not driving the car at the time of the occurrence.

VOID 
Invalid, not legally binding.

WAIVER 
The intentional relinquishment of a known right. A waiver under a policy is required to be clearly expressed and in writing.

WARRANTY 
Statement or stipulation in a contract, the breach of which nullifies the contract.

WATER DAMAGE CLAUSE
A Portion of the policy affording coverage for certain specific causes of water damage.

WAIVER OF PREMIUM RIDER
With this provision, if an insured is disabled for six consecutive months or more, the insured may stop making premium payments and their policy will stay in force just as if the insured was still making premium payments.

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NOTE: Portions of the above information have been graciously provided by The Insurance Institute. These definitions are not applicable in all states or for all products. This is not an insurance contract. Other terms, conditions, and exclusions apply. Please read your policy for full details about the coverage’s. These definitions do not alter or modify the terms of any insurance contract. If there is any conflict between these definitions and the provisions of the applicable insurance policy, the terms of the policy control.

La Pine Insurance Center

Phone: 541-536-1718 | Toll Free: 800-506-1718 | Fax: 541-536-5032