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 a local area private party sales and dealer quotations. Kelly Blue Book would only be used as a guide and not the final word.

AGENT - A licensed person or organization authorized to sell insurance by or on behalf of an insurance company.

AGGREGATE - The maximum limit available for the policy period. No additional coverage is afforded by the policy once this aggregate is met.

BINDER - A temporary or preliminary agreement which provides coverage until a policy can be written or delivered.

BROKER - A licensed person or organization paid by you to look for insurance on your behalf.

CANCELLATION - The termination of insurance coverage during the policy period. Flat cancellation is the cancellation of a policy as of its effective date, without any premium charge.

CLAIM - Notice to an insurer that under the terms of a policy, a loss maybe covered.

CLAIMANT - The first or third party. That is any person who asserts right of recovery.

COMMERCIAL GENERAL LIABILITY (CGL) - Converage against all liability exposures of a business unless specifially excluded. Coverage includes products, completed operatins, premises and operations and independent contractors.

CONTENTS-ONLY COVERAGE - In personal property insurance, this coverage is for personal property items that are movable, that is, not attached to the building's structure(the home), such as television sets, radios, clothes and household goods. Not included under the coverage are animals, automobiles and boats.

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

DEDUCTIBLE - The amount of the loss which the insured is responsible to pay before benefits from the insurance company are payable. You may choose a higher deductible to lower your premium.

DEPRECIATION - A decrease in value due to age, wear and tear, etc.

ENDORSEMENT - Amendment to the policy used to add or delete coverage. Also referred to as a "rider."

EXCLUSION - Certain causes and conditions, listed in the policy, which are not covered or are specifically excluded.

EXPIRATION DATE -The date on which the policy ends.

FACE AMOUNT - The dollar amount to be paid to the beneficiary when the insured dies. It does not include other amounts that may be paid from insurance purchased with dividends or any policy riders.

FIRE INSURANCE - Coverage for loss of or damage to a building and/or contents due to fire.

GRACE PERIOD - A period (usually 31 days) after the premium due date, during which an overdue premium may be paid without penalty. The policy remains in force throughout this period.

GUARANTEED INSURABILITY - An option that permits the policy holder to buy additional stated amounts of life insurance at stated times in the future without evidence of insurability.

HEALTH INSURANCE - A policy that will pay specifies sums for medical expenses or treatments. Health policies can offer many options and vary in their approaches to coverage.

INCONTESTABLE CLAUSE - A policy provision in which the company agrees not to contest the validity of the contract after it has been in force for a certain period of time, usually two years.

INDEPENDENT AGENT - Contractor who represents different insurance companies and who searches the market for the best coverage based on a client's insurance needs.

INLAND MARINE PROPERTY INSURANCE - Also known as equipment floater coverage, this is property insurance for owned and leased property requiring coverage regardless of location; in transit, at an office, storage or at and event site. Leased walkie-talkies, chairs and tables are items that you might consider insuring under this type of insurance.

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

INSURER - The insurance company.

LIMIT - Maximum amount a policy will pay either overall or under a particular coverage.

MATERIAL MISREPRESENTATION - The policyholder / applicant makes a false statement of any material (important) fact on his/her application. For instance, the policyholder provides false information regarding the location where the vehicle is garaged.

MISQUOTE - An incorrect estimate of the insurance premium.

NON-OWNED AUTO LIABILITY - Excess auto liability coverage that protects the employers organization in relations to any liability arising out of employees and volunteers driving their own cars on company time.

PERIL - The cause of a possible loss. For example, fire, theft, or hail.

POLICY - The written contract of insurance.

POLICY LIMIT - The maximum amount a policy will pay, either overall or under a particular coverage.

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

PRO-RATA CANCELLATION - When the policy is terminated midterm by the insurance company, the earned premium is calculated only for the period coverage was provided. For example: an annual policy with premium of $1,000 is cancelled after 40 days of coverage at the company's election. The earned premium would be calculated as follows: 40/365 days X $1,000=.110 X $1,000=$110.

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

RATE - Cost per unit of insurance. When used to calculate a premium, it must be adequate enough to pay expected losses according to frequency and severity, reasonable to the point that insurers do not not earn an excessive profit and not discriminatory or inequitable. Based on the amount of coverage needed, an individual will purchase the appropriate number of units of insurance with the total cost reflected in a premium payment.

REPLACEMENT COST - The cost to repair or replace an insured item. Some insurance only pays the actual cash or market value of the item at the time of the loss, not what it would cost to fix or replace it. If you have personal property replacement cost coverage, your insurance will pay the full cost to repair an item or buy a new one once the repairs or purchases have been made.

REPLACEMENT VALUE - The full cost to repair or replace the damaged property with no deduction for depreciation, subject to policy limits and contract provisions.

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.

RIDER - Usually known as an endorsement, a rider is an amendment to the policy used to add or delete coverage.

SHORT-RATE CANCELLATION - When the policy is terminated prior to the expiration date at the policyholder's request. 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.

SOLICITOR - A licensed employee of a fire and casualty agent or broker who may act for the agent or broker in some circumstances.

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

SURRENDER To terminate or cancel a life insurance policy before the maturity date. In the case of a cash value policy, the policyholder may exercise one of the nonforfeiture options at the time of surrender.

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 unacceptable risks.

WAITING PERIOD - A period of time set forth in a policy which must pass before some or all coverages begin.