Here at MyCAQuote.com we offer a glossary of insurance terms that you may find helpful while browsing our website and determining the best insurance policy available to you.

Actual Cash Value - An amount equivalent to the fair market value of the stolen or damaged property immediately preceding the loss. For real property, this amount can be based on a determination of the fair market value of the property before and after the loss.  For vehicles, this amount can be determined by local area private party sales and dealer quotations for comparable vehicles.

Additional Insured – the person covered by the policy in addition to the named insured.

Admitted Company - An insurance company authorized to do business in California.

Advertising Injury Liability – covers claims charging misappropriation of advertising ideas or style of doing business, infringement of copyright, title or slogan and oral or written material that violates a person's right to privacy.

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

Aggregate Limits-An aggregate total limit on claims during a policy period, which applies in addition to a limit per claim. Often this applies to liability and medical policies.

Aircraft Insurance - Coverage for the insured in the event that the insured's negligent acts and/or omissions result in losses in connection with the use, ownership, or maintenance of aircraft.

Automobile Insurance - Coverage on the risks associated with driving or owning an automobile. It can include collision, liability, comprehensive, medical, and uninsured motorist coverages.

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

Bodily Injury Liability – legal liability arising from “bodily injury” to a person from the negligent acts or omissions by an insured, including sickness or disease (includes medical expenses, lost wages, mental anguish, disfigurement, etc.).

Boiler and Machinery Insurance - Covers losses resulting from the malfunction of boilers and machinery.  This coverage is usually excluded from property insurance creating the need for this separate product.

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

Burglary - Coverage against loss as a result of forced entry into premises.

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.

Certificate of Insurance – a document evidencing the fact that an insurance policy has been written. The certificate includes the effective date, name of the insurer and the limits of liability.

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.

Collision - Reimburses you for damage to YOUR automobile sustained in a collision with another car or with any other object, movable or fixed, (for example, you accidentally backed into another object while pulling out from a parking stall and causing damage to the bumper and fender of your covered automobile).

Collision Deductive Waiver - This coverage waves your collision deductible if you are hit by an negligent uninsured motorist. COMMON CARRIER LIABILITY Coverage for transportation firms that must carry any customer's goods so long as the customer is willing to pay.   Examples include trucking companies, bus lines, and airlines.

Comprehensive Auto - Provides coverage for any direct and accidental loss of, or damage to, YOUR covered automobile and its normal equipment, to include but not limited to fire, theft or malicious mischief.

Comprehensive Glass Insurance - Coverage on an "all risks" basis for glass breakage, subject to exclusions of war and fire.

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

Declarations – the part of the insuring contract that includes basic information as to who is insured, when the policy goes into effect and expires, where the coverage is provided, how much coverage and how much premium.

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.

Disability Insurance - Health insurance that provides income payments to the insured wage earner when income is interrupted or terminated because of illness, sickness, or accident.

Endorsements-An endorsement is a special amendment to a policy wording. It may be attached to the policy from inception or it may be added to the policy mid term. Mid term endorsements are often issued at the request of the Insured. For example an endorsement may be issued to note a change of address of the Insured.

Errors and Omissions Insurance-Engineers, architects, lawyers, and accountants hold themselves out as professionals capable of offering accurate and well considered advice. If they fail in their duty to provide “best” advice they leave themselves exposed to claims for errors and omissions or professional negligence. There have been some spectacular claims in recent years with accountants failing to provide accurate reports on the financial status of companies, which are involved in takeovers.

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

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.

Financial Guarantee Insurance - A surety bond, insurance policy or, when issued by an insurer, an indemnity contract and any guaranty similar to the foregoing types, under which loss is payable upon proof of occurence of financial loss to an insured claimant, obligee, or indemnitee.

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

First Named Insured – the person whose name appears first on the list of those defined as insureds.

Good Driver Discount - To be eligible for the Good Drivers Discount all operators of the insured vehicles must have been licensed for three or more year, have no more than a one (1) point charge on their driving record and has not been determined "at fault" in an accident resulting in bodily injury or death to any person.

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.

Indemnity-Indemnity is one of the basic principles of insurance and has been legally defined on several occasions. It states that the Insured should not profit by any claim, but should be returned to as near as possible the same financial position as he would have been had the loss not occurred.

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

Insurer - The insurance company.

Liability (Auto) - This coverage will pay for BODILY INJURY and/or PROPERTY DAMAGE to the OTHER party for which you become legally responsible of an automobile accident.

Liability Insurance - Coverage for all sums that the insured becomes legally obligated to pay because of bodily injury or proprty damage, and sometimes other wrongs, to which an insurance policy applies.

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

Loan Value - The amount which can be borrowed at a specified rate of interest from the issuing company by the policyholder, using the value of the policy as collateral. In the event the policyholder dies with the debt partially or fully unpaid, then the amount borrowed plus any interest is deducted from the amount payable.

Marine Insurance - Coverage for goods in transit and the vehicles of transportation on waterways, land, and air.

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.

Medical Payments - Will pay reasonable expenses incurred for necessary medical and /or funeral services because of bodily injury caused by accident and sustained by YOU OR ANY OTHER PERSON WHILE OCCUPYING A COVERED AUTOMOBILE.

Miscellaneous Insurance - Includes insurance against loss from damage done, directly or indirectly by lightning, windstorm, tornado, earthquake or insurance under an open policy indemnifying the producer of any motion picture, television, theatrical, sport, or similar production, event, or exhibition against loss by reason of the interruption, postponement, or cancellation of such production, event, or exhibition due to death, accidental injury, or sickness preventing performers, directors, or other principals from commencing or continuing their respective performance or duties; and any insurance not included in any other classes and which is a proper subject of insurance (California Insurance Code §120).

Named Insured – the person specifically designated in the policy as the one protected and is generally the person with whom the contract of insurance has been made.

Negligence – a civil wrong; failure to act in a reasonable and prudent manner (as a prudent person would) and is usually reprimanded by monetary penalty. The fact that there was an accident does not itself establish a presumption of negligence. The person claiming damages, in almost every instance, must prove the actions of the other was the direct or proximate cause of the injury or damages.

Occurrence – an event that results in an insured loss. A broader definition than accident because it also includes continued and repeated exposure. (Example – someone takes blood pressure medicine and over time develops a rash.)

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

Personal Injury Liability – legal liability incurred because of mental harm to another person (libel, slander, false arrest, invasion of privacy, etc.)

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.

Premium Financing - A policyholder contracts with a lender to pay the insurance premium on his/her behalf. The policyholder agrees to repay the lender for the cost of the premium, plus interest and fees.

Property Damage - Damage to another person's property.  The purpose of liability insurance is to cover property damage to a third party resulting from the negligent or intentional acts of an insured.

Property Damage Liability – physical injury to tangible property, including loss of use for that property (if the insured is legally liable for damage).

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

Replacement Costs - 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.

Reinstallment - 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.

Sprinkler Insurance - Coverage for property damage caused by untimely discharge from an automatic sprinkler system.

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

Team and Vehicle Insurance - Includes insurance against loss through damage or legal liability for damage, to property caused by the use of teams or vehicles other than ships, boats, or railroad rolling stock, whether by accident or collision or by explosion of engine, tank, boiler, pipe, or tire of the vehicle, and insurance against the theft of the whole or part of such vehicle (California Insurance Code §115).

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.

Uninsured Motorists Bodily Insurance - Will pay you and your passengers for BODILY INJURY cause by a negligent uninsured motorist, a hit-and-run driver, or by a driver whose insurer is insolvent.

Uninsured Motorist Property Damage - Will pay for damages to your automobile, set up to a limit, when caused by a negligent unisured motorist.

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

Workers Compensation Insurance - Coverage providing four types of benefits (medical care, death, disability, and rehabilitation) for employee job-related injuries or diseases as a matter of right (without regard to fault).

Insurance Terms Used in the Area of Sureties and Bonds
Bailee - A person or concern having possession of property committed in trust from the owner.

Bid Bond - A guarantee that the contractor will enter into a contract, if it is awarded to him, and furnish such contract bond (sometimes called "performance bond") as is required by terms thereof.

Bonds-These are a guarantee issued by a bank or insurance company that an individual or company will meet various obligations.

Under a construction contract a contractor may be required to obtain:

A bid bond. - This will protect the developer against the failure of the contractor to proceed with a project at his bid price.

Prepayment bond. – This guarantees any advance payment made by the developer for the contractor’s mobilisation.

Performance bond. – This guarantees that the contractor carries out the project properly and the developer will be compensated for any breach of contract.

Retention bond. – Often a developer will retain a small amount from the contract price for a period to ensure that any defects in the project discovered after completion are corrected in a timely manner. This can adversely effect the contractor’s liquidity. A retention bond will guarantee that any corrective work is carried out and allow the developer to settle in full with the contractor immediately the project is complete.

Effective Date - The date on which an insurance policy or bond goes into effect, and from which protection is furnished.

Fidelity Bond - An obligation of the insurance company against financial loss caused by the dishonest acts of employees.

Obligee - Broadly, anyone in whose favor an obligation runs. Frequently used in surety bonds, this refers to the person, firm or corporation protected by the bond.

Obligor - Commonly called "principal," one bound by an obligation. Under a bond, strictly speaking, both the principal and the surety are obligers.

Power of Attorney - Authority given one person or corporation to act for and obligate another, to the extent laid down in the instrument creating the power.

Principal - A person or organization whose obligation are guaranteed by a bond.

Surety - An arrangement whereby one party becomes answerable to a third party for the acts of a second party. Customarily an insurance company, the party in a suretyship arrangement who holds himself responsible to one person for the acts of another.

Surety Bond - A bond which the surety agrees to answer to the obligee for the non-performance of the principal (also known as the obligor).

Suretyship - Stated in its simplest terms, suretyship embraces all forms of obligation to pay debts or answer for the default of another.