A Property and Casualty Insurance Glossary
Demystify insurance jargon with our Central New York glossary. Get plain-language definitions for policy terms and coverage details.
A
Accessory Coverage: Protection that may apply to structures not attached to your home, like sheds, detached garages, or fences. Standard home policies typically include limited coverage for these structures (usually 10% of your dwelling coverage), but you may be able to increase these limits. Some items, like boat docks or expensive landscaping, might need additional coverage.
Actual Cash Value (ACV): When you have a loss, ACV pays the depreciated value of damaged property. For example, if your 5-year-old TV is damaged, you'll receive what a used 5-year-old TV is worth, not what a new one costs. This typically means lower premiums but less payment when you have a claim.
Additional Insured: Someone who has limited coverage rights under a policy but isn't the main policyholder. For example, a mortgage company might be an additional insured on a landlord's policy. They can file claims and receive notifications about the policy but don't pay premiums or make policy changes.
Aggregate Limit: The maximum amount an insurance policy may pay during the entire policy period, regardless of the number of claims. For example, if your policy has a $2 million aggregate limit and you have three claims in one year, the total payout for all claims combined cannot exceed $2 million.
B
Blanket Coverage: Instead of listing specific coverage amounts for each item or location, blanket coverage provides one limit that applies across multiple items or locations. This can offer more flexibility when you have a loss but often costs more than scheduled coverage.
Business Owners Policy (BOP): A package policy combining property and liability coverages for qualifying small businesses. It typically includes business property, liability coverage, and business interruption insurance in one policy, often at a lower cost than buying separate policies.
C
Care, Custody, or Control: A common liability policy exclusion that applies to property you're responsible for, temporarily using, or storing for others. For example:
- A repair shop working on a customer's car
- A warehouse storing a client's inventory
- A dog walker watching someone's pet
Regular liability policies typically don't cover damage to these items.
Claim: A formal request for payment under an insurance policy. The claims process typically involves:
- Reporting the loss to your insurance company
- Documentation of damages
- Investigation by the insurance company
- Coverage determination
- Payment if the loss is covered
Not every incident needs to become a claim—sometimes the damage might be less than your deductible.
Claimant: The person or organization making a claim against an insurance policy. This could be:
- The policyholder filing a claim on their own policy
- Someone injured on your property filing against your liability coverage
- Another driver filing against your auto insurance after an accident
Understanding who qualifies as a claimant helps determine whose damages the policy might cover.
Co-Insurance: A policy provision that may require you to insure your business property to a minimum percentage of its total value, typically 80%, 90%, or 100%. If you don't meet this requirement, the insurance company may reduce claim payments, even for partial losses.
For example, if your building is worth $1,000,000 and your policy has an 80% co-insurance clause, you need to carry at least $800,000 in coverage to avoid a penalty. Insurance companies include this provision to encourage adequate insurance coverage relative to property value. Some policies offer agreed value provisions that may suspend co-insurance requirements if certain conditions are met.
Cyber Liability Insurance: In today's digital world, cyber threats are common. This coverage may help if someone steals your data, hacks your computer, or commits online fraud using your information. It often includes help with restoring compromised devices and recovering lost data. Some policies may even include credit monitoring or help if someone demands ransom for your data.
D
Declarations Page: Often called the "dec page," this document summarizes your insurance policy. It lists who is insured, what's covered, coverage limits, deductibles, and other key information. Think of it as your policy's quick reference guide.
Deductible: The amount you pay out of pocket before insurance coverage begins paying. For example, with a $1,000 deductible, if you have a $5,000 claim, you pay the first $1,000 and the insurance may cover the remaining $4,000, subject to policy terms.
E
Employment Practices Liability Insurance (EPL or EPLI): Coverage that may help protect businesses from claims made by employees alleging discrimination, wrongful termination, harassment, retaliation, or other employment-related issues. For example, if a former employee sues claiming age discrimination during layoffs, this coverage may help with legal defense costs and settlements. The coverage typically applies to claims from current employees, former employees, and even job applicants. Most policies work on a claims-made basis, meaning they only cover claims reported while the policy is active. Claims brought after a policy expires typically aren't covered, even if the incident occurred while the policy was in force.
Endorsement: Also called a “rider,” this is a document that changes your insurance policy. It might add coverage, remove coverage, or clarify policy terms. For example, an endorsement might add jewelry coverage or change your deductible. Each endorsement becomes part of your policy.
Equipment Breakdown Coverage: Think of this like a warranty for your home's systems and appliances. If your furnace suddenly stops working or your water heater breaks down, this coverage may help pay for repairs or replacement. Unlike a home warranty, this coverage typically responds to sudden failures rather than wear and tear.
Excess Coverage: Insurance that kicks in after another policy reaches its limits. For example, if you have a $1 million primary liability policy and a $2 million excess policy, the excess coverage only pays after you exhaust the first $1 million. (Also see Umbrella Coverage)
Exclusion: Specific conditions, perils, or types of property your policy won't cover. For example, most homeowners policies exclude flood damage, intentional acts, and wear and tear. Understanding your policy's exclusions helps you identify where you might need additional coverage. Think of exclusions as your policy's "won't do" list.
F
Fire Legal Liability: Coverage that may protect you if you're legally responsible for fire damage to commercial premises you rent or occupy. This coverage comes into play when, for example, a business causes a fire in their rented office space or an employee accidentally starts a fire in a rented warehouse.
The coverage may also respond if fire spreads from your rented unit to other parts of the building. Fire Legal Liability typically provides coverage specifically for fire damage to rented premises and may include resulting smoke damage. It's often provided with a separate limit from general liability coverage and may appear in your policy as "Damage to Premises Rented to You."
Standard limits often start at $100,000, though higher limits may be available. This coverage doesn't replace the need for property insurance, as it typically only applies to fire damage, not other perils like water damage or theft. The coverage generally applies only to specified locations and rental properties, and may not cover intentional acts or gross negligence.
Many business owners misunderstand this coverage, thinking it protects their business property or covers all types of damage, when it actually focuses specifically on fire damage to rented spaces.
G
GAP (Guaranteed Asset Protection) Insurance: Coverage that may help pay the difference between what you owe on a vehicle loan and what your insurance pays if your vehicle is totaled or stolen. For instance, if you owe $20,000 on your car loan and your car is totaled, but insurance values it at only $16,000, GAP coverage may help pay the $4,000 difference.
This coverage becomes particularly important with new vehicles because they depreciate quickly. Many people find GAP coverage valuable when making small down payments or taking longer loan terms, as these situations can leave them owing more than the vehicle is worth.
Leased vehicles often require this coverage as part of the lease agreement. The coverage is most valuable for new car purchases with minimal down payments, loans extending beyond 60 months, leased vehicles, or situations where negative equity from an old loan was added to a new loan.
H
Home Business Coverage: A standard home policy provides limited coverage for business property. If you work from home, this coverage expands protection for your business equipment, inventory, and liability. It bridges the gap between homeowners and commercial insurance for small home-based businesses.
Home Sharing Coverage: Renting your home through services like Airbnb creates new risks. This coverage may protect you from theft, damage, or liability claims from short-term renters. Standard home policies often exclude or limit coverage for home-sharing activities.
I
Identity Theft Coverage: Identity theft can take months to resolve and cost thousands of dollars. This coverage may help pay for legal fees, lost wages, and document replacement if someone steals your identity. Many policies include assistance services to help restore your identity.
Inflation Guard: A policy feature that automatically increases your coverage limits to help keep pace with rising construction costs. For example:
- Your dwelling coverage might increase 4% each year
- This helps reduce the risk of being underinsured due to inflation
- The increase typically affects your premium
Some policies include this automatically, while others offer it as an optional coverage.
Insurance Adjuster: A professional who investigates and evaluates insurance claims. There are several types:
- Company Adjusters: Work directly for insurance companies
- Independent Adjusters: Contract with insurance companies but aren't employees
- Public Adjusters: Work for policyholders to help settle claims
Adjusters typically:
- Investigate the cause of loss
- Document damage
- Review policy coverage
- Prepare estimates
- Negotiate settlements
A CNY adjuster should be licensed in New York Sstate.
Insurance Score: Like a credit score, this number helps insurers evaluate risk. It considers factors like credit history, claims history, and other data allowed by state law. A better insurance score often means lower premiums. Unlike credit scores, you typically can't check this number directly.
Insuring Agreement: The basic statement of what your policy covers. It's the "will do" section of your policy that outlines the insurance company's main promises. For example, a homeowners policy's insuring agreement typically promises to cover your house for specific types of damage. The rest of the policy adds details and limitations to this basic agreement.
L
Liability Coverage: Protection against claims others make against you for injury or damage. For example, if someone slips on your sidewalk and sues you, liability coverage may help with legal costs and any settlement.
Limit: The maximum amount your policy will pay for a covered loss. You might have different limits for different types of coverage. For example, your home might be insured for $300,000, but jewelry might have a $1,500 limit unless specifically scheduled (See Scheduled Items.) Think of limits as your policy's ceiling for payments.
Loss History: A record of insurance claims you've filed, typically spanning the past 3-7 years. Unlike loss runs (which are formal reports), loss history is a broader term that includes claims across different types of insurance. Insurance companies use this history to evaluate risk and set premiums. Major or frequent losses might affect your ability to get coverage or your premium costs.
Loss Runs: A report showing your insurance claim history, usually for the past 3-5 years. Insurance companies use it to evaluate risk when you apply for coverage. Like a credit report, it follows you even if you change insurance companies.
M
Medical Payments Coverage: If a guest gets hurt on your property, this coverage may pay their medical bills regardless of fault. It typically covers small injuries and helps prevent lawsuits. Think of it as a goodwill payment - it's faster and simpler than liability coverage.
N
Named Insured: The person or organization specifically named on the insurance policy. They have full policy rights, including the ability to make changes, file claims, and receive claim payments. Think of them as the policy's owner.
Named Perils: Specific causes of loss listed as covered in your policy. For example, a named perils policy might cover fire, theft, and windstorm but exclude everything else. This differs from "all-risk" coverage, which covers everything except what's specifically excluded.
No-Fault: In states with no-fault auto insurance, your own insurance pays for medical bills after an accident regardless of who caused it. This system aims to reduce lawsuits and get claims paid faster. Property damage claims still depend on fault in most states.
O
Ordinance or Law Coverage: Building codes change over time. If you must rebuild after a loss, current codes may require expensive upgrades. Standard policies typically don't cover these extra costs. This coverage helps pay for required improvements like better wiring or stronger foundations.
P
Personal Injury Coverage: This goes beyond physical injuries to cover things like libel, slander, or invasion of privacy. For example, if you're sued for writing a negative online review or accidentally sharing someone's private information, this coverage may help with legal costs.
Premium: The amount you pay for insurance coverage. Companies calculate premiums based on many factors, including:
- Type and amount of coverage
- Property characteristics
- Location
- Claims history
- Insurance score
- Deductible choice
Your premium might change at renewal based on claims, coverage changes, or general rate adjustments.
Professional Liability: Coverage for mistakes made while providing professional services. Also called Errors & Omissions insurance, it may help if you're sued for giving bad advice or making a mistake in your professional work. Many professionals, like accountants and consultants, need this coverage.
R
Rental Reimbursement Coverage: Coverage that may help pay for a rental car when your vehicle is being repaired due to a covered loss. If your car is in the shop for a week after an accident, this coverage may help with rental car expenses, subject to daily and total limits. Some policies specify maximum daily amounts (such as $30 or $50 per day) and total limits per claim (like $900). Available rental amounts may vary based on your selected coverage level. The coverage typically only applies when your car is being repaired due to a covered claim, not for mechanical repairs or routine maintenance.
Replacement Cost: Unlike Actual Cash Value, replacement cost coverage pays to replace damaged property with new items of similar type and quality, without deducting for depreciation. For example, if your 5-year-old TV is damaged, you receive enough to buy a new comparable TV.
Residence Premises: The location listed on your policy where you live. For homeowners insurance, this typically means your primary home and its grounds. The definition matters because coverage often depends on whether damage occurs at your residence premises. Some policies provide limited coverage for property at other locations.
Risk: The chance of loss or damage that insurers evaluate when deciding whether to offer coverage and at what price. Risks can be reduced through safety measures, which might lead to lower premiums.
S
Scheduled Personal Property Coverage: Standard policies limit coverage for valuable items like jewelry or art. A schedule provides broader coverage for specific items based on professional appraisals. This often means no deductible and coverage for mysterious disappearance.
T
Temporary Premises: A location where you're staying temporarily due to a covered loss or renovation. Some policies provide coverage for property at temporary premises, but limits and conditions apply. For example, if your home is being repaired after a fire, your policy might cover your belongings at your temporary rental.
Trampoline Coverage: Many insurers exclude or limit trampoline coverage due to injury risks. If coverage is available, it often requires safety measures like nets and padding. Some carriers may cancel policies if you add a trampoline without telling them.
U
Umbrella Coverage: Extra liability protection that kicks in after your primary policies (like home and auto) reach their limits. For example, if you're sued for $1 million but your auto policy only provides $300,000 in liability coverage, an umbrella policy could cover the difference. Umbrella coverage typically:
- Starts at $1 million in coverage
- Requires minimum liability limits on underlying policies
- May cover some losses excluded by primary policies
- Could extend protection to rental properties or watercraft
- Often costs less than increasing underlying policy limits
Underground Service Line Coverage: Underground utility lines on your property are your responsibility. If your water or power line breaks, repairs can cost thousands. This coverage may help pay for excavation, repair, and even landscaping damage. It often includes lines that standard policies exclude.
Underwriting: The process insurance companies use to evaluate risks and decide whether to offer coverage. They consider factors like claims history, construction type, location, and other details allowed by state law.
W
Water and Sewer Backup Coverage: A backed-up sewer or failed sump pump can cause extensive damage. Standard policies typically exclude this type of water damage. This coverage may help pay for cleanup, repairs, and replacing damaged property. Coverage limits often start at $5,000.
Watercraft Coverage: Home policies provide limited coverage for small boats. This coverage expands protection for larger boats or personal watercraft. It may include liability coverage while operating the boat and physical damage coverage.
Note: This guide provides general information about coverage terms that may be available. Coverage availability, terms, and conditions vary by state and insurance carrier. Specific coverage can only be determined by your individual policy documents. Always consult with a licensed insurance professional regarding your specific insurance requirements.