Terminology Flashcards
Who are the two parties involved in an insurance contract?
The policyholder and the insurance company
What is the function of insurance?
Protects the consumer against risk (the uncertainty of a loss occurring)
Automobile insurance
A contract. A type of insurance that protects against losses involving automobiles. Can contain different types of coverage
What do the different types of coverage depend on?
The needs and wants of the policyholder.
What are some factors that affect an automobile insurance?
Driver’s age, driving record, car history, make and model, area of vicinity, level of coverage, etc.
Agent
A licensed individual or organization authorized to sell and service insurance policies for an insurance company
License
A certificate of authority issued by the department of insurance to an insurer, agent, broker, to transact insurance business. Different types of insurance require different types of license certification
Insured
The policy-holder entitled to covered benefits in case of an accident or loss
Insurer
The insurance company who issued the insurance and agrees to pay for losses and provide covered benefits; the insurance provider
Quotation
“Quote” an estimate of the cost of insurance based on the information supplied to the agent, broker, or insurance company
How can an insurance quote be more accurate?
By providing more accurate, specific information
Commission
A portion of the policy premium that is paid to an agent by the insurance company as compensation for the agent’s work
Policy
An agreement (contract) between insured and insured that states the rights and duties of each party. Contains critical informations about the policy and what it does for the client
Premium
The amount (in dollars) of what a policy is worth for a specified period of time (monthly or annually)
Limits
The maximum amount of benefits the insurance company agrees to pay in the event of a loss
Liability insurance
Coverage of a policyholder’s legal liability resulting from injuries to other person(s) or damage to their property
Comprehensive insurance
Pays for damage to car caused by reason other than collision
Ex. Fire, theft, vandalism, sand damage, hail damage, etc
Collision coverage
Pays for damage to your car caused by physical contact with another vehicle or with other objects such as a tree, Boulder, guardrail, structure, etc.
Deductible
The amount that the policyholder is responsible to pay upfront before covered benefits from the insurance company are payable. Applicable to comprehensive or collision coverage only
Why is a deductible payment required?
To keep policyholder’s from a using the policy and prevent minor dings and dents
What is full coverage?
Financial coverage for all parties involved in incident (up to policy limit)
What is a finance company?
Lenders, lien holders, banks
ACV
Actual Cash Value
A method of determining the value of insured property. What the property is actually worth and not what it sells for
Uninsured motorist coverage
Provides coverage for a policyholder involved in an accident with an at-fault driver who does not have insurance. Per California law, must be either included or rejected in writing by the customer at the point of sale
Medical payments coverage
Covers medical costs (up to specified limit) resulting from an auto accident for you, your family, or others in your car. This coverage pays regardless of fault
Claim
Notice to insurance company that a loss has occurred which may be covered under the terms and conditions of the policy
Appraiser
The person who evaluates the damage caused by an accident or other covered loss and determines the amount to be paid under the policy terms
Insurance
A contract between two parties (policyholder and the company) in which the insurance company agrees to pay specific benefits against specific benefits against specific losses as stated in the specific policy for the specific customer
How many parties are involved in an automobile insurance contract?
3
First party- policyholder
Second party- insurance company
Third party- the other person(s) involved in the loss/accident with the name insured
Loan gap coverage
Pays the difference between the Actual Cash Value of the vehicle and the loan balance owed to the lender/lien holder
Declarations (DEC) page
First page of policy that contains summary of insurance policy
What information does the DEC page contain?
Name of insurance Name and address of policyholder Listed drivers Policy number w/ effective & expiration dates Amounts & types of coverage Deductibles Vehicles insured and VIN
Endorsements
Changes to auto insurance policy that alters it’s current status
Exclusions
A contractual stipulation in an insurance policy that denies or restricts coverage for certain perils, persons, property, or locations.
Total loss
Damage or destruction to real or personal property to such extent that it cannot be rebuilt or repaired to its condition prior to the loss.
What amount is paid by the insurance company in the event of a total loss?
A check in the amount of the actual cash value of the vehicle
Salvage
Severely damaged policyholder property that is legally signed one to an insurer in a loss settlement
Surcharge
An extra charge applied to the premium by an insurance company
When is a surcharge usually applied to the premium?
For a moving violation.
