Insurance Glossary: Personal Lines – General Terms

Personal Lines – General Terms

This section covers common terms found in personal lines insurance, including homeowners, renters, and auto insurance. Understanding these terms will help you navigate your personal insurance policies with confidence.

**1. Premium

The amount of money you pay to an insurance company for coverage under your policy. Premiums can be paid annually, semi-annually, or monthly, and the cost depends on factors such as coverage limits, the value of the property insured, and your claims history.

**2. Deductible

The amount of money you must pay out of pocket before your insurance coverage kicks in. For example, if your auto insurance policy has a $500 deductible and you file a claim for $2,000, you’ll need to pay $500, and the insurance will cover the remaining $1,500.

**3. Coverage Limit

The maximum amount an insurance company will pay for a covered loss under a specific policy. For example, if you have $100,000 in coverage for property damage and your claim exceeds that amount, you will be responsible for the difference.

**4. Exclusions

Specific conditions, situations, or types of damage that are not covered by the policy. For example, most homeowners policies exclude damage caused by flooding or earthquakes unless additional coverage is purchased.

**5. Claim

A formal request made by the policyholder to the insurance company for compensation due to a loss or damage. For instance, if your home is damaged by fire, you would file a claim to recover the costs of repairs.

**6. Underwriting

The process in which an insurance company evaluates the risk associated with insuring a property or individual. Underwriting factors such as the location, construction type, claims history, and overall risk exposure to determine whether to issue a policy and what the premium will be.

**7. Liability Coverage

Insurance that provides protection if you are legally responsible for injury or property damage to others. For example, if you cause a car accident, liability coverage will help pay for medical expenses, legal fees, and property damage for the other party.

**8. Comprehensive Coverage

A type of auto insurance that covers damage to your vehicle from non-collision events, such as theft, vandalism, or natural disasters. This coverage is often optional but recommended for higher-value vehicles.

**9. Collision Coverage

Auto insurance that covers damage to your vehicle resulting from a collision, regardless of who is at fault. This is typically required by lenders if you have a car loan or lease.

**10. Actual Cash Value (ACV)

A method used to determine the payout for a claim that takes depreciation into account. If your property is damaged, the insurance company will pay the current market value of the item or property, minus depreciation.

**11. Replacement Cost

Coverage that reimburses the full cost to repair or replace damaged property, without factoring in depreciation. This type of coverage is often available for homes and personal property.

**12. Rider/Endorsement

An add-on to a standard insurance policy that modifies the terms, conditions, or coverage limits. For example, a rider may be added to a homeowners insurance policy to cover a valuable jewelry collection.

**13. Named Perils

A list of specific risks or events that are covered by the insurance policy. For example, homeowners policies may cover "named perils" like fire, theft, and vandalism, but exclude others like flooding or earthquake.

**14. Underinsured Motorist Coverage (UM/UIM)

A type of auto insurance that provides coverage if you’re in an accident with a driver who has insufficient insurance to cover the damages. This can include medical expenses, repair costs, and other losses.

**15. Endorsement

An attachment or amendment to an insurance policy that alters the coverage. For example, you might add a special endorsement to your homeowners insurance to cover flood damage or valuable personal items.

**16. Policyholder

The individual or entity that owns the insurance policy. The policyholder is responsible for paying premiums and adhering to the policy's terms and conditions.

**17. Loss of Use

A provision in homeowners or renters insurance that covers additional living expenses when your home is uninhabitable due to a covered loss, such as a fire or severe storm. This may include costs for temporary housing and living expenses.

**18. Medical Payments Coverage

An option in auto and homeowners insurance policies that covers medical expenses for you or your guests in the event of an injury, regardless of who is at fault.

**19. Flood Insurance

A specialized insurance policy that covers damages caused by flooding, which is typically not included in standard homeowners policies. Flood insurance can be purchased separately through the National Flood Insurance Program (NFIP).

**20. Umbrella Insurance

A type of personal liability insurance that provides extra coverage beyond the limits of your auto or homeowners insurance. It can help protect against large claims or lawsuits that exceed the coverage limits of your primary policies.

**21. Windstorm Insurance

Coverage for damage caused by windstorms, including hurricanes and tornadoes. This may be included in a homeowners policy or available as a separate add-on depending on the location.

**22. Tenant Liability Coverage

A type of renters insurance that provides protection if you’re held liable for damage or injury caused to someone else or their property while living in a rental property.

**23. Scheduled Property

Property that is specifically listed or scheduled in a policy and insured for its full value. This is typically used for high-value items such as jewelry, fine art, or collectibles.

**24. Personal Property Coverage

Coverage that protects the belongings inside your home, such as furniture, electronics, and clothing, from perils like fire, theft, or vandalism. This is often part of a homeowners or renters policy.

**25. Coverage End Date

The date when an insurance policy expires unless renewed. It is important to review your coverage before the end date to avoid lapses in protection.

These general personal lines insurance terms are commonly used across homeowners, renters, and auto policies. Understanding them can help you make informed decisions about your coverage and ensure you have the right protection in place.

If you have questions or need more detailed information about any of these terms, contact Armada Insurance Services for expert advice tailored to your needs!