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Property Insurance Checklist of Terms: Homeowners & Renters
Property Insurance Checklist of Terms: Homeowners & Renters
Other insurance clause - A clause that allows for a prorated payment if more than one insurance policy provides coverage. The proportional coverage is determined by each policy's share of the total coverage of all policies. Rating territories - Areas in the state that denote locations that are subject to various insurance coverage rates determined by the risks associated with the territories. Risks used to establish premium rates are population size and perils associated with the location such as theft and weather conditions. Replacement value (cost) - The cost to replace the damaged or lost property whether it is personal property or the residence and other buildings. Depreciation is not used to determine the loss. The insurance company can replace the property or reimburse the insured for the dollar value of the property. To determine the replacement cost of a home, the current building cost per square foot to rebuild the home is calculated according to the size of the home.
AUTO INSURANCE
Accidental death/disability - A provision added to a policy that provides the payment of additional benefits in case of death by accidental means or disability. Automobile insurance plan (assigned risk plan) - Plans developed by states to provide insurance coverage for those who are unable to obtain liability coverage on their own due to rating requirements by companies. This plan allows higher risk drivers to purchase state-required coverage, usually at a higher premium cost. Bodily injury liability losses (BI) - Coverage for medical expenses for others (not the insured or their household members) involved in an accident when the insured is at fault. Collision coverage - Pays for car repair or replacement for any car covered by the policy, caused by collision with another object and for upset of the car. The policy only pays for the amount in excess of the deductible stated in the policy, up to the market value of the car. Comprehensive coverage (other than collision) - Pays for loss of or damage to the insured's car(s) for everything except collision or upset. Perils included are fire, hailstorm, theft, or other non-collision events (malicious mischief, glass breakage, vandalism, and collision with birds or animals. A small deductible is common in the coverage, thus the policy pays the damage minus the insured's deductible. Financial responsibility laws - Legal requirements by states that require drivers to show they can pay for accidents they cause. Most drivers purchase auto insurance to meet or exceed the minimum coverage set by each state. Texas requires BIPD of 20/40/15. To certify current coverage the insurance company issues a proof-of-insurance card. Medical payments - Coverage for medical, hospital and funeral expenses resulting from an accident whether the insured is liable or not. The coverage primarily protects the insured, the insured's family, and any passengers in the insured's car. Coverage is provided to insureds involved in a motor vehicle accident as a pedestrian or a bicyclist. No-fault insurance - A policy concept whereby the parties involved are not required to prove blame in an action. The accident victim collects directly from his/her own insurance company for bodily injury expenses. No-fault statutes vary from state to state. Personal auto policy (PAP) - Insurance contract where coverage is selected from several types of common coverages. Personal injury protection (PIP) - A type of no-fault coverage that provides coverage identical to Medical Payments
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coverage plus a benefit for loss of income for wage earners and the cost of hiring someone to do the household and caregiver responsibilities of an injured person. Lost wages are limited to 80% of lost income. Property damage liability losses (PD) - Coverage for property damage of other's property (not the insured or their household members) involved in an accident when the insured is at fault. Subrogation - A process where a third party (insurance company) seeks redress/repayment for benefits paid to the insured. The insured must ask if the insurance company plans to "subrogate" to receive any return of out-of-pocket costs (deductible) paid by the insured. The insurance company is not required to automatically return any funds received from the at-fault party. Umbrella personal liability policy - A liability insurance policy providing excess coverage beyond regular liability policies. An umbrella policy will begin to pay claims only after the underlying liability policy's coverage limits have been exceeded. These policies are purchased to protect the insured against the possibility of a large jury award in a lawsuit. High limits are required for comprehensive personal liability (homeowners / renters policy) and bodily injury / property damage liability (auto policy). Slander and libel are covered under this policy, but not professional liability for the insured's occupation. Underinsured / uninsured motorist coverage - Coverage for the insured in the event the driver at-fault in an accident has insufficient or no insurance to cover the insured's property damage and medical costs. Coverage is also provided to the insured for damage from a hit-and-run driver. Property damage has a deductible, but not medical benefits.