Glossary of Terms


An event that happens by chance and is not expected in the normal course of events, which results in harm to people, damage to property or equipment, or a loss of process or productivity.

Actual Cash Value

The fair market value of property taking into account factors that might augment or reduce the value of the property in question.


A certified professional who specializes in mathematics of insurance and evaluates statistical information to determine rates and risks.

Additional Insured

A person other than the named insured who is protected by the terms of the policy. Most automobile policies, for example, insure a specific individual as an insured, but also insure anyone driving with that insured’s consent. The additional insured may be “named” or “unnamed.”


An adjuster reviews and settles claims on behalf of the insurance company. The adjuster could be an employee of the insurance company or an independent contractor hired by the company.


An individual authorized by an insurance company to create, modify, and terminate contracts of insurance or to arrange to do so or to advise on contracts of insurance.


A request for insurance. This may be done verbally, in writing or by using a printed form.


The status of a policy on which the premiums are overdue and unpaid but are still considered collectible.


A temporary or preliminary agreement that provides coverage until a policy can be written or delivered.

Blue Book Value

The Blue Book lists the values of automobiles. Insurers typically use this book to establish the amount of loss in automobile physical damage claims. These values are synonymous with market value

Bodily Injury

A term, mostly used in automobile insurance, meaning physical injury as a result of a car collision.


An insurance broker sells insurance for more than one company.

Business Insurance

Insurance purchased by businesses, also called “commercial insurance”. Includes several types: property, boiler and machinery, liability (professional liability, product liability, directors and officers liability), commercial auto, business interruption, etc.

Certificate of Insurance

Written document stating that insurance is in effect. Includes general statement of policy’s coverage.


The exercising of a policyholder’s right under a policy to be paid by his or her insurance company for certain financial losses suffered. A claim can be any notification of a possible loss under an insurance policy, whether or not any payment follows. For every claim that is reported, the insurance company must set aside money (“reserves”) sufficient to cover its anticipated cost.


Words in a policy which describe certain specifications, limitations or modifications.


A vehicle or a ship collides when it strikes another object or another vehicle or ship. Collision insurance insures against loss so caused.

Commercial Auto Insurance

This policy is designed to protect a business in the event of accident, theft, injury and/or other damages involving business vehicles and business staff while driving those insured company vehicles, or their own vehicles or rented vehicles for business purposes. There are a variety of coverages for commercial autos, depending on the business being operated and who owns the vehicles being used.

Commercial lines

Refers to insurance for businesses, organizations, institutions, volunteer groups, governmental agencies, and other commercial establishments.

Comprehensive Automobile Coverage

An item of coverage in an Automobile Physical Damage policy insuring against loss or damage resulting from numerous miscellaneous causes such as fire, theft, windstorm, flood, vandalism, etc., but normally not including loss by collision or upset.

Compulsory Insurance

Any form of insurance (usually auto insurance) that is required by law.


Conditions are terms of insurance contracts that impose obligations an insured person must satisfy in order to preserve coverage.


What the insurance contract covers.

Death Benefit

An amount set out in the policy representing the amount that will be paid in the event of death. Also referred to as “principal sum.”