Insurance Terms

Here is a list of terms for your knowledge about cheap insurance rates. Get to know what these terms mean and you may have a better understanding about what to look for when shopping for insurance.

ACTUAL CASH VALUE (ACV)

Actual cash value is the amount of money it would take to replace items that were lost such as in a fire. Usually this amount is adjusted for depreciation and does not mean the amount that it would actually take to purchase the item at the time of the loss. The amount repaid under a policy will not exceed the policy limit regardless of how much loss there is.

AGGREGATE

This is a limit in the amount that a policy will pay for losses over the course of a period of time (usually in a year). An example of this would be if you have a $50,000 flood insurance policy with a $100,000 aggregate limit, no matter how many floods you have and how much loss you have you will not be paid more than $100,000 in one year for your losses.

BLANKET INSURANCE

Blanket insurance provides protection for items against loss no matter where the items are.

INDEMNIFICATION

Indemnification means that an insurance company will reimburse the insured for losses paid for under the policy. An example of this would be if you suffered losses in a fire and paid out of your own pocket to replace destroyed items. Your personal effects insurance will then repay you the amounts that you paid (up to the limits of your coverage).

PERSONAL INJURY LIABILITY COVERAGE

Personal injury liability protects you from lawsuits that may come about based on libel slander or other injurious claims that may be made against you.

SUBROGATION

Subrogation is an insurance company's right to seek to recover their losses for paying for a claim from another party or insurance company. An example would be if you were in a car accident and suffered $75,000 worth of losses, the insurance company would pay you, but then may seek to recover all or some of that money through lawsuit or negotiations with the party you had the accident with, or their insurance company.