Auto and Home Summary

Glossary of Terms

Personal Automobile is insurance on privately owned autos. There are nine basic coverages:
· liability · medical
· uninsured motorist · comprehensive
· collision · car rental
· death and dismemberment · total disability
· loss of earnings.

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Liability:

(a) the company pays damages for which an insured becomes legally obligated because negligent acts or omissions resulted in bodily injury and/or property damage to a third party;

(b) the company defends the insured against liability suits for damages caused to the third party, paying various expenses in this connection; and

(c) vehicles covered include the insured’s own car, a newly acquired care, and a temporary substitute car. 

Collision—the company pays for loss to the insured’s car for all damages in excess of a deductible amount caused by collision.

Comprehensive—the company pays for loss to the insured’s car for all damages in excess of a deductible amount, except due to collision.

Combined Average Premium is the average amount for full coverage (liability, collision, comprehensive) premium on a car in a given state.

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Median is a statistical term indicating the central value of a frequency distribution, such that smaller and greater values than this central value occur at an equal rate.

Average Expenditure is how much the average person spends on auto insurance in a given state. (Total Written Premium/Liability Car-Years)

Homeowners Insurance is a package policy that combines

1) coverage against the insured’s property being destroyed or damaged by various perils, and

2) coverage for liability exposure of the insured. 

Dwelling Fire (one family, owner-occupied: non-seasonal buildings) protects building only and may customarily include extended coverage; and Homeowners (owner-occupied dwelling (1-4 family units)) coverage on buildings and personal property.

Homeowners Tenants & Condominium Renter’s Insurance: Broad named-perils coverage for the personal property of tenants. Condo/Co-op Insurance: Broad name-perils coverage for personal property of condominium or cooperative unit owners, as well as certain building items in which the unit owner may have an insurable interest.

Exposure is the number of premiums written with risk to the possibility of loss. The most cost efficient way to purchase insurance is to insure an unexpected loss with a low probability of occurrence.

A Premium is the rate that an insured is charged, reflecting his/her expectation of loss or risk. The insurance company will assume the risks of the insured in exchange for a premium payment. Premiums are calculated by combining expectation of loss and expense and profit loadings.

Average or arithmetic mean is the sum of a series of numbers divided by the number of numbers comprising the sum. The arithmetic mean is the expected loss which the insurance company prepares itself to pay, as reflected in the basic premium.

A Claim is a request by an insured for indemnification by an insurance company for loss incurred from an insured peril and a Benefit is the monetary sum paid or payable to a recipient for which the insurance company has received the premiums.