ADMITTED COMPANY
An insurance company authorized to do business in California.

AGENT
A licensed person or organization authorized to sell insurance by or on behalf of an insurance company.

AIRCRAFT INSURANCE 
Coverage for the insured in the event that the insured's negligent acts and/or omissions result in losses in connection with the use, ownership, or maintenance of aircraft.

AUTOMOBILE INSURANCE
Coverage on the risks associated with driving or owning an automobile. It can include collision, liability, comprehensive, medical, and uninsured motorist coverages.

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

BODILY INJURY
Any physical injury to a person.  The purpose of liability insurance is to cover bodily injury to a third party resulting from the negligent or intentional acts of an insured.

BOILER AND MACHINERY INSURANCE 
Covers losses resulting from the malfunction of boilers and machinery.  This coverage is usually excluded from property insurance creating the need for this separate product.

BROKER
A licensed person or organization paid by you to look for insurance on your behalf.

BURGLARY 
Coverage against loss as a result of forced entry into premises.

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CANCELLATION 
The termination of insurance coverage during the policy period. Flat cancellation is the cancellation of a policy as of its effective date, without any premium charge.

CLAIM
Notice to an insurer that under the terms of a policy, a loss maybe covered.

CLAIMANT
The first or third party. That is any person who asserts right of recovery.

COLLISION (AUTO)
Reimburses you for damage to YOUR automobile sustained in a collision with another car or with any other object, movable or fixed, (for example, you accidentally backed into another object while pulling out from a parking stall and causing damage to the bumper and fender of your covered automobile).

COLLISION DEDUCTIVE WAIVER
This coverage waves your collision deductible if you are hit by an negligent uninsured motorist. COMMON CARRIER LIABILITY Coverage for transportation firms that must carry any customer's goods so long as the customer is willing to pay.  Examples include trucking companies, bus lines, and airlines.

COMPREHENSIVE (AUTO)
Provides coverage for any direct and accidental loss of, or damage to, YOUR covered automobile and its normal equipment, to include but not limited to fire, theft or malicious mischief.

COMPREHENSIVE GLASS INSURANCE 
Coverage on an "all risks" basis for glass breakage, subject to exclusions of war and fire.

CREDIT LIFE INSURANCE 
Insurance issued to a creditor (lender) to cover the life of a debtor (borrower) for an outstanding loan.

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DECLINE 
The company refuses to accept the request for insurance coverage.

DEDUCTIBLE
The amount of the loss which the insured is responsible to pay before benefits from the insurance company are payable. You may choose a higher deductible to lower your premium.

DEPRECIATION
A decrease in value due to age, wear and tear, etc.

DISABILITY INSURANCE 
Health insurance that provides income payments to the insured wage earner when income is interrupted or terminated because of illness, sickness, or accident.

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ENDORSEMENT 
Amendment to the policy used to add or delete coverage. Also referred to as a "rider."

EXCLUSION
Certain causes and conditions, listed in the policy, which are not covered.

EXPIRATION DATE
The date on which the policy ends.

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FACE AMOUNT 
The dollar amount to be paid to the beneficiary when the insured dies. It does not include other amounts that may be paid from insurance purchased with dividends or any policy riders.

FINANCIAL GUARANTEE INSURANCE
A surety bond, insurance policy or, when issued by an insurer, an indemnity contract and any guaranty similar to the foregoing types, under which loss is payable upon proof of occurence of financial loss to an insured claimant, obligee, or indemnitee.

FIRE INSURANCE 
Coverage for loss of or damage to a building and/or contents due to fire.

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GOOD DRIVER DISCOUNT
To be eligible for the Good Drivers Discount all operators of the insured vehicles must have been licensed for three or more year, have no more than a one (1) point charge on their driving record and has not been determined "at fault" in an accident resulting in bodily injury or death to any person.

GRACE PERIOD
A period (usually 31 days) after the premium due date, during which an overdue premium may be paid without penalty. The policy remains in force throughout this period.

GUARANTEED INSURABILITY
An HEALTH INSURANCE option that permits the policy holder to buy additional stated amounts of life insurance at stated times in the future without evidence of insurability.

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A policy that will pay specifies sums for medical expenses or treatments. Health policies can offer many options and vary in their approaches to coverage.

HOMEOWNER INSURANCE
An elective combination of coverages for the risks of owning a home. Can include losses due to fire, burglary, vandalism, earthquake, and other perils.

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INCONTESTABLE CLAUSE 
A policy provision in which the company agrees not to contest the validity of the contract after it has been in force for a certain period of time, usually two years.

INSURED
The policyholder - the person(s) protected in case of a loss or claim.

INSURER
The insurance company.

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LEGAL INSURANCE 
Prepaid legal insurance coverage plan sold on a group basis.

LIABILITY (AUTO)
This coverage will pay for BODILY INJURY and/or PROPERTY DAMAGE to the OTHER party for which you become legally responsible of an                   automobile accident.

LIABILITY INSURANCE 
Coverage for all sums that the insured becomes legally obligated to pay because of bodily injury or proprty damage, and sometimes other wrongs, to which an insurance policy applies.

LIFE INSURANCE
A policy that will pay a specified sum to beneficiaries upon the death of the insured.

LIMIT
Maximum amount a policy will pay either overall or under a particular coverage.

LOAN VALUE
The amount which can be borrowed at a specified rate of interest from the issuing company by the policyholder, using the value of the policy as collateral. In the event the policyholder dies with the debt partially or fully unpaid, then the amount borrowed plus any interest is deducted from the amount payable.

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MARINE INSURANCE 
Coverage for goods in transit and the vehicles of transportation on waterways, land, and air.

MATERIAL MISREPRESENTATION
The policyholder / applicant makes a false statement of any material (important) fact on his/her application. For instance, the policyholder provides false information regarding the location where the vehicle is garaged.

MEDICAL PAYMENTS
Will pay reasonable expenses incurred for necessary medical and /or funeral services because of bodily injury caused by accident and sustained by YOU OR ANY OTHER PERSON WHILE OCCUPYING A COVERED AUTOMOBILE.

MISCELLANEOUS INSURANCE 
Includes insurance against loss from damage done, directly or indirectly by lightning, windstorm, tornado, earthquake or insurance under an open policy indemnifying the producer of any motion picture, television, theatrical, sport, or similar production, event, or exhibition against loss by reason of the interruption, postponement, or cancellation of such production, event, or exhibition due to death, accidental injury, or sickness preventing performers, directors, or other principals from commencing or continuing their respective performance or duties; and any insurance not included in any other classes and which is a proper subject of insurance (California Insurance Code §120).

MISQUOTE
An incorrect estimate of the insurance premium.

MORTGAGE INSURANCE 
Life insurance that pays the balance of a mortgage if the mortgagor (insured) dies.

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PERIL 
The cause of a possible loss. For example, fire, theft, or hail.

POLICY
The written contract of insurance.

POLICY LIMIT
The maximum amount a policy will pay, either overall or under a particular coverage.

PREMIUM 
The amount of money an insurance company charges for insurance coverage.

PREMIUM FINANCING
A a policyholder contracts with a lender to pay the insurance premium on his/her behalf. The policyholder agrees to repay the lender for the cost of the premium, plus interest and fees.

PRO-RATA CANCELLATION
When the policy is terminated midterm by the insurance company, the earned premium is calculated only for the period coverage was provided. For example: an annual policy with premium of $1,000 is cancelled after 40 days of coverage at the company's election. The earned premium would be calculated as follows: 40/365 days X $1,000=.110 X $1,000=$110.

PROPERTY DAMAGE
Damage to another person's property.  The purpose of liability insurance is to cover property damage to a third party resulting from the negligent or intentional acts of an insured.

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QUOTE
An estimate of the cost of insurance, based on information supplied to the insurance company by the applicant.

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REPLACEMENT COST 
The cost to repair or replace an insured item. Some insurance only pays the actual cash or market value of the item at the time of the loss, not what it would cost to fix or replace it. If you have personal property replacement cost coverage, your insurance will pay the full cost to repair an item or buy a new one once the repairs or purchases have been made.

REPLACEMENT VALUE
The full cost to repair or replace the damaged property with no deduction for depreciation, subject to policy limits and contract provisions.

REINSTATEMENT
The restoring of a lapsed policy to full force and effect. The reinstatement may be effective after the cancellation date, creating a lapse of coverage. Some companies require evidence of insurability and payment of past due premiums plus interest.

RIDER
Usually known as an endorsement, a rider is an amendment to the policy used to add or delete coverage.

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SHORT-RATE CANCELLATION 
When the policy is terminated prior to the expiration date at the policyholder's request. Earned premium charged would be more than the pro-rata earned premium. Generally, the return premium would be approximately 90 percent of the pro-rata return premium. However, the company may also establish its own short-rate schedule.

SOLICITOR
A licensed employee of a fire and casualty agent or broker who may act for the agent or broker in some circumstances.

SPRINKLER INSURANCE 
Coverage for property damage caused by untimely discharge from an automatic sprinkler system.

SURCHARGE
An extra charge applied by the insurer. For automobile insurance, a surcharge is usually for accidents or moving violations.

SURRENDER
To terminate or cancel a life insurance policy before the maturity date. In the case of a cash value policy, the policyholder may exercise one of the nonforfeiture options at the time of surrender.

TEAM AND VEHICLE INSURANCE 
Includes insurance against loss through damage or legal liability for damage, to property caused by the use of teams or vehicles other than ships, boats, or railroad rolling stock, whether by accident or collision or by explosion of engine, tank, boiler, pipe, or tire of the vehicle, and insurance against the theft of the whole or part of such vehicle (California Insurance Code §115).

TITLE INSURANCE 
Coverage for losses if a land title is not free and clear of defects that were unknown when the title insurance was written.

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UNDERWRITING 
The process of selecting applicants for insurance and classifying them according to their degrees of insurability so that the appropriate premium rates may be charged. The process includes rejection of unacceptable risks.

UNINSURED MOTORIST BODILY INJURY
Will pay you and your passengers for BODILY INJURY cause by a negligent uninsured motorist, a hit-and-run driver, or by a driver whose insurer is insolvent.

UNINSURED MOTORIST PROPERTY DAMAGE
Will pay for damages to your automobile, set up to a limit, when caused by a negligent unisured motorist.

WAITING PERIOD
A period of time set forth in a policy which must pass before some or all coverages begin.

WORKERS COMPENSATION INSURANCE 
Coverage providing four types of benefits (medical care, death, disability, and rehabilitation) for employee job-related injuries or diseases as a matter of right (without regard to fault).

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Insurance Terms Used in the Area of Sureties and Bonds 

Arrestee - A person in custody whose release may be secured by posting bail.

Bailee - A person or concern having possession of property committed in trust from the owner.

Bid Bond - A guarantee that the contractor will enter into a contract, if it is awarded to him, and furnish such contract bond (sometimes called "performance bond") as is required by terms thereof.

Court Bonds - All bonds and undertakings required of litigants to enable them to pursue certain remedies of the courts.

Effective Date - The date on which an insurance policy or bond goes into effect, and from which protection is furnished.

Fidelity Bond - An obligation of the insurance company against financial loss caused by the dishonest acts of employees.

Judicial Bond - A bond required in civil and criminal court actions.

Named Schedule Bond - A fidelity bond providing coverage for persons listed or scheduled on the bond.

Obligee - Broadly, anyone in whose favor an obligation runs. Frequently used in surety bonds, this refers to the person, firm or corporation protected by the bond.

Obligor - Commonly called "principal," one bound by an obligation. Under a bond, strictly speaking, both the principal and the surety are obligers.

Power of Attorney - Authority given one person or corporation to act for and obligate another, to the extent laid down in the instrument creating the power.

Principal - A person or organization whose obligation are guaranteed by a bond.

Surety - An arrangement whereby one party becomes answerable to a third party for the acts of a second party. Customarily an insurance company, the party in a suretyship arrangement who holds himself responsible to one person for the acts of another.

Surety Bond - A bond which the surety agrees to answer to the obligee for the non-performance of the principal (also known as the obligor).

Suretyship - Stated in its simplest terms, suretyship embraces all forms of obligation to pay debts or answer for the default of another.