New Jersey Auto Insurance Buyers Guide
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Below is a glossary of New Jersey Auto Insurance Terms.
You can discover the meaning of many common terms used in New Jersey Car
Insurance Policies. It is important to know what these terms mean so you can get
the best deal on NJ Auto Insurance. |
ACTUAL CASH VALUE
An amount equivalent to the replacement cost of a stolen or damaged property at
the time of the loss, less depreciation
ADMITTED COMPANY
An insurance company authorized to do business in New Jersey.
AGENT
A licensed person or organization authorized to sell insurance by or on behalf
of an insurance company.
AUTOMOBILE INSURANCE
Coverage on the risks associated with driving or owning an automobile. It can
include collision, liability, comprehensive, medical, and uninsured motorist
coverages
BINDER
A temporary or preliminary agreement which provides coverage until a policy can
be written or delivered.
BROKER
A licensed person or organization paid by you to look for insurance on your
behalf.
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.
CARRIER
See INSURER.
CLAIM
Notice to an insurer that under the terms of a policy, a loss may be covered.
CLAIMANT
The first or third party; that is, any person who asserts right of recovery.
CO-INSURANCE
Many insurers require that homeowners insure their homes for at least 80 percent
of REPLACEMENT COST. If the homeowner fails to do this, a penalty is applied to
partial losses. This penalty is usually referred to as Co-insurance.
DECLINE
Refusal by an insurer 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, and the like.
ENDORSEMENT
Amendment to the policy used to add or delete coverage. Sometimes referred to as
a FLOATER or RIDER.
EXCLUSION
Certain causes and conditions, listed in the policy, which are not covered.
EXPIRATION DATE
The date on which the policy ends.
FIRE INSURANCE
Coverage for loss of or damage to a building and/or contents due to fire.
FLOATER
See ENDORSEMENT
GRACE PERIOD
A period after the premium due date, during which an overdue premium may be paid
without penalty. The policy remains in force throughout this period.
HOMEOWNER INSURANCE
An elective combination of coverages for the risks of owning a home. Can include
losses due to fire, burglary, vandalism, and other PERILS.
INCEPTION DATE
The date on which a policy begins.
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.
LIMIT
Maximum amount a policy will pay either overall or under a particular coverage.
MATERIAL MISREPRESENTATION
A false statement of an important fact on an application; for instance, false
information regarding the location where a vehicle is garaged.
MISQUOTE
An incorrect estimate of the insurance premium.
PERIL
The cause of a possible loss; for example, fire, theft, or windstorm.
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 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.
QUOTE
An estimate of the cost of insurance, based on information supplied to the
insurance company by the applicant.
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.
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.
RETURN PREMIUM
The amount of money the insurance company has to give back to you in the event
of a PRO-RATA CANCELLATION or a SHORT-RATE CANCELLATION of your policy.
RIDER
See ENDORSEMENT.
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.
SURCHARGE
An extra charge applied by the insurer.
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.
WAITING PERIOD
A period of time set forth in a policy which must pass before some or all
coverages begin.
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