Agent
(Independent): An independent agent sells
and services insurance products and may represent more than one licensed
insurer. When you deal with an independent agent, you are, in effect, dealing
directly with the company.
Broker:
A broker also sells insurance products, but represents you, not the insurance
company. A broker does not usually have the power to issue policies or bind an
insurance company to issue a policy. However, once a broker has found a
company willing to issue you a policy, any premium payments you make to the
broker are considered the equivalent of directly paying the insurance company.
Cancellation:
The decision by the insurer to discontinue a homeowners policy prior to its
three-year term. In New York, insurers are prohibited from canceling a policy
after the first 60 days it is in effect, except in certain limited
circumstances such as when the policyholder fails to pay the premium.
Contents: The
personal property in your home. (See Personal Property
below.)
Deductible:
The amount of a covered loss paid by the policyholder. The higher the
deductible, the lower the cost of the policy.
Direct Writer: An
insurance company that does not use independent agents or other intermediaries
to sell its products. Instead, direct writers use their own employees or sales
representatives as well as internet websites. You may deal with direct writers
by telephone, the internet, mail or directly at their sales offices.
Endorsement:
A written agreement attached to the homeowners policy policy that adds or
removes insurance coverages.
Extended
Coverage: Protection against losses due to
windstorm, hail, smoke, explosion, riot, civil commotions, etc. Such coverage
is included in a standard homeowners package policy.
Homeowners-3
(HO-3): The HO-3, or Special Form Policy,
has become the standard homeowners policy. This policy covers your home for
all risks of physical loss, except those that are specifically excluded, such
as flood, earthquake, war, and nuclear accident.
Insured:
A person entitled to benefits under the terms of the policy. Generally, an
insured is any relative or dependent person in your care if they are residents
of your household.
Liability
Coverage: A homeowners insurance policy
provides both property and liability coverage. Liability coverage protects you
in the event another person is injured on your property due to your
negligence. Liability coverage also provides protection if somebody else’s
property is damaged due to your negligence.
Monoline Policy:
A monoline policy contains only one type of coverage, such as liability
insurance or fire insurance. Most homeowners purchase package policies rather
than monoline policies.
Nonrenewal:
A decision by a homeowners insurer not to renew coverage beyond the three-year
policy period. In most areas, homeowners insurers that intend to nonrenew must
notify policyholders between 45 to 60 days prior to the close of the
three-year policy period.
Package Policy: A
package policy, or homeowners multi-peril policy, includes several different
types of coverage, such as fire insurance, liability insurance, theft, and
extended coverage.
Peril:
The cause of a loss - hurricanes, fires, burglaries and accidents can all be
considered perils.
Personal
Property: The contents of your home, such
as furniture, televisions, clothes, etc. Does not include pets, automobiles or
boats. Your coverage for personal property under a homeowners policy is
usually covered for 50% of the amount for which your home is insured.
Policyholder: The
person (or persons) whose name appears on the policy. The policyholder is also
referred to as the "named insured."
Premium: The
amount paid to the insurer for coverage.
Property
Coverage: A homeowners policy provides both
property and liability coverage. Property coverage is designed to protect you
from losses to your home and personal possessions from a number of perils,
including fire, windstorm, vandalism and theft.
Replacement Cost:
The amount payable to you as a result of a covered loss based on the full cost
of a replacement. See "Actual Cash Value" above.
