The insurance industry is not known for being very easy to understand. From abbreviations to confusing definitions, it is normal to look at a policy and have no idea what any of it means. At Mitchell Insurance Services we pride ourselves in educating our clients, so they know exactly what type of insurance they are purchasing. We broke down some of the most common insurance terms, and their definitions to help you better understand your insurance policies.
Hazard: Conditions that increase the probability of loss. Examples include poor maintenance to a condominium building or inadequate lighting around stairwells and steps.
Peril: Cause of loss, e.g. fire, windstorm, collision.
Flood: A 0general and temporary condition where two or more acres of normally dry land or two or more properties are inundated by water or mudflow. … Many conditions can result in a flood: hurricanes, broken levees, outdated or clogged drainage systems and rapid accumulation of rainfall.
All Other Perils (AOP): The All Other Peril, or AOP, the deductible is usually a flat dollar amount. The AOP deductible applies to covered damages to your property such as lightning, fire, hail, vandalism, and theft to name a few. This deductible applies per occurrence. Let’s say you have a theft claim in March, a hail claim in July, and a lightning claim in August. Each of these claims will be subject to the full amount of the deductible that’s been set.
Coinsurance: Specifies that the insured will recover no more than the following: the amount of the loss multiplied by the ratio of the amount of insurance purchased (the limit of insurance) to the amount of insurance required (the value of the property on the date of loss multiplied by the coinsurance percentage), less the deductible.
Total Insurable Value (TIV): The value of property, inventory, equipment, and business income covered in an insurance policy.
Actual Cash Value (ACV): The cost to repair or replace the damaged property with materials of like kind and quality, less depreciation of the damaged property.
Replacement Cost: A property insurance provision that changes the valuation of covered property from actual cash value (ACV) to replacement cost value (RCV): the cost to replace it today with property of like kind and quality without deduction for depreciation. We will continue to provide insurance definitions with each of our upcoming newsletters in order for you to better understand your policies. If you have any immediate questions or questions, please give our office a call at 727-360-8190 to speak with a licensed agent.
