Chapter 14 Vocabulary – Consumer Ed
1. 80 Percent Rule – Insurance company rule that you must buy homeowner’s coverage for at least
80% of your homes actual replacement value at the time of your loss in order to receive full
reimbursement for any loss.
2. Appraisal – an expert’s determination of the value of a piece of property.
3. Assigned Risk – Driver who has been assigned an insurance company by the state because a bad
driving record makes every other company unwilling to insure the person.
4. Bodily Injury Liability Coverage – insurance that protects you against financial loss, including the
cost of your legal defense, when you are legally responsible for inuring other people in an
automobile accident.
5. Claim – Formal request made to an insurance company for payment of loss.
6. Collision Coverage – Insurance that pays for damage to your car caused by colliding with another
car or object.
7. Comprehensive Coverage – Insurance that pays for damage to your car caused by something
other than a collision, such as damage from storms, vandalism, and theft.
8. Deductible – Amount you pay for a loss before the insurance company pays anything.
9. Homeowner’s Insurance – Insurance that provides personal property and liability protections for
your home.
10. Insurable Interest – Something of value that, if lost, would cause you financial harm.
11. Insurance – Risk management tool that limits financial loss due to illness, injury or damage in
exchange for a premium.
12. Liability Insurance – Insurance that protects you from losses that you cause.
13. Medical Payments Coverage – Insurance that pays medical/funeral expenses for you, your family
members, and other passengers in your car because of injuries sustained in an accident, no
matter who caused the accident.
14. No-fault Insurance – Laws adopted in some states that require each person’s automobile
insurance company to pay for the insured’s losses, no matter who caused the accident.
15. Personal Insurance – Insurance that protects you, your spouse, and your children against
financial loss due to illness, disability or death.
16. Points – Bad marks recorded on a person’s driving record because of traffic violations and
accidents.
17. Policy – Insurance contract.
18. Premium – Regular payment required to purchase insurance.
19. Property Damage Insurance – Insurance that pays for damage you caused to another person’s
property.
20. Property Insurance – Insurance that protects you from financial loss when something you own is
stolen, damaged, or destroyed.
21. Renter’s Insurance – Insurance that protects renters from property and liability losses.
22. Rider – special addition to an insurance policy that covers a specific loss not covered in the
standard policy.
23. Shared Risk – Insurance principle of using premiums from many policyholders to reimburse the
losses of a few, so that no one suffers a financially devastating loss.
24. Umbrella Policy – Insurance that provides additional liability protection beyond that in an
automobile or homeowner’s policy.
25. Uninsured/Underinsured Motorist Coverage – Insurance that pays medical and damage
expenses for you and your passengers caused by a driver without insurance or with too little
insurance to cover the loss.