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Be in the know with insurance lingo

A glossary to help you come to terms with your insurance policy

When Equidae Insurance started writing a blog, the goal was to educate and inform our readers not only about equine and farm insurance, but current equine-related topics as well. Very little is written on equine insurance –except for sales subjects – and every farm or horse owner needs to be able to make informed choices about what is a very important financial decision.

We hope this reference library, which currently resides on our website, will one day be a resource for the horse industry. It is not a sales piece, but an educational tool. As such, every resource needs a glossary, so we have provided one in this month’s blog. It’s not very sexy reading, and definitely not a quick one, but we hope you find it a useful device when you are reviewing your own insurance quotes and policies.

A.M. Best – a national service that grades insurance companies on their financial strength and economic outlook. The ratings range from A++ to D.

Actual Cash Value – the cost to replace damaged property with materials of like kind and quality, with deduction for depreciation of the property. (See “Replacement Cost Value” and “Valuation”)

Additional Insured – a person or organization not automatically included as an insured under an insurance policy who is included or added as an insured under the policy at the request of the named insured.

Admitted Company – an insurance company licensed to do business in a state, yet based in another state or country. The licensed state has the responsibility to pay an insurer’s claims, up to state-specified limits, in the event of a company’s insolvency.

Agent – a person or organization who/that solicits, negotiates, or instigates insurance contracts on behalf of an insurer and can be independent or an employee of an insurer. Insurance agents are the legal representatives of insurers, rather than policyholders, with the right to perform certain acts on behalf of the insurers they represent, such as to bind coverage. (See “Broker” and “Independent Agent”)

Agreed Value – the amount of insurance for an “ownership interest” in a horse.

Binder – oral or written statement that provides immediate insurance protection for a specified period (30 days); designed to provide temporary coverage until a policy is issued.

Broker – an insurance intermediary who/that represents the insured rather than the insurer. Since they are not the legal representatives of insurers, brokers, unlike independent agents, often do not have the right to act on behalf of insurers, such as to bind coverage. (See “Agent” and “Independent Agent”)

Cancellation – the termination of an insurance policy or bond, before its expiration, by either the insured or the insurer.

Care, Custody or Control – Horses are considered personal property and are excluded under general liability policies. Care, Custody or Control coverage fills this void by paying for all sums you are legally obligated to pay for damage to non-owned horses in your care, custody or control. This coverage does not apply to horses that you own or lease.

Carrier – an insurance or reinsurance company that insures or "carries" the insurance or reinsurance.

Certificate of Insurance – written form that verifies a policy has been written; provides a summary of the coverages provided under the policy.

Claims Adjuster – one who settles insurance claims. This typically involves investigation of the loss and a determination of the extent of coverage.

Coverage – used synonymously with “insurance” or “protection.”

Declaration Page – section of the policy that shows who is insured, what property or risk is covered, effective date and how much coverage applies.

Deductible – an amount the insurer will deduct from the loss before paying up to its policy limits.

Emergency Colic Surgery – coverage for the cost of emergency colic surgery on qualifying horses with no history of colic/gastrointestinal disturbances.

Endorsement – an insurance policy form that either changes or adds to the provisions included in one or more other forms used to construct the policy, such as the declarations page or the coverage form.

Exclusion – specific situation, conditions, or circumstances that are listed in the contract as not being covered.

Independent Agent – an independent contractor (“agent”) who sells insurance on a commission or fee basis with one or more insurers. In contrast to the direct marketing system, the independent agent retains ownership, use, and control of policy records and expiration data. (See “Agent” and “Broker”)

Insured Value – the stated value of a horse that is covered under a policy. It may be the purchase price, or another value agreed upon by the insurance company based on appraisal, show records and training expenses.

Liability Insurance – coverage of bodily injury or property damage to a third party, including claims of negligence. 

Loss of Use – coverage of horses ages 3 and older from loss of use for their specific purpose due to accident, sickness and illness.

Loss Payee – a person or entity that is entitled to all or part of the insurance proceeds in connection with the covered property in which it has an interest.

Major Medical – a form of health insurance purchased as an additional endorsement to an equine mortality policy.

Mortality Insurance – a type of coverage equivalent to life insurance for a horse. It provides death and theft coverage on a broad perils’ basis, including accident, injury, illness and disease.

Named Insured – any person, firm, or organization, or any of its members specifically designated by name as an insured in an insurance policy, as distinguished from others that, although unnamed, fall within the policy definition of an “insured.”

Necropsy – post-mortem examination and dissection of a dead horse conducted by a qualified veterinarian to establish the identity of the horse and the cause of its death or the reason for its authorized humane destruction.

Negligence – failure to use a degree of care considered reasonable under a given set of circumstances. (See “Liability Insurance”)

Non-Admitted Company – an insurance company not licensed to do business in a certain state or country. In U.S. jurisdictions, such insurers can nevertheless write coverage through an excess and surplus-lines broker licensed in that jurisdiction. Insured claims will not be resolved in the event of the non-admitted company’s bankruptcy.

Nonrenewal – decision made by an insured or insurance company to not continue coverage for another policy period after the current policy period expires.

Notice of Cancellation – notice given to the insured notifying them of an upcoming cancellation of their policy for non-payment.

Notice of Rescission – notice sent to the insured when a late payment has been processed wherein the insurer has already been sent a notice of cancellation.

Occurrence – an unforeseen and unplanned event or circumstances or an unfortunate event resulting from carelessness or ignorance.

Policy – an insurance contract.

Policy Limit – maximum amount the insurance company will pay for a loss or for losses sustained during the policy period.

Policy Period – the date and time specified in the declaration page for when coverage begins and ends.

Premium – the amount of money an insurer charges to provide the coverage described in the policy or bond.

Rate – a unit of cost that is multiplied by an exposure base to determine an insurance premium.

Renewal – an insurance policy issued to replace an expiring policy.

Replacement Cost Value – the cost to replace the damaged property with materials of like kind and quality, without any deduction for depreciation. (See “Actual Cost Value” and “Valuation”).

Risk – (1) Uncertainty arising from the possible occurrence of given events. (2) The insured or the property to which an insurance policy relates.

Surgical Coverage – an endorsement that covers under-anesthesia surgical costs for accident, injury or illness, plus a portion of the non-surgical medical costs that are necessitated as a result of the surgery.

Underwriter – any individual in insurance who has the responsibility of making decisions regarding the acceptability of a submission and of determining the amount, price, and conditions under which the submission is acceptable.

Valuation – a provision in a policy that specifies the financial cost basis if a property is destroyed. (See “Actual Cash Value” and “Replacement Cost Value”).

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For more information about any insurance term, or if you have a topic you’d like to see covered in our blog, contact us direct at: Equidae Insurance, Inc. 608 Virginia Street East, Suite 302 Charleston, WV 25301 p. (304) 346-1198 f. (304) 345-3535

Stacey Halloran, Agent
shalloran

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