Wealth Exposed: Insurance Planning for High Net Worth Individuals and Their Advisors

Insurance Glossary

abandonment clause A clause often contained in property insurance policies stating that the insured cannot abandon damaged property to the insurer and later demand to be reimbursed for its full value.

accident: A sudden and unexpected event, which occurs at a specific time and place. In easy-to-read policies, an accident is also defined as a loss, which occurs over a period of time.

actual cash value (ACV): The cost to replace an item of property at the time of loss, less an allowance for depreciation. Often used to determine amount of reimbursement for a loss (replacement cost–depreciation).

additional living expense A property coverage included in dwelling and older homeowners contracts, designed to reimburse the insured for an increase in living expenses necessitated by loss to the dwelling. This indirect loss must be the result of direct loss by a covered peril.

aftermarket part A vehicle replacement part manufactured by a company other than the vehicle maker. These parts are less expensive than the original equipment manufacturer (OEM) part. There is ongoing controversy as to whether aftermarket parts are equal to or inferior to OEM parts. Individual states have various rules and regulations regarding the use of aftermarket parts.

agent The state-licensed professional who represents the insurance company in the sale and servicing of insurance. The direct link between the insurance company and the policyholder.

aggregate limit A type of policy limit found ...