The following are some general terms that may be helpful to you in reading and understanding your Homeowner, Condominium, or Renters insurance policy with Liberty Mutual. Because insurance laws vary throughout the United States and Canada or coverages may not be available in some jurisdictions, the information below may not apply in all situations. The terms and definitions in your actual policy will govern any claims or questions of interpretation. Please take this opportunity to read these terms and if you have any questions, please discuss with your claim handler or call your nearest Liberty Mutual Sales Office.
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Act of God
An unpreventable accident or event that is the result of natural causes; for example, floods, earthquakes, or lightning.
Actual Cash Value
An amount equal to the replacement cost of lost or damaged property at the time of loss, less depreciation.
Additional Insurance
Insurance that supplements an already existing policy. It is uncommon that the company or its duly authorized agent allows additional insurance.
Additional Living Expense
Any necessary increase in living expenses incurred by the insured, so the household can maintain its normal standard of living.
Applicant
A person who fills out and signs a written application for insurance.
Application
A written statement by a prospective policyholder that gives the information the company relies upon when evaluating the applicant and issuing the policy.
Appraisal
A survey by a Liberty Mutual Claims Representative or Claims Appraiser estimating the amount of damage to property and the cost to repair or the determination of a complete loss.
Basic Limits
The lowest coverage amount, as prescribed by law or the company, for which an insurance policy can be written. Basic Limits primarily prescribe limits of liability.
Cancellation
Termination of an insurance contract before its expiration date by either the insurance company or the policyholder.
Catastrophe
A sudden, severe disaster that causes a large loss.
Claim
A demand for payment under an insurance contract for the estimated or actual amount of loss.
Conditions
Provisions that set forth the rights, duties, and responsibilities of the parties to an insurance contract. Conditions may be found anywhere in the contract.
Coinsurance Clause
A clause requiring the insured maintains insurance on the property at least equal to a stipulated percentage of its value in order to collect partial losses in full.
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Damages
A sum of money that a party is legally obligated to pay to another as compensation for injury.
Declarations
The part of the policy that provides detailed information about the insured, the insurer, and the coverages.
Deductible
The amount of a claim that the policyholder has agreed to pay. This amount is deducted from a claims payment.
Depreciation
A decrease in the value of any type of tangible property over time.
Effective Date
The date the coverage begins on an insurance contract (policy).
Endorsement
An amendment to your policy written especially to cover unique items just for you. An endorsement is also a change to your policy that is made during the policy's term. An endorsement is attached to your policy to modify the terms of the insurance contract.
Exclusion
Part of an insurance contract that excludes coverage of certain perils, persons, property, or locations.
Expiration Date
The ending date of an insurance contract (policy).
Extended Coverage
A clause in an insurance policy or in an endorsement that provides additional coverage for other hazards or risks than those provided under the basic policy provisions.
Fire Insurance
Contract prescribed by each state insuring against direct loss by fire, lightning, and other defined causes.
Flood Insurance
Coverage against damage caused by the rising or overflowing of bodies of water. This is available through a national insurance program and must be bought separately.
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Hazard
Situation or condition that increases the possibility or extent of a loss.
Homeowner's Policy
A form of package policy including fire and other perils, theft insurance, and comprehensive personal liability. The premium is stated as one amount.
Insurance Department
A state's department that has responsibility for the enforcement of the state's insurance code. It is charged with the supervision and licensing of insurance companies and agents and the general administration of insurance laws of the state.
Insurance to Value
The amount of insurance written on property is approximately equal to its value. An insured most always wants to insure all property to value.
Insuring Agreements
Part of an insurance policy that states the coverage of the contract.
Insured
The person who is protected by the insurance policy.
Insurer
The company that issues a policy to a policyholder; the party in the insurance contract that promises to pay losses and render services.
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Liability Insurance
Liability insurance pays on behalf of the insured for certain types of injury to others.
Limit of Liability
The maximum amount that an insurer agrees to pay in the case of loss under policy contract.
Loss
A value reduction in an insured's property caused by an insured peril, the amount sought in a claim, or the amount paid on behalf of an insured under an insurance contract.
Loss Payable Clause
A policy condition that enables an insured to direct the company to pay any loss that may be due to a third party.
Loss of Use Insurance
Compensation for loss caused because the policyholder has lost the use of his property.
Mobile Home Insurance
A special policy designed to meet the needs of mobile home owners or occupants, covering physical damage to the home, contents, and personal liability while the home is used as a permanent residence.
Mortgage Clause
A clause in an insurance policy that makes a claim jointly payable to the policyholder and the party that holds a mortgage on the property.
Mutual Insurance Company
A company with no capital stock that is owned and controlled by policyholders.
Named Insured
The individual or organization with whom an insurance contract is made and who is specifically named as a Named Insured in the policy declarations. Additional individuals or organizations can also be added as named insureds.
Natural and Probable Consequences
Consequences of a given act that a reasonable person could foresee.
Non-Renewal
A policy that the insurer does not continue after its expiration date.
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Occurrence
An accident or loss, including continuous or repeated exposure to substantially the same general harmful conditions, that result in bodily injury or property damage.
Partial Loss
A loss that does not completely destroy the insured property that is covered by an insurance policy.
Payroll Deduction
The policyholder authorizes his or her employer to deduct amounts from the employee's earnings to cover the premium.
Peril
The cause of a possible accident, loss, or claim.
Personal Inland Marine Insurance
(Personal Articles Floater) Worldwide coverage on an all risk basis for scheduled valuable personal property.
Policy
A formal written contract of insurance.
Policyholder
The party to whom a policy is issued who agrees to pay a premium to an insurer in consideration of the latter's promise to provide insurance protection.
Premium
The amount that a policyholder agrees to pay to the insurance company for an insurance policy.
Policy Anniversary
Date on which an insurance policy must be reinstated to remain in force.
Protection
Coverage afforded by an insurance contract.
Premises
The building insured or containing the insured property. Depending on policy conditions, it may also include an adjacent area.
Property Damage
Means physical injury to, destruction of, or loss of use of tangible property.
Property Insurance
First party insurance of real and personal property against physical loss or damage.
Rate
The cost of insurance per unit; used as a base for the determination of premiums.
Real Property
The earth and all attached land and buildings, also known as real estate.
Reinstatement
Returning a lapsed policy to its full value after its termination as if it was never terminated.
Renewal
A policy issued to replace one that has expired.
Replacement Cost
Coverage for replacing property with new material; depreciation is not taken into consideration.
Residence Employee
An employee of an insured whose duties are related to the maintenance or use of the insured residence premises.
Residence Premises
Principal residence of the named insured.
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Scheduled Property
Listing specific personal property for a stated insured value. This is usually considered for valuable items that are subject to limited coverage.
Tenants Policy
A form of homeowner policy sold to person(s) who rent their living quarters.
Total Loss
Loss to the insured of the entire value of goods or other property insured, or a loss entailing the payment of the full face amount of an insurance contract.
Underwriting
A process that evaluates an applicant and their property against pre-established criteria for insurability to determine whether the applicant will be rejected or accepted for coverage and whether at standard or modified rates.
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