Welcome to the Cornerstone National Insurance Glossary!

Navigating the world of insurance can sometimes feel like deciphering a foreign language. From deductibles to endorsements, understanding the terminology is essential to making informed decisions about your coverage. That's why we've created this comprehensive guide to insurance terms, designed to empower you with the knowledge you need to protect what matters most.

Actual Cash Value (ACV)
Actual cash value (ACV) is a method used to determine the value of an item at the time of a loss or damage. It's calculated by subtracting depreciation from the item's original purchase price. ACV represents the current market value of an item, taking into account its age, condition, and overall worth. Example: If your five-year-old laptop is stolen, the insurance company may pay you the ACV of the laptop, which would be its original purchase price minus depreciation for the years you've owned it. Unlike replacement cost value (RCV), which reimburses you for the cost to replace the item with a new one of similar kind and quality, ACV typically provides a lower payout amount due to depreciation.

Adjuster
An adjuster is a professional employed by an insurance company who is responsible for investigating and evaluating insurance claims. When a policyholder submits a claim for a covered loss or damage, the claims adjuster is assigned to assess the situation, gather relevant information, and determine the extent of coverage under the policy. Their objective is to ensure that the claim is handled fairly and efficiently while adhering to the terms and conditions of the insurance policy.

Agent
See Independent Agent

Additional Living Expenses (ALE)
Additional Living Expenses, often abbreviated as ALE, refer to the costs incurred by policyholders for temporary housing, meals, and other essential living expenses when their home becomes uninhabitable due to a covered peril. This coverage is typically included in homeowners insurance policies and helps policyholders maintain their standard of living while their home is being repaired or rebuilt.

Carrier
A carrier refers to the insurance company that assumes the risk and provides coverage to policyholders. The carrier is the entity that underwrites the insurance policies and promises to pay for covered losses or damages. At CFM Insurance, that's us. We take on the risk and provide the insurance protection that the independent agents sell.

Claim
A claim refers to a formal request made by a policyholder to an insurance company for payment or reimbursement for a covered loss or damage. When an unexpected event occurs, such as an accident or property damage, policyholders can file a claim with their insurance provider to seek financial compensation to help cover the costs associated with the incident.

Coverage Limits
Coverage limits refer to the maximum amount an insurance policy will pay for covered losses or damages. These limits are set by the insurance company and are specified within the terms of the policy. If the cost of a covered loss exceeds the coverage limit, the policyholder may be responsible for paying the difference out of pocket. Reviewing and adjusting coverage limits periodically can help policyholders ensure they have sufficient coverage to protect their assets and financial interests. 

Deductible
The deductible is the amount of money you agree to pay out of pocket before your insurance coverage kicks in to cover the rest of a claim. Example: You have a $500 deductible and you file a claim for $1,500 in damages, you'll pay the first $500, and your insurance company will cover the remaining $1,000. Generally, policies with higher deductibles have lower premiums, while policies with lower deductibles tend to have higher premiums.

Depreciation
Depreciation refers to the decrease in value of your property over time due to factors like wear and tear, age, or obsolescence. Example: Your car loses value as it ages and accrues mileage, or your home may depreciate in value as its materials wear down or become outdated. When filing a claim for damaged or lost property, insurance companies often take depreciation into account when determining the payout amount. However, some policies offer coverage that accounts for depreciation, while others may provide coverage based on the property's actual cash value or its replacement cost.

Endorsements
Endorsements, also known as riders or add-ons, are amendments to an insurance policy that modify its terms, conditions, or coverage. These modifications can either broaden or restrict the scope of coverage provided by the original policy. Endorsements allow policyholders to customize their insurance coverage to better suit their specific needs.

Exclusions
Exclusions are specific situations or circumstances that are not covered by an insurance policy. They outline what the policy will not pay for. Exclusions vary depending on the type of insurance and the policy terms. Example: In homeowners insurance, common exclusions may include intentional damage, acts of war, and certain natural disasters like floods or earthquakes. In auto insurance, exclusions may include using your vehicle for commercial purposes or driving under the influence of drugs or alcohol. It's essential to review your policy's exclusions to understand what risks are not covered and consider purchasing additional coverage if needed.

Independent Agent
An independent insurance agent is a licensed professional who sells insurance products from multiple companies, offering clients personalized service and tailored coverage options. Cornerstone National Insurance partners exclusively with independent agents across the midwest, providing policyholders with access to a wide range of insurance solutions and expert advice.

Liability
Liability coverage provides financial protection if you're found legally responsible for injuring someone else or damaging their property. In homeowners insurance, liability coverage helps pay for medical bills, legal fees, and damages if someone is injured on your property or if your pet injures someone. For auto insurance, liability coverage pays for injuries or property damage you cause in a car accident.

Peril
A peril refers to a specific event or circumstance that may cause damage, loss, or injury to property or persons and is covered by an insurance policy.  Common perils include fire, theft, vandalism, and windstorm. Some policies may explicitly list covered perils, while others may specify exclusions or limitations.

Premium
Your insurance premium is the amount you pay your insurance company for coverage. It's usually paid on a monthly, quarterly, or annual basis. Your premium amount is determined by several factors, including your coverage limits, deductible amount, the type of coverage you're buying, and your individual risk factors like your driving record or credit score. In essence, it's the cost of having insurance protection.

Replacement Cost Value (RCV)
Replacement cost value (RCV) is a method used to determine the amount of money needed to replace or repair a damaged or destroyed item with a new one of similar kind and quality. Unlike actual cash value (ACV), which accounts for depreciation, RCV provides coverage for the full cost of replacing the item without deducting for depreciation. Example: Your five-year-old television is damaged by a covered peril, RCV coverage would reimburse you for the cost of purchasing a new television of similar kind and quality, regardless of the depreciation that may have occurred over time. RCV coverage typically results in higher payouts compared to ACV coverage, as it allows policyholders to replace their lost or damaged items with new ones, providing greater financial protection.

Underwriter
An underwriter is a trained professional who evaluates insurance applications and assesses the risk associated with insuring a particular individual or property. Their job is to determine whether to accept, modify, or reject insurance applications based on factors like the applicant's risk profile, the type of coverage requested, and the insurance company's underwriting guidelines.

Umbrella Policy
An umbrella policy is a type of liability insurance that provides additional coverage beyond the limits of an individual's primary insurance policies, such as auto or homeowners insurance. It offers extra protection against major claims and lawsuits by covering costs that exceed the limits of the underlying policies. Umbrella policies are designed to protect the policyholder's assets and future earnings in the event of a large liability claim or lawsuit.