Saturday, August 2, 2008

US Insurance Glossary

Absolute Liability

Liability for damages even though fault or negligence cannot be proven. (Liability without fault.)

Accidental Bodily Injury

Injury to the body as the result of an accident.

Accidental Death and Dismemberment

A benefit purchased through an endorsement which covers loss due to bodily injury caused solely through accidental means.

Accidental Death Benefit

A benefit paid in addition to the face amount of a life insurance policy, if the insured dies as the result of an accident. Sometimes referred to as "double indemnity."

Accident Insurance

A contract purchased to guarantee compensation for a specific loss due to an accident.

Actual Cash Value

1) The cost of replacing or restoring property at prices prevailing at the time and place of the loss, less depreciation, however caused;

2) replacement cost minus depreciation.

Accident

An event or occurrence which is unforeseen and unintended. A sudden unexpected event, identifiable in time and place. Accidents may be considered either at fault or not at fault. If you have at fault accidents on your driving record, your rates will be higher.

Additional Insured or Additional Interest
A person or entity, other than the named insured or covered person, who is protected under the named insured's auto policy. If an auto is leased, the leasing company may want to be listed as an Additional Insured as well as a lien holder or loss payee. This protects the leasing company if it's named in a lawsuit for an accident caused by a policyholder.

Adjuster

A person who investigates and settles claims for an insurance carrier.

Adjusting

The process of investigating and settling claims with or by an insurance carrier.

Adverse Carrier

Another insurance company that may be a party in any given claim or loss related to an accident.

Agent

An insurance company representative licensed by the state who solicits, negotiates or effects contracts of insurance, and provides service to the policyholder for the insurer.

Age Limits

Stipulated minimum and maximum ages below and above which the company will not accept applications or may not renew policies.

All-risks Policy

Coverage by an insurance contract that promises to cover all losses except those losses specifically excluded in the policy.

Ambulatory Care

Medical services that are provided on an outpatient (nonhospitalized) basis. Services may include diagnosis, treatment, and rehabilitation.

Amendment

A formal document changing the provisions of an insurance policy signed jointly by the insurance company officer and the policy holder or his authorized representative.

Amortization

Paying an interest-bearing liability by gradual reduction through a series of installments, as opposed to one lump-sum payment.


Anti-Theft Device
Devices intended to prevent theft or vandalism, or to assist in the recovery of a stolen vehicle. Some examples include etched VIN numbers, car alarms, the "Club" and other such devices, etc.

Application

A signed statement of facts made by a person applying for insurance and then used by the insurance company to decide whether or not to issue a policy. The application becomes part of the insurance contract when the policy is issued.

Arbitration

A form of alternative dispute resolution where an unbiased person or panel renders an opinion as to responsibility for or extent of a loss

Association Group

A group formed from members of a trade or a professional association for group insurance under one master insurance contract.
Assigned Risk
A poor risk that an insurance company is compelled to cover under state laws.

Automobile Insurance
Insurance designed to protect against losses involving automobiles. All types of policies, including basic liability, collision and comprehensive, etc. come together to constitute automobile insurance.

Automobile Liability Insurance

Protection for the insured against financial loss because of legal liability for car-related injuries to others or damage to their property. Insurance which agrees to pay on behalf of the policy holder sums he/she may be legally required to pay to others as the result of negligence.

Automobile Physical Damage Insurance

Coverage to pay for damage to or loss of an insured automobile resulting from collision, or other than collision(comprehensive) fire, theft, or other perils.

Bail Bond

Variously used in connection with the release of a person or property from the custody of the law, referring to the bond or sum of money that is furnished the court or other official as indemnity for nonperformance of the obligation.

Bailee

One who has custody of the property of another. Bailees "for hire" have certain responsibilities to care for the property of another.

Bailment

The delivery of goods or personal property by one person to another, in trust for the execution of a special purpose in relation to such goods, beneficial either to the bailor, the bailee or both. This is done by contract, express or implied, which obligates the bailee to perform the trust and carry out its purpose and then either redeliver the goods to the bailor or dispose of the goods according to the purpose of the trust.

Bailor

The owner of property legally possessed by another bailee.

Basic Limits of Liability
These vary locally, they are the lowest amounts of liability coverage that you can legally buy in your state.

Benefit Period

A period of time typically one to three years during which major medical benefits are paid after the deductible is satisfied. When the benefit period ends, the insured must then satisfy a new deductible in order to establish a new benefit period. Length of time a policy will pay benefits to an insured.

Benefits

The amount payable by the insurance company to a claimant, assignee or beneficiary under each coverage.

Binder

A written or oral contract issued temporarily to place insurance in force when it is not possible to issue a new policy or endorse the existing policy immediately. A binder is subject to the premium and all the terms of the policy to be issued.

Blanket Contract

A contract of health insurance affording benefits, such as accidental death and dismemberment, for all of a class of persons not individually identified. It is used for such groups as athletic teams, campers, travel policy for employees, etc.

Blanket Medical Expense

A provision which entitles the insured person to collect up to a maximum established in the policy for all hospital and medical expenses incurred, without any limitations on individual types of medical expenses.

Blue Cross

An independent, nonprofit membership corporation providing protection on a service basis against the cost of hospital care in a limited geographical area.

Blue Shield

An independent, non-profit membership corporation providing protection on a service basis against the cost of surgical and medical care in a limited geographical area.

Bodily Injury Liability
A legal responsibility due to negligence arising from an occurrence resulting in an injury of another person's life or health.

Bond

A certificate issued by a government or corporation as evidence of a debt. The issuer of the bond promises to pay the bondholder a specified amount of interest for a specified period and to repay the loan on the expiration (maturity) date.

Broker

A marketing specialist who represents buyers of property and liability insurance and who deals with either agents or companies in arranging for the coverage required by the customer.

Business Insurance

Any insurance for commercial or business enterprises, as opposed to personal insurance, which is for the protection of individuals; a policy written for business purposes, such as key employees, partnerships, and corporations. Synonym is Commercial Lines.

Cancellation

The discontinuance of an insurance policy before its normal expiration date, either by the insured or the company.

Captive Agent

A licensed insurance agent who sells insurance for only one company.

Captive Insurance Company

A company owned solely or in large part by one or more non- insurance entities for the primary purpose of providing insurance coverage to the owner or owners.

Casualty Insurance

Insurance concerned with the insured's legal liability for injuries to others or damage to other persons' property; also encompasses such forms of insurance as plate glass, burglary, robbery and workers' compensation.

Catastrophe

Event which causes a loss of extraordinary magnitude, involving a large number of people, such as a hurricane or tornado.

Cede

To transfer all or part of a risk written by an insurer (the ceding, or primary company) to a reinsurer.

Certificate of Insurance

A statement of coverage issued to an individual insured under a group insurance contract, outlining the insurance benefits and principal provisions applicable to the member.

Cession

Amount of the insurance ceded to a reinsurer by the original insuring company in a reinsurance operation.

Claim

A request for payment of a loss which may come under the terms of an insurance contract.

Claimant Vehicle

Vehicle owned or driven by another party involved in a loss.

Claims Adjuster

Person who investigates and/or settles claims - an agent, company adjuster, independent adjuster, adjustment bureau, or public adjuster

Class Factor

Class factors (also referred to as driver class factors) are based on the age of the driver and the usage of the vehicle. It is one of the main components used in rating auto policies. The factor is applied to the base rate and specific coverages.

Classic Car Insurance

A special type of coverage, which applies to collector cars, which could not be otherwise insured through regular channels.

Collision Insurance

Protection against loss resulting from any damage to the policyholder's car caused by collision with another vehicle or object, or by upset of the insured car, whether it was the insured's fault or not.

Collision

A form of insurance protecting the insured against loss resulting from any damage to the insured's vehicle caused by collision with any object whether or not it was the insured's fault. Requires comprehensive coverage.

Collision for Rental Vehicle

Collision coverage, which may be purchased on liability only policies to cover rented vehicles. Coverage only available in state of Alaska.

Collision Full Glass

No deductible for glass damage resulting from a collision. Deductible applies to all other damage.

Collision Liability Buy Back

Available in Michigan, this coverage will pay the $500 that a Michigan resident is responsible for if they damage the property of another in an at fault accident.

Collision Waiver Deduction

Collision deductible would be waived ONLY if vehicle is damaged by an AT-FAULT uninsured motorist. Requires CL and UMBI. Coverage only available in state of California

Combined Ratio

Basically, a measure of the relationship between dollars spent for claims and expenses and premium dollars taken in; more specifically, the sum of the ratio of losses incurred to premiums earned and the ratio of commissions and expenses incurred to premiums written. A ratio above 100 means that for every premium dollar taken in, more than a dollar went for losses, expenses, and commissions.

Combined Single Limit

Liability limits that specify a single dollar amount for combined Bodily Injury and Property damage, without showing specific limits for each indiviudal coverage. For instance the combined single limit for the policy is $100,000. The individual coverages are not given specific limits and limited only by the aggregate amount of coverage.

Commercial Auto Insurance

Provides coverage to a business for losses that arise out of vehicles which are owned or used by the business.

Commercial General Liability Policy

Commercial liability policy drafted by the Insurance Services Office containing two coverage forms-an occurrence form and a claims-made form.

Commercial Lines

A general term for any type of insurance (property, casualty, health, life, etc.) purchased by businesses, organizations, institutions, governmental agencies or other commercial establishments to protect risks associated with their operations.

Commission

The part of an insurance premium paid by the insurer to an agent or broker for his services in procuring and servicing the insurance.

Commissioner

A state officer who administers the state's insurance laws and regulations. In some states, this regulator is called the director or superintendent of insurance.

Comparative Negligence

Under this concept a plaintiff (the person bringing suit) may recover damages even though there is contributory negligence. His or her recovery, however, is reduced by the amount or percent of that negligence.

Comprehensive Insurance

Losses caused by factors other than collision are covered: ex. Missiles or falling objects; fire; theft or larceny; explosion or earthquake; windstorm; hail; water or flood; malicious mischief or vandalism; riot or civil commotion; contact with a bird or animal; or breakage of glass.

Comprehensive Full Glass

Comprehensive with no deductible for glass damage only. Deductible does apply to other comprehensive losses. In FL, CPG applies to windshield ONLY. Coverage not available in every state.

Comprehensive Personal Liability Insurance

Protection against loss arising out of legal liability to pay money for damage or injury to others for which the insured is responsible. It does not include automobile or business operation liabilities. Refers to the general liability (not auto related) exposures that accompany a person's non-business activities. For example, your dog bites someone or you hit someone with a golf ball. This coverage is generally available to our Fulltimers as a form of coverage to replace their Homeowner's Liability that they lose when they sell their house and RV Fulltime.

Comprehensive Rental Vehicle

Comprehensive coverage, which may be purchased on a liability-only policy to cover rented vehicles. Available only in AK.

Compulsory Liability Insurance

Insurance laws in some states required motorists to carry at least certain minimum auto coverages. This is called "compulsory" insurance.

Concealment

Deliberate failure of an applicant for insurance to reveal a material fact to the insurer.

Concurrent Causation

Legal doctrine that states when a property loss is due to two causes, one that is excluded and one that is covered, the policy provides coverage.

Consideration

One of the elements for a binding contract. Consideration is acceptance by the insurance company of the payment of the premium and the statement made by the prospective policyholder in the application.

Consumer Report

A variety of information about the consumer including, prior loss reports (PLR), motor vehicle reports (MVR), and credit score.

Continuous Coverage or Continuous Liability Insurance
The length of time you have had your vehicle insured without a break in coverage (some insurers require at least six months.)

Contract

A binding agreement between two or more parties for the doing or not doing of certain things. A contract of insurance is embodied in a written document called the policy.

Contractual Liability

Legal liability of another party that the business firm agrees to assume by a written or oral contract to a declared limit.

Contribution by Equal Shares

Type of other-insurance provision often found in liability insurance contracts that requires each company to share equally in the loss until the share of each insurer equals the lowest limit of liability under any policy or until the full amount of loss is paid.

Contributory Negligence

Any negligence on the part of the plaintiff which contributed to the cause of the accident may bar the plaintiff from recovery against a negligent defendant, even if the defendant was more negligent than the plaintiff.

Coverage

The scope of protection provided under a contract of insurance; any of several risks covered by a policy.

Covered Person
The person(s) insured under a policy contract.

Credit Score

A number that is obtained from a credit bureau vendor. The number, which is also referred to as a score is the result of applying the consumers credit file information against a standard insurance industry model. The score does not enable anyone to determine specifically what information was in the consumer's credit file.

Death and Dismemberment

An added benefit rider that can be attached to a life insurance policy that provides monetary payment for the loss of function of vital limbs or organs.

Death Benefit

A payment made to a designated beneficiary upon the death of the employee annuitant.

Debenture

A bond that is backed only by the general credit of the issuing corporation. No specific property is pledged as security behind the loan.

Declarations

Statements in an insurance contract that provide information about the property or life to be insured. Used for underwriting and rating purposes and for identification of the property or life to be insured.

Declination

The insurer's refusal to insure an individual after careful evaluation of the application for insurance and any other pertinent factors.

Deductible

An amount which a policyholder agrees to pay, per claim or per accident, toward the total amount of an insured loss.

Deferred Annuity

An annuity providing for the income payments to begin at some specified future date.

Deductible

The minimum amount you will have to pay before your own insurance policy begins to reimburse you for your loss. Normally, policies with a higher deductible will have lower premiums (they'll be cheaper)

Depreciation

A decrease in the value of property (Automobile) over a period of time due to wear and tear or obsolescence. Depreciation is used to determine the actual cash value of property (Automobile) at time of loss.

Defensive Driver Course
Courses offered by your own state's DMV or by an approved entity that promote safe driving. Upon completion of such a course, you may become eligible for lower insurance rates. A good deal if you can get it.

Discount Auto Insurance

A policy is eligible for premium discounts if something about the driver or car that makes the policy a better-than-average risk.

Direct Loss

Financial loss in damages that results directly from an insured peril.

Disability

A physical or a mental impairment that substantially limits one or more major life activities of an individual. It may be partial or total. (See Partial Disability; Total Disability.)

Dismemberment

Loss of body members (limbs), or use thereof, or loss of sight due to injury.

Disposable Personal Income

The personal income less personal tax and other financial obligations or payments. It is the income available to people for spending and saving.


Double Indemnity

A policy provision usually associated with death, which doubles payment of a designated benefit when certain kinds of accidents occur.

Down Payment

The premium deposit paid by a prospective policy holder when an application is made for an insurance policy. It is usually equal, at least, to the first month's estimate premium and is applied toward the actual premium when billed.

Drive-Other-Car Endorsement
A part of your policy that extends coverage to any other car you might be driving (for example, a rental car.)

Driver Education
A course accredited by your state's DMV, consisting of at least 30 hours of professional classroom instruction. Often required for teen car insurance.


Driver Training
A course accredited by your state's DMV, consisting of at least 6 hours of behind-the-wheel training.

Earned Premium
The part of your premium used up by any given point in the life of your policy. After six months of coverage on a twelve-month policy, one half of your premium will have been "earned". That portion of the premium which represents coverage already provided. Each day that an insurance policy is in force represents a day of earned premium.

Economic Loss

The estimated total cost, both insured and uninsured, of mishaps (such as motor vehicle accidents, work accidents, and fires); includes such factors as property damage, funeral expenses, wage loss, insurance administration costs, and medical, hospital and legal costs.

Effective Date

The date in which insurance protection begins under a policy.

Effective Date/Inception Date
The actually date on which your policy begins to cover you against losses (not necessarily the day you pay, or sign, etc.)

Electronic Funds Transfer

A method of collecting policy premium electronically from the policy holder's bank account.

Elements of a Negligent Act

Four elements an injured person must show to prove negligence - existence of a legal duty to use reasonable care, failure to perform that duty, damages or injury to the claimant, and proximate cause relationship between the negligent act and the infliction of damages.

Escheatable

Property that has reverted back to the state when no legal heirs or claimants exist. An example is a customer refund check that is undeliverable or unredeemed.

Estate

The assets and liabilities of a person left at death. Extent and nature of one's interest in land; the assets constituting a descendent's property at the time of death; the assets of a debtor in bankruptcy proceedings.

Estoppel

Legal doctrine that prevents a person from denying the truth of a previous representation of fact, especially when such representation has been relied on by the one to whom the statement was made.

Exclusions

Specific conditions or circumstances listed in the policy for which the policy will not provide benefit payments

Exclusive Agent

An agent who is employed by one and only one insurance company and who solicits business exclusively for that company.

Expense Ratio

The ratio of a company's operating expenses to premiums.

Experience

A term used to describe the relationship, usually expressed as a percent or ratio, of premium to claims for a plan, coverage, or benefits for a stated time period.

Experience Letter

Letter requested by an insured that documents their loss history with us.

Expiration Date
The date your coverage ends. There is also usually a time involved, for example Midnight of such and such day.

Extended Coverage Insurance

Protection for the insured against property damage caused by windstorm, hail, smoke, explosion, riot, riot attending a strike, civil commotion, vehicle and aircraft. This is provided in conjunction with the fire insurance policy and the various "package" policies.

External Sources

Third Party providers that have personal data on record such as name and address.

Family Purpose Doctrine

Concept that imputes negligence committed by immediate family members while operating a family car to the owner of the car

Farmowners-Ranchowners Policy

A package policy for a farm or a ranch, providing property and liability coverages against personal and business losses.

Federal Crime Insurance

Insurance against burglary, larceny, and robbery losses offered by the federal government where the Federal Insurance Administration has determined that an insurance availability problem exists.

Federal Crop Insurance

Comprehensive coverage at rates subsidized by the federal government for unavoidable crop losses, including those that result from hail, wind, excessive rain, drought, freezes, plant disease, snow, floods, and earthquake.

Federal Flood Insurance

Insurance sold by private insurers with rates subsidized by the federal government to persons who reside in flood zones and whose community joins the program and agrees to establish and enforce flood control and land-use measures.

Fiduciary

A person holding the funds or property of another in a position of trust, and who is obligated to act in a prudent and ethical manner. An example would be an attorney, bank trustee, the executor of an estate, etc.

File and Use

Regulatory rule whereby the insurer must have rates, rules, and/or forms on file with a department of insurance prior to implementing them.

Financial Responsibility Law

A state law which may require motorists (the insured) to furnish evidence, either before or after involvement in an auto accident (depending on the individual state's law), of ability to pay for damages up to certain minimum dollar limits. These requirements commonly are met by carrying auto liability insurance with specified minimum limits or more.

Financial Ratings
Ratings, similar to credit ratings, of insurance providers meant to accurately represent a carrier's ability to meet claims. Often mentioned ratings are by agencies such as Standard and Poor's and AM Best.

Financial Responsibility Filing (SR22)
A requirement by a state regulatory entity (usually the state Motor Vehicle Department) for an insurance company to certify on a driver's behalf that the driver has the ability to pay future claims up to the state required limit. The certification is done by means of a form called an SR-22.

Fire

A combustion accompanied by a flame or glow, which escapes its normal confines to cause damage.

Fire Insurance

Coverage for losses caused by fire and lightning, plus resultant damage caused by smoke and water.

First Party Benefits
Often also know as Personal Injury Protection (PIP) or Medical Coverage, this policy pays for physical injuries sustained by the occupants of your car in the event of any accident, regardless of who was at fault. This is generally not a good deal, as a good health insurance policy would cover these injuries anyway.

Flat Cancel

Cancellation of an insurance contract as of its date of inception, without premium charge.

Floaters

Insurance policies that cover property that can be moved from one location to another for both transportation perils and perils affecting property at a fixed location.

Flood Insurance

Insurance sold by private insurers with rates subsidized by the federal government to persons who reside in flood zones and whose community joins the program and agrees to establish and enforce flood control and land-use measures.

Foreign Insurer

An insurance company licensed to operate in a state but has its home office in another state.

Franchise Insurance

Insurance under individual contracts issued to the employees of a common employer or the members of an association under an arrangement by which the employer or association agrees to collect the premiums and remit them to the insurer. The insurer usually agrees to waive its right to discontinue or modify any individual policy, unless its simultaneously discontinues or modifies all other policies in the same group.

Fraternal Insurance

A cooperative type of insurance provided by social organizations, such as members of a lodge or a fraternal order, for their members.

Fronting Company

An insurer that issues policies with the intention of transferring most of the insured exposure through reinsurance or other means to unauthorized insurers or reinsurers or captive insurers. This fronting insurer assumes little or no loss exposure; instead, financial arrangements are made to guarantee claims administration and payments. The fronting insurer is usually paid a percentage of the premium.

Gap Auto Insurance

A gap car insurance policy insures you for the difference between what you owe on your car and what your insurance company says it's worth. Often required when buying or leasing a new car.

Garage Address
Where you park your car at night.

General Agency System

An insurance distribution system where an insurer appoints a general agent to service the agents within a specified geographic area, rather than opening an insurance company branch office.

General Damages.

Damages awarded to an injured person for intangible loss which cannot be measured directly by dollars. Popularly known as "pain and suffering." General damages are distinguished from special damages which are awarded for actual economic loss, such as medical costs, loss of income, etc.

General Damages

Damages awarded to an injured person for intangible loss which cannot be measured directly by dollars. Popularly known as "pain and suffering." General damages are distinguished from special damages which are awarded for actual economic loss, such as medical costs, loss of income, etc.

General Liability Insurance

Coverage that pertains, for the most part, to claims arising out of the insured's liability for injuries or damage caused by ownership of property, manufacturing operations, contracting operations, sale or distribution of products, and the operation of machinery, as well as professional services.

Generally Accepted Accounting Principles

A set of uniform accounting rules for recording and reporting financial data to accurately represent an organization's financial condition. These standards are endorsed by the Financial Accounting Standards Board and their use is required by the SEC.

Glass Insurance

Protection for loss of or damage to glass and its accessories.

GMAC Customer

Someone who has an existing GMAC account with one of the GMAC companies such as GMAC Mortgage, GMAC Auto Lease, or GMAC Credit Card.

Grace Period

A specified period after a premium payment is due, in which the policyholder may make such payment, and during which the protection of the policy continues.

Gross Negligence

Negligence beyond the ordinary. A reckless or wanton disregard of the duty of care towards others.

Gross Premium

The entire premium charged by an insurer to a policyholder, including all of the insurer's expenses, estimated loss costs, and profits.

Group Insurance

Insurance written on a number of people under a single master policy, issued to their employer or to an association with which they are affiliated.

Hazard

Condition that creates or increases the chance of loss.

Health Maintenance Organization

An organization that provides a wide range of comprehensive health care services for a specified group at a fixed periodic payment. The HMO can be sponsored by the government, medical schools, hospitals, employers, labor unions, consumer groups, insurance companies, and hospital-medical plans.

High-Risk Automobile Insurer

Company that specializes in insuring motorists who have poor driving records, have been canceled, or have been refused insurance (ex: high risk vehicle, commercial use).

Hold-Harmless Clause

Clause written into a contract by which one party agrees to release another party from all legal liability, such as a retailer who agrees to release the manufacturer from legal liability if the product injures someone.

Homeowners Policy

A package of insurance providing homeowners with a broad range of property and liability coverages.

Hospice

Health care facility providing medical care and support services such as counseling to terminally ill persons.

Hurricane

A tropical storm marked by extremely low barometric pressure and circular winds with a velocity of 75 miles an hour or more.

Good Driver Discount
Better insurance companies offer discounts to customers with good driving records.

Good Student Discount
A discount which sometimes applies to teen car insurance when the driver maintains at least a "B" average at school.

ID (Identification) Card
A document identifying you as having liability coverage for the vehicle that you are driving. Liability insurance is required in most states.

Immediate Annuity

An annuity that commences benefit payments immediately after a specified interval (one month or one year). This type of annuity is nearly always purchased with a single premium.

Imputed Negligence

Case in which responsibility for damage can be transferred from the negligent party to another person, such as an employer.

Incurred Claims

Incurred claims equal the claims paid during the policy year plus the claim reserves as of the end of the policy year, minus the corresponding reserves as of the beginning of the policy year. The difference between the year end and beginning of the year claim reserves is called the increase in reserves and may be added directly to the paid claims to produce the incurred claims.

Indemnification. Compensation to the victim of a loss, in whole or in part, by payment, repair, or replacement.

Indemnity

Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss.

Independent Adjuster

Claims adjuster who offers his or her services to insurance companies and is compensated by a fee.

Independent Agent

An independent contractor who sells insurance usually on behalf of more than one insurance company under the independent agency system. Independent agents operate their own business, own the records of the policies sold through them, and are compensated by commissions or fee.

Indirect Loss

Property loss from a peril that is not the immediate cause of loss; an indirect loss (e.g. a business interruption loss, extra expense, lost rent, etc.) arising out of an insured's inability to use property damaged by another peril.

Inheritance tax

A tax based on an estate's value at the time of the owner's death. A federal unified tax is assessed on the combined value of the estate and qualifying gifts so that estate taxes cannot be avoided by gifts in anticipation of death.

Insolvent

Having insufficient financial resources (assets) to meet financial obligations (liabilities).

Inspection

In property and casualty insurance, the insurer retains the right to make inspections and surveys relating to the insurability of the risk and the premiums charged. The insurer also reserves the right for inspection of property for which a loss arises and claim presented.

Installment Fee
A fee often required if you prefer to spread your payments over time.

Installments

When a policy is placed on a payment plan, multiple equal installments due in the future are created.

Insurability

The risk-associated qualities of a person or entity that meet an insurer's underwriting standards and therefore make the insurer willing to offer coverage at a standard premium.

Insurable Interest

The person who stands to lose financially in the event of a loss. For example, loss to an automobile, home, or contents.

Insurable Risk

A risk that meets the following criteria:
1. The insured loss must have a definite time and place;
2. The insured event must be accidental;
3. The insured must have an insurable interest in the subject of coverage;
4. The insured risks must belong to a sufficiently large group of homogeneous exposure units to make losses predictable;
5. The risk must not be subject to a catastrophic loss where a large number of exposure units can be damaged or destroyed in a single event;
6. The coverage must be provided at a reasonable cost;
7. The chance of loss must be calculable.

Insurance

A system under which individuals, businesses, and other organizations or entities, in exchange for payment of a sum of money (a premium), are guaranteed compensation for losses resulting from certain perils under specified conditions.

Insurance Adjuster

An insurance company employee who is responsible for settling or adjusting claims.

Insurance Commissioner

The senior official in a state's department of insurance or other insurance regulatory agency.

Insurance Company

An organization chartered to operate as an insurer.

Insurance Examiner

The insurance department representative assigned to audit the books or the market conduct of an insurance company.

Insurance Exchange

An insurance marketplace or organization patterned after Lloyd's of London, formed during the 1980s in New York City, Miami, Florida, and Chicago, Illinois. Exchanges were formed to write large or unique risks, generally on a surplus lines basis, and to write reinsurance business. Both the New York and Florida exchanges have suspended operations.

Insurance Guaranty Funds

Plans established and administered individually at the state level which assess solvent insurers in order to settle the unpaid claims of a insolvent company and to return unearned premiums to its policyholders. Insurers each pay a proportional share of the losses based on their premium volume in the state. Frequently funds are set up in such a way as to have immediate access to assets of the insolvent insurer (rather than waiting until liquidation proceedings are completed). In many states, funds are given priority before general creditors to obtain assets of insolvent insurers. In some states, solvent insurers are permitted tax offsets against money paid into guarantee funds.

Insurance Services Offices

Members: Rating bureaus, actuarial associations and other insurance research groups. Objectives: Provides statistical and actuarial information, policy forms and related services to insurers. Functions as an insurance advisory organization and statistical agent. Publishes rate manuals, plans, policy forms and endorsements and other materials.

Insured

The person whose insurable interest is protected under an insurance policy; the one to whom or at whose direction an insurer reimburses losses, pays benefits, or provides services. The term is generally preferred to policyholder.

Insured Loss Ratio

The ratio that a reinsurer's percentage of losses incurred bears to premiums earned.

Insured Person
The person(s) insured under a policy contract. (Same as a covered person.)

Insured Vehicle

A vehicle which is covered by an insurance policy or any vehicle which meets the definition of a covered auto according to the language of the insurance policy.

Insurer

The party to the insurance contract who promises to pay losses or benefits. Also, any corporation engaged primarily in the business of furnishing insurance to the public.

Insuring Agreement

That part of an insurance contract that states the promises of the insurer.

Insuring Clause

The clause which sets forth the type of loss being covered by the policy and the parties to the insurance contract.

Interest

The price for the use of money, expressed as a percentage of the amount borrowed; the charge paid by a borrower to a lender

Inter vivos Trust

An ordinary trust established by a person while living to manage and distribute assets to other living persons. (Inter vivos is Latin for "between the living.")

Intestate

Dying without having made a legal will; a person who has died without leaving a will

Investment Income

An insurance company's earnings from its investment portfolio, including interest, dividends, capital gains, and rent.

Joint-and-Several Liability

Liability arising from a contract or from a tort that applies to the responsible persons either separately (severally) or in combination (jointly), at the injured person's option. If a group of persons who default on an obligation or cause a loss are held jointly and severally liable either by terms of the contract or by operation of law, the claimant may sue either the group or any one member for the entire amount owed. This is a way to compensate an injured person if, for example, one or more liable persons are bankrupt or flee the jurisdiction.

Joint Tenants

A form of joint property ownership with right of survivorship, i.e., in which the survivors automatically own the share of a deceased co-owner.

Judicial Bond

A general term applied to all bonds filed with a court. Examples are appeal bond, bail bond, court bond, defendant's bond to dissolve, fiduciary bond, financial guaranty bond, injunction bond, plaintiff's bond to secure, plaintiff's replevin bond, security for expenses.

Jumbo Risk

A risk involving exceptionally high benefits.

Kenney Rule

This is a solvency guideline for property casualty insurers and holds that an insurer should not have written premiums of more than twice its total capital and surplus, a 2:1 ratio of premiums to surplus.

Key-Person Insurance

A disability, life, or health insurance program designed to protect an employer from the loss of an individual employee whose special skills or experience are vital to the firm. Policy proceeds are used to cover the firm's lost income and to locate and hire a replacement for the key employee.

Lapse

Insurance policy termination due to the insured's failure to make premium payments.

Lapse in Coverage
Also known as policy lapse. The point in time when a policy is canceled for any reason, including failure to pay, change of provider, etc.


Larceny-theft. The unlawful taking, carrying, leading or riding away of another person's property.

Larceny

Theft other than one involving a forcible entry (burglary) or an actual or threatened bodily harm (robbery). Many jurisdictions prefer the term theft.

Last Clear Chance Rule

The last reasonable opportunity to avoid an accident or injury. One who has the last clear chance to avoid an injury and fails to do so is usually held solely responsible, notwithstanding the injured person's own contributory negligence.

Law of Large Numbers

A principle that the larger the number of exposures considered, the more closely will reported losses equal the true probability of loss. This is the basis for the statistical expectation of loss, which determines premium rates.

Legal Reserve

Minimum reserves required by state law or regulation that life insurers must maintain to operate in that state.

Liability

An actual or potential legal obligation, duty, debt, or responsibility to another person; the obligation to compensate, in whole or part, a person harmed by one's acts or omissions. Liability insurance policies provide coverage for an insured's legal liability, excluding criminal acts, most intentional torts, and breach of contract.

Liability

Protection for the insured against financial loss because of legal liability for car-related injuries to others or damage to their property.

Liability Insurance

Insurance that provides indemnity or compensation for a harm or wrong to a third party for which the insured is legally obligated to pay. Usually, the injury or damage is caused by the insured's negligent acts or omissions, but in some situations the law imposes strict liability without regard to negligence, and this may also be covered by liability insurance.

Liability Insurance
Insurance coverage to protect against claims alleging that one's negligence or inappropriate action resulted in bodily injury or property damage.

Liability Insurance.

(1)Insurance covering the policyholder's legal liability resulting from injuries to other persons or damage to their property. (2) Provides protection for the insured against loss arising out of legal liability to third parties.


Liability Limits

The stipulated sum or sums beyond which an insurance company is not liable to protect the insured.

Lender
The lender is the entity (usually a bank) which lends you the money to purchase a car. They are usually the loss payees, until you pay off the balance of the loan.

Lessor
Similar to the lender, the lessor is the entity which leases your vehicle to you. This is quite often the financial arm of the car company itself.

Note: both lenders and lessors may require that you purchase gap auto insurance to fully protect the value of your car.

License

Legal authority granted by the state for a specified activity or business enterprise. State insurance departments grant licenses to insurance companies, agents, brokers, and other entities to transact insurance-related business within its borders.

License Bond

A bond guaranteeing that a person who has been issued a license will comply with the laws, regulations, and ordinances associated with the issuance of the license.

Lienholder

The financial institution that holds title of a vehicle until the loan is paid off.

Life Expectancy

The length of time a person of a given age can be expected to live, based on mortality tables.

Limited Collision

Physical damage protection for the insured's vehicle when damage results from impact with another object or upset. Paid ONLY if insured is LESS than 50% at fault. No deductible applies. Coverage only available in state of Michigan.

Liquidation

The conversion of an insolvent organization's assets into cash in order to pay creditors. An insurance department takes this action after it has determined that an insolvent insurer cannot be rehabilitated. Its business is wound up, and any remaining assets are used to pay policyholder claims and other creditors.

Liquor Liability Law

State or local statutes ("dram shop acts") that establish the liability of a business that sells or serves alcoholic beverages to customers for injuries caused by intoxicated customers to third parties. Laws sometimes also include people who serve alcohol to guests.

Living Trust

An ordinary trust established by a person while living to manage and distribute assets to other living persons.


Longevity
Insurance companies often reward their long-time customers with premium discounts. An insurer may provide a discount after an insured has been with the company for a specified amount of time.

Long-Term Care

Custodial care provided by a rehabilitation facility, nursing home or mental hospital on a continuum basis for chronically ill, disabled or retarded individuals. The care may be on an inpatient, outpatient, or at-home basis.

Loss Payee/Lien holder
Usually your lender or lessor, this is the person or entity to whom loss payments are made, in addition to you. Liability Coverage Insurance that provides compensation for a harm or wrong to a third party for which an insured is legally obligated to pay.

Loss

The happening of the event for which insurance pays. The amount the insurer is required to pay because of a happening against which it has insured.

Loss Avoidance

The elimination of a loss exposure by ceasing or never undertaking an activity that produces the exposure. In making this decision, the person or organization must weigh the potential value of the activity against the potential loss.

Loss Control

Prevention and reduction of losses. An insured, often in consultation with an underwriter or loss control specialist, takes measures to reduce the frequency of losses and to minimize the financial impact or severity of a loss.

Loss Expense – Allocated

An expense assigned to and recorded with a specific claim, including defense and investigation costs. Allocated claim expenses have more significance in liability insurance because of the legal costs involved in defending liability claims.

Loss Expense – Unallocated

An expense that cannot be assigned to and recorded with a specific claim. This includes claim department operating expenses such as rent, heat and electricity, and other overhead expenses.

Loss of Use / Services

Applies to a policyholder's exposure to financial loss if the part of the residence premises where the insured lives is damaged so badly that it is "not fit to live in".

Loss Payable Clause

A property insurance policy provision that authorizes the insurer to make a loss payment to a person (loss payee) other than the insured to the extent that the loss payee has an insurable interest in the property.

Loss Prevention

Measures designed to reduce the probability that a loss will occur. See also loss prevention services and loss reduction.

Loss Prevention Services

Survey, consultation, or loss control management services provided to policholders by an insurer to reduce the likelihood of accidents.

Loss Ratio

A formula used by insurers to relate loss expenses to income. Formula: (incurred losses + loss adjustment expenses) divided by earned premiums. See also accident year statistics, burning ratio, expected loss ratio, insured loss ratio.

Loss Reduction

A loss control measure designed to reduce the severity of loss occurrences.

Loss Reserve

An insurer's estimate of the amount an individual claim will ultimately cost. On an insurer's financial statement, it is the amount of estimated liabilities for known claims not yet paid and incurred but not reported claims.

Mail Order Insurer

Type of insurance company that sells policies through the mail or other mass media, eliminating need for agents.

Manual Rate

A loose-leaf manual, periodically updated or revised, that contains rules, rates and other information prepared by an insurance company or rating bureau to develop premiums for insurance policies. Hard-copy manuals have been supplemented or replaced by electronic data (CD-ROMs, computer disks, electronic networks).

Manuscript Policy

An insurance policy designed or tailored for a large commercial insured; a unique coverage written at the request of a broker or a risk manager.

Marital deduction

A reduction of an estate for estate tax purposes, which is available if the decedent is survived by his or her spouse, can be as large as the administrator or executor elects so long as it does not exceed the value of qualifying property passing to the surviving spouse.

Market Price

The price at which a security can be bought or sold at any particular time.

Master Policy

An original, complete insurance policy contract that is issued by an insurer with the understanding that certificates of insurance or underlying policies will be issued to others; for example, a master group health policy is issued to an employer while certificates are given to the employees. A master policy and underlying policies may be issued to a property owner to comply with requirements of a mortgage holder.

Material Damage

Insurance against damage to a vehicle itself. It includes automobile comprehensive, collision, fire and theft. Material damage and physical damage are terms that often are used inter- changeably.

Maximum family benefit

The largest amount in Social Security benefits that will be paid to any family unit.

McCarran-Ferguson Act

Federal legislation (U.S. Code Title 15, Chapter 20) enacted in 1945 to permit the states to continue regulating the insurance business after the Supreme Court, in U.S. v. South-Eastern Underwriters Association, overruled the decision in Paul v. Virginia, declaring insurance to be interstate commerce and therefore within Congress's constitutional authority to regulate. Under the Act, insurance is exempt from some federal antitrust statutes to the extent that it is regulated by the states. The exemption primarily applies to gathering data in concert for the purpose of ratemaking. Otherwise, antitrust laws prohibit insurers from boycotting, acting coercively, restraining trade, or violating the Sherman or Clayton Acts.

Medicaid

A state medical benefit program for persons, regardless of age, whose income and resources are insufficient to pay for health care. As of January 1, 1966, federal matching funds were provided to the states under Title XIX of the Social Security Act.

Medical Examination

The examination given by a qualified physician to determine to the insurability of an applicant. A medical examination may also be used to determine whether an insured claiming disability is actually disabled.

Medical Payments Insurance

A coverage, available in various liability insurance policies, in which their insurer agrees to reimburse the insured and others, without regard for the insured's liability, for medical or funeral expenses incurred as the result of bodily injury or death by accident under specified conditions.

Medical Payments Coverage

Medical payments coverage, also called personal injury protection, or PIP, covers the cost of injuries to you, your family, and your passengers.

Medicare

A federally administered program of hospital insurance (Part A) and supplementary medical insurance (Part B) primarily for people over 65, created by 1965 amendments to the Social Security Act. It also covers people of any age with permanent kidney failure and certain other disabilities. The Health Care Financing Administration in the U.S. Department of Health and Human Services reimburses hospitals and physicians for services to qualified patients. Part A (hospital insurance) coverage is automatic for all eligible people and is financed by a payroll tax on employers and employees. Part B (supplementary medical insurance) is a voluntary program of government-subsidized insurance requiring participants to make premium payments.

Medigap

Private insurance purchased by Medicare participants on a voluntary basis that is designed to fill the gaps in Medicare, such as coinsurance, deductibles and noncovered services (e.g., hospital stays beyond a certain length).

Minimum Liability Limits
These vary locally, they are the lowest amounts of liability coverage that you can legally buy in your state.

Minimum Benefits

A provision that a minimum amount of annuity will be paid if the regular benefit formula produces less. This minimum is usually payable only if certain service requirements are met at retirement.

Minimum Group

The minimum number of persons required to form a group insurance program under state law; the minimum number that an insurance company requires to issue a group policy.

Miscellaneous Expenses

Expenses involving hospital care other than room, board and doctors' fees, such as lab tests, drugs and radiology. Most hospital policies limit coverage for these expenses by scheduling the amounts covered or combining them for a an aggregate limit.

Misrepresentation

A false, incorrect, improper, or incomplete statement of a material fact, made in the application for a policy.

Moral Hazard

Circumstances of morals or habits that increase the probability of a loss from an insured peril. Example: An insured previously convicted of arson.

Morbidity

The frequency of the incidence of disease, illness or sickness.

Morbidity Tables

A table showing the number of individuals exposed to the risk of illness, sickness, and disease at each age, and the actual number of individuals who incurred an illness, sickness, and disease at each age.

Mortality Table

A table that indicates the number of individuals within a specified group of individuals (males, females, airline pilots, etc.), starting at a certain age, who are expected to be alive at succeeding ages. It is used to derive the "natural premium" for an individual life policy.

Motor Vehicle Records

The record maintained by a state motor vehicle department of a driver's accidents and traffic violations.

Motor Vehicle Report

Report that lists the moving violations and accidents that a driver has had in the past several years.


Multi-Peril Policy

A package policy which provides protection against a number of separate perils. Multi-peril policies are not necessarily multiple line policies, since the combined perils may be all within one insurance line.

Multiple Employer Trust (MET)

A legal trust formed by a health benefit plan sponsor to combine a number of small, unrelated employers for the purpose of providing group medical coverage on an insured or group self-insured basis.

Mutual Insurance Company

An insurance company that has no capital stock, but is owned by its policyholders, who elect a board of directors or trustees through whom business is conducted. Any earnings belong to the policyholders and may be distributed to them as policy dividends or educed premiums.

Multi-car discount
Discount often given when insuring multiple vehicles under the same policy. By choosing this option, you will almost always save over having separate policies for each car.

Named Perils

Coverage in a property policy that provides protection against loss from only the perils specifically listed in the policy rather than protection from physical loss. Examples of named perils are fire, windstorm, theft, smoke, etc.

National Association of Insurance Commissioners (NAIC)

The association of insurance commissioners of various states formed to promote national uniformity in the regulation of insurance.

Named Driver Exclusion
An individual specifically identified on the policy as an excluded driver. This often applies to teen-aged family members, whose inclusion in a policy would raise the premium considerably.

Named Insured
Entities or individuals named on the policy as insured by that policy. Most commonly this refers to spouses and other relatives living in the household.

Negligence

Failure to use the care that a reasonable and prudent person would have used under the same or similar circumstances.

Net Premium

The portion of the premium rate which is designed to cover benefits of the policy, but not expenses, contingencies, or profit.

Net written premiums

Premium income retained by insurance companies, directly or through reinsurance, after payments made for reinsurance.

No-Fault Insurance.

(1) A type of auto insurance mechanism whereby the right to sue another party for damages caused by negligence is limited and, in exchange, expanded first party benefits are offered.

(2) A form of insurance by which a person's financial losses resulting from an automobile accident are paid by his or her own insurer regardless of who was at fault. Thirteen states currently use some form of no fault insurance.

No-Fault

A type of auto insurance mechanism whereby the right to sue another party for damages caused by negligence is limited and, in exchange, expanded first party benefits are offered.

No-fault Automobile Insurance

A form of insurance by which a person's financial losses resulting from an automobile accident are paid by his or her own insurer regardless of who was at fault.

Non-drivers

A nondriver is any person who lives in the household that is not listed as a driver or excluded. Nondrivers include children under legal driving age and someone who has NEVER held a drivers license.

Nonconfining Sickness

A sickness that disables the insured person but does not confine him to his home or a hospital.

Noncontributory

A term applied to employee benefit plans under which the employer bears the full cost of the benefits for the employees. One hundred percent of the eligible employees must be insured.


Nondisabling Injury

An injury which may require medical care, but does not result in loss of working time or income.

Nondisabling Injury Benefit

A benefit in some disability income policies providing payment for medical expense due to injury when medical care is necessary but the insured is not totally disabled.


Nonforfeiture Option

One of the choices available if the policyholder discontinues premium payments on a policy with a cash value. This, if any, may be taken in cash, as extended term insurance or as reduced paid-up insurance.

Nonmedical Limit

The maximum face value of a policy that a given company will issue without the applicant taking a medical examination.

Nonoccupational Policy

One that provides off-the-job coverage only; it does not cover loss resulting from accidents or sickness arising out of or in the course of employment or covered under any workers' compensation law.

Nonoccupational Policy

Contract which insures a person against off-the-job accident or sickness. It does not cover disability resulting from injury or sickness covered by Workers' Compensation. Group accident and sickness policies are frequently non- occupational.

Nonparticipating Insurance

Plan of insurance under which the policy-holder is not entitled to share in the dividend distribution of the company.

Nonparticipating Policy

A life insurance policy in which the company does not distribute to policyholders any part of its surplus. Note should be taken that premiums for nonparticipating polices are usually lower than for comparable participating polices. Note should also be taken that some nonparticipating polices have both a maximum premium and a current lower premium. The current premium reflects anticipated experience that is more favorable than the company is willing to guarantee, and it may be changed from time to time for the entire block of business to which the policy belongs. (See also - Participating policy)

Nonprofit Insurers

Persons organized under special state laws to provide hospital, medical, or dental insurance on a nonprofit basis. The laws exempt them from certain types of taxes.


Number of Drivers
Somewhat self-explanatory: the number of drivers who covered under your policy. This usually includes you, your spouse, and any relatives living in your household (unless otherwise excluded.)

Number of Vehicles
The number of cars covered under your policy. If you want to insure more than four vehicles, you may have to purchase an additional policy.

Occupation
Insurance companies often use your occupation, and the distance that you drive to work every day, to calculate risk. Certain professions incur higher premiums, though this is not common.

Occupational Hazards

Occupations which expose the insured to greater than normal physical danger by the very nature of the work in which the insured is engaged, and the varying periods of absence from the occupation, due to the disability, that can be expected.

Occurrence

An accident, including continuous or repeated exposure to substantially the same general, harmful conditions, that results in bodily injury or property damage during the period of an insurance policy.

Occurrence policy

A liability insurance policy that covers claims arising out of occurrences that take place during the policy period, regardless of when the claim is filed.

Ocean Marine Insurance

Insurance for sea-going vessels, including liabilities connected with them, and their cargoes.

Ocean Marine Insurance

Coverage on all types of vessels, including liabilities connected with them, and on their cargoes.

Odometer Reading
The total number of miles that a car has been driven in its "lifetime". Certain insurers will not even offer a quote for vehicles with more than a set amount of miles on its odometer.


Operating Ratio

The sum of expenses and losses expressed as a percent of earned premium.

Optionally Renewable Contract

A contract of health insurance in which the insurer reserves the right to terminate the coverage at any anniversary or, in some cases, at any premium due date, but does not have the right to terminate coverage between such dates.

Ordinary Life

Synonymous With Whole Life and Straight Life - The three terms are applied to the type of policy which continues during the whole of the insured's life and provides for the payment of amount insured at this death.

Ordinary Life Insurance

Life insurance usually issued in amounts of $1,000 or more with premiums payable on an annual, semi-annual, quarterly or monthly basis.

Over-the Counter Market

A means of buying and selling securities that are not listed on a stock exchange. Negotiations are carried out by telephone or computer network.

Overhead Expense Insurance

A special form of health insurance designed to help offset overhead expenses such as office rent, utilities, employees' wages, and auditors' fees, incurred during total disability. The monthly payments during disability is not a fixed amount of indemnity as on regular disability polices, but the amount of overhead expense actually incurred, or a percentage thereof, up to the limit specified in the policy.

Overhead Insurance

A type of short-term disability income contract that reimburses the insured person for specified, fixed monthly expenses, normal and customary in the operation and conduct of his/her business or office.

Overriding Commission (Overwrite)

A commission paid to general agents or agency managers in addition to the commission paid the soliciting agent or broker.

Package Policy

A combination of two or more individual polices or coverages into a single policy. A homeowners policy, for example, is a package combining property, liability and theft coverages for the homeowner.

Paid-up Insurance

Insurance on which all required premiums have been paid. The term is frequently used to mean the reduced paid-up insurance available as a nonforfeiture option.

Paramedical Examination

Physical examination of an applicant by a trained person other than a physician.

Partial Disability

A benefit sometimes found in disability income policies providing for the payment of reduced monthly income in the event the insured cannot work full time and/or is prevented from performing one or more important daily duties pertaining to his occupation.

Participating Insurance

Insurance issued by an insurance company providing participation in dividend distribution.

Participating Policy

A life insurance policy under which the company agrees to distribute to policyholders the part of its surplus which its Board of Directors determines is not needed at the end of the business year. Such a distribution serves to reduce the premium the policyholder had paid. (See also - Policy dividend; Nonparticipating policy)

Pension Benefit Guaranty Corporation (PBGC)

The Federal body responsible for administering the plan termination insurance program under ERISA.

Pension Benefits

A series of payments to be provided in accordance with the plan of benefits.

Pension Plan

A plan established and maintained by an employer, group of employers, union or any combination, primarily to provide for the payment of definitely determinable benefits to participants after retirement.

Percentage Participation

A provision in a health insurance contract that the insurer and insured will share covered losses in agreed proportions. Also see Coinsurance.

Peril

The cause of a possible loss, such as fire, windstorm, theft, explosion, or riot.

Permanent Life Insurance

A phrase used to cover any form of life insurance except term; generally insurance that accrues cash value, such as whole life or endowment.


Per Occurrence Limit
This refers to the cap amount an insurance company will pay for all claims arising from a single incident. In an automobile accident, it comprises bodily injuries sustained by all parties. When Bodily Injury coverage is purchased in split limits, the second limit is the "per occurrence" limit: e.g. $100,000(per person)/$300,000(per occurrence.)

Per Person Limit
This refers to the cap amount an insurance company will pay for any one person's injuries arising from a single incident. In an automobile accident, it comprises bodily injuries sustained by each person. When Bodily Injury is purchased in split limits, the first limit is the "per person" limit: e.g. $100,000(per person)/$300,000(per occurrence.)

Personal Auto Policy

Also known as "PAP", personal auto policies are the most common type of auto insurance policies sold. They include coverage for liability, medical payments, uninsured/underinsured motorist coverage, and physical damage protection.

Persistency

The degree to which policies stay in force through the continued payment of renewal premiums.

Personal Articles Floater

A form of coverage designed to meet the needs for insurance on property of a moveable nature. The coverage usually protects against all physical loss, subject to special exclusions and conditions. Examples of property covered include jewelry, furs, silverware, fine arts.

Personal Injury Protection (PIP)

First-party no-fault coverage in which an insurer pays, within the specified limits, the wage loss, medical, hospital and funeral expenses of the insured.

Personal Injury Protection

Also known as "PIP", this is the name given to no fault benefits in those states that have some sort of no fault auto insurance laws. This type of coverage usually includes benefits for medical expenses, loss of income, essential services, accidental death, funeral expenses, and survivor benefits.

Personal Lines

Those types of insurance, such as auto or home insurance, for individuals or families rather than for businesses or organizations.

Personal representative

A person appointed through the will of a deceased or by a court to settle the estate of one who dies.


Physical Damage

Damage to or loss of the auto resulting from collision, fire, theft or other perils.

Physician's Expense Insurance

Coverage which provides benefits toward the cost of such services as doctor's fees for nonsurgical care in the hospital, at home or in a physician's office, and X-rays or laboratory tests performed outside the hospital. (Also called Regular Medical expense Insurance.)

Plan Administrator

The person or persons controlling the money or property contributed to the plan, usually designated in the plan agreement.

Point-of-Service Plans

Often known as open-ended HMOs or PPOs, these plans permit insureds to choose providers outside the plan yet are designed to encourage the use of network providers.

Policy

The legal document issued by the company to the policyholder, which outlines the conditions and terms of the insurance; also called the policy contract or the contract.

Policy Dividend

A refund of part of the premium on a participating life insurance policy reflecting the difference between the premium charged and actual experience.

Policyholder

A person who pays a premium to an insurance company in exchange for the insurance protection provided by a policy of insurance.

Policyholders' Surplus

Sum left after liabilities are deducted from assets. Sums such as paid-in capital and special voluntary reserves are also included in this term. This surplus is an additional financial protection to policyholders in the event a company suffers unexpected or catastrophic losses. In effect, it is the financial base that permits a company to sell insurance.

Policy Loan

A loan made by a life insurance company from its general funds to a policyholder on the security of the cash value of a policy.

Policy Reserves

The measure of the funds that a life insurance company holds specifically for fulfillment of its policy obligations. Reserves are required by law to be so calculated that, together with future premium payments and anticipated interest earnings, they will enable the company to pay all future claims.

Policy Term

That period for which an insurance policy provides coverage.

Pollution Liability

Exposure to lawsuits for injury or cleanup costs that result from pollution damage

Pool

An organization of insurers or reinsurers through which particular types of risk are underwritten and premiums, losses and expenses are shared in agreed-upon amounts.

Portability

The transfer of pension rights and credits when a worker changes jobs.

Preadmission Certification

Process in which a health care professional evaluates an attending physician's request for a patient's admission to a hospital by using established medical criteria.

Preexisting Condition

A physical and/or mental condition of an insured which first manifested itself prior to the issuance of his/her policy or which existed prior to issuance and for which treatment was received.

Preexisting Condition

A physical condition that existed before the effective date of coverage.

Preferred Provider Organization (PPO)

An arrangement whereby a third-party payer contracts with a group of medical care providers who furnish services at lower than usual fees in return for prompt payment and a certain volume of patients.

Preferred Stock

Evidence of ownership which entitles the owners to receive dividends from the corporation before the common stockholders and which usually also provides a prior claim to corporate assets if the corporation is dissolved.

Premium

The sum paid by a policyholder to keep an insurance policy in force.

Premium Finance

Allows the insured to pay part of the premium when coverage takes effect and pay the rest during the policy period.

Premium Loan

A policy loan made for the purpose of paying premiums.

Premium Tax

A tax, imposed by each state, on the premium income of insurers doing business in the state.

Prepaid Group Practice Plan

A plan under which specified health services are rendered by participating physicians to an enrolled group of persons, with a fixed periodic payment in advance made by or on behalf of each person or family. If a health insurance carrier is involved, a contract to pay in advance for the full range of health services to which the insured is entitled under the terms of the health insurance contract. Such a plan is one form of Health Maintenance Organization (HMO).

Primary Insurance

Insurance that pays compensation for a loss ahead of any other insurance coverages the policyholder may have.

Principal Sum

The amount payable in one sum in the event of accidental death and in, some cases, accidental dismemberment. When a contract provides benefits for both accidental death and accidental dismemberment, each dismemberment benefit is an amount equal to the principal sum or some fraction thereof.

Probate

The court-supervised process of validating or establishing a distribution for assets of a deceased including the payment of outstanding obligations.

Probate Estate

That portion of the assets and liabilities whose distribution is supervised by the courts in the probate process.

Probationary Period

A period from the policy date to a specified time, usually 15 to 30 days, during which no sickness coverage is effective. It is designed to eliminate a sickness actually contracted before the policy went into effect.

Product Liability

Legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage resulting from the use of its product.

Product Liability Insurance

Protection against financial loss arising out of the legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage resulting from the use of a covered product.

Professional Review Organization (PRO)

An organization in which practicing physicians assume responsibility for reviewing the propriety and quality of health care services provided under Medicare and Medicaid.

Proof of Loss

Documentary evidence required by an insurer to prove a valid claim exists. It usually consists of a claim form completed by the insured and the insured's attending physician. For medical expense insurance itemized bills must also be included.

Proof of Loss.

Documentation presented to the insurance company by the insured in support of a claim so that the insurer can determine its liability under the policy. For automotive insurance itemized estimates must also be included.

Property Damage Coverage.

An agreement by an insurance carrier to protect an insured against legal liability for damage by an insured automobile to the property of another.

Property Insurance

Insurance providing financial protection against the loss of, or damage to, real and personal property caused by such perils as fire, theft, windstorm, hail, explosion, riot, aircraft, motor vehicles, vandalism, malicious mischief, riot and civil commotion, and smoke.

Proration

The adjustment of benefits paid because of a mistake in the amount of the premiums paid or the existence of other insurance covering the same accident or disability.

Physical Damage
The physical damage to the covered vehicle caused by (though often not limited to) collision with another vehicle, vandalism, theft, etc.

Policy
The actual contract between you and the insurance company, which spells out your coverages, rights, and obligations. Learn more about the contents of insurance policy documents.

Policy Period
The period of time during which you are covered by your policy.

Premium
The cost of your insurance policy and all the included coverage.

Pro Rata Cancellation
What happens when you cancel your policy before it expires. Pro Rata refers to the amount of money that may be refunded to you based on the amount of time left on your policy that you have already paid for.

Property Damage Liability

Coverage for physical damage caused to property when the insured person is liable.

Prospective Payment

An advancement of payment for health care charges that are likely to occur.

Prototype Plan

A standardized plan, approved and qualified as to its concept by the Internal Revenue Service, which is made available by life insurance companies, banks and mutual funds for employers' use.

Provision

A part (clause, sentence, paragraph, etc.) of an insurance contract that describes or explains a feature, benefit, condition, requirement, etc. of the insurance protection afforded by the contract.

Proximate Cause

The dominating cause of loss or damage; an unbroken chain of events between the occurrence and damage.

Punitive Damages

A court-awarded amount that exceeds the economic losses and general damages of a defendant and is intended solely to punish the plaintiff.

Qualification Period

The period during which the insured must be totally disabled before becoming eligible for residual disability benefits.

Qualified Impairment Insurance

A form of substandard or special class insurance, which restricts benefits for the insured person's particular condition.


Qualified Plan

A plan which the Internal Revenue Service approves as meeting the requirements of Section 401(a) of the 1954 Internal Revenue Code. Such plans receive tax advantages.

Qualified terminable interest property

A category of property, created by the Economic Recovery Tax Act, which by a deceased spouse's will entitles the surviving spouse to all income from the property for life, with that income payable at least annually, and precludes anyone including the spouse from appointing the property to anyone else during the spouse's life.

Rate

The pricing factor upon which the insurance buyer's premium is based.

Rated Policy

Sometimes called an "extra-risk" policy, an insurance policy issued at a higher-than-standard premium rate to cover the extra risk where, for example, an insured has impaired health or a hazardous occupation.

Ratemaking

The statistical process by which insurers determine risks and pricing for the basic classes of insurance.

Rating Territory

A geographical grouping in which like hazards tend to equalize and permit the establishment of an equitable rate for the territory.

Reasonable and Customary Charge

A charge for health care, which is consistent with the going rate or charge in a certain geographical area for identical or similar services.

Rebating

Giving any valuable consideration, usually all or part of the commission, to the prospect or insured as an inducement to buy or renew. Rebating is prohibited by law.

Recurring Claim Provision

A provision in some health insurance policies which specifies a length of time during which the recurrence of a condition is considered to be a continuation of a previous period of disability or hospital confinement.

Recurring Clause

A provision in some health insurance policies, which specifies a period of time during which the recurrence of a condition is considered a continuation of a prior period of disability or hospital confinement.

Reduced Paid-up Insurance

A form of insurance available as a nonforfeiture option. It provides for continuation of the original insurance plan, but for a reduced amount.

Regulation

Supervision of business practices by a governmental entity.

Rehabilitation

(1) Restoration of a totally disabled person to a meaningful occupation, (2) a provision in some long- term disability policies that provides for continuation of benefits or other financial assistance while a totally disabled insured is retraining or attempting to resume productive employment.

Reimbursement

The payment of the expenses actually incurred as a result of an accident or sickness, but not to exceed any amount specified in the policy.

Reinstatement

The resumption of coverage under a policy which has lapsed.

Reinsurance

Assumption by one insurance company of all or part of a risk undertaken by another insurance company.

Reinsurance Facility

An alternative mechanism to service those insureds that cannot obtain insurance in the voluntary market. Premiums and losses for the business that is ceded to the facility are pooled and all insurers share according to their proportion of the voluntary market.

Renewable Term Insurance

Term insurance which can be renewed at the end of the term, at the option of the policyholder and without evidence of insurability, for a limited number of successive terms. The rates increase at each renewal as the age of the insured increases.

Renewal

Continuance of coverage under a policy beyond its original term by the insurer's acceptance of the premium for a new policy term.

Renter's Policy

A package type of insurance that includes coverage similar to a homeowners policy to cover the personal property of a renter or tenant in a building.

Replacement

The substitution of health insurance coverage from one policy contract to another.

Replacement Cost

The cost to repair or replace property at construction costs prevailing at time of loss; the cost to repair or rebuild property without considering depreciation. (See Actual Cash Value)

Replacement ratio

The percentage of income before retirement that is required to be replaced to maintain the same standard of living after retirement.

Representation

Statements made by an applicant in the application, which he represents as being substantially true to the best of his knowledge and belief, but which are not warranted as exact in every detail.

Rescission

Termination of an insurance contract by the insurer on the grounds of material misstatement on the application for insurance. The action of rescission must take place within the contestable period or Time Limit on Certain Defenses but takes effect as of the date of issue of the policy, thus voiding the contract from its inception.

Reservation of Rights

An arrangement whereby an insurer defends a case without commitment to provide coverage in the event that the facts disclosed during the trial reveal that the occurrence is not covered.

Reserve

(1) An amount representing liabilities kept by an insurer to provide for future commitments under policies outstanding. (2) An amount allocated for a special purpose. Note that a reserve is usually a liability and not an extra fund.

Residual Disability

A period of partial disability that immediately follows a period of total disability. Benefits for residual disability are paid on a pro-rata basis, depending on the percentage of earnings loss.

Residual Disability Benefits

A provision in an insurance policy that provides benefits in proportion to a reduction of earnings as a result of disability, as opposed to the inability to work full-time.

Residual Market

A system through which insurance is made available to buyers that represent unusually high risks.

Retention

The net amount of risk retained by an insurance company for its own account or that of specified others, and not reinsured.

Retrocession

The process by which a reinsurer obtains reinsurance from another company.

Retrospective Date

The first date for which claims will be paid under a claims-made policy of liability insurance.

Retrospective Rating

Rating procedure which allows adjustment of an insured's final rate on the basis of the insured's own loss experience.

Revocable Trust

A trust that can be terminated or revoked by its creator.

Rider

A special policy provision or group of provisions that may be added to a policy to expand or limit the benefits otherwise payable.

Right of Survivorship

At the death of one co-owner of property, that person's interest in the property automatically passes to the surviving joint tenant or tenants.

Risk

The chance of loss. Also used to refer to the insured or to property covered by a policy. A term used to refer to a person or the peril insured.

Risk Classification

The process by which a company decides how its premium rates for life insurance should differ according to the risk characteristics of individuals insured (e.g., age, occupation, sex, state of health) and then applies the resulting rules to individual applications. (See - Underwriting)

Risk Control

Any conscious action (or decision not to act) intended to reduce the frequency, severity, or unpredictability of accidental losses.

Risk Retention Group

An alternative form of insurance in which members of a similar profession or business band together to self insure their risks.

Robbery

The taking of property from a person by force or threat of violence.

Rollover

Transfer of IRA or other qualified pension funds from one financial institution (trustee) to another.

Rated Annual Mileage
This is the annual mileage that is used to determine the mileage rating classification that is applied to a vehicle.

Rental Reimbursement
This optional coverage will pay for the use of a rental car while damage to your car is being fixed or while the claim for a totaled vehicle is processed.

Renewal

Continuance of coverage under a policy beyond its original term by the insurer's acceptance of the premium for a new policy term.


Safety Equipment
Enhancements in your car, such as automatic seat belts and driver-side and passenger-side airbags, that reduce your risk of being injured in a collision. Vehicles with safety equipment often qualify for discount car insurance.

Salvage

Recovery made by an insurance company by the sale of property which has been taken over from the insured as a part of loss settlement.

Self- Administered (Trusteed or Directly Invested) Plan

A plan funded through a fiduciary, generally a bank, but sometimes a group of individuals, which directly invests the accumulated funds. Retirement payments are made from the fund as they fall due.

Self-Administration

The procedure where an employer maintains all records regarding the employees covered under a group insurance plan.

Self-Insurance

A program for providing group insurance with benefits financed entirely through the internal means of the policyholder, in place of purchasing coverage from commercial carriers.

Senior Citizen Policies

Contracts insuring persons 65 years of age or more. In most cases, these policies supplement the coverage afforded by the government under the Medicare program.

Separate Account

An asset account established by a life insurance company separate from other funds, used primarily for pension plans and variable life products. This arrangement permits wider latitude in the choice of investments, particularly in equities.

Service-Type Plans

Plans that provide their benefits in the form of services rendered rather than cash (for example, Blue Cross and Blue Shield).

Settlement Options

The several ways, other than immediate payment in cash, which a policyholder or beneficiary may choose to have policy benefits paid.

Short-Term Disability Income Insurance

The provision to pay benefits to a covered disabled person as long as he/she remains disabled up to a specified period not exceeding two years.

Sickness Insurance

A form of health insurance providing benefits for loss resulting from illness or disease.

Skip person

a beneficiary who is at least two generations younger than the person making the transfer.

Social Security Freeze

A long- term disability policy provision which establishes that the offset from benefits paid by Social Security will not be changed regardless of subsequent changes in the Social Security law.

Social Security Option

An option under which the employee may elect that monthly payments of an annuity before a specified age (62 or 65) be increased, and that payments thereafter be decreased to produce, as nearly as practical, a level total annual annuity to the employee, including Social Security benefits when they become due.

Soft Market

That part of the insurance sales cycle in which competition is at a maximum as insurance companies use their excess capacity to sell more policies at lower prices (see "Hard market").

Special Damages

Compensation awarded for actual economic losses, such as medical expenses and lost wages. (See general damages)

Special Risk Insurance

Coverage for risks or hazards of a special or unusual nature.

Split Funding

The use of two or more funding agencies for the same pension plan. An arrangement whereby a portion of the contributions to the pension plan are paid to a life insurance company and the remainder of the contributions invested through a corporate trustee, primarily in equities.

Split Limit
Limits set on the types of coverages that are part of one group of benefits. Most often applied to liability insurance.

Spouse's Benefit

Payments to the surviving spouse of a deceased employee, usually in the form of a series of payments upon meeting certain requirements and usually terminating with the survivor's remarriage or death.

SR-22 (Financial Responsibility Filing)
A requirement by a state regulatory entity (usually the state Motor Vehicle Department) for an insurance company to certify on a driver's behalf that the driver has the ability to pay future claims up to the state required limit. The certification is done by means of a form called an SR-22.

Standard Insurance

Insurance written on the basis of regular morbidity underwriting assumption used by an insurance company and issued at normal rates.

Standard Markets

Insurance companies for which the vast majority of people qualify

Standard Provisions

A set of policy provisions prescribed by former laws setting forth certain rights and obligations of both the insured and the company under an individual policy of health insurance. These were originally introduced in 1912 and have now been replaced by the Uniform Provisions.

Standard Risk

A person who, according to a company's underwriting standards, is entitled to purchase insurance protection without extra rating or special restrictions.


State-of-the-Art Defense

An argument used in product liability cases that the technology needed to avoid the loss in a particular case did not exist at the time of the product's manufacture

State Disability Plan

A plan for accident and sickness, or disability insurance required by state legislation of those employers doing business in that particular state.

State Fund

A fund set up by a state government to provide a specific line or lines of insurance. Some state permit private insurers to compete with the state fund.

State Insurance Department

A department of a state government whose duty is to regulate the business of insurance and give the public information on insurance.

Statutory Accounting

Special accounting practices for insurance companies required by state law and designed to provide greater protection for the public against potential insolvency of these essential institutions.

Statutory Accounting Principles (SAP)

Principles required by statute which must be followed by an insurance company when submitting its financial statements to the various state insurance departments. Such principles differ from the Generally Accepted Accounting Principles (GAAP).

Statutory Underwriting Profit or Loss

Premiums earned less losses and expenses.

Step-Rate Premium

A rating structure in which the premiums increase periodically at pre-determined times such as policy years or attained ages.

Step-up in basis

An increase in the tax basis of property to the value claimed in the taxable estate of a decedent.

Stock Company

A company organized and owned by stockholders, as distinguished from the mutual form of company which is owned by its policyholders.

Stock Exchange

An organization that provides a facility for buyers and sellers of listed securities to come together to make grades in those securities.

Stockholder (or shareholder)

A person who owns shares of stock in a corporation.

Stock Insurance Company

A company in which the legal ownership and control is vested in the stockholders.

Stock Life Insurance Company

A life insurance company owned by stockholders who elect a board to direct the company's management. Stock companies, in general, issue nonparticipating insurance, but may also issue participating insurance.

Stock Redemption Plan

An entity purchase form of buy-sell agreement within a corporation that involves the corporation buying back shares from a departing owner.

Straight Life Insurance

Whole life insurance on which premiums are payable for life.

Strict Liability

Liability for damages even though fault or negligence cannot be proven.


Subrogation

Process by which one insurance company seeks reimbursement from another company or person for a claim it has already paid.

Substandard (Impaired Risk)

A risk that cannot meet the normal health requirements of a standard health insurance policy. Protection is provided in consideration of a waiver, a special policy form, or a higher premium charge. Substandard risks may include those persons who engage in certain sports and persons who are rated because of poor habits or morals.

Substandard Insurance

Insurance issued with an extra premium or special restriction to those persons who do not qualify for insurance at standard rates.


Substandard Risk

A risk that cannot meet the normal requirements of an auto insurance policy. Protection is provided in consideration of a waiver, a special policy form, or a higher premium charge. Substandard risks may include those persons who are rated because of poor driving habits.

Substandard Risk

An individual, who, because of health history or physical limitations, does not measure up to the qualification of a standard risk.

Supplementary Contract

An agreement between a life insurance company and a policyholder or beneficiary by which the company retains the cash sum payable under an insurance policy and makes payments in accordance with the settlement option chosen.

Surety Bond

An agreement providing for monetary compensation in the event of a failure to perform specified acts within a stated period. The surety company, for example, becomes responsible for fulfillment of a contract if the contractor defaults.

Surgical Expense Insurance

Health insurance policies, which provide benefits toward the physician's or surgeon's operating fees. Benefits may consist of scheduled amounts for each surgical procedure.

Surgical Schedule

A list of cash allowances attached to the policy, which are payable for various types of surgery, with a maximum amount based upon the severity of the operation.

Surplus

The net worth of a company, i.e. the amount by which assets exceed liabilities. Adequate net worth is necessary for the protection of policyholders against unforeseen losses.

Surplus Lines

(1) A risk or a part of a risk for which there is no normal insurance market available. (2) Insurance written by non-admitted insurance companies.

Suspended or Revoked License
Drivers with a licence suspension on their driving record face higher premiums, and are often barred from getting insurance coverage from mainstream companies.

Table of multiples

The life expectancy figures provided by the Internal Revenue Service to be used in calculating the exclusion ratio for life contingent annuities after June 30, 1986. Separate tables provide the figures for joint and last survivor annuities, annuities that contain a refund or minimum payment guarantee, and for annuities that pay quarterly, semiannually, or annually.

Taxable estate

The value upon which estate taxes are calculated by the federal government.

Tax Basis

The cost from which your profits or losses are calculated for income tax purposes.

Temporary Life Annuity

An annuity payable while the annuitant lives but not beyond a specified period, such as five years. No payments are to be made after the end of the stipulated temporary period or the death of the annuitant.

Tenants in common

A form of joint property ownership in which the owners may have unequal shares and which does not involve a right of survivorship.

Term
The period of time during which the policy is in effect.

Term Insurance

Life or health insurance protection during a limited number of years but expiring without value if the insured survives the stated period.

Testamentary trust

A trust created through the will of its creator.

Third-party over suit

A lawsuit where a third party tries to recover damages assessed against that party by bringing suit against the employer.

Third Party

The claimant under a liability policy. So called because the person making the claim is not one of the two parties, insured and insurer, to the insurance contract.

Third party claim

A demand made by a person against a policyholder of another company and any payment that will be made by that company.

Threshold Level
In the case of some no fault insurance laws, the point at which the insured may bring tort action for non-economic (pain and suffering) damages under a No Fault Auto Plan. Many of these plans prohibit tort action for pain and suffering unless medical bills exceed a set figure, or disfigurement or death occur.

Threshold (No-Fault)

The point, measured in money, time or other ways, beyond which tort liability can be established. Until that point is reached, reparations must be paid within the provisions of the no-fault plan, with no recourse to the courts.

Time Limit

The period of time during which a notice of claim or proof of loss must be filed.

Time Limit on Certain Defenses

The 2-year or 3-year time period in health policies after which the insurer cannot deny a claim or void the policy because of pre-existing conditions or misstatements on the application.

Tornado

A whirling wind over land, accompanied by a funnel-shaped cloud. It is usually very violent and destructive in a narrow path, often for many miles.

Tort
A private wrong or harm (other than a breach of contract) committed against another, resulting in legal liability. A tort is either intentional or accidental (negligent). Auto liability insurance is purchased to protect one from suits arising from unintentional torts.

Total Disability

An illness or injury which prevents an insured person from continuously performing every duty pertaining to his/her occupation or engaging in any other type of work. (This wording varies among insurance companies.)

Towing and Labor Costs
An endorsement, which pays for the costs associated with certain repairs and towing in the event of an accident. You're better off with an auto club.

Transferability

Any arrangement under which the accumulated benefit credits of a terminating participant, or their actuarial value, are transmitted from one plan to another, or to a central agency.

Travel Accident Policy

A limited contract covering only accidents while an insured person is traveling, usually on a commercial carrier.

Treaty

An agreement between a reinsurer and a ceding insurer setting forth details of the reinsurance arrangement.

Trust

A legal instrument allowing one party to control property for the benefit of another.

Turnover Rate

The rate at which employees terminate covered service other than by death or retirement. Expected future turnover can be taken into account in translating contributions into benefits.

Twisting

The practice of inducing by misrepresentation, or inaccurate or incomplete comparison, a policyholder in one company to lapse, forfeit or surrender his insurance for the purpose of taking out a policy in another company.

Uninsured Motorists Bodily Injury
Uninsured motorists bodily injury coverage (which must be offered in most states) pays for a covered person's bodily injuries for which an uninsured or hit-and-run motorist is legally liable, but unable to pay.

Underinsured Motorists Bodily Injury
Underinsured motorists bodily injury coverage (which must be offered in most states) pays for a covered person's bodily injuries for which a person with not enough insurance is legally liable.

Uninsured/Underinsured Motorists Coverage

This coverage provides protection for the insured, resident relatives, and occupants of a covered vehicle in an accident in which the owner or operator of a motor vehicle who is legally liable and either does not have sufficient coverage or does not have any insurance to cover the loss.

Unearned Premium
The part of your policy term remaining before expiration. If your six-month policy is in effect a months, the unearned premium is 5/6.

Usage

The primary function of your vehicle, can be categorized as either "business", "commute", or "pleasure".

Underwriter

(a) A company that receives the premiums and accepts responsibility for the fulfillment of the policy contract; (b) the company employee who decides whether or not the company should assume a particular risk; (c) the agent who sells the policy.

Uninsured (Underinsured) Motorist Coverage

A form of insurance that pays the policy holder and passengers in his/her car for bodily injury caused by the owner or operator of an uninsured or inadequately insured automobile.


ULAE

Un-Allocated Loss Adjustment Expense

Umbrella Liability

Insures losses in excess of amounts covered by other liability insurance policies; also protects the insured in many situations not covered by the usual liability polices.

Unallocated Benefit

A policy provision providing reimbursement up to a maximum amount for the cost of all extra miscellaneous hospital services, but not specifying how much will be paid for each type of service.

Underwriter

1) a company that receives the premiums and accepts responsibility for the fulfillment of the policy contract; 2) the company employee who decides whether or not the company should assume a particular risk; 3) the agent who sells the policy.

Underwriting

The process of selecting risks for insurance and determining in what amounts and on what terms the insurance company will accept the risk.

Underwriting Profit or Loss

The amount of money which an insurance company gains or loses as a result of its insurance operations. It excludes investment transactions and federal income taxes.

Unearned Premium

The portion of a premium that a company has collected but has yet to earn because the policy still has unexpired time to run.

Unified Credit

A one-time credit of $192,800, usually applied against Federal Estate Taxes, that is available to every individual's estate. The credit also can be used for payment of Federal Gift Taxes during that individual's lifetime.

Uniform Premium

A rating structure in which one premium applies to all insureds, regardless of age, sex, or occupation.

Uniform Provisions

Statutory policy provisions of health insurance policies which specify some of the rights and obligations of the insured and the company. These provisions, with some modifications, are part of the insurance laws of all 50 states and the District of Columbia.
Uninsurable Risk

One not acceptable for insurance due to excessive risk.

Uninsured/Underinsured Motorist Coverage

A form of insurance that pays the policy holder and passengers in his/her car for bodily injury caused by the owner or operator of an uninsured or inadequately insured automobile.

Universal Life Insurance

A flexible premium life insurance policy under which the policyholder may change the death benefit from time to time (with satisfactory evidence of insurability for increases) and vary the amount or timing of premium payments. Premiums (less expense charges) are credited to a policy account from which mortality charges are deducted and to which interest is credited at rate which may change from time to time.

Variable Annuity

An annuity under which the benefit varies according to the investment results of a life insurance company's separate account (usually invested primarily in common stocks).

Variable Life Insurance

Life insurance under which the benefits relate to the value of assets behind the contract at the time the benefit is paid. The amount of death benefit payable would, under variable life policies that have been proposed, never be less than the initial death benefit payable under the policy.

Vehicle Identification Number (VIN)

Your VIN is the number that identifies your particular vehicle. It usually can be found on the dashboard of your vehicle.

Verbal Threshold

In no-fault auto insurance states with a verbal threshold, victims are allowed to sue in tort only if their injuries meet certain verbal descriptions of the types of injuries that render one eligible to recover for pain and suffering.

Vested Commissions

Renewal commissions payable to the writing agent or his estate, whether or not he remains with the company.

Vesting

A provision that a pension participant will, after meeting certain requirements, retain a right to all or part of the accrued benefits, even though the employee may leave the job before retirement.

Viatical Settlement

Payment of a portion of the proceeds from life insurance to an insured who is terminally ill.

Voluntary Market

The market where one seeking insurance obtains insurance in the open market with no help from the state, through an insurer of his or her own selection.

Verbal Threshold. In no-fault auto insurance states with a verbal threshold, victims are allowed to sue in tort only if their injuries meet certain verbal descriptions of the types of injuries that render one eligible to recover for pain and suffering.


VIN (Vehicle Identification Number)
The Vehicle Identification Number is a 17 digit number (which includes both numbers and letters) unique to your car. The VIN tells the company the make, model, body type and year of the insured vehicle. You can find your VIN in several places including the title to your vehicle, your vehicle registration, your insurance card, your insurance policy, the dashboard of your vehicle, the driver side door or engine of your vehicle.

Waiting Period

The length of time an employee must wait from his/her date of employment or application for coverage, to the date his/her insurance is effective.

Waiver

An agreement attached to a policy which exempts from coverage certain disabilities or injuries that otherwise would be covered by the policy.

Waiver of Collision Deductible
If you have collision coverage on your car, this option pays your deductible for damage caused by an uninsured or hit-and-run driver, if you can identify the driver and car that caused the damage.

Waiver of Premium

A provision in some policies to relieve the insured of premium payments falling due during a period of continuous total disability that has lasted for a specified length of time, such as three or six months.

Whole Dollar Premium

Simply stated, premiums are rounded to nearest dollar, up for amounts over 51 cents, and down for fifty cents and lower.

Whole Life Insurance

A plan of insurance for the whole of life. It includes straight life on which premiums are payable until death.

Will

The legal statement of a person's wishes concerning the disposal of his or her property after death.


Workers' Compensation Insurance

Insurance against liability imposed on certain employers to pay benefits and furnish care to employees injured, and to pay benefits to dependents of employees killed in the course of or arising out of their employment.

Workers Compensation

A system established under state law that provides payments, without regard to fault, to employees injured in the course and scope of their employment.

Written Premiums

The entire amount of premiums due in a year for all polices issued by an insurance company.

Waiver

An agreement attached to a policy which exempts from coverage certain disabilities or injuries that otherwise would be covered by the policy.

1 comment:

Dave said...

Excellent information on difficult insurance terms. Great Idea!