Glossary

Don't speak insurance? Take a look to our glossary

 

  • Accelerated Death Benefits
    This life insurance provision pays all or part of a policy’s death benefits while the policyholder’s still alive. Conditions include:  Proof the policyholder’s is terminally ill, with a life expectancy of <12 months  The policyholder has a specified life-threatening disease  The policy holder is in a long-term care facility (e.g., a nursing home) By accepting an accelerated-benefit payment, the policyholder might be ruled ineligible for Medicaid or other government benefits. The payout may also be taxed.
  • Accident
    An event causing loss. Accidents occur without being expected or designed.
  • Accidental Death Benefit
    A policy provision popularly known as “double indemnity.” An accidental death benefit provides payment of an additional amount–usually equal to the face value of the policy–if the insured is killed in an accident.
  • Acquisition Costs
    Soliciting business  Issuance of policies  Collection of premiums  Agents compensation  Field supervision  Advertising  Any other expense reasonably attributable to acquisition and conservation of written premiums
  • Actual Cash Value (ACV)
    ACV is the cost of replacing or restoring property at prices prevailing at the time and place of the loss, less depreciation, regardless of the cause, including includes physical wear and tear, and obsolescence.
  • Actuary
    An insurance professional who makes technical calculations regarding the pricing of insurance policies.
  • Additional Extended Coverage
    A second endorsement on a fire policy (fire and lightning with extended coverage) insuring the dwelling and/or contents against water damage from plumbing, etc.; boiler explosion; glass breakage; and damage by ice and snow, freezing, falling trees, collapse, vandalism, vehicles owned by insured or tenants and landslide.
  • Additional Insured
    One who is protected by an insurance policy in addition to the primary insured. In automobile insurance, for example, an operator who drives the insured’s car with his consent ordinarily is protected. In property insurance, this might be a co-owner, mortgagee, or lien holder.
  • Adjuster
    A person who investigates and settles losses for an insurance carrier or for the insured.
  • Advance Premium
    The right to make premium payments in advance. Most companies allow this.
  • Age Change
    An age change occurs on the date, halfway between birth dates, on which the life insurance age changes. Immediately after, the premium for new life insurance will be computed to the age on the next following birth date. The life insurance age is the age at nearest birthday.
  • Age Limits
    The ages below and above which an insurance company will not accept applicants.
  • Age of Car (age group)
    Categorization used to classify cars according to age for rating purposes.
  • Agency
    An organization that solicits insurance for one or more carriers. An agency may perform other functions such as issuing policies and adjusting losses.
  • Agent
    An individual who solicits insurance for one or more carriers. Agents may perform other functions, such as issuing policies. Agents of a direct writer are sales employees of only one company.
  • All Physical Loss Form
    This coverage protects against loss from "all risks of physical loss" for dwellings subject to certain exclusions contained in the form.
  • Annual Policy
    Insurance policy written for a one-year term
  • Annuitant
    The person during whose life an annuity is payable (usually the person who receives the annuity payments).
  • Annuity
    A contract in which the buyer deposits money with a life insurance company for investment. Annuities provide specific payment amounts at regular intervals for a fixed period or for life
  • Application
    A request to a company for a policy. The application is a conditional offer to buy. If the medical examination and the inspection are in order, the company usually accepts the offer. It may be the policy named in the application or, if the applicant is substandard, it may be on a higher premium or other policy form.
  • Appraisal
    The determination of a property’s value or the extent of damage by impartial experts. Many property insurance policies allow for "appraisal" if the company and the insured don’t agree on the amount or extent of a loss.
  • Approved
    In fire insurance, “approved” usually signifies that the construction, equipment, preventive, and protective devices meet established requirements for insurance. In many cases, "approved" construction will reduce insurance premiums.
  • Area
    A territorial subdivision, usually called "rating territory," within a given state used for rating purposes.
  • Arson
    The willful and malicious burning of property. Arson is sometimes committed to defraud an insurance company of payout money.
  • Assets
    All of the property owned by a carrier.
  • Assignee
    One to whom the legal ownership of a policy or a limited interest therein is transferred.
  • Assignment
    The partial or complete transfer by a person of his right or interest in a policy to another person. The ability of a person to assign a policy may be limited by law or individual circumstances. An assignment must be written and signed by the policyholder whose interest is being transferred. It must also be properly attested, with the original or a certified copy being filed with the associated insurance company. A valid assignment so filed is binding on said company.
  • Assurance-Insurance
    In current industry practice, these terms are generally accepted as synonymous. This was not originally the case. The term "assurance" is used more commonly in Canada and Great Britain than in the United States.
  • Binder
    A written or oral contract issued to temporarily put insurance in force when it’s not possible to issue a new policy or immediately endorse the existing policy immediately. A binder is subject to the premium and all the policy terms to be issued.
  • Bodily Injury Benefit Coverage
    This automobile coverage is designed to protect the insured and any passengers in this car against loss by reason of bodily injury or death caused by the owner or operator of an uninsured automobile (or a "hit-and-run"). Also called uninsured motorist coverage.
  • Bodily Injury Coverage
    This coverage, often called "public liability insurance," protects an insured against legal liability for injury to the person of another arising from an accident.
  • Broad Form
    A policy affording more liberal benefits, or in fire insurance, an endorsement that grants broader or additional coverage to a basic policy. A broad form is usually added standard fire and extended coverage policies. For example, on a dwelling policy, broad form usually adds the following: vandalism, glass breakage, falling trees, weight of ice, snow or sleet, collapse. If added to a commercial fire policy, it might include vandalism, falling objects, weight of ice, snow or sleet, and collapse.
  • Broker
    A representative of the insured in placing insurance with companies. A broker is paid a commission by the company or its agent. Often, a broker is also a licensed "agent" for one or more companies.
  • Builder's Risk Insurance
    Insurance against loss resulting from damage to buildings while they’re under construction. Builder’s risk also covers materials incidental to construction, including machinery and equipment.
  • Burglary
    Breaking and entering into the premises of another for the purpose of stealing with visible signs of forced entry.
  • Business Insurance (Life)
    Insurance concerned primarily with the protection of an insured business or vocation. Business insurance protects a business against the loss of its valuable lives or key men; stabilizes the business through the establishment of better credit relations; and provides a practical plan for the retirement of business interest in the event of the death of one of the owners.
  • Cancellable Policy
    A policy that can be canceled by the company at any time, provided the company provides advance notice to the insured and refunds any unearned premium.
  • Cancellation
    The discontinuance of an insurance policy before its normal expiration date.
  • Capital Sum/Principle Sum
    A term in accident insurance to describe the amount payable for death or for loss of hands, feet or sight.
  • Carrier
    The insurance company or other party legally bound to pay losses. The carrier may be organized as a company, either stock, mutual, or reciprocal, or as an association of underwriters such as Lloyds.
  • Cash Surrender Value
    The cash payout value of a life insurance policy before it matures as a death claim or otherwise.
  • Casualty Insurance
    A general class of insurance covering liability resulting from accidents and some types of property insurance. It includes, among other coverages: automobile, workers compensation, employers liability, general liability, plate glass, theft and personal liability. Casualty insurance excludes life, fire and marine insurance. However, as ordinarily used, it includes health insurance and fidelity, and surety bonds.
  • Catastrophe Reincurance
    This is a form of insurance written on an excess-of-loss basis to improve the spread of risk against unknown liability concentrations, subject to a single occurrence. The parties settle on a deductible amount to reduce the probable frequency of loss to an acceptable level to the reinsurer, and the severity of loss to a level acceptable to the reinsured company.
  • Chartered Life Underwriter (C.L.U.)
    A designation conferred in recognition of the attainment of certain standards of education and proficiency in the art and science of life insurance underwriting.
  • Chartered Property and Casualty Underwriter (C.P.C.U.)
    A designation conferred in recognition of the attainment of certain standards of education and proficiency in the art and science of fire and casualty insurance underwriting.
  • Claim
    A request for monetary compensation for a loss. A claim typically arises from the terms of an insurance contract. There are two types of claims. A first-party claim is one in which the policyholder reports the claim directly to the insurance company. A third-party claim is one in which a person makes a claim against the policyholder of another company. In a third-party claim, payment if any, is made by the first-party insurer.
  • Claim Severity
    The average cost per claim considering all claims under a certain coverage for a specified period.
  • CLAIMANT
    One who makes a claim
  • Claims-Made Coverage
    Claims-made insurance is a type of liability protection that covers current legal obligations resulting from certain actions by the insured. It provides coverage to the insured for claims reported during the policy term.
  • Coinsurance Provision
    An insurance provision for property coverage in which the policy holder must carry an amount of insurance that is at least equal to a set percentage of the value of the property in order to receive full payment of a loss.
  • Collision Coverage
    Covers loss to the insured person’s auto caused by its collision with another vehicle or object.
  • Combined Single Limit
    Bodily Injury and Property Damage coverage expressed as a single amount.
  • Commercial Fire
    This coverage insures all property not occupied as a residence, excluding farming and manufacturing, against loss by fire.
  • Common Disaster Clause
    In life insurance, this clause is designed to alleviate the hardship that can result if the insured and primary beneficiary die at the same time or within a short period of time of each other. Usually, this clause provides that, if the primary beneficiary dies either before proof of the insured’s death is submitted to the company, or within a stated period (usually 14-or-30 days after the insured’s death), the proceeds will be paid to a contingent beneficiary.
  • Comprehensive Coverage (physical damage other than collision)
    Pays for damage to or loss of your automobile from causes other than accidents. These include hail, vandalism, flood, fire, and theft.
  • Compulsory Insurance
    Compulsory insurance laws require all residents to buy liability insurance before auto license plates are issued. The law requires proof of financial responsibility (insurance) when license plates are issued.
  • Concealment
    The withholding of material facts from an insurer, either in applying for a policy or making a claim.
  • Contents
    A term used to refer to the personal property contained in a building. It maybe household furniture, personal effects, or other types of personal property, movable in nature and not firmly affixed to the real property.
  • Contingent Beneficiary
    A beneficiary whose right to receive depends upon the occurrence of a certain contingency. For example, the right to receive certain benefits only in the event that another named beneficiary dies prior to the time of payment.
  • Contract
    In most cases, an insurance policy. A policy is considered to be a contract between an insurance company and a policyholder.
  • Contributory Negligence
    The carelessness of an injured person that contributes to the cause of an accident in which he was injured.
  • Coverage
    Another term for insurance. Can be used to mean either the dollar amounts of insurance purchased (e.g., $500,000 of liability coverage), or the type of loss covered (coverage for theft).
  • Damages
    “Damages” refer to the money or compensation recoverable in a lawsuit by a party whose person, property, or rights have been injured by the negligence of another.
  • Death Benefit
    Amount paid to the beneficiary upon the insured’s death.
  • Death Claim
    When a policy holder dies, the person entitled to the proceeds must complete certain forms giving due proof of death and establishing the claimant’s right to the payout. When filed with the company, the company is said to have received a death claim.
  • Declarations Page
    The page in a policy showing the name and address of the insurer, the period of time a policy’s in force, the premium and coverage amounts.
  • Decreasing Term Life Insruance
    This is a type of term insurance in which the face value decreases in scheduled steps from the date the policy comes into force until expirations. The premium remains unchanging. Intervals between decreases are usually monthly or annually.
  • Deductible
    The amount an insured person must pay before the insurance company pays the remainder of each covered loss, up to policy-specified limits.
  • Deferred Aunnuity
    An annuity under which the payment period begins at some predetermined future date
  • Depreciation
    A decrease in a property’s value over time due to wear-and-tear or obsolescence. Depreciation is used to determine actual cash value at the time of a loss. (See ACTUAL CASH VALUE.)
  • Direct Loss
    A loss where an insured peril is the immediate cause. If a windstorm blows off a house’s roof, the windstorm is the insured peril that caused the direct loss or damage.
  • Disability Clause
    A benefit provision forming part of a life insurance policy providing certain benefits in the event of total and permanent disability from accident or sickness.
  • Dividends
    A return to the policyholder of excess premium over losses and expenses at the end of the policy period. Dividends are authorized by the board of directors, and are payable to all participating policyholders of a specified class.
  • Domestic Carrier
    An insurance company organized in a given state is referred to in that state as a domestic carrier
  • Double Indemnity
    Payment of twice the basic benefit in the event of loss resulting from specific causes or circumstances specified in a policy.
  • Earned Premium
    The portion of the total policy premium that’s been “used up” during a policy term. With a one-year policy, half of the total premium has been earned after six months.
  • Effective Date
    The date on which an insurance binder or policy goes into effect
  • Endorsement
    A written agreement attached to a policy expanding or limiting the benefits otherwise payable. Also called a “rider.”
  • Equipment Floater
    Property insurance coverage for equipment that is often moved from place to place.
  • Estimated Premium
    A preliminary premium amount that could be adjusted based on variances in exposures.
  • Evidence of Insurability
    To qualify for a particular policy at a particular price, companies have the right to ask for information about health and lifestyle. An insurance company will use this information – the evidence of insurability – in deciding if your application for insurance is acceptable and at what rates.
  • Excess and Surplus Lines Insurance
    Coverage that is provided by insurers not licensed in states where the risk is located.
  • Excess Liability Policy
    A policy that provides additional limits in excess of an underlying liability policy.
  • Exclusions
    Items or conditions that are not covered by the general insurance contract. These are specified in the policy itself.
  • Expense Ratio
    The ratio of a company’s operating expenses to premiums.
  • Expiration Date
    The specified date and time at which a policy terminates.
  • Exposure
    Measure of vulnerability to loss, usually expressed in dollars or units.
  • Extended Coverage
    An extension of the fire policy to cover the additional perils of windstorm, hail, explosion, or riot, attending a strike, civil commotion, aircraft, vehicle and smoke.
  • Extended Term Insurance Option
    A policy provision providing the option to continue the existing amount of insurance as term insurance for as long a period of time as the contract’s cash value can purchase.
  • Face Amount
    The amount covered by the terms of an insurance contract. Face amount is usually on the policy’s first page.
  • Family Auto Insurance
    A family automobile insurance policy is the most common type in the industry. These policies provide protection for all family members.
  • Final Expenses
    Final expenses are the costs associated with a person’s death. Final expenses include, but are not limited to: Funeral costs Legal court expenses Outstanding bills and debt Mortgages Loans and taxes
  • First Party Claim
    A claim filed by an insured person against his/her insurance policy.
  • Fixed Benefit
    A death benefit whose dollar amount does not vary.
  • Flat Cancellation
    The full cancellation of a policy as of the effective date of coverage. Flat cancellation requires a full refund return of paid premium.
  • Floater
    A type of insurance policy that covers property that’s easily movable. Floaters also provide additional coverage above and beyond normal coverages. These policies can cover anything from jewelry to expensive stereo equipment.
  • Flood Exclusion
    A provision in most property insurance policies eliminating coverage for damage by flood and, possibly, other types of water damage (e.g., seepage, sewer backup, etc.).
  • Franchise Insurance
    Individual life or health insurance policies issued to a small group of people having a common affiliation or interest. Same as wholesale insurance.
  • Free Look
    A trial period required in most states wherein policyholders have up to 20 days to examine their new policies with no obligation.
  • Full Coverage
    Insurance that covers all losses, with no deductions, up to the dollar amount specified in the policy.
  • Gap Insurance
    Insurance that pays the difference between a vehicle’s actual cash value and the amount owed on the loan. Some gap policies also reimburse the deductible amount.
  • Garage Liability Insurance
    Insurance coverage for the legal liability of automobile dealers, garages, repair shops and service stations for bodily injury and property damage arising from day-to-day business operations.
  • General Liability
    A broad term meaning liability insurance, other than automobile, written to cover personal, professional, and commercial risks. Commercial liability protects business owners and operators from exposures such as liability arising from accidents occurring on the insured’s premises or arising from the insured’s operations. It also covers products sold by the insured; operations completed by the insured, and contractual liability.
  • Grace Period
    A given period of time after the due date of a premium during which the policy remains in full force, without penalty, if the premium isn’t paid on time.
  • Gross Negligence
    Willful and wanton misconduct
  • Gross Vehicle Weight (GVW)
    The weight specified by a manufacturer for the maximum total loaded weight of a single vehicle.
  • Group of Companies
    Several insurance companies under common ownership and, often, common management.
  • Hazard
    A circumstance that increases the likelihood or probable severity of a loss. For example, the storing of explosives in a home basement is a hazard that increases the probability of an explosion.
  • Health Maintenance Organization (HMO)
    HMOs are a type of managed care plan providing healthcare services to their members through networks of doctors, hospitals, and other healthcare providers. HMOs cover a wide variety of services, usually at a lower cost than traditional health care plans.
  • Hold Harmless Agreement
    A contractual agreement that requires one contracting party to assume certain legal liabilities of the other party.
  • Homeowner's Policy
    A policy in which fire and extended or broad coverage for dwelling and contents, residents’ theft insurance, additional living expense, and personal liability insurance are combined.
  • Impaired Risks
    In health insurance, impaired risks are individuals who can reasonably be expected to have an above-average number of claims due to medical history or physical impairment. Most impaired risks can be insured by use of a waiver or a waiting period.
  • Indemnity
    Restoration to the victim of a loss by payment, repair or replacement.
  • Independent Adjuster
    A claims adjuster who provides adjustment services to insurance companies for a fee but is not employed by them.
  • Insurability
    The fitness for coverage of an individual wishing to be insured, including his/her health, susceptibility to injury, and life expectancy.
  • Insurance Policy
    The printed form which serves as the contract between an insurer and an insured.
  • Insured
    The person or organization covered by an insurance policy.
  • Insurer
    The insurance company. The party providing insurance coverage, typically through a contract of insurance.
  • Irrevocable Beneficiary
    A named beneficiary whose rights to life insurance policy proceeds are vested and cannot be canceled by the policy owner unless the beneficiary consents.
  • Juvenile Insurance
    Life insurance policies written on the lives of children within specified age limits.
  • Key Man Insurance
    A business-based policy, usually used to reimburse a corporation for its losses when an important member of the firm dies.
  • Lapse
    The termination or discontinuance of a policy due to non-payment of the premium.
  • Liability
    Responsibility to another for one’s negligence that results in injury or damage.
  • Liability Coverage
    Covers losses for which an insured is legally liable. For example, homeowner’s insurance liability coverage protects the policyholder against financial loss if they’re sued and found legally responsible for someone else’s injury or property damage.
  • Liability Insurance
    Auto insurance coverage that pays for injuries to the other party and damages to the other vehicle resulting from an accident the policyholder caused. It also pays if the accident was caused by someone covered by the policyholder’s policy, including a driver operating the car with permission.
  • License - Agent or Broker
    Certification, issued by the department of insurance, legally certifying that individual is qualified to solicit insurance applications for the period covered.
  • License - Company
    Certification, issued by the department of insurance, stating that an insurance company is qualified to do business in the state.
  • Life Expectancy
    The average number of years a person is expected to live, based on a national average per age group and other factors.
  • Life Insurance
    Insurance coverage that pays out a set amount of money to specified beneficiaries upon the death of the insured person.
  • Limit of Liability
    The maximum amount an insurance company agrees to pay for a loss.
  • Loss
    The amount an insurance company pays for damages under the terms of the policy.
  • Loss of Use
    A provision in homeowner’s and renter’s insurance policies that reimburses policyholders for the additional costs (housing, food, and other essentials) of having to live elsewhere while the home is being restored following a disaster.
  • Loss Payable Clause
    An insurance clause that authorizes loss payments to a person or entity having an insurable interest in the covered property.
  • Loss Payee/ Lien Holder
    A person or entity with a legally secured insurable interest in another’s property, usually a financial institution that loaned money for a car. The car is the loan collateral. If the auto is damaged in an accident, loss payments will be made to you and to the loss payee on your policy.
  • Loss Ratio
    Percentage of losses incurred against earned premiums for a given period.
  • Medical Payments
    Optional coverage under an auto policy that pays for medical expenses arising from bodily injury in an auto accident, regardless of fault. Coverage for persons other than the named insured and his or her family members is typically restricted to circumstances occurring while they are occupants of the insured auto.
  • Minimum Premium
    The lowest premium amount charged for providing a particular insurance coverage.
  • Mortgage Clause
    Property insurance provisions granting protection for the mortgagee named in the policy. It establishes that loss to mortgaged property is payable to the insured and to the mortgagee named in the policy.
  • Mortgage Insurance
    One of the basic uses of life insurance. Family heads buy mortgage insurance for the specific purpose of paying off any mortgage balance outstanding at their death.
  • Multi-Car Discount
    A discount offered by some insurance companies for those with more than one vehicle insured on the same policy.
  • Multiple Line
    A general term referring to fire and casualty insurance in general. A multiple line company writes auto, fire, health, commercial, boat owners, homeowners, individual fire, theft insurance.
  • Mutual Insurance Companies
    Insurance companies without capital stock, owned by the policyholders for the purpose of sharing in the profits through dividends at the end of the policy year.
  • MVR- Motor Vehicle Record
    A motor vehicle record contains information obtained from an individual’s driver license application, abstracts of convictions, and accidents.
  • Named Driver Exculsion
    An endorsement to an auto policy a specifying a specific individual who the policy will not cover in an accident as the driver of the vehicle.
  • Named Insured
    Any person, firm, or corporation designated by name as the insured person(s) in a policy. Others may be protected by policy definition even though their names aren’t on the policy, such as other drivers operating (with consent) the named insured’s covered auto.
  • Named Perils Coverage
    A property insurance term referring to exact causes of loss specifically listed as covered.
  • Negligence
    The failure to use the care that a reasonable and prudent person would have used under the same or similar circumstances.
  • Non-Owned Automobile
    In commercial auto policies, coverage for autos that are used in connection with the named insured’s business but are neither owned, leased, hired, rented or borrowed by the named insured. The term specifically applies to vehicles owned by employees and used for company business.
  • Non-Renewal
    The decision by an insurance company not to renew a policy.
  • Nonstandard Auto (High Risk Auto or Substandard Auto)
    Insurance for motorists who have poor driving records or have been canceled or refused insurance. The premium is much higher than standard auto due to the additional risks.
  • Occupancy
    This refers to the use of property. A home, for example, may have a real estate office in it. This dwelling would then have a "business occupancy." Occupancy plays an important role in determining rates, and the acceptance or rejection of risks.
  • Occupational Hazard
    The danger of suffering a sickness or injury due to the hazards of a specific occupation.
  • Occurence
    An event that results in an insured loss. In some lines of business, such as liability, an occurrence is distinguished from an accident in that the loss doesn’t have to be sudden and fortuitous. Instead, said loss can result from continuous or repeated exposure that results in bodily injury or property damage neither expected nor intended by the insured.
  • Occurence Coverage
    Occurrence coverage is insurance for incidents of liability alleged to have occurred during the term of the policy, no matter when the claim is reported.
  • Omnibus Clause
    An automobile policy provision covering people driving the insured’s auto with the insured’s permission.
  • Original Age
    The age you were when you bought an insurance policy.
  • Owner
    The person who can legally exercise all rights and privileges in a life policy. This will usually be the insured, but may be any other party to whom legal transfer of these rights and privileges has been made.
  • Paid-Up
    This event occurs when a life insurance policy will not require any further premiums to keep the coverage in force.
  • Paid-Up Additions
    Additional amounts of life insurance purchased using dividends. Paid-up additions don’t require additional premium payments.
  • Partial Disability
    An injury which prevents the insured from performing one or more, but not all, important duties of his/her job
  • Peril
    The cause of possible loss, such as fire, windstorm, theft, explosion, or riot.
  • Persistency
    A term used to refer to the length of time insurance remains continuously in force.
  • Personal Auto Policy (PAP)
    A policy insuring private-passenger autos owned by individuals.
  • Personal Injury
    A general liability coverage for insurable offenses that cause harm, other than bodily injury, such as false arrest, detention or imprisonment, malicious prosecution, wrongful eviction, slander, libel and invasion of privacy.
  • Personal Injury Protection (PIP)
    An automobile insurance coverage mandated by law in some states. The statues typically require insurers to provide or offer to provide first-party benefits for medical expenses, loss of income, funeral expenses and similar expenses without regard to fault.
  • Personal Property
    Personal property is usually movable and easily transportable. On the other hand, real property generally is considered to be immovable such as land and things affixed to it. A rule of thumb definition for personal property is "everything other than real property."
  • Physical Hazard
    This refers to the material, structural or operational features of the risk itself, apart from the persons owning or managing it. Electrical wiring, building construction, type of heating system, are examples of physical hazards.
  • Policies-In-Force
    Policies written and recorded on the books of the carrier which are unexpired as of a given date.
  • Policy
    The name generally used to mean the written contract of insurance.
  • Policy Fee
    An amount charged by some companies in addition to the first regular premium. Also referred to as a "joiner’s fee."
  • Policy Holder
    One who owns an insurance policy. A mortgagee often is issued a copy of an insurance policy, or a certificate of insurance, at the request of the insured, but he is not a policyholder.
  • Policy Loan (Life)
    A loan made by an insurance company to a policyholder on the security of the cash value of his policy.
  • Policy Period
    The period a policy is in force, from the beginning or effective date to the expiration date.
  • Pre-Existing Condition
    A physical condition in existence before the issuance of a health insurance policy.
  • Preferred Risk
    A positive characteristic of someone seeking to be insured. Usually means a better likelihood for long life, and usually means a lower premium.
  • Premises
    The location where coverage applies.
  • Premium
    The amount paid by a policyholder to an insurance company to obtain or maintain an insurance policy.
  • Premium Earned
    The amount of the premium, paid for in advance, that has “been earned” by virtue of the fact that time has passed without a claim.
  • Premium Unearned
    The portion of an insurance premium that applies to the unexpired portion of the policy period.
  • Premiums-In-Force
    Premium dollars that have been written and are unexpired on the books of the insurance carrier.
  • Primary Beneficiary
    The portion of an insurance premium that applies to the unexpired portion of the policy period. 
  • Primary Policy
    The insurance policy that pays first when you have a loss that is covered by more than one policy.
  • Pro Rata Cancellation
    The cancellation of an insurance policy with the return of the full proportion of premium for the unexpired term of the policy. In pro rata cancellations, there’s no penalty for early cancellation.
  • Proceeds
    The net amount of money payable by the company at the death of an insured or at the maturity of a policy.
  • Property Damage
    In the general liability policy, a physical injury to property, resulting in the loss of use.
  • Property Damage Coverage
    An agreement by an insurance carrier to protect an insured against legal liability for damage by his automobile to the property of another.
  • Property Insurance
    First-party insurance for real and personal property against physical loss or damage.
  • Provisions
    Details of an insurance policy that explain the benefits, conditions and other features of the insurance contract.
  • Proximate Cause
    The primary cause of loss or damage. Proximate cause involves an unbroken chain of events between the occurrence of an insured peril and damage to property. For example, water damage caused by firefighting is covered under the fire policy because fire was the proximate cause of the loss.
  • Qualifying Event
    An occurrence that triggers an insured’s protection.
  • Rate
    A charge per unit in determining insurance premiums.
  • Rated Policy
    A policy issued at a higher premium to cover a person classified as a greater-than-average risk, usually due to impaired health or a dangerous occupation.
  • Rating Territory
    A geographical grouping in which like hazards tend to equalize and permit the establishment of an equitable rate for the territory.
  • Re-entry Option
    An option in a renewable term life policy under which the policy owner is guaranteed, at the end of the term, to be able to renew his or her coverage without evidence of insurability, at a premium rate specified in the policy.
  • Real Property
    Real estate including buildings, land, and vegetation.
  • Refund
    An amount of money returned to the policyholder for overpayment of premium or if the policyholder is due unearned premium.
  • Reinstatement
    Putting a lapsed policy back in force by producing satisfactory evidence of insurability and paying any past-due premiums.
  • Renewal Policy
    A policy issued to replace an expiring policy
  • Rental Reimbursement Coverage
    Optional auto insurance coverage that pays a set daily amount for a rental car if the policyholder’s car is being repaired because of damage covered by the auto policy.
  • Renters Insurance
    A form of property insurance that covers a policyholder’s belongings against perils. It also provides personal liability coverage and additional living expenses. Possessions can be covered for their replacement cost or for their cash value, including depreciation.
  • Rents or Rental Value
    Insurance against loss of the rental value of a property; protects against loss of rents resulting from an insured peril.
  • Replacement Cost
    The dollar amount required to replace damaged personal property or dwelling property without deducting for depreciation. The payout is limited by the maximum dollar amount declared in the policy.
  • Residual Benefit
    In disability insurance, a benefit paid when you suffer a loss of income due to covered disability or if loss of income persists. The benefit is based on a formula specified in your policy; it’s generally a percentage of the full benefit. A residual benefit may be paid up to the maximum benefit period.
  • Return Premium
    A portion of the premium returned to a policy owner as a result of cancellation, rate adjustment, or a calculation that an advance premium was in excess of the actual premium.
  • Rider
    An endorsement or special provision added to an original policy contract.
  • Risk
    The chance of loss with respect to person, liability, or the property of the insured. Also used to mean "the insured."
  • Schedule
    A list describing the property and/or items insured under the policy.
  • Secondary Beneficiary
    An alternate beneficiary designated to receive payment, usually in the event the original beneficiary dies before the insured.
  • Short Term Cancellation
    Cancellation of an insurance policy. A short term cancellation occurs prior to the expiration date in which a penalty in the form of a less-than-full pro-rata premium refund is allowed.
  • Single Interest Insurance
    Insurance coverage for only one of the parties sharing an insurable interest in a property. For instance, if a policyholder still owes money on his mortgage, but doesn’t have homeowner’s insurance, the lender may take out a single interest insurance policy to protect its own interest in the property. Single interest insurance protects only the policyholder, not the homeowner.
  • Special Class
    Policies for which an extra premium rate is charged because an extra risk is presented.
  • Standard Provisions
    Policy provisions required by law or supervisory regulation –such as provisions relating to grace period and incontestability.
  • Standard Risk
    A person who, according to a life insurance company’s underwriting standards, is entitled to insurance protection without extra rating or special restrictions.
  • Stock Company
    A company organized and owned by stockholders, as distinguished from a mutual company, which is owned by the policyholders.
  • Subrogation
    Assignment of rights of recovery from insured.
  • Substandard Risk
    A person who is considered an under-average or impaired insurance risk because of physical condition, family or personal history of disease, occupation, residence in unhealthy climate, or dangerous habits.
  • Surcharge
    An extra charge added to a premium by an insurance company. With automobile insurance, a surcharge is usually added if a policyholder borrows money on the policy or if the policy lapses for non-payment.
  • Surrender Charges
    Charges that are deducted if a life insurance policy or annuity is surrendered (cashed in). These charges also are deducted if the policyholder borrows money on the policy or if the policy lapses for non-payment.
  • Term
    The length of time for which a policy or bond is in force.
  • Term Insurance
    Life or health insurance protection during a limited number of years but expiring without value if the insured survives the stated period.
  • Termination
    The recording of a cancellation of an insurance policy.
  • Third Party Claim
    A claim filed against another person’s insurance policy
  • 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). Automobile liability insurance is purchased to protect one from suits arising from unintentional torts.
  • Total Disability
    Disability which prevents a person from performing (a) any of his occupational duties, or (b) any duties of any occupation, or ( c) any duties for which he is reasonably qualified. Definitions vary within policies.
  • Total Loss
    A loss of sufficient size about which it can be said there is no value left. The complete destruction of the property. The term also is used to mean a loss requiring the maximum amount a policy will pay.
  • Towing and Labor Coverage
    Auto insurance coverage that pays for towing charges when a car can’t be driven. Also pays labor charges, such as changing a flat tire, at the place where the car broke down.
  • Umbrella Policy
    Coverage for losses above the limit of an underlying policy or policies such as homeowners and auto insurance.
  • Underlying Coverage
    The insurance or coverage in place on the same risk that will respond to loss before the excess policy is called on to pay any portion of the claim.
  • Underwriter
    The person trained in evaluating risks, deciding whether to accept or reject an application for a policy, and determining rates and coverages for risks.
  • Unearned Premium
    The amount of a pre-paid premium that has not yet been used to buy coverage. For instance, if a policyholder paid in advance for a six-month premium, but then cancels the policy after two months, the company must refund the remaining four months of “unearned” premium.
  • Uninsured Motorist Coverage
    Protects the insured against financial loss resulting from bodily injury carelessly inflicted by an uninsured motorist, including a hit and run driver, who is legally liable. Bodily Injury Benefit.
  • Uninsured/Underinsured Motorist (UM/UIM) Coverage
    Auto insurance coverage that pays for the policyholder’s injuries and, in some states, property damage caused by a hit-and-run driver or a motorist without liability insurance. It will also pay when medical and car repair bills are higher than the other driver’s liability coverage.
  • Universal Life Insurance
    An interest-sensitive life insurance policy with flexible, adjustable premium payments, that builds cash values.
  • Unreported Claims
    Accidents which have occurred but which have not been reported or recorded.
  • Usage
    Refers to the primary function or purpose in which you intend to operate your vehicle. For example, if you primarily drive your car to and from work, the usage is considered “commute”; if you are self-employed and you primarily drive to see customers, the usage is considered “business.”
  • Usual and Customary Fees
    Charges for medical services that refer to the amount approved by the carrier for payment. These charges may be based on rates usually charged by physicians and providers in your area; rate averages compiled by independent rating services; or rate averages compiled by the insurance company.
  • Vacancy Provision
    Property insurance provision found in commercial property policies that restrict coverage in connection with buildings that have been vacant for a specified number of days, usually 60 days.
  • Variable Annuity
    A form of annuity policy under which the amount of each benefit payment is not guaranteed or specified in the policy, but which instead fluctuates according to the earnings of a separate account fund.
  • Variable Life Insurance
    A form of life insurance whose face value fluctuates depending upon the value of the dollar, securities or other equity products supporting the policy at the time payment is due.
  • Viator
    A terminally with a life-threatening or terminal illness who sells his or her life insurance policy.
  • VIN (Vehicle Identification Number)
    A 17-digit alpha-numeric code that provides valuable information concerning the vehicle’s serial number, make, model, options, and year in official records (like a Social Security number for your car).
  • Whole Life Insurance
    A plan of insurance that offers protection for a person’s “whole life.” and which pays a benefit upon the person’s death.
  • Worker's Compensation
    A system (established under state law) which provides payments to employees who are injured in the course of employment, irrespective of fault.

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