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Abandonment: As used in property insurance, prohibits the insured
from abandoning damaged property to the insurance company for repair or disposal
Accelerated Benefits Rider: An adjustment (rider) to a life insurance
policy that allows for the early payment of some portion of the policy's face amount
should the insured suffer from a terminal illness or injury.
Accidental Death Benefit Rider: An adjustment (rider) to a life
insurance policy that provides for payment of an additional cash benefit when death
occurs by accidental means. This amount depends on the value of the policy.
Accidental Death Insurance: An Insurance poicy that provides payment
if the insured's death occurs as a results from an accident.
Accounts Receivable Coverage: Covers loss of sums owed to the insured
by its customers that are uncollectible due to damage by an insured peril to accounts
receivable records
Actual Cash Value (ACV): Cost to repair or replace damaged property
with materials of like kind and quality, less depreciation
Additional Insured: A person or organization for whom insured status
is arranged by endorsement
Advertising Injury: General liability coverage that insures against
libel, slander, invasion of privacy, copyright infringement and misappropriation
of advertising in connection with the insured's advertising of its goods or services
Agent: An authorized representative of an insurance company.
Aggregate: The maximum amount an insurance company will pay during
the policy
All Risk Coverage: Property insurance covering loss arising from
all causes of loss except those that are specifically excluded
Annually Renewable Term: Term insurance that provides coverage
for one year and allows the policy owner to renew his or her coverage each year.
Application: A form with the information needed for an insurance
company to underwrite and rate a specific policy
Assignment Assignment: The transfer of ownership of a Life Insurance
policy from one person to another.
Attained Age: Your current age. Your attained age is a factors
life insurance companies use to determine premiums.
Audit: A verification of the financial records, usually payroll
or receipts, of an organization to determine exposures and premiums
Automobile: A land motor vehicle, trailer or semi-trailer designed
for travel on public roads, not including 'mobile equipment'
Backdating: Making the effective date of a policy earlier than
the date of application. Backdating is often used to make the age of the applicant
lower than it actually was at the time of application so that he/she can get a lower
premium. State laws often set limits to this.
Bailee Coverage: Coverage on property left in the care of the insured
for storage, repair or servicing
Basic Cause of Loss Form: Property coverage for named perils: Fire,
Lightening, Explosion, Smoke, Windstorm, Hail, Riot, Civil Commotion, Aircraft,
Vehicles, Vandalism, Sprinkler Leakage, Sinkhold Collapse and Volcanic Action
Basic Limits: The minimum limits of liability that can be carried
by an insured
Beneficiary: The designated person set to receive the death benefit
if the insured should die.
Best's Rating: A rating system by A.M. Best Company giving the
financial condition of insurance companies
Binder: A temporary insurance policy that expires at the end of
a specific time period or when a permanent policy is written. A binder is given
to an applicant for insurance during the time it takes the an insurance company
to complete the policy paperwork.
Bodily Injury by Accident Limit: The most an insurer will pay under
Part Two of a Workers' Compensation Policy for claims arising out of any one accident,
regardless of how many employee claims arise out of the accident
Bodily Injury by Disease, Each Employee: The most an insurer will
pay under Part Two of a Workers' Compensation Policy for damages due to bodily injury
by disease to any one employee
Bodily Injury by Disease-Policy Limit: The most an insurer will
pay under Part Two of a Workers' Compensation Policy employee bodily injury by disease
claims during the policy period regardless of the number of employees who make such
claims
Bodily Injury Liability Limit: The insured is legally liable for
damages due to bodily injury, sickness, or disease, including resulting death
Boiler & Machinery Insurance: Coverage for loss caused by mechanical
or electrical equipment breakdown, including damage to the equipment
Bond: A written agreement in which one party, the surety, guarantees
the performance or honesty of a second party, the principal (obligor), to the third
party (obligee) to whom the performance or debt is owed
Brands and Labels Endorsement: Property insurance coverage that
allows the insured to remove labels from damaged goods or mark the items as 'salvage,'
provided the goods are not damaged in the process
Broad Causes of Loss Form: Property coverage for the named perils:
Fire, Lightening, Explosion, Smoke, Windstorm, Hail, Riot, Civil Commotion, Aircraft,
Vehicles, Vandalism, Sprinkler Leakage, Sinkhole Collapse, Volcanic Action, Breakage
of Building Glass, Falling Objects, Weight of Snow, Ice or Sleet, Water Damage (in
the form of leakage from appliances) and Collapse from Specified Causes
Building Ordinance Coverage: Covers against loss caused by enforcement
or ordinances or laws regulating construction and repair of damaged buildings
Burglary: Theft of property by forcible entry, which is evidenced
by visible signs, in a premises, by a person
Business Auto Policy: Auto Policy for businesses that includes
auto liability and auto physical damage coverages
Business Income Coverage: Insurance covering loss of income by
a business when operations are interrupted due to property loss that is a covered
cause of loss
Business Interruption Coverage: See Business Income Coverage
Business Owners Policy (BOP): A policy that combines property and
liability coverages for special types of small businesses
Cancellation: The termination of an insurance policy usually before
its expiration
Care, Custody or Control: An exclusion of liability insurance which
eliminates coverage for damage to property in the insured's care, custody or control
Carrier: The insurance company which provides coverage
Cash Benefits: The Money that is paid to the policy holder upon
settlement of a covered claim.
Cash Value: The equity amount or "savings" accumulation in a whole
life insurance policy.
Casualty Insurance: Insurance that covers loss caused by injuries
to persons and the legal liability imposed on the insured for injury or for damage
to property of others
Catastrophe: A severe loss causing sizable financial loss
Causes of Loss Forms: The commercial property forms that define
the covered causes of loss for which coverage is provided. Commonly, there are 3
Cause of Loss Forms: Basic, Broad and Special
Certificate of Insurance: A document providing evidence that insurance
has been purchased
Claim: A request by a policyholder or a claimant for payment under
a policy of insurance
Claim Expense: Expenses of settling or investigating a claim
Claimant: The person presenting a claim
Claims Reserve: An amount of money set aside to meet claims reported
but not paid
Class: A group of businesses who have common or similar exposures
and are grouped together for rating purposes
Classification: The arranging or establishing of business groups
or categories for rating purposes
Coinsurance Provision: An insurance provision for property coverages
in which the policyholder 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
Collapse: Collapse of a building and collapse of personal property
within a building due to specified causes (such as weight of snow, ice or rain).
Does not include collapse due to design error or due to faulty workmanship or materials
if the collapse occurs after construction is complete
Collision Insurance: Provides for payment to a covered automobile
resulting from the striking of another object by a moving vehicle
Commercial General Liability Policy (CGL): A coverage which protects
business organizations against liability claims for bodily injury and property damage.
Those claims may be the result of events at your place of business, from your business
operations, the products or services you make or do, communications or advertisements
your business broadcasts
Competitive State Funds: State-owned and operated facilities that
write Workers' Compensation Insurance solely for that state
Completed Operations: A General Liability coverage for the work
of the insured that has been completed away from the business premises
Comprehensive Auto Coverage: Covers an automobile for loss or damage
for all causes except for those
specifically excluded
Compulsory Insurance: Insurance that is required by law
Concealment: Failure to disclose facts which may void an insurance
policy
Conditional Receipt: Given to policy owners when they pay a premium
at the time of the application. These receipts bind the insurance company, provided
your policy is approved, but are subject to any other conditions stated on the receipt.
Conditions: Things agreed upon in an insurance policy that state
the rights and the requirements of the insured and the insurer
Consequential Loss: An indirect loss such as the reduction in value
of property that is the result of a direct damage loss
Constructive Total Loss: Term used when damage to property is more
than the value of the property
Contestable Clause: A provision in an insurance policy setting
forth the conditions or time period under which the insurance company may contest
or void the policy. After this time has lapsed, typically two years, the policy
cannot be contested. Example: Suicide.
Contingent Beneficiary: Person or persons designated to receive
the value of an insurance policy in case the original beneficiary is not alive.
Contract: An agreement between two or more parties with characteristics
of mutual assent, competent parties, a valid consideration and legal subject
*Coverage: Coverage is just another term for Insurance. It can
be used to mean either the dollar amounts
of insurance purchased ($500,000 of liability
coverage), or the type of loss covered (coverage for theft).
Convertible Term: A policy that may be changed to another form
by contractual provision and without evidence of insurability. Most term policies
are convertible into permanent insurance.
Countersignature: The signature of a licensed agent or representative
on a policy that is required to validate the policy
Cross-Purchase Plan: An agreement that provides that upon a business
owner's death, surviving owners will purchase the deceased's interest, often with
funds from life insurance.
Cumulative Injury: A type of injury which occurs from the repetition
of tasks over an extended length of time
Data Processing or EDP Coverage: All risk property insurance for
electronic data processing equipment (computers), computer programs and data including
mechanical breakdown, electrical injury and changes in temperature and humidity
Death Benefit: The amount of money paid to the beneficiary when
the insured person dies.
Decreasing Term Insurance: Term life insurance on which the face
value slowly decreases in scheduled steps from the date the policy comes into force
to the date the policy expires, while the premium remains level. The intervals between
decreases are usually monthly or annually.
Debris Removal: The cost of removal of debris from covered property
damaged by an insured peril
Deductible: The amount of loss which is paid or absorbed by the
insured prior to determining the insurance company's liability
Deposit Premium: The amount of premium required at the beginning
of a policy prior to the actual premium being determined
Depreciation: The reduction in value of property over a period
of time. Usually as a result of age, wear and tear, or economic obsolescence
Direct Damage: Causes of loss that produce direct and straightforward
property damage (without interruption in time or deviation in space) from the cause
of the event to the damaged property
Double Indemnity: Payment of twice the basic benefit in the event
of loss resulting from specified causes or under specified circumstances.
Driver Other Car Endorsement: An endorsement that can be added
to an automobile policy that gives protection while the insured designated in the
endorsement is driving a car other than the one named in the policy
Drop Down Provision: A clause used in Umbrella policies providing
that the Umbrella will 'drop-down' over underlying policy aggregate limits when
they have been reduced or exhausted
Earned Premium: The amount of premium that has been used for certain
periods of time
Earth Movement or Earthquake Exclusion: An exclusion found in most
property insurance policies eliminating coverage for earth movement or earthquake,
except ensuing fire
Effective Date: The date on which an insurance binder or policy
goes into effect
Electrical Damage or Injury Exclusion: An exclusion usually contained
in property insurance policies eliminating coverage for damage to electrical appliances
caused by artificially generated currents, except for ensuing fire or explosion
Employee Dishonesty Coverage: Coverage for theft of money, securities
or property by an employee
Employee Leasing: A staffing method which an employee leasing company
provides all or most of its client's employees
Employers Excess Indemnity Insurance: Insurance coverage purchased
by employers that do not subscribe to the Texas Workers' Compensation law
Employers Liability Coverage: Part 2 of the Workers' Compensation
policy which pays on behalf of the employer all sums that the employer becomes legally
obligated to pay because of bodily injury by accident or disease sustained by any
employee of the insured arising out of and in the course of his employment by the
insured
Employment Practices Liability Insurance: A form of liability insurance
covering wrongful acts arising from employment practices such as wrongful termination,
discrimination and sexual harassment
Endorsement: A document attached to an insurance policy that changes
the original policy provisions
Equipment Floater: A 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 a variance in exposures
Evidence of Insurability: Any statement or proof of a person's
physical condition, occupation, etc., affecting acceptance of the applicant for
insurance.
Excess and Surplus Lines Insurance: Coverage that is provided by
insurers not licensed in the states where the risk is located
Excess Liability Policy: A policy that provides additional limits
in excess of an underlying liability policy
Exclusions: Specified hazards listed in a policy for which benefits
will not be paid.
Expected or Intended: An exclusion for injury or damage that is
expected or intended
Expediting Expense Coverage: Coverage providing reimbursement of
expenses for temporary repairs
and costs incurred to speed up the permanent repair
or replacement of covered property or equipment
Expense Constant: A small flat expense charged to Workers' Compensation
policies
Experience Modifier: A debit or credit factor developed by measuring
the difference between the insured's actual past experience and the expected or
actual experience of the class of business
Expiration: The ending date of an insurance policy
Exposure Base: The basis of rates that are applied to determine
premium. Some exposures may be
measured by payroll, receipts, sales, square footage,
area, man-hours or per unit
Extra Expense Coverage: Coverage for reimbursement of expenses
in excess of normal operating expenses that are incurred to continue operations
after a direct damage loss
Extraterritorial Coverage: The coverage for extending workers'
compensation law to provide benefits for workers hired in one state but injured
while working in another state
Face Amount: The amount covered by the terms of an insurance contract,
usually found on the first page of the policy.
Fiduciary Liability: The liability placed on trustees, employers,
fiduciaries and professional administrators with respect to errors and omissions
in the administration of employee benefit programs
Final Expenses: Expenses incurred at the time of a person's death.
These include but are not limited to:funeral costs, court expenses, current bills
or debt, mortgages, loans and taxes.
Fine Arts Coverage: Property insurance for works of art
Fire Department Service Charge Coverage: Coverage in a property
insurance policy for charges incurred by the insured from a fire department for
their services in fighting a fire
Fire Legal Liability Coverage: Liability coverage for the insured's
legal liability for fire damage to premises rented by the insured
Fire Wall: A wall designed to prevent the spread of fire from one
part of a building to another
Firewall: A computer that protects a company's private network
from outside internet users
Fixed Benefit: A death benefit, the dollar amount of which does
not vary.
Flat Cancellation: The full cancellation of a policy as of the
effective date of coverage which requires the return of paid premium in full
Flood Coverage: Coverage for damage to property caused by flood
Flood Exclusion: A provision in most all property insurance policies
eliminating coverage for damage by flood and possibly other types of water damage,
such as seepage and sewer backup
Follow Form: An umbrella policy provision that follows the underlying
policy for coverages and policy provisions
Forgery or Alteration Coverage: Covers loss due to the dishonesty
of writing, signing or altering of checks and bank drafts
Fortuitous Event: An event that is subject to chance without the
implication of suddenness
Free Look: Trial period required in most states where policy owners
have up to 20 days to examine their new policies with no obligation.
Frequency: The number of times that a loss will occur within any
given period of time
Full Coverage: Any form of insurance that provides payment in full
of all losses caused by the perils insured against without applying a deductible
or depreciation
Funeral Expenses: Expenses including casket, vault, grave plot,
headstone and funeral director.
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 out of their business operations
Garagekeepers Coverage: Provides coverage to owners of storage
garages, parking lots and body and repair shops for their liability of damage to
automobiles left in their custody for safekeeping or repair
General Aggregate Limit: The maximum amount of insurance payable
during the policy period for losses (other than those arising from the products
- completed operations hazards as covered under the standard commercial general
liability policy)
General Liability Insurance: Insurance protecting businesses from
most liability exposures other than automobile and professional liability
Glass Insurance: A property insurance policy covering breakage
of building glass regardless of cause
Governing Classification: In Workers' Compensation Insurance, the
classification that best describes the workers' compensation exposure of an employer's
business
Grace Period: Period of time after the due date of a premium during
which the policy remains in force without penalty.
Graded Premium Policy: A type of whole life policy designed for
people who want more life coverage than they can currently afford. They pay a lower
premium rate that increases gradually over the first three to five years and then
remains constant over the life of the policy.
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
Guaranteed Term: A form of renewable term insurance that remains
in force as long as the premiums are paid on time. With guaranteed term insurance,
the insurance company cannot terminate the policy during the term.
Hired Automobile: An automobile whose exclusive use has been temporarily
given to another for a monetary sum or other consideration. The business auto definition
of 'hired autos,' however, includes autos borrowed except those borrowed from employees
or partners
Hold Harmless Agreement: A contractual agreement that requires
one contracting party to assume certain legal liabilities of the other party
Host Liquor Liability: Liability coverage for hosts of business
or social functions arising out of the serving or distribution of alcoholic beverages
by a party not engaged in this activity as a business enterprise
Improvements and Betterments: Additions or changes made by a lessee
at his own expense to property that may not legally be removed. Usually covered
under the tenants property coverage
Incontestable Clause: A clause in a policy providing that a policy
has been in effect for a given length of time (two or three years), the insurer
shall not be able to contest the statements contained in the application. In life
policies, if an insured lied as to the condition of his health at the time the policy
was taken out, that lie could not be used to contest payment under the policy if
death occurred after the time limit stated in the incontestable clause.
Incurred Losses: The amount of paid claims and loss reserves within
a particular period of time, usually a policy year. Customarily computed as losses
incurred during the period, plus outstanding losses at the end of the period, less
outstanding losses at the beginning of the period
Independent Adjuster: A claims adjuster who provides adjustment
services to insurance companies but is not employed by them
Independent Contractor: An individual or company who has agreed,
in writing, with another party to perform a job or function on behalf of that party
Inflation Guard Provision: A provision that increases the limit
of insurance by a specified percentage over a specified period of time to offset
inflation costs
Insurability: The condition of the individual wishing to be insured,
including their health, susceptibility to injury and life expectancy.
Insurance: A formal social device for reducing risk by transferring
the risks of several
individual entities to an insurer. The insurer agrees, for a consideration, to pay
for the loss in the amount specified in the contract.
Insurance Policy: The printed form which serves as the contract
between an insurer and an insured.
Insurance to Value: Insurance written in an amount equal to the
value of the property or which meets coinsurance requirements
Insured: The party who is being insured. In life insurance, it
is the person because of his or her death the insurance company would pay out a
death benefit to a designated beneficiary.
Insurer: The insurance company; Party that provides insurance coverage,
typically through a contract of insurance.
Irrevocable Beneficiary: A beneficiary that cannot be changed without
that beneficiary's consent.
Increasing Term Insurance: Term life insurance in which the death
benefit increases periodically over the policy's term. Usually purchased as a cost
of living rider to a whole life policy.
Joint Venture: A business relationship when two or more persons
join their labor or property for a business undertaking and share profits
Lapse: Termination of a policy due to the policy owner's failure
to pay the premium within the grace period.
Leasehold Interest: Property insurance covering the loss suffered
by a tenant due to termination of a lease because of damage to the leased premises
by a covered loss
Lessee: The person to whom a lease is granted
Lessor: The person granting the lease
Liability: The legal obligation to pay a monetary award for injury
or damage caused by one's negligent or statutorily prohibited action
Liberalization Clause: A provision within an insurance policy that
broadens the coverage if the insurance company offers a broader coverage form within
the first 45 days of coverage
Lien: An obligation that can be held by an individual who has an
interest in a particular matter or property
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 individual who is insured.
Limit of Liability: The most an insurance company agrees to pay
in the case of loss
Limited Pay Policy: A type of whole life insurance designed to
let the policyholder pay higher premiums over a specific time period such as 10
or 20 years so that they won't have to pay any premiums for the rest of his or her
life.
Longshore and Harbor Workers' Compensation Act: A federal law that
provides workers' compensation benefits to employees of a vessel injured in maritime
employment - usually in loading, unloading, repairing or building a vessel - but
not applicable to crew members
Loss: The amount an insurance company pays for damages under the
terms of a policy
Loss Adjustment Expense: The cost assessed to a particular claim
for investigating and adjusting that claim
Loss Constant: A flat charge added to the premium of small workers'
compensation policies to offset higher loss ratios
Loss Control: A technique that is put in place to reduce the possibility
that a loss will occur or reduce the severity of those that do occur
Loss Payable Clause: An insurance clause that authorizes loss payments
to a person or entity having an insurable interest in the covered property
Loss Ratio: Percentage of losses incurred against earned premiums
Loss Report: A form showing reported claims which provides information
such as the date of occurrence, type of claim, amount paid and amount reserved for
each loss
Loss Reserve: An estimated amount set aside for a particular claim
that has not yet been paid
Lost Policy Release: A signed statement by the named when the insured
wishes to cancel the policy, but has lost or mislaid the policy, which releases
the insurance company from all liability or losses
Medical: A document completed by a physician or another approved
examiner and submitted to an insurer (insurance company) in order to provide medical
information. This is usually done to determine insurability (or lack of insurability)
or is sometimes done in relation to a claim.
Medical Expenses: Reasonable charges for medical, surgical, x-ray,
dental, ambulance, hospital, professional nursing, prosthetic devices, and funeral
expenses. What is considered reasonable is outlined in a policy.
Medical Payments, Auto: Coverage, which is optional, under an auto
policy to pay for medical expenses for bodily injury caused by 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 when they are occupants
of the insured auto
Medical Payments, General Liability: A general liability coverage
that reimburses others, regardless of fault, for medical or funeral expenses incurred
as a result of bodily injury or death sustained by an accident
Mexico Coverage: Coverage which is sometimes provided under automobile
policies for the operation of an insured motor vehicle within Mexico, usually limited
to a stated number of miles from the U.S. border
Minimum Premium: The lowest amount of premium to be charged for
providing a particular insurance coverage
Misrepresentation: The act of knowingly presenting false information.
Mobile Equipment: Equipment such as earthmovers, tractors, diggers,
farm machinery, forklifts, etc., that even when self-propelled, are not considered
as automobiles for insurance purposes
Monopolistic State Funds: States or Jurisdictions where an employer
must obtain workers' compensation insurance from a state fund or qualify as a self-insurer,
as is allowed in five of the states: North Dakota, Ohio, Washington, West Virginia,
Wyoming, Puerto Rico and the U.S. Virgin Islands
Mortality Rate: The number of deaths in a group of people, usually
expressed as deaths per thousand.
Mortality Table: A table showing the incidence of death at specified
age groups.
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
Named Perils Coverage: A property insurance term referring to exact
causes of loss specifically listed as covered
National Flood Insurance Program: A federally funded program established
to make flood insurance available to properties located in participating communities
National Flood Insurance Program: A federally funded program established to make
flood insurance available to properties located in participating communities
Nonadmitted Insurer: An insurance company that is not licensed
to do business in a specific state. The insurers may write coverage through an excess
and surplus lines broker that is licensed in these jurisdictions
Nonowned 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
Nonsubscription: A Workers' Compensation term used in Texas that
refers to employers who choose to be out of the workers' compensation system. Firms
that are proven negligent in causing a worker's injury, can be held liable in tort,
since nonsubscribing employers waive the traditional common law defenses available
to employers subject to workers' compensation laws
Original Age: The age you were when you bought an insurance policy.
Other Insured Rider: The temporary addition to an insurance policy,
usually a member of the direct family.
Ownership: All rights, benefits and privileges under life insurance
policies are controlled by their owners. Policy owners may or may not be the insured.
Ownership may be assigned or transferred by written request of current owner.
Occupational Hazard: A condition in the workkplace that increases
the chances of the an accident, sickness, or death. It usually will mean higher
premiums.
Occurrence: A continual, gradual or repeated exposure to substantially
the same general harmful conditions. General liability policies insure liability
for bodily injury or property damage that is caused by an occurrence
Package Policy: A policy providing several different coverages
combined into one policy. Refers to a policy providing both general liability insurance
and property insurance
Payroll Limitation: A limit on the amount of payroll for certain
classifications used for the development of premium
Peril: Cause of loss such as fire, windstorm, collision, etc.
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 statutes 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: All tangible property not classified as real
property such as contents
Policy: The printed document given to the insured, outlining the
terms and conditions of the Insurance coverage.
Policy Fee: A one-time charge per policy that does not change with
the size of the premium
Policy Holder: The person who owns a life insurance policy. This
is usually the insured person, but it may also be a relative of the insured, a partnership
or a corporation.
Policy Period: The term or duration of a policy including the effective
and expiration dates
Pollutant: An irritant or contaminant, whether in solid, liquid,
or gaseous form, including smoke, vapor, soot, fumes, acids, alkalis, chemicals
and waste
Preferred Risk: A positive characterisic of someone seeking to
be insured. Usually means a better likely hood for long life, and usually means
a lower premium.
Premises: The location where coverage applies
Premises-Operations: A category of hazard ordinarily insured by
a general liability policy which is composed of those exposures to loss that fall
outside the defined 'products-completed operations hazard,' including liability
for injury or damage arising out of the insured's premises or out of the insured's
business operations while such operations are in progress
Premium: The agreed upon, payment made to keep an insurance policy
in force, usually a monthly payment.
Premium Flexibility: The policy holder's right to vary the amount
of premium paid each
month.
Primary Beneficiary: In life insurance, the beneficiary designated
by the insured as the first to receive policy benefits.
Primary Policy: The insurance policy that pays first when you have
a loss that's covered by more than one policy.
Pro Rata Cancellation: The cancellation of an insurance policy
with the return premium being the full proportion of premium for the unexpired term
of the policy, without penalty for early cancellation
Product: Items manufactured, sold, handled, distributed or disposed
of by the named insured or others involved with the named insured in the course
of their business. Includes containers, parts and equipment, product warranties
and provision of or failure to provide instructions and warnings
Product Liability: The liability for bodily injury or property
damage a merchant or manufacturer may incur as a consequence of some defect in the
product sold or manufactured
Products-Completed Operations: General Liability coverage for liability
arising out of the insured's products or business operations conducted away from
the insured's premises once those operations have been completed
Professional Liability: Coverage designed to protect professionals
such as physicians and real estate brokers, against liability incurred as a result
of errors and omissions in performing professional services
Property Damage: In the general liability policy, a physical injury
to property, resulting in the loss of use
Property Insurance: First-party insurance for real and personal
property against physical loss or damage
Provisions: Details of an insurance policy which explain the benefits,
conditions and other features of the insurance contract.
Real Property: Real estate including buildings and vegetation
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.
Reinstatement: Putting a lapsed policy back in force by producing
satisfactory evidence of insurability and paying any past-due premiums required.
Renewal Policy: A policy issued to replace an expiring policy
Rents or Rental Value Insurance: Insurance that reimburses a building
owner for loss of rental income due to damage by an insured peril
Replacement: A new policy written to take the place of one currently
in force.
Representation: Statements made by applicants on their applications
for insurance that they represent as being substantially true to the best of their
knowledge and belief but that are not warranted as exact in every detail.
Return Premium: The amount of premium due the insured should the
actual cost of a policy be less than the insured previously paid
Rider: An attachment to a policy that modifies its conditions by
expanding or restricting benefits or excluding certain conditions from coverage.
Risk: The chance of injury, damage, or loss.
Robbery: Theft of property while force is used or threatened
Secondary Beneficiary: An alternate beneficiary designated to receive
payment, usually in the event the original beneficiary predeceases the insured.
Short-Term Cancellation: Cancellation of an insurance policy prior
to the expiration date in which a penalty in the form of a less than full pro-rata
premium refund is allowed
Single Premium Policy: A whole life policy for people who want
to buy a policy for a one-time lump sum,
and then be covered for the rest of their
lives without paying any additional premiums.
Special Causes of Loss Form: A cause of loss form providing coverage
from all causes of loss unless specifically excluded or limited
Specified Causes of Loss Coverage: Auto physical damage coverage
only for losses caused by the perils listed in the policy
Sprinkler Leakage Coverage: Coverage for property damage caused
by the accidental discharge or leakage of water from automatic sprinkler systems
or other fire prevention devices
Surplus Lines Insurance: Insurance written by insurers not licensed
in the states where the risks are located and placed with such insurers under the
surplus line laws of the various states. Before such placements can be made through
specially licensed surplus line agents and brokers, state laws generally require
evidence reported before some predetermined future date ('sunset')
Time Element Insurance: A term referring to property coverage for
loss of earnings or income resulting from the inability to put damaged property
to its normal use
Term Insurance: Protection during limited number of years; expiring
without value if the
insured survives the stated period, which may be one or more years but usually is
five to twenty years, because such periods usually cover the needs for temporary
protection.
Term: Period for which the policy runs. In life insurance, this
is to the end of the term period for term insurance.
Third-Party Owner: A policy owner who is not the prospective insured.
The policy owner and the insured may be, and often are the same person. If for example,
you apply for and are issued an insurance policy on your life, then you are both
the policy owner and the insured and may be known as the policy owner-insured. If,
however, your mother applies for and is issued a policy on your life, then she is
the policy owner and you are the insured.
Transit Coverage: Coverage on the insured's property while in transit
from one location to another, over land
Umbrella Liability Policy: A policy designed to provide additional
protection against catastrophic losses covered under liability policies, such as
the business auto policy, commercial general liability policy, watercraft and aircraft
liability policies and employers liability coverage. It provides excess limits when
the limits of the underlying liability policies are used up by the payment of claims
and it drops down and picks up where the underlying policy leaves off when the aggregate
limit of the underlying policy in question is exhausted by the payment of claims.
It also provides protection against some claims not covered by the underlying policies,
subject to a self-insured retention
Underinsured Motorists Coverage: Provides coverage for bodily injury,
and in some states property damage, for losses incurred by an insured when an accident
is caused by a motorist who does not have sufficient insurance limits
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: Company receiving premiums and accepting responsibility
for fulfilling the policy contract. Also, company employee who decides whether the
company should assume a particular risk; or the agent who sells the policy
Uninsurable Risk: A person who is not acceptable for insurance
due to excessive risk.
Universal Life: An interest-sensitive life insurance policy that
builds cash values. The premium payer has control over how the policy is structured.
He has the flexibility to eliminate the premiums (essentially pay up the policy
and pay no more premiums) or have the premiums continue for life. It is a matter
of juggling three variables: the assumed interest rate, the cash value and the premium
payment plan. The policy is interest-sensitive, and if interest rates change from
the assumed interest, it will affect the other two variables. In the past, many
Universal Life Policies were structured assuming a higher interest rate then was
actually received, therefore, most of them have under performed. If you have a Universal
Life Policy, you should have it evaluated to see if it needs
to have the premiums adjusted to get it back on track. A fourth variable that has
not been a factor but could be in the future, and the owner should be aware of,
is the Mortality variable. Universal Life policies are usually structured assuming
current mortality rates. The insurance companies reserve the right to change those
rates.
Unearned Premium: That portion of the policy premium that represents
the unexpired policy term
Uninsured Motorist Coverage: Provides coverage for bodily injury,
and in some states property damage, for losses incurred by an insured when an accident
is caused by a motorist who is not insured
Utility Service Interruption Coverage: Coverage for the loss to
an insured due to lack of incoming electricity which was caused by damage from a
covered cause of loss, such as a fire or windstorm, to property away from the insured's
premises - usually the utility generating station. Also referred to as 'off-premises
power coverage'
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
Valuable Papers and Records Coverage: Coverage that pays the cost
to reconstruct damaged or destroyed valuable papers and records and usually includes
almost all forms of printed documents or records except money or securities; data
processing programs, data and media are usually excluded
Waiver of Premium: Rider or provision included in most
life insurance
policies exempting the insured from paying premiums after he or she has been disabled
for a specified period of time, usually six months.
Waiver of Subrogation: Also known as 'transfer of rights of recovery,'
the relinquishment by an insurer of the right to collect from another party for
damages paid on behalf of the insured
Whole Life Insurance: Life insurance that is kept in force for
a person's whole life as long as the scheduled premiums are maintained. All Whole
Life policies build up cash values. Most Whole Life policies are guaranteed as long
as the scheduled premiums are maintained. The variable in a Whole life Policy is
the dividend which could vary depending on how well the insurance is doing. If the
company is doing well and the policies are not experiencing a higher mortality than
projected, premiums are paid back to the policy holder in the form of dividends.
Policyholders can use the cash from dividends in many ways. The three main uses
are: it can be used to lower or vanish premiums, it can be used to purchase more
insurance or it can be used to pay for term insurance.
Workers' Compensation: Protection which provides benefits to employees
for injury or contracted disease arising out of and in the course of employment.
Most states have laws which require such protection for workers and prescribe the
length and amount of such benefits provided
