A
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'
B
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
C
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
D
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
E
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
F
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.
G
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.
H
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
I
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.
J
Joint
Venture: A business relationship when two or
more persons join their labor or property for a business
undertaking and share profits
L
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
M
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
N
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
O
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
P
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.
R
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
S
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')
T
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
U
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'
V
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
W
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
