Assurena Insurance Agency is an independent insurance brokerage agency that carries some of the best coverage options in the entire New USA.

Our Contacts

88 Centre Street North,
Toronto L4W 1C9
+1 (419)-507-0468
+1 (213)-345-0468

Working Hours

Monday
9.00 - 5.00
Tuesday
8.00 - 5.00
Wednesday
8.00 - 5.00
Thursday
8.00 - 5.00
Friday
8.00 - 4.00
Satureday
Closed
Sunday
Closed

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401(k) plan

A 401(k) plan is a tax-advantaged, defined-contribution retirement account offered by employers to their employees. Internal Revenue Code 401K is the section the plan is named after.  Workers on the plan will make contributions to their accounts through payroll deductions, and their employers can match some or all of the employees’ contributions. Investment earnings in a traditional 401(k) plan are not taxed until the employee withdraws that money, typically after retirement. A Roth 401(k) plan, employers also can make contributions, the largest difference being withdrawals can be tax-free.

529 college savings plan

A 529 plan is a tax-advantaged college savings plan for education savings.  The plan, sponsored by your state or institution is designed to help families set aside funds for future college costs. Originally the 529 plan was limited to college or post-secondary education costs, but expanded to cover K-12 education in 2017, and in 2019 for apprenticeship programs. All earnings in a 529 college savings plan are tax-deferred. A savings plans and a repaid tuition plans are the 2 major types of 529 plans.

A 529 savings plans grow tax-deferred and withdrawals are tax-free if used for qualified education expenses. The prepaid tuition plan allows the account owner to pay tuition at a college and university, this is done to lock in the cost at today’s rates for future use. Sometimes referred as qualified tuition programs.

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Accelerated Benefits

In the special case of terminal illness or catastrophic circumstances, this allows a portion of a life insurance policy’s death benefit to be paid out.

Acceleration Clause

A contract provision or clause that states a lender can require a borrower must repay all of the outstanding balance of a loan or mortgage if certain requirement is not met.  The acceleration clause defines the reasons a lender can demand repayment.

Accident

An unanticipated occurrence or condition that may result in damage or injury.

Accident forgiveness

A program offered by insurance companies in which customers may not lose a discount or incur an accident surcharge following an at-fault accident.

Accident Insurance 

Insurance for unforeseen bodily injury.

Accident Only 

An insurance contract that provides coverage, singly or in combination, for death, dismemberment, disability, or hospital and medical care caused by or necessitated as a result of accident or specified kinds of accident.

Accident Only or AD&D 

Policies providing coverage, singly or in combination, for death, dismemberment, disability, or hospital and medical care caused by or necessitated as a result of accident or specified kinds of accidents. Types of coverage include student accident, sports accident, travel accident, blanket accident, specific accident or accidental death and dismemberment (AD&D).

Accidental Bodily Injury

Unexpected injury to a person.

Accidental Death & Dismemberment 

An insurance contract that pays a stated benefit in the event of death and/or dismemberment caused by accident or specified kinds of accidents.

Accidental Death Benefit

In a life insurance policy, benefit in addition to the death benefit paid to the beneficiary, should death occur due to an accident. There can be certain exclusions, as well as time and age limits.

Accidental death coverage

An added rider to some life insurance policies that pays upon the named insured’s death, but only if that death is caused by an accident. If the named insured dies from natural causes, there is no coverage under this rider.

Accumulation Period 

Period of time insured must incur eligible medical expenses at least equal to the deductible amount in order to establish a benefit period under a major medical expense or comprehensive medical expense policy.

Active Participant

Person whose absence from a planned event would trigger a benefit if the event needs to be canceled or postponed.

Activities of Daily Living

Bathing, preparing and eating meals, moving from room to room, getting into and out of beds or chairs, dressing, using a toilet.

Actual Cash Value (ACV)

Replacement cost minus depreciation.  For example, if a mattress was destroyed in a fire and the cost to replace that item was $2,000.00 but you owned the mattress for 5 years.  The value of the item is scheduled to last for 20 years, it has depreciated $500.00 the actual cash value is $1500.00.

Additional coverage for sound, picture and data devices (auto)

Coverage for electronic equipment that receives or transmits audio, visual or data signals and is not designed solely for the reproduction of sound, as well as any accessories used with such equipment. These devices do not need to be permanently installed in the vehicle, but are attached to a component of the vehicle.

Additional insured

 

A person, company or entity who is protected by an insurance policy owned by another party. For example, a person purchases or leases a car with bank financing, the lienholder is named as Additional Insured to protected its interest for any liability caused by purchaser of the Auto. The leaseholder requires protection because it has a financial interest in the vehicle.

Additional living expense

A type of protection provided in a homeowners and renters an insurance policy that can pay for reasonable extra costs that result when a policyholder is dislocated because of a covered peril. For example, if you are forced to relocate from your home due to a fire into a hotel.  You would have to eat out rather than cook meals for you and your family.  The additional living expenses protection would be provided for the cost difference between your regular grocery bills and eating out.  Cost of eating out for the month $600.00, cost of purchasing groceries $325.00, the additional expense is $275.00.

Adjustable Rate Mortgage (ARM)

A, adjustable-rate mortgage (ARM), is a mortgage loan with the interest rate that is periodically adjusted based on an index the lender uses to borrow on the credit markets. The loan may be the lender’s standard variable rate above their base rate. It can be a direct and defined link to the lenders underlying index, but lenders may not offer any specific connection to an underlying market or index, then it is the lenders discretion to change the rate as it feels fit.  The term “variable-rate mortgage” is also used. 

Adjuster

An insurance professional who assigned to investigate coverage and the evidences of a loss to administer the compensation an insurance company pays its insured, or a third-party making a claim. Other names are, field adjuster, an independent adjuster or a claims examiner.

Admission

Hospital inpatient care for any medical condition.

Admitted Assets 

Insurer assets which can be valued and included on the balance sheet to determine financial viability of the company.

Admitted Company

 

An admitted company is an insurance company that is domiciled or headquartered in one state and is allowed to conduct business in another state. Each state governs all Insurance licenses; therefore, all insurance company must be licensed in the state is does business in and abide by its rules and regulations.

For example, Progressive Corporation does business in all 50 states but its Headquarters are located in Mayfield, Ohio; therefore, it is an admitted company in 49 states.

Advance Premiums 

The term used to describe an initial payment of premium or sometimes referred to as a deposit to bind an insurance policy. Advance premium can also refer to pre-paid premiums, in which the policyholder makes a premium payment before policy has started. For example, a gas bill or other utility bill is paid for service already provided whereas, an advance premium is paid for services to be provided. 

Adverse Carrier

 

Term used to refer to the other party’s insurance company. For example, if you get into an accident and your insurance company is Geico and the other person in the accident has Progressive Insurance.

Adverse Selection 

Adverse selection has different meanings depending on the industry.  In the insurance industry the person purchasing insurance has withheld information about themselves or their business to gain insurance coverage at a lower cost than the true risk to insure that person or business.  For example, if you are seeking an auto insurance policy and has children of legal driving age with a license to drive and reside in your home but do not disclose the children live in the home is adverse selection. The additional youth driver poses a high risk than their parents.

Advisory Organization 

A group of member companies whose main function is to gather and publish loss statistics trending loss costs.

Affiliate 

A person or entity that directly, or indirectly, through one or more other persons or entities, controls, is controlled by or is under common control with the insurer.

After-Market Parts

 

Aftermarket parts, are not made by the original manufacturer, are occasionally used to replace damaged parts in a vehicle.

Agent

A person who acts as a representative for the insurance company to sell its insurance products on a commission basis. There are ‘exclusive’, ‘non-exclusive’ and independent agent.

Aggregate

The maximum dollar amount or total amount of coverage an insurance covers for a single loss, or multiple losses, during a policy period, or on a specific project. For example, if you have a policy with 1 million for any single occurrence

Agreed Value Policy

Agreed value is a provision in the coverage where policyholder and the insurance company agree upon the value of your vehicle when you purchase the policy. … No other changes in the policy will be affected and ion the event of a covered loss, you’ll be compensated the smaller of the repair cost to fix the vehicle or the agreed value, regardless of any depreciation.  For example, if you own a classic car that cannot be replaced and has special meaning to the owner.  The owner and the insurance carrier agree to value the car at $500,000.00 then the premium will be adjusted to reflex the agreed value.

Aircraft 

Coverage for aircraft (hull) and their contents; aircraft owners’ and aircraft manufacturers liability to passengers, airports and other third parties.

Aircraft Insurance

 

Coverage for the insured in the event that the insured’s negligent acts and/or omissions result in losses in connection with the use, ownership, or maintenance of aircraft.

ALAE 

Allocated loss adjustment expenses (ALAE) are attributed to the processing of a specific insurance claim. ALAE is part of an insurer’s expense reserves. It is one of the largest expenses for which an insurer has to set aside funds—along with contingent commissions

Alien Company 

An alien insurer is an insurance provider offering coverage in a country other than the company’s home country.  When the policy is sold in a country other than where the insurer is headquartered or domiciled, the provider is considered “alien.” This is different than an admitted company, which is an insurer from another state. For example, a policy from Lloyds of London sold in Florida would be an “Alien Company”.

All other perils not enumerated

All causes of loss not listed on an insurance policy.

Allied Lines 

Coverages which are generally written with property insurance, e.g., glass, tornado, windstorm and hail; sprinkler and water damage; explosion, riot, and civil commotion; growing crops; flood; rain; and damage from aircraft and vehicle, etc.

All-Risk

Also known as open peril, this type of policy covers a broad range of losses. The policy covers risks not explicitly excluded in the policy contract.

All-terrain vehicle (ATV) insurance

Insurance designed to cover off-road, all-terrain classes of vehicles.

Alternative Workers’ Compensation 

Other than standard workers’ compensation coverage, employer’s liability and excess workers’ compensation (e.g., large deductible, managed care).

Ambulatory Services 

Health services provided to members who are not confined to a health care institution. Ambulatory services are often referred to as “outpatient” services.

Amendment

A change to the basic policy contract. An amendment alters the policy; an endorsement adds to it.

Annual Administrative Fee

Charge for expenses associated with administering a group employee benefit plan.

Annual Crediting Cap

 

The maximum rate that the equity-indexed annuity can be credited in a year. If a contract has an upper limit, or cap, of 7% and the index linked to the annuity gained 7.2%, only 7% would be credited to the annuity.

Annual percentage rate (APR)

The amount of interest charged each year for borrowing or achieved through investment expressed as a single percentage. The APR is the actual yearly cost of the amount financed. For example, a credit card company may claim that it only charges 2 percent per month, but that translates to an APR of 24 percent (2 percent at 12 months).

Annual percentage yield (APY)

The total yearly rate of return on an investment, accounting for the compounding of interest. This allows for the comparison of varying interest-rate agreements by expressing yield in an annualized percentage number.

Annual Statement 

An annual report required to be filed with each state in which an insurer does business. This report provides a snapshot of the financial condition of a company and significant events which occurred throughout the reporting year.

Annuitant

 The beneficiary of an annuity payment, or person during whose life and annuity is payable.

Annuities – Immediate Non-variable 

An annuity contract that provides for the fixed payment of the annuity at the end of the first interval of payment after purchase. The interval may vary, however the annuity payouts must begin within 13 months.

Annuitization

Process by which you convert part or all of the money in a qualified retirement plan or non-qualified annuity contract into a stream of regular income payments, either for your lifetime or the lifetimes of you and your joint annuitant. Once you choose to annuitize, the payment schedule and the amount is generally fixed and can’t be altered.

Annuitization Options

Choices in the way to annuitize. For example, life with 10-year period certain means payouts will last a lifetime, but should the annuitant die during the first 10 years, the payments will continue to beneficiaries through the 10th year. Selection of such an option reduces the amount of the periodic payment.

Annuity

A type of insurance vehicle issued by an insurance company where contributions and earnings are tax-deferred. There are several types of annuities: fixed, variable, immediate, deferred, indexed and equity linked. As an annuity owner, you have control over how long the annuity is invested, when you receive benefits and how often you are paid.

Annuity Certain

A contract that provides an income for a specified number of years, regardless of life or death.

Anti-lock Braking System (ABS)

An automated vehicle braking system that helps prevent a vehicle’s wheels from locking up in order to help improve driver control. ABS automatically pumps the brake system to avoid wheel lockup. Most recent-model commercial and personal autos come equipped with ABS.

Antique automobile

A private passenger automobile that is 25 years old or older and has been restored, maintained or preserved by antique automobile hobbyists. Antique, vintage and classic automobiles can be covered with classic car insurance.

Anti-Theft Device

There are essentially two types of anti-theft devices: passive and active. Passive devices require no action or activation and automatically arm themselves when the vehicle is turned off, the ignition key is removed or a door is shut. Active devices require some action or activation, such as pushing a button or placing a “lock” somewhere in your car. Typically, with active devices, you must re-activate them every time you set them or they won’t work. Keep in mind that you could get a discount for having an anti-theft device in your car.

Applicant

Prospective policyholder; completes and signs the insurance application.

Application

A statement of information made by a person applying for life insurance. It helps the life insurance company assess the acceptability of risk. Statement made in the application are used to decide on an applicant’s underwriting classification and premium rates.

Appraisal

A process by which an insurance carrier and a homeowner arrive at an agreed value for a loss covered by a homeowners insurance policy. In auto insurance, an appraisal is a process by which a body shop employee or auto damage appraiser estimates the cost to repair a damaged vehicle.

Arbitration

A process of settling a dispute through an impartial party. It is used as an alternative to litigation.

Arrestee

A person in custody whose release may be secured by posting bail.

Arson

Intentional and malicious burning of property.

Assessed Value 

Estimated value for real or personal property established by a taxing entity

Asset

Any item a person owns or is paying for over time. This can include real estate, personal property, automobiles or other personal possessions. In addition to such tangible items, assets can also be intangible, such as patents or copyrights the insured may own.

Asset allocation

 

The strategy of investing your money among several different areas, such as stocks, bonds and cash instruments, to balance risk and return in your portfolio based on your goals, risk tolerance and time horizon. Asset allocation programs do not assure a profit or protect against loss in a declining market.

Asset class

 

A set of securities that are standardized and act similarly in the financial marketplace. The main financial asset classes are stocks, bonds and money market funds. However, classes can include real property (such as buildings and land) and personal property (such as office furnishings).

Asset Risk 

In the risk-based capital formula, risk assigned to the company’s assets.

Assets

The items on a balance sheet showing the value of property owned.

Assigned Risk (AIP)

A driver or vehicle owner who cannot qualify for insurance in the regular market. He or she must get coverage through a state assigned risk plan which specifies that each company must accept a proportionate share of these drivers/owners.

Assisted Living Care 

A policy or rider that provides coverage only while a policyholder is confined to an assisted living facility and meets the policy requirements for coverage.

Assumed Reinsurance

The assumption of risk from another insurance entity within a reinsurance agreement or treaty.

Assuming Company

An insurance company that accepts the risk transferred from another insurance company in a reinsurance transaction.

Assured

The policyholder and/or the individual(s) insured on a policy. Sometimes used in place of “insured” or “policyholder.”

At-Fault

The driver who caused an accident, either fully or partially.

Attained Age

Insured’s age at a particular time. For example, many term life insurance policies allow an insured to convert to permanent insurance without a physical examination at the insured’s then attained age. Upon conversion, the premium usually rises substantially to reflect the insured’s age and diminished life expectancy.

Authorized Company

An insurer licensed or admitted to do business in a particular state.

Authorized Control Level Risk Based Capital

Theoretical amount of capital plus surplus an insurance company should maintain.

Authorized Reinsurance 

Reinsurance placed with a reinsurer who is licensed or otherwise allowed to conduct reinsurance within a state.

Auto Damage (AD)

Division of the claims department that handles auto claims.

Auto Damage Adjuster

The auto damage adjuster is responsible for writing the repair estimate for your vehicle. This adjuster will also answer your questions about the repair process, your rental vehicle, or your total loss settlement.

Auto Insurance

Auto Insurance provides protection from losses resulting from owning and operating an auto. The insurance covers losses to the insured’s property and losses for which the insured is liable as a result of owning or operating an auto.

Auto Liability 

Coverage that protects against financial loss because of legal liability for motor vehicle related injuries (bodily injury and medical payments) or damage to the property of others caused by accidents arising out of ownership, maintenance or use of a motor vehicle (including recreational vehicles such as motor homes). Commercial is defined as all motor vehicle policies that include vehicles that are used primarily in connection with business, commercial establishments, activity, employment, or activities carried on for gain or profit. No Fault is defined by the state concerned.

Auto loan calculator

 

An automated tool that helps estimate auto loan payments. Some companies such as financial and consumer credit institutions offer auto loan calculators on their websites for consumers so they can estimate their car payments by entering variables such as vehicle cost, interest rate and the length of the loan.

Auto Physical Damage 

Motor vehicle insurance coverage (including collision, vandalism, fire and theft) that insures against material damage to the insured’s vehicle. Commercial is defined as all motor vehicle policies that include vehicles that are used in connection with business, commercial establishments, activity, employment, or activities carried on for gain or profit.

Auto safety ratings

 

An analysis of how vehicles stand up under various types of crash testing. The National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute for Highway Safety (IIHS) are two organizations that conduct and track vehicle crash-test data and provide vehicle safety ratings that detail the ability of vehicles to withstand various types of collisions.

Auto Theft

The theft of an auto is a type of loss that is covered under comprehensive coverage.

Automatic deposit

 

A regularly scheduled electronic deposit to an account. Also known as direct deposit.

Automobile Insurance

Coverage on the risks associated with driving or owning an automobile. It can include collision, liability, comprehensive, medical, and uninsured motorist coverages.

Automobile Liability Insurance 

 

Coverage if an insured is legally liable for bodily injury or property damage caused by an automobile.

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Bailee

A person or concern having possession of property committed in trust from the owner.

Balance Sheet 

Accounting statement showing the financial condition of a company at a particular date.

BCEGS – Building Code Effectiveness Grading Schedule 

Classification system for assessment of building codes per geographic region with special emphasis on mitigation of losses from natural disasters.

Beneficiary

The person named in the policy to receive the insurance proceeds at the death of the insured. Anyone can be named as a beneficiary.

Benefit

The proceeds or payout from a life insurance policy, supplemental health policy or an annuity. Typically paid to the policy holder or the beneficiary.

Benefit Period

 

In health insurance, the number of days for which benefits are paid to the named insured and his or her dependents. For example, the number of days those benefits are calculated for a calendar year consist of the days beginning on Jan. 1 and ending on Dec. 31 of each year.

Bid Bond

A guarantee that the contractor will enter into a contract, if it is awarded to him, and furnish such contract bond (sometimes called “performance bond”) as is required by terms thereof.

Billing Clerk

Person responsible for revenue billing.

Binder

A temporary agreement declaring that the policy is in effect. Used in certain cases to protect a policyholder when it is not possible to issue or endorse the policy immediately.

Blanket coverage 

Coverage for property and liability that extends to more than one location, class of property or employee.

Blind spot

A portion of the roadway completely or partially obscured to the driver, often by part of the vehicle’s body.

Boat insurance

Typically provides coverage if a covered driver is legally liable for damages resulting from a covered auto accident in which others are injured.

Boatowners/Personal Watercraft 

Covers damage to pleasure boats, motors, trailers, boating equipment and personal watercraft as well as bodily injury and property damage liability to others.

Bodily Injury Liability coverage (BI)

Coverage for damages resulting in bodily injury or death sustained by others, including covered medical costs, that you become legally responsible for because of a covered auto accident.

Boiler & Machinery or Equipment Breakdown & Machinery 

Coverage for the failure of boilers, machinery and other electrical equipment. Benefits include

      i.        property of the insured, which has been directly damaged by the accident;

     ii.        costs of temporary repairs and expediting expenses; and

    iii.        liability for damage to the property of others. Coverage also includes inspection of the equipment.

Boiler and Machinery Insurance

Covers losses resulting from the malfunction of boilers and machinery. This coverage is usually excluded from property insurance creating the need for this separate product.

Bond

A form of debt security whereby the debt holder has a creditor stake in the company. Obligations issued by business units, governmental units and certain nonprofit units having a fixed schedule for one or more future payments of money; includes commercial paper, negotiable certificates of deposit, repurchase agreements and equipment trust certificates.

Bonus Rate Annuity

An extra percent of interest credited to an annuity during the first year that it is in force. The extra amount is above the interest rate to be credited beginning the second year and the remaining years that the annuity is in force. The extra rate is paid in the first year in an effort to attract new policyholders.

Book Value 

Original cost, including capitalized acquisition costs and accumulated depreciation, unamortized premium and discount, deferred origination and commitment fees, direct write-downs, and increase/decrease by adjustment.

Brand New Belongings (also called extended replacement cost)

Homeowners’ coverage that helps replace or repair personal property without depreciation being taken from the value of the property.

Broad-form collision coverage (Michigan)

A type of auto insurance offered in the state of Michigan. If you are more than 50 percent at fault in an accident, your insurance could help pay, except you must pay the deductible. If you are 50 percent or less at fault in an accident, your insurance pays, and you do not have to pay the deductible.

Broker

An individual who receives commissions from the sale and service of insurance policies. These individuals work on behalf of the customer and are not restricted to selling policies for a specific company but commissions are paid by the company with which the sale was made.

Builders’ Risk Policies 

Typically written on a reporting or completed value form, this coverage insures against loss to buildings in the course of construction. The coverage also includes machinery and equipment used in the course of construction and to materials incidental to construction.

Building / additions / alterations coverage (tenant/condo only)

Pays for damages to additions, alterations, fixtures, improvements or installations that you make to your rented residence or condo.

Building glass coverage

A type of business insurance coverage that provides extended protection for a property’s glass, as well as coverage for temporary board-up services after a loss.

Bundling

The act of obtaining more than one type of insurance policy from the same insurance company. Policyholders usually bundle insurance policies to take advantage of discounts offered by the insurance company. Bundling can apply to obtaining two or more policies, for example, homeowners’ insurance and auto insurance, or a business owners insurance policy covering both liability and property, to obtain savings.

Burglary

Coverage against loss as a result of forced entry into premises.

Burglary and Theft 

Coverage for property taken or destroyed by breaking and entering the insured’s premises, burglary or theft, forgery or counterfeiting, fraud, kidnap and ransom, and off-premises exposure.

Business Auto 

Coverage for motor vehicles, other than those in the garage business, engaged in commerce. Business auto filings include singularly or in any combination coverage such as the following: Auto Liability, PIP, MP, Uninsured Motorist and/or Underinsured Motorists (UM/UIM); Specified Causes of Loss, Comprehensive, and Collision.

Business Interruption 

Loss of income as a result of property damage to a business facility.

Business Interruption Insurance

If you have to temporarily close your business, such as to make repairs after a fire, business interruption insurance covers lost income and ongoing expenses. This way, you can pay your bills during a time when you might not be earning income.

Business owner policy (BOP)

This covers a broad range of property and liability risks. It can help protect your business in case of things like fire (property damage), suspended operations (business income) or lawsuits (liability) resulting from bodily injury, property damage, personal injury or advertising injury.

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Calendar Year Deductible 

In health insurance, the amount that must be paid by the insured during a calendar year before the insurer becomes responsible for further loss costs.

Cancellation

Terminating an insurance contract before the specified end-date listed in the policy.

Capital and Surplus 

A company’s assets minus its liabilities.

Capital and Surplus Requirement 

Statutory requirement ordering companies to maintain their capital and surplus at an amount equal to or in excess of a specified amount to help assure the solvency of the company by providing a financial cushion against expected loss or misjudgments and generally measured as a company’s admitted assets minus its liabilities, determined on a statutory accounting basis.

Capital Gains (Loss) 

Excess (deficiency) of the sales price of an asset over its book value. Calculated on the basis of original cost adjusted, as appropriate, for accrual of discount or amortization of premium and for depreciation.

Capitation Arrangement 

A compensation plan used in connection with some managed care contracts where a physician or other medical provider is paid a flat amount, usually on a monthly basis, for each subscriber who has elected to use that physician or medical provider. Capitated payments are sometimes expressed in terms of a “per member/per month” payment. The capitated provider is generally responsible, under the conditions of the contract, for delivering or arranging for the delivery of all contracted health services required by the covered person.

Captive Agent 

An individual who sells or services insurance contracts for a specific insurer or fleet of insurers.

Captive Insurer 

An insurance company established by a parent firm for the purpose of insuring the parent’s exposures.

Car payment calculator

See “Auto loan calculator”.

Carrier

Carrier

Term used to refer to the company that issues your insurance policy.

The insurance company or insurer.

Carrying Value (Amount) 

The SAP book value plus accrued interest and reduced by any valuation allowance and any non-admitted adjustment applied to the individual investment.

Case Management

A system of coordinating medical services to treat a patient, improve care and reduce cost. A case manager coordinates health care delivery for patients.

Cash 

A medium of exchange.

Cash Equivalent 

Short-term, highly liquid investments that are both

      i.        readily convertible to known amounts of cash, and

     ii.        so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Investments with original maturities of three months or less qualify under this definition.

Cash investment

 

A short-term, generally liquid, investment into which you invest cash and typically receive a return in 90 days or less. Examples include money market funds and certificates of deposit (CDs).

Cash Surrender Value

The amount available in cash upon voluntary termination of a policy by its owner before it becomes payable by death or maturity. The amount is the cash value stated in the policy minus a surrender charge and any outstanding loans and any interest thereon.

Cash value (life insurance)

The portion of the permanent life insurance policy that is available for withdrawals or loans. The cash value earns tax-deferred interest.

Casualty Insurance 

A form of liability insurance providing coverage for negligent acts and omissions such as workers compensation, errors and omissions, fidelity, crime, glass, boiler, and various malpractice coverages.

Catastrophe

 

A disaster affecting a specific geographic area. Catastrophes often cause injury or even death; most result in extensive property damage. Hurricanes, floods, tornadoes, and even large hailstorms are typical examples of catastrophes.

Catastrophe Bonds 

Bonds issued by an insurance company with funding tied to the company’s losses from disasters, or acts of God. A loss exceeding a certain size triggers a reduction in the bond value or a change in the bond structure as loss payments are paid out of bond funds.

Catastrophe Loss 

A large magnitude loss with little ability to forecast.

Catastrophic Event

An event that causes loss to many people at once. Also called catastrophe, several examples are tornados, hurricanes and plane crashes.

Catch-Up Contributions

Additional money you can contribute to a Health Savings Account if you have reached the age of 55 before the end of a taxable year.

Cede

To transfer to a reinsurer all or part of the insurance or reinsurance written by a ceding company.

Ceded Premium 

Amount of premium (fees) used to purchase reinsurance.

Ceding Company 

 

An insurance company that transfers risk by purchasing reinsurance.

Ceiling

 

A restriction put on certain financial products indicating the highest level of earning permitted for a specified period. For example, if an annuity has a 3.75 percent ceiling, the most it can earn during the specified period is 3.75 percent, even if the market return was higher.

Centers for Medicare & Medicaid Services (CMS) 

U.S. governmental agency responsible for the licensing of federally qualified HMOs. This was formerly the Health Care Financing Administration.

Certificate of Financial Responsibility (CFR)

See SR-22

Certificate of Satisfaction

A form signed by the insured when he or she takes delivery of the car from the repairer. It certifies that he or she is satisfied with the vehicle operations, appearance, and visible quality of the repairs.

Certificates of deposit (CD)

A savings vehicle offered by a financial institution that earns a fixed rate of interest over a specified period of time. CDs are insured by the FDIC and are used as short-range or mid-range savings options.

Certified pre-owned vehicle

 

A used, usually late-model, vehicle that has been inspected for damage, had necessary repairs and is endorsed by a manufacturer or other authorizing body. These vehicles typically carry a limited warranty and as a class are generally under a certain age and mileage.

Change in Valuation Basis 

A change in the interest rate, mortality assumption or reserving method or other factors affecting the reserve computation of policies in force.

Chartered Life Underwriter (CLU) 

A professional designation awarded by the American College to persons in the life insurance field who pass a series of exams in insurance, investment, taxation, employee benefit plans, estate planning, accounting, management, and economics.

Chartered Property Casualty Underwriter (CPCU) 

A professional designation awarded by the American Institute of Property and Casualty Underwriters to persons in the property and liability insurance field who pass a series of exams in insurance, risk management, economics, finance, management, accounting, and law. Designates must also have at least three years experience in the insurance business or related field.

Choice of Title Insurer

Per the Real Estate Settlement Procedures Act (RESPA) of 1974 (Public Law 93-533), a seller cannot require you to purchase title insurance from any particular company. This survey should be used as you shop for both types of title insurance and be sure that any company you select meets your standards and those of your lender. Please visit the Federal Department of Housing and Urban Development (HUD) for additional information on RESPA and title insurance.

Claim

A policyholder’s request for reimbursement from an insurance company for a loss of property.

Claim Adjuster

The person who investigates insurance claims for losses and recommends an effective settlement.

Claim Examiner

A person responsible for investigating and settling a claim.

Claim Service Representative

Also called CSR; they are responsible for clerical completion of all claim files.

Claimant

The first or third party. That is any person who asserts right of recovery.

Claims Adjustment Expenses 

Costs expected to be incurred in connection with the adjustment and recording of accident and health, auto medical and workers’ compensation claims.

Claims-made Form 

A type of liability insurance form that only pays if the both event that causes (triggers)the claim and the actual claim are submitted to the insurance company during the policy term.

Class Rating 

A method of determining rates for all applicants within a given set of characteristics such as personal demographic and geographic location.

Classic automobile

A rare or historic private passenger automobile that is 10 years old or older (age may vary by state) and has been restored, maintained or preserved by classic automobile hobbyists. These types of cars are covered by classic car insurance.

Classic car insurance

Classic car insurance covers your collectible vehicle up to an agreed value decided by you and your insurance company.

Clause

A section of an insurance policy dealing with various coverages, exclusions, duties of the insured, locations covered and conditions that terminate coverage.

CLUE® Report

Comprehensive Loss Underwriting Exchange (CLUE) report; provides claim history information.

Coastal area

A location near a body of water, including (but not limited to) an ocean, gulf, bay, harbor, inlet, sound, bayou or water that surrounds a barrier island.

Coinsurance

 

A clause contained in most property insurance policies to encourage policy holders to carry a reasonable amount of insurance. If the insured fails to maintain the amount specified in the clause (Usually at least 80%), the insured shares a higher proportion of the loss. In medical insurance a percentage of each claim that the insured will bear.

Collar

An agreement to receive payments as the buyer of an Option, Cap or Floor and to make payments as the seller of a different Option, Cap or Floor.

Collateral Loans 

Unconditional obligations for the payment of money secured by the pledge of an investment.

Collateralized Bond Obligations (CBOs) 

An investment-grade bond backed by a pool of low-grade debt securities, such as junk bonds, separated into tranches based on various levels of credit risk.

Collateralized Mortgage Obligations (CMOs) 

A type of mortgage-backed security (MBS) with separate pools of pass-through security mortgages that contain varying classes of holders and maturities (tranches) with the advantage of predictable cash flow patterns.

Collision (Auto)

Reimburses you for damage to your automobile sustained in a collision with another car or with any other object, movable or fixed, (for example, you accidentally backed into another object while pulling out from a parking stall and causing damage to the bumper and fender of your covered automobile).

Collision Deductive Waiver

This coverage waves your collision deductible if you are hit by a negligent uninsured motorist.

Collision Insurance

 

Covers physical damage to the insured’s automobile (other than that covered under comprehensive insurance) resulting from contact with another inanimate object.

Collision vs. Comprehensive Coverage

Collision coverage helps pay for damage to your vehicle if it hits another car or object, is hit by another car, or rolls over. Comprehensive coverage helps pay for damages to your vehicle that are not caused by a collision. Examples include theft, vandalism, glass-only damage, hitting a deer or other animal, storms and certain natural disasters.

Combinations

A special form of package policy composed of personal automobile and homeowners insurance.

Combined Ratio

The sum of the loss ratio and the expense ratio. Commercial Lines Insurance for businesses, professionals and commercial establishments. Compulsory Mandatory or enforced.

Combined single limit

One number that expresses the maximum amount that the liability coverage of an insurance policy will pay for property damage and bodily injury from a single incident.

Commencement Date 

Date when the organization first became obligated for any insurance risk via the issuance of policies and/or entering into a reinsurance agreement. Same as “effective date” of coverage.

Commercial Auto 

 

Coverage for motor vehicles owned by a business engaged in commerce that protects the insured against financial loss because of legal liability for motor vehicle related injuries, or damage to the property of others caused by accidents arising out of the ownership, maintenance, use, or care-custody & control of a motor vehicle. This includes Commercial Auto Combinations of Business Auto, Garage, Truckers and/or Other Commercial Auto.

Commercial Earthquake 

Earthquake property coverage for commercial ventures.

Commercial Farm and Ranch 

A commercial package policy for farming and ranching risks that includes both property and liability coverage. Coverage includes barns, stables, other farm structures and farm inland marine, such as mobile equipment and livestock.

Commercial Flood 

Separate flood insurance policy sold to commercial ventures.

Commercial General Liability 

Flexible & broad commercial liability coverage with two major sub-lines: premises/operations sub-line and products/completed operations sub-line.

Commercial Mortgage-Backed Securities 

A type of mortgage-backed security that is secured by the loan on a commercial property.

Commercial Multiple Peril 

Policy that packages two or more insurance coverages protecting an enterprise from various property and liability risk exposures. Frequently includes fire, allied lines, various other coverages (e.g., difference in conditions) and liability coverage. Such coverages would be included in other annual statement lines, if written individually. Include under this type of insurance multi-peril policies (other than farmowners, homeowners and automobile policies) that include coverage for liability other than auto.

Commercial Package Policy 

Provides a broad package of property and liability coverages for commercial ventures other than those provided insurance through a business owners policy.

Commercial Property 

Property insurance coverage sold to commercial ventures.

Commercial use

A classification for vehicles used mainly for business purposes. Commercial use does not apply to vehicles used for commuting to and from a place of business. If business-related use makes up the majority of the vehicle’s driving, it is typically considered a commercial use (or business use) vehicle.

Commercial vehicle

A vehicle used for business purposes.

Commission

Fee paid to an agent or insurance salesperson as a percentage of the policy premium. The percentage varies widely depending on coverage, the insurer and the marketing methods.

Common Carrier

 

A business or agency that is available to the public for transportation of persons, goods or messages. Common carriers include trucking companies, bus lines and airlines.

Common Carrier Liability

Coverage for transportation firms that must carry any customer’s goods so long as the customer is willing to pay. Examples include trucking companies, bus lines, and airlines.

Community Rating 

A rating system where standard rating is established and usually adjusted within specific guidelines for each group on the basis of anticipated utilization by the group’s employees.

Company Code 

A five-digit identifying number assigned by NAIC, assigned to all insurance companies filing financial data with NAIC.

Comparative Negligence

A doctrine of law that, in some states, may enable claimants to recover a portion of their damages even when they are partially at fault, or negligent. Each party’s negligence is compared to the other’s and a claimant’s recovery can be reduced by the percentage of his or her own negligence.

Competitive Auto Repair Parts

Parts made by a company other than the manufacturer of the auto. All parts authorize meet or exceed the quality of the manufacturer’s parts, but cost less. Insurance carriers will guarantee these parts for as long as you own the car.

Competitive Estimate

A term used when an insurance company requests that you submit multiple repair estimates for consideration.

Completed Operations Liability 

 

Policies covering the liability of contractors, plumbers, electricians, repair shops, and similar firms to persons who have incurred bodily injury or property damage from defective work or operations completed or abandoned by or for the insured, away from the insured’s premises.

Compounding interest

Interest paid on both the principal and the accumulated unpaid interest.

Comprehensive Coverage (Auto)

Provides coverage for any direct and accidental loss of, or damage to, your covered automobile and its normal equipment, to include but not limited to fire, theft or malicious mischief.

Comprehensive (Hospital and Medical) 

Line of business providing for medical coverages; includes hospital, surgical, major medical coverages; does not include Medicare Supplement, administrative services (ASC) contracts, administrative services only (ASO) contracts, federal employees health benefit plans (FEHBP), medical only programs, Medicare and Medicaid programs, vision only and dental only business.

Comprehensive General Liability (CGL) 

Coverage of all business liabilities unless specifically excluded in the policy contract.

Comprehensive Glass Insurance

Coverage on an “all risks” basis for glass breakage, subject to exclusions of war and fire.

Comprehensive Insurance

Auto insurance coverage providing protection in the event of physical damage (other than collision) or theft of the insured car. For example, fire damage or a cracked windshield would be covered under the comprehensive section.

Comprehensive Personal Liability 

Comprehensive liability coverage for exposures arising out of the residence premises and activities of individuals and family members. (Non-business liability exposure protection for individuals.)

Comprehensive Physical Damage Coverage

Pays for damage to your car from theft, vandalism, flood, fire or other covered perils. This coverage is subject to the terms, limits and conditions of your policy contract.

Comprehensive/Major Medical 

Policies that provide fully insured indemnity, HMO, PPO, or Fee for Service coverage for hospital, medical, and surgical expenses. Coverage excludes Short-Term Medical Insurance, the Federal Employees Health Benefit Program and non-comprehensive coverage such as basic hospital only, medical only, hospital confinement indemnity, surgical, outpatient indemnity, specified disease, intensive care, and organ and tissue transplant coverage.

Concurrent Causation 

Property loss incurred from two or more perils in which only one loss is covered but both are paid by the insurer due to simultaneous incident.

Concurrent Periods

 

In hospital income protection, when a patient is confined to a hospital due to more than one injury and/or illness at the same time, benefits are paid as if the total disability resulted from only one cause.

Condition

The portion of the insurance contract which outlines the duties and responsibilities of both the insured and the insurance company.

Condo Insurance

 

A type of homeowners insurance that meets the special needs of condominium owners.

Condos

Homeowners insurance sold to condominium owners occupying the described property.

Congenital and Hereditary Disorders

Disorders present at birth (congenital) or passed on from parent to offspring (hereditary). Some pet insurance covers these disorders, which are likely to be first noticed when the pet is young.

Construction and Alteration Liability 

Covering the liability of an insured to persons who have incurred bodily injury or property damage from alterations involving demolition, new construction or change in size of a structure on the insured’s premises.

Construction type

Refers to the construction of a building, such as your residence. For example, frame or masonry.

Contingency Reserves 

Required by some jurisdictions as a hedge against adverse experience from operations, particularly adverse claim experience.

Contingent Liability 

The liability of an insured to persons who have incurred bodily injury or property damage from work done by an independent contractor hired by the insured to perform work that was illegal, inherently dangerous, or directly supervised by the insured.

Continuation of Care Requirement 

Statutory or contractual provision requiring providers to deliver care to an enrollee for some period following the date of a Health Plan Company’s insolvency.

Continuing Care Retirement Communities 

Senior housing arrangements that in addition to housing include some provision for skilled nursing care.

Continuous insurance

When a policyholder has been insured by one or more insurance companies, without any lapse in coverage, for a specified period of time.

Continuously insured

Being continuously insured means your insurance coverage from one or more insurers is always in effect, without a break or lapse in coverage for any reason.

Contract

Legally binding agreement between two parties who wish to exchange some sort of consideration (anything of value, e.g. money or goods).

Contract Reserves 

Reserves set up when, due to the gross premium structure, the future benefits exceed the future net premium. Contract reserves are in addition to claim and premium reserves.

Contractual Liability 

Liability coverage of an insured who has assumed the legal liability of another party by written or oral contract. Includes a contractual liability policy providing coverage for all obligations and liabilities incurred by a service contract provider under the terms of service contracts issued by the provider.

Contributions

The amount of money you put into a savings plan, such as a 401(k) or IRA for retirement, or a 529 plan for college.

Contributory Negligence

A doctrine of law that, in some states, may prevent claimants from recovering any portion of their damages if they are even partially at fault, or negligent.

A standard of law in which a party cannot collect damages for a loss for which he or she is in any way at fault, even if someone else’s fault is greater. Only a few states apply this standard.

Conversion allowance

A credit the insurance company provides when converting a term life insurance policy to a permanent policy. In many instances, it can also help build the initial cash value amount in the new permanent policy.

Conversion date

The last day you are able to convert your term policy to a permanent policy.

Convertible Term Insurance Policy –

Term life insurance coverage that can be converted into permanent insurance regardless of an insured’s physical condition and without a medical examination. The individual cannot be denied coverage or charged an additional premium for any health problems.

Coordination of Benefits (COB) 

Provision to eliminate over insurance and establish a prompt and orderly claims payment system when a person is covered by more than one group insurance and/or group service plan.

Copay

A cost sharing mechanism in group insurance plans where the insured pays a specified dollar amount of incurred medical expenses and the insurer pays the remainder.

Corrective Order 

Commissioner’s directive of action to be completed by an insurer.

Cost-of-Living Adjustment (COLA)

Automatic adjustment applied to Social Security retirement payments when the consumer price index increases at a rate of at least 3%, the first quarter of one year to the first quarter of the next year.

Court Bonds

All bonds and undertakings required of litigants to enable them to pursue certain remedies of the courts.

Coverage

Protection and benefits provided in an insurance contract.

 

Coverage Area

The geographic region covered by travel insurance.

Coverdell Education Savings Account (ESA)

An account defined by the Internal Revenue Code as an incentive to help taxpayers save for education expenses. A taxpayer may deposit up to $2,000 per year for each student under the age of 18. These deposits are not tax deductible, but interest on them accrues tax-free. The student will not owe tax when the funds are distributed to the extent the amount distributed is not greater than the student’s qualified education expenses.

Covered Lives 

The total number of lives insured, including dependents, under individual policies and group certificates.

Covered loss

Loss or legal liability for which an insurance company will pay benefits pursuant to the terms and conditions of a policy.

Covered peril

An event causing damage to your home or property that is covered by your insurance. Fire, lightning, and wind and hail damage are some examples of covered perils.

Credit

Individual or group policies that provide benefits to a debtor for full or partial repayment of debt associated with a specific loan or other credit transaction upon disability or involuntary unemployment of debtor, except in connection with first mortgage loans.

Credit – Assumption Agreement 

An insurance certificate issued on an existing insurance contract indicating that another insurer has assumed all of the risk under the contract from the ceding insurance company.

Credit – Credit Default 

Coverage purchased by manufacturers, merchants, educational institutions, or other providers of goods and services extending credit, for indemnification of losses or damages resulting from the nonpayment of debts owed to them for goods or services provided in the normal course of their business.

Credit – Involuntary Unemployment 

Makes loan/credit transaction payments to the creditor when the debtor becomes involuntarily unemployed.

Credit Accident and Health (group and individual) 

Coverage provided to or offered to borrowers in connection with a consumer credit transaction where the proceeds are used to repay a debt or an installment loan in the event the consumer is disabled as the result of an accident, including business not exceeding 120 months duration.

Credit based insurance score

A number representing the likelihood of loss, assigned to insurance applicants, based on credit history. Like most insurers, Nationwide uses a credit-based insurance score to predict insurance losses. Studies show that considering a person’s credit behavior can help in predicting potential losses more accurately. By taking this into account, Nationwide can provide a more appropriate rate for each customer. About half of our existing customers receive a rate decrease based on their good credit scores.

Credit card, forgery and counterfeit money coverage

Coverage that pays for the legal obligation of an insured to pay because of theft or unauthorized use of credit cards (including Electronic Funds Transfer cards) issued to or registered in an insured’s name. This coverage also applies to forged checks and counterfeit money, but does not provide identity theft coverage.

Credit Disability 

Makes monthly loan/credit transaction payments to the creditor upon the disablement of an insured debtor.

Credit Health Insurance 

Policy assigning creditor as beneficiary for insurance on a debtor thereby remitting balance of payment to creditor should the debtor become disabled.

Credit Involuntary Unemployment 

Credit insurance that provides a monthly or lump sum benefit during an unpaid leave of absence from employment resulting from specified causes, such as layoff, business closure, strike, illness of a close relative and adoption or birth of a child. This insurance is sometimes referred to as Credit Family Leave.

Credit Life Insurance

Insurance issued to a creditor (lender) to cover the life of a debtor (borrower) for an outstanding loan.

Policy assigning creditor as beneficiary for insurance on a debtor thereby remitting balance of payment to creditor upon death of debtor.

Credit Personal Property Insurance 

Insurance written in connection with a credit transaction where the collateral is not a motor vehicle, mobile home or real estate and that covers perils to the goods purchased through a credit transaction or used as collateral for a credit transaction and that concerns a creditor’s interest in the purchased goods or pledged collateral, either in whole or in part; or covers perils to goods purchased in connection with an open-end transaction.

Credit Placed Insurance 

Insurance that is purchased unilaterally by the creditor, who is the named insured, subsequent to the date of the credit transaction, providing coverage against loss, expense or damage to property as a result of fire, theft, collision or other risks of loss that would either impair a creditor’s interest or adversely affect the value of collateral. “Creditor Placed Home” means “Creditor Placed Insurance” on homes, mobile homes and other real estate. “Creditor Placed Auto” means insurance on automobiles, boats or other vehicles.

Credit Risk 

Part of the risk-based capital formula that addresses the collectability of a company’s receivables and the risk of losing a provider or intermediary that has received advance capitation payments.

Credit score

A numerical standard by which a lender can determine an individual’s likelihood of repaying a debt by the agreed terms. A credit score is affected by payment history, length of credit history, debt-to-credit ratio, debt-to-income ratio and other financial factors.

Credit union

A nonprofit financial institution offering many of the same products and services as a bank. These services include checking and savings accounts, certificates of deposit, mortgages and car loans. Membership in credit unions is sometimes restricted to those in a certain group, such as employees of a company or those in a trade, such as a teacher’s union. However, many credit unions have relaxed membership requirements over the years, and many people may be eligible to join a credit union based on their location.

Creditable Coverage

 

Term means that benefits provided by other drug plans are at least as good as those provided by the new Medicare Part D program. This may be important to people eligible for Medicare Part D but who do not sign up at their first opportunity because if the other plans provide creditable coverage, plan members can later convert to Medicare Part D without paying higher premiums than those in effect during their open enrollment period.

Creditor-Placed Auto 

Single interest or dual interest credit insurance that is purchased unilaterally by the creditor, who is the named insured, subsequent to the date of the credit transaction, providing coverage against loss to property that would either impair a creditor’s interest or adversely affect the value of collateral on automobiles, boats, or other vehicles.

Creditor-Placed Home 

Single interest or dual interest credit insurance purchased unilaterally by the creditor, who is the named insured, subsequent to the date of the credit transaction, providing coverage against loss to property that would either impair a creditor’s interest or adversely affect the value of collateral on homes, mobile homes, and other real estate.

Crop

Coverage protecting the insured against loss or damage to crops from a variety of perils, including but not limited to fire, lightening, loss of revenue, tornado, windstorm, hail, flood, rain, or damage by insects.

Crop-Hail Insurance 

Coverage for crop damage due to hail, fire or lightning.

Custodial account

An account set up at a financial institution and managed by an adult for a minor or incapacitated individual. The term also commonly refers to an Individual Retirement Account.

Customization

Any after-market add-ons or accessories installed on a vehicle, such as chrome rims, ground effects body kits and off-road lights. (Customization does not include engine performance accessories or modifications.)

Customized Vehicle

A vehicle that has been altered or has equipment or accessories not typically found in a personal vehicle.

Cyber Insurance

This can be essential in helping your company recover after a data breach. This includes costs such as the disruption of your business, revenue loss, equipment damages, legal fees, public relations expenses, forensic analysis and costs associated with legally mandated notifications.

D

Damage

Harm or injury to an individual or property.

Data compromise coverage

A type of business insurance protection that helps the insured business cover the cost of notifying customers affected by a breach in electronic data and providing assistance for the customers in monitoring their credit reports and restoring their identities.

Date of Issue 

Date when an insurance company issues a policy.

Death Benefit

 

Some life insurance may offer death benefit options, including: a specific benefit that does not vary; a face amount plus the policy value; or the face amount plus premiums paid less withdrawals and loans.

Debt financing

A way in which a company raises money, through the sale of bonds, stocks or notes to investors or individuals. The company promises the investors that it will repay the money invested plus interest.

Declaration’s Page (Dec page)

This page is a coverage summary provided by your insurance company and lists the following:

      i.        Types of coverages you’ve elected

     ii.        Limit for each coverage

    iii.        Cost for each coverage

    iv.        Specified properties or vehicles covered by the policy

     v.        Types of coverage for each property or vehicle covered by the policy

    vi.        Other information applicable to the policy

Decline

The company refuses to accept the request for insurance coverage.

Deductible

Amount of loss that the insured pays before the insurance kicks in.

Defensive Driver Discount

Certain drivers (usually over age 50) who have voluntarily taken a defensive driving course may qualify for this discount on their auto insurance premiums.

Deferred Annuity 

A financial instrument sold by insurance companies that provides income or a stream of income to the payee at a later date of his or her choosing. Generally, the money earned on a deferred annuity is taxed only when the owner withdraws it, thus providing a tax benefit to the owner. A deferred annuity may also provide a death benefit.

Demutualization

Conversion of a mutual insurance company to a capital stock company.

Dental Insurance 

Policies providing only dental treatment benefits such as routine dental examinations, preventive dental work, and dental procedures needed to treat tooth decay and diseases of the teeth and jaw.

Dental Only 

Line of business providing dental only coverage; coverage can be on a stand-alone basis or as a rider to a medical policy. If the coverage is as a rider, deductibles or out-of-pocket limits must be set separately from the medical coverage. Does not include self-insured business as well as FEHBP or Medicare and Medicaid programs.

Depreciation

A decrease in the value of property due to wear, age or other cause. Compare actual cash value.

Derivative

 

Securities priced according to the value of other financial instruments such as commodity prices, interest rates, stock market prices, foreign or exchange rates.

Difference In Conditions (DIC) Insurance 

Special form of open-peril coverage written in conjunction with basic fire coverage and designed to provide protection against losses not reimbursed under the standard fire forms. Examples are flood and earthquake coverage.

Direct Check

Direct Check is an electronic payment method that lets you pay your premium online with an electronic check.

Direct Incurred Loss 

Loss whereby the proximate cause is equivalent to the insured peril.

Direct Loss

A loss which is a direct consequence of a peril.

Damage to covered real or personal property caused by a covered peril.

Direct Pay

See Electronic Funds Transfer.

Direct Response

Insurance sold directly to the insured by an insurance company through its own employees by mail or over the counter.

Direct Writer 

An insurance company that sells policies to the insured through salaried representatives or exclusive agents only; reinsurance companies that deal directly with ceding companies instead of using brokers.

Direct Written Premium 

Total premiums received by an insurance company without any adjustments for the ceding of any portion of these premiums to the Reinsurer.

Directors & Officers Liability 

Liability coverage protecting directors or officers of a corporation from liability arising out of the performance of their professional duties on behalf of the corporation.

Disability Income 

A policy designed to compensate insured individuals for a portion of the income they lose because of a disabling injury or illness.

Disability Income – Long-Term 

Policies that provide a weekly or monthly income benefit for more than five years for individual coverage and more than one year for group coverage for full or partial disability arising from accident and/or sickness.

Disability Income – Short-Term 

Policies that provide a weekly or monthly income benefit for up to five years for individual coverage and up to one year for group coverage for full or partial disability arising from accident and/or sickness.

Disability Insurance

 

Covers wage loss for the disabled person.

Disclosure Statement

A comparison form required by New York Department of Financial Services Regulations to be given to every applicant considering replacing one life insurance policy with another.

Discount

 

A reduction in your premium if you or your car meet certain conditions that are likely to reduce the insurer’s losses or expenses. For example, auto insurance discounts are given for cars with auto theft devices and for drivers and passengers who use seat belts.

Disease Management

A system of coordinated health-care interventions and communications for patients with certain illnesses.

Diversification

The strategy of having a variety of investments in your financial portfolio to hedge and balance against the investments already in it. Ideally, this minimizes the risk inherent in any one investment and increases the possibility of optimizing a return overall. Diversification does not assure or guarantee better performance and cannot eliminate the risk of investment losses.

Dividend

A return of part of the premium on participating insurance to reflect the difference between the premium charged and the combination of actual mortality, expense and investment experience. Dividends are not considered to be taxable distributions because they are interpreted as a refund of a portion of the premium paid.

Dollar cost averaging

An investment strategy in which you invest with the same amount of money at regular times. For example, you may buy $1,000 in Stock A every month, regardless of Stock A’s current price. Because this means you buy fewer shares when the price is high and more when the price is low, dollar-cost averaging aims to reduce the average cost of the shares you buy. Dollar cost averaging is most common with shares of a mutual fund or a retirement plan. Dollar cost averaging does not assure a profit and does not protect against loss in declining markets.

Domestic Insurer 

An insurance company that is domiciled and licensed in the state in which it sells insurance.

Driver

One who operates a motor vehicle.

Driver improvement course

Drivers can take a voluntary driver improvement course to refresh and enhance their driving skills. Taking this course may qualify you for a discount if you meet eligibility requirements.

Driver status

People can be added to policies with the following types of driver status:

·         Rated: Actively drives vehicles on the policy

·         Excluded: Not allowed to drive vehicles on the policy and won’t be covered under your policy in the event of an accident

·         Listed: Residents of the household who don’t drive the vehicles on the policy (such as a roommate)

Driver Training Discount

A discount for people who have taken an approved driver training course. This discount is not available in all states or for all individuals.

Driver’s education

A formalized program of classroom and behind-the-wheel training for vehicle operators. Many states require minors to pass both sections of the training prior to taking the written and behind-the-wheel tests for a driver’s license.

Dual Interest 

Insurance that protects the creditor’s and the debtor’s interest in the collateral securing the debtor’s credit transaction. “Dual Interest” includes insurance commonly referred to as “Limited Dual Interest.”

Duplicate claim

When the same person makes more than one request to an insurance company for action on an insurance policy following the same incident.

Dwelling fire policy

Coverage offered for property that is, at least partially, rented out to others.

Dwelling Property/Personal Liability 

A special form of package policy composed of dwelling fire and/or allied lines, and personal liability insurance.

Dwelling protection coverage

Insurance for covered losses stemming from physical damage to a home, subject to certain limitations.

Dwelling replacement cost plus/guarantee

An optional coverage that can provide additional protection above the amount a home is insured for. It is designed to protect against unforeseen increases in the cost of repairs.

Early warning system 

A system designed by insurance industry regulators of identifying practices and risk-related trends that contribute to systemic risk by measuring insurer’ financial stability.

Earned Premium

The portion of the premium for which protection has been provided. If an insured has an annual premium and makes monthly payments, each month the insurer earns 1/12th of the premium.

Earthquake             Coverage

Property coverages for losses resulting from a sudden trembling or shaking of the earth, including that caused by volcanic eruption. Excluded are losses resulting from fire, explosion, flood or tidal wave following the covered event.

EBNR – Earned but not reported 

Premium amount insurer reasonably expects to receive for which contracts are not yet final and exact amounts are not definite.

EDP Policies 

Coverage to protect against losses arising out of damage to or destruction of electronic data processing equipment and its software.

Effective Date

Date at which an insurance policy goes into force.

Electronic Funds Transfer (EFT)

EFT is an electronic payment method that lets you pay your premiums with automatic deductions from your checking account.

Elevators and Escalators Liability 

Liability coverage for bodily injury or property damage arising from the use of elevators or escalators operated, maintained or controlled by the insured.

Eligible rollover distribution

The money in a retirement plan, such as a 401(k), that can be moved to another qualified plan such as an Individual Retirement Account (IRA) without triggering income tax or penalties.

Elimination Period

The time which must pass after filing a claim before policyholder can collect insurance benefits. Also known as “waiting period.”

Emergency Road Service Coverage

Protection for problems that are not typically handled by your auto insurance, such as:

•          being locked out of your car

•          towing not related to an accident

•          having a dead battery re-charged

•          inflating a flat tire

•          filling an empty gas tank.

This additional insurance pays a set amount of money toward certain types of assistance, such as towing, jump-starts and changing flat tires.

Emissions inspection

A test conducted on an automobile to determine how much pollutant the automobile expels. Some states and/or local authorities test cars for carbon emissions each year prior to license plate renewal.

Employee Benefit Liability 

Liability protection for an employer for claims arising from provisions in an employee benefit insurance plan provided for the economic and social welfare of employees. Examples of items covered are pension plans, group life insurance, group health insurance, group disability income insurance, and accidental death and dismemberment.

Employee dishonesty coverage

A type of business insurance coverage that helps protect against employee theft of money, securities or property.

Employee Retirement Income Security Act of 1974 (ERISA) 

A federal statute governing standards for private pension plans, including vesting requirements, funding mechanisms, and plan design.

Employers Liability 

Employers’ liability coverage for the legal liability of employers arising out of injuries to employees. This code should be used when coverage is issued as an endorsement, or as part of a statutory workers’ compensation policy.

Employer-sponsored retirement plan

A valuable benefit such as a 401(k) plan that may be offered to you as an employee that may help you save for retirement in a tax-advantaged way.

Employment Practices Liability Coverage 

 

Liability insurance that covers an employer for wrongful acts arising from the employment process. Often, claims involve allegations of wrongful termination, discrimination, whistleblowing or sexual harassment. This coverage is sometimes available on a stand-alone basis or as an endorsement to a directors and officers (D&O) liability policy.

Encumbrance

Outstanding mortgages or other debt related to real estate and any unpaid accrued acquisition or construction costs.

Endorsement

A provision or document added to an insurance policy that changes the original coverage offered in the policy.

Enrollment

The total number of plans, not the total number of covered lives, providing coverage to the enrollee and their dependents.

Environmental Impairment Liability (EIL) 

Environmental Pollution Liability 

Coverage for negligence or omission resulting in pollution or environmental contamination.

Liability coverage of an insured to persons who have incurred bodily injury or property damage from acids, fumes, smoke, toxic chemicals, waste materials or other pollutants.

Equipment breakdown coverage

A type of business insurance protection that helps cover costs to repair or replace equipment after a breakdown. Coverage may also include damage done to other property caused by the breakdown, lost business income and extra expenses.

Equity financing

A method in which a company raises money through the sale of either common or preferred stock to investors or individuals. In return for their investment, investors receive share capital or part-ownership in the corporation.

Equity Indexed Annuity 

A fixed annuity that earns interest or provides benefits that are linked to an external reference or equity index, subject to a minimum guarantee.

Errors and Omissions Liability Professional Liability other than Medical 

Liability coverage of a professional or quasi professional insured to persons who have incurred bodily injury or property damage, or who have sustained any loss from omissions arising from the performance of services for others, errors in judgment, breaches of duty, or negligent or wrongful acts in business conduct.

Escrow

Title insurance issues are normally part of this escrow process and are handled differently in Northern and Southern California. In Northern California, title insurance companies tend to handle all title and escrow services in the same transaction. In Southern California, the title and escrow transactions are separate with escrow being provided by banks, escrow companies, or title companies. Practices will vary from county to county so be sure you understand the dynamics of your individual transaction(s).

Escrow Loan Fee

 

For a sale or purchase, the fee paid is a loan tie-in fee if required by the escrow company. For a refinance, the fee paid is for the escrow of a refinance.

 

Estate

The general term used to refer to all the assets an individual owns, such as real estate, art collections, jewelry, investments and life insurance.

Estate planning

Tasks undertaken to efficiently manage a person’s estate upon his or her death. Such tasks may include creating a will, setting up trust accounts for beneficiaries, naming guardians for dependents, funeral planning and creating a durable power of attorney to direct the assets and investments. Everyone needs some estate planning, even for a modest estate.

Estimate

An evaluation of the cost to repair or replace damaged property covered on an insurance policy.

Event Cancellation 

Coverage for financial loss because of the cancellation or postponement of a specific event due to weather or other unexpected cause beyond the control of the insured.

Evidence of Insurability

A statement or proof of your health, finances or job, which helps the insurer decide if you are an acceptable risk for life insurance.

Excess and Umbrella Liability 

Liability coverage of an insured above a specific amount set forth in a basic policy issued by the primary insurer; or a self insurer for losses over a stated amount; or an insured or self insurer for known or unknown gaps in basic coverages or self insured retentions.

Excess of Loss Reinsurance 

Loss sharing mechanism where an insurer pays all claims up to a specified amount and a reinsurance company pays any claims in excess of stated amount.

Excess Workers’ Compensation 

Either specific and/or aggregate excess workers’ compensation insurance written above an attachment point or self-insured retention.

Excluded driver

A driver who is specifically excluded from coverage under an auto insurance policy.

Exclusion

A provision in an insurance policy that excludes and/or limits certain coverages.

Expense

Your policy’s share of the company’s operating costs-fees for medical examinations and inspection reports, underwriting, printing costs, commissions, advertising, agency expenses, premium taxes, salaries, rent, etc. Such costs are important in determining dividends and premium rates.

Expense Ratio 

 

Percentage of premium income used to attain and service policies. Derived by subtracting related expenses from incurred losses and dividing by written premiums.

Experience Rating 

Rating system where each group is rated entirely on the basis of its own expected claims in the coming period, with retrospective adjustments for prior periods. This method is prohibited under the conditions for federal qualification.

Expiration Date

 

This date, found on your declarations page, indicates when your policy coverage runs out. Your renewal policy will start on this date.

Expiry date

The last day the policy or rider(s) can be extended to.

Exposure

Risk of possible loss.

Exposure to Loss

The policyholder’s possibility of loss.

Extended coverage on jewelry, watches and fur

Additional insurance protection that can be purchased to help cover the loss of jewelry, watches and furs with values that exceed the personal property limit on a homeowners insurance policy. However, this add-on coverage may not cover the valuables if they’re damaged by excluded perils.

Extended Replacement Cost

 

This option extends replacement cost loss settlement to personal property and to outdoor antennas, carpeting, domestic appliances, cloth awnings, and outdoor equipment, subject to limitations on certain kinds of personal property; includes inflation protection coverage.

Extra Expense Insurance 

A type of property insurance for extraordinary expenses related to business interruption such as a back-up generator in case of power failure.

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Face Amount

The amount stated on the face of the policy that will be paid in case of death or at the maturity of the policy. It does not include additional amounts payable under accidental death or other special provisions, or acquired through the application of policy dividends.

Facultative Reinsurance 

Reinsurance for a specific policy for which terms can be negotiated by the original insurer and reinsurer.

FAIR Plan – Fair Access to Insurance Requirements 

State pools designed to provide insurance to property owners who are unable to obtain property insurance through conventional means.

Fair Value 

The amount at which an asset (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale. Quoted market prices in active markets are the best evidence of fair value and shall be used as the basis for the measurement, if available. If a quoted market price is available, the fair value is the product of the number of trading units’ times market price.

Family liability protection coverage

Personal liability insurance coverage that helps protects the insured and family living with them against claims and lawsuits if he or she injures others or damages their property in an accident.

Farmowners Insurance 

Farmowners insurance sold for personal, family or household purposes. This package policy is similar to a homeowner’s policy, in that it has been developed for farms and ranches and includes both property and liability coverage for personal and business losses. Coverage includes farm dwellings and their contents, barns, stables, other farm structures and farm inland marine, such as mobile equipment and livestock.

Federal Flood Insurance 

Coverage for qualifying residents and businesses in flood prone regions through the National Flood Insurance Act, a federally subsidized flood insurance program enacted in 1968.

Federally Reinsured Crop 

Crop insurance coverage that is either wholly or in part reinsured by the Federal Crop Insurance Corporation (FCIC) under the Standard Reinsurance Agreement (SRA). This includes the following products: Multiple Peril Crop Insurance (MPCI); Catastrophic Insurance, Crop Revenue Coverage (CRC); Income Protection and Revenue Assurance.

Fees Payable 

Fees incurred but not yet paid.

FEMA – Federal Emergency Management Agency 

An independent agency, tasked with responding to, planning for, mitigating and recovery efforts of natural disasters.

Fender bender

Typically refers to a minor auto collision which results in little, if any, damage to property.

Fidelity

A bond or policy covering an employer’s loss resulting from an employee’s dishonest act (e.g., loss of cash, securities, valuables, etc.).

Fidelity Bond

An obligation of the insurance company against financial loss caused by the dishonest acts of employees.

Field Adjuster

An insurance adjuster who works primarily outside of an office and often meets personally with the public. Field adjusters can conduct face-to-face meetings, negotiations with claimants, scene investigations, and damage inspections.

Financed Car

A car purchased with a loan. In the case of a financed car, the loan holder (the bank or the finance company) typically requires the vehicle owner to purchase collision and comprehensive coverage.

 

Financial Guarantee Insurance

A surety bond, insurance policy, or an indemnity contract (when issued by an insurer), or similar guaranty types under which loss is payable upon proof of occurrence of financial loss to an insured claimant, obligee or indemnitee as a result of failure to perform a financial obligation or any other permissible product that is defined as or determined to be financial guaranty insurance.

Financial Reporting 

Insurance companies are required to maintain records and file annual and quarterly financial statements with regulators in accordance with statutory accounting principles (SAP). Statutory rules also govern how insurers should establish reserves for invested assets and claims and the conditions under which they can claim credit for reinsurance ceded.

Financial Responsibility Law 

A statute requiring motorists to show capacity to pay for automobile-related losses.

Financial Statement 

Balance sheet and profit and loss statement of an insurance company. This statement is used by the NAIC, and by State Insurance Commissioners to regulate an insurance company according to reserve requirements, assets, and other liabilities.

Financing Entity

Provides money for purchases.

Fire 

Coverage protecting the insured against the loss to real or personal property from damage caused by the peril of fire or lightning, including business interruption, loss of rents, etc.

Fire and vandalism coverage

A type of business insurance coverage that helps protect against loss caused only by fire or vandalism.

Fire department charges coverage

A type of insurance protection that helps pay reasonable fees for fire department services related to a covered fire, up to a specified limit.

Fire Insurance

 

Coverage for loss of or damage to a building and/or contents due to fire.

Fire Legal Liability 

Coverage for property loss liability as the result of separate negligent acts and/or omissions of the insured that allows a spreading fire to cause bodily injury or property damage of others. An example is a tenant who, while occupying another party’s property, through negligence causes fire damage to the property.

First Party

Term used to refer to an insured.

First Party Claims

A claim for damage, loss or injury made by an insured.

Fixed annuity

This type of annuity offers a specified rate of return to the holder for a defined period of time.

Fixed interest rate (CDs and annuities)

An interest rate that does not change for a specified period of time.

Fixed interest rate (life insurance)

An interest rate that may change over the life of the policy but offers a minimum guaranteed rate

Flexible premium adjustable life insurance

A type of permanent life insurance policy that allows you to modify your payment. By changing the amount, you pay, you also affect the benefit amount, cash value and how long the policy will stay in force.

Floater

Floater policy

A separate policy available to cover the value of goods beyond the coverage of a standard renters insurance policy including movable property such as jewelry or sports equipment.

 

Flood

Coverage protecting the insured against loss or damage to real or personal property from flood. (Note: If coverage for flood is offered as an additional peril on a property insurance policy, file it under the applicable property insurance filing code.)

Flood damage title

A branded certificate of title issued, by a state, alerting consumers of a vehicle’s flood or water damage history. Criteria for issuing such a title vary by state.

Flood insurance

 

A type of insurance coverage that helps protects a homeowner against covered losses as a result of flooding. Property insurance policies typically do not cover damage caused by flooding. Homeowners can purchase flood insurance through the federal government-run National Flood Insurance Program. A local insurance agent may be able to assist with this purchase.

Foreign Insurer 

An insurance company selling policies in a state other than the state in which they are incorporated or domiciled.

Foreign Investment 

An investment in a foreign jurisdiction, or an investment in a person, real estate or asset domiciled in a foreign jurisdiction. An investment shall not be deemed to be foreign if the issuing person, qualified primary credits source or qualified guarantor is a domestic jurisdiction or a person domiciled in a domestic jurisdiction, unless: a) The issuing person is a shell business entity; and b) The investment is not assumed, accepted, guaranteed or insured or otherwise backed by a domestic jurisdiction or a person, that is not a shell business entity, domiciled in a domestic jurisdiction.

Foreign jurisdiction 

A jurisdiction outside of the United States, Canada or any province or political subdivision of the foregoing.

Forms

The type of coverage and endorsements used on a policy. Forms are named, dated and numbered to provide continuity throughout an insured’s policy.

Two types of forms are important in insurance:

1.     pre-printed contracts that comprise your insurance policy,

 

2.     questionnaires or coverage selection forms that a policyholder is required to fill out.

Fortuitous Losses

Unintentional loss occurring by accident or chance.

FR-44/SR-22

A legal document filed if you are convicted of certain traffic violations or driving under the influence of alcohol or drugs. The state may require you to file an FR-44/SR-22 to verify that you maintain auto liability coverage. Both forms are official documents showing proof of financial responsibility, but use different titles based on your state of residence. If an FR-44/SR-22 should expire or be canceled, an insurance company will issue an FR-46/SR-26 form, which certifies the cancellation of the policy.

Fraternal Insurance 

A form of group coverage or disability insurance available to members of a fraternal organization.

Free Look Provision

A certain amount of time provided (usually between 10-30 days) to an insured in order to examine the insurance policy and if not satisfied, to return it to the company for a full refund.

Frequency of Loss

Refers to the actual numbers or times the same or similar loss occurs.

Frequency-Severity Matrix

Matrix used to determine which type of risk treatment is appropriate for a risk.

Fronting 

An arrangement in which a primary insurer acts as the insurer of record by issuing a policy, but then passes the entire risk to a reinsurer in exchange for a commission. Often, the fronting insurer is licensed to do business in a state or country where the risk is located, but the reinsurer is no

Full coverage

“Full coverage” is a common term used to describe how much auto insurance coverage a person has. Though there is no such thing as “full coverage”, it often implies that the policy has more than just liability coverage.

Future Purchase Option

Life and health insurance provisions that guarantee the insured the right to buy additional coverage without proving insurability. Also known as “guaranteed insurability option.”

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GAP coverage

Guaranteed Asset Protection coverage. A type of insurance that typically covers the difference between what your car is worth and what you still owe on it, in the event that your car is declared a total loss due to an accident or theft.

Garaging location

The address where a vehicle is usually parked or garaged, which could differ from the policyholder’s primary residence or policy mailing address.  Students attending school 100+ miles from home with a vehicle should use their school address as their garaging address.

Gated community

A housing community with controlled entry access.

General Account

 

All premiums are paid into an insurer’s general account. Thus, buyers are subject to credit-risk exposure to the insurance company, which is low but not zero.

General Liability

Insurance to protect an owner or operator of a business from a wide range of liability exposures.

General liability coverage

A type of business insurance coverage that helps protect against customer lawsuits involving injuries and damages.

Generally Accepted Accounting Principles (GAAP) 

An aggregate of the accounting standards, principles and best practices for the preparation of financial statements allowing for consistency in reporting.

Golf cart insurance

 

There are typically two ways to insure a golf cart. An endorsement added to a homeowners insurance policy may help provide limited coverage, while broader protection is usually provided through an off-road vehicle policy. Owners should consider the coverages offered by both options and choose the one that better fits their needs.

Good Driver Discount

To be eligible for the Good Drivers Discount all operators of the insured vehicles must have been licensed for three or more year, have no more than a one (1) point charge on their driving record and has not been determined “at fault” in an accident resulting in bodily injury or death to any person.

Good Student Discount

May be awarded to full-time students who maintain a grade average of “B” or better.

Goodwill

The difference between the cost of acquiring the entity and the reporting entity’s share of the book value of the acquired entity.

Grace period

A specified period immediately following the premium due date during which a payment can be made to continue a policy in force without interruption. This applies only to Life and Health policies. Check your policy to be sure that a grace period is offered and how many days, if any, are allowed.

Graduated Driver Licensing

 

A practice implemented by many states granting progressing stages of automobile operator permission to new drivers in the hope of improving driver safety. Under such a system, a teenager, usually around the age of 16, may obtain a provisional driver’s license that allows him or her to drive, but with certain restrictions on hours and passengers. When a driver makes it through the probationary period, which varies in length by state, he or she then receives full driving privileges. Driver licensing laws vary by state.

Gramm-Leach Bliley Act (GLBA) 

Act, repealing Glass-Steagal Act of 1933, allows consolidation of commercial banks, investment institutions and insurance companies. Established a framework of responsibilities of federal and state regulators for these financial industries. It permits financial services companies to merge and engage in a variety of new business activities, including insurance, while attempting to address the regulatory issues raised by such combinations.

Gross Paid-in and Contributed Surplus 

Amount of capital received in excess of the par value of the stock issued.

Gross Premium 

The net premium for insurance plus commissions, operating and miscellaneous commissions. For life insurance, this is the premium including dividends.

Group Accident and Health 

Coverage written on a group basis (e.g., employees of a single employer and their dependents) that pays scheduled benefits or medical expenses caused by disease, accidental injury or accidental death. Excludes amounts attributable to uninsured accidents and health plans and the uninsured portion of partially insured accident and health plans.

Group Annuities – Deferred Non- Variable and Variable 

An annuity contract that provides an accumulation based on both (1) funds that accumulate based on a guaranteed crediting interest rates or additional interest rate applied to designated considerations, and (2) funds where the accumulation vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder. The contract provides for the initiation of payments at some designated future date.

Group Annuities – Deferred Variable 

An annuity contract that provides an accumulation based fund where the accumulation varies in accordance with the rate of return of the underlying investment portfolio selected by the policyholder. Must include at least one option to have the accumulation vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder and may include at least one option to have the series of payments vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder. This annuity contract provides for the initiation of payments at some designated future date.

Group Annuities – Immediate Non-Variable and Variable 

An annuity contract that provides an accumulation based on both (1) funds that accumulate based on a guaranteed crediting interest rates or additional interest rate applied to designated considerations, and (2) funds where the accumulation vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder. The contract provides for the initiation of payments at some interval that may vary, however the annuity payouts must begin within 13 months.

Group Annuities – Immediate Variable 

An annuity contract that provides for the first payment of the annuity at the end of the fixed interval of payment after purchase. The interval may vary, however the annuity payouts must begin within 13 months. The amount varies with the value of equities (separate account) purchased as investments by the insurance companies.

Group Annuities – Unallocated 

Annuity contracts or portions thereof where the Insurer purchases an annuity for the retirees.

Group Annuity 

A contract providing income for a specified period of time, or duration of life for a person or persons established to benefit a group of employees.

Group Code 

A unique three-to-five-digit number assigned by the NAIC to identify those companies that are part of a larger group of insurance companies.

Group Credit – Life 

Contracts sold in connection with loan/credit transactions or other credit transactions, which do not exceed a stated duration and/or amount and provide insurance protection against death.

Group Health 

Health insurance issued to employers, associations, trusts, or other groups covering employees or members and/or their dependents, to whom a certificate of coverage may be provided.

Group Health Organizations – Health Maintenance (HMO) 

A plan under which an enrollee pays a membership fixed fee in advance in return for a wide range of comprehensive health care services with the HMO’s approved providers in a designated service area.

Group policy

 

A home, vehicle, or health insurance policy sold through an employment-based group, association or special group insurance trust in which members are included under one master policy. Individuals receive certificates of coverage from the group policy.

Guaranteed Insurability

An option that permits the policy holder to buy additional stated amounts of life insurance at stated times in the future without evidence of insurability.

See “Future Purchase Option.”

Guaranteed Issue Right

The right to purchase insurance without physical examination; the present and past physical condition of the applicant are not considered.

Guaranteed premium

Your premium payments are fixed and will not change.

Guaranteed Renewable

 

A policy provision in many products which guarantees the policyowner the right to renew coverage at every policy anniversary date. The company does not have the right to cancel coverage except for non-payment of premiums by the policyowner; however, the company can raise rates if they choose.

Guaranty Association

An organization of life insurance companies within a state responsible for covering the financial obligations of a member company that becomes insolvent.

Guaranty Fund 

Funding mechanism employed by states to provide funds to cover policyholder obligations of insolvent reporting entities.

Guest medical protection

Can help pay for reasonable and necessary medical expenses if someone is injured in an accident in your residence.

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Hagerty

Industry leader in classic car insurance that Nationwide has partnered with to provide premier coverage for classic, vintage and antique vehicles.

Hard Market 

A market characterized by high demand and low supply.

Hazard

A condition that creates or increases the chance or severity of a loss due to a peril.

Hazardous Activity

Bungee jumping, scuba diving, horse riding and other activities not generally covered by standard insurance policies. For insurers that do provide cover for such activities, it is unlikely they will cover liability and personal accident, which should be provided by the company hosting the activity.

Health – Excess/Stop Loss 

This type of insurance may be extended to either a health plan or a self-insured employer plan. Its purpose is to insure against the risk that any one claim will exceed a specific dollar amount or that an entire plan’s losses will exceed a specific amount.

Health Insurance

A generic term applying to all types of insurance indemnifying or reimbursing for losses caused by bodily injury or illness including related medical expenses.

Health Maintenance Organization (HMO)

A medical group plan that provides physician, hospital, and clinical services to participating members in exchange for a periodic flat fee.

Managed health-care plan that provides medical care to its members through a network of participating health-care providers.

Health Plan 

Written promise of coverage given to an individual, family, or group of covered individuals, where a beneficiary is entitled to receive a defined set of health care benefits in exchange for a defined consideration, such as a premium.

Health Reimbursement Arrangement

An IRS-approved tax-advantaged benefit that reimburses employees for medical care expenses not covered by the employer-sponsored health plan. It is funded exclusively by the employer. Unused balances may be rolled over to the next coverage period based on the employer’s plan design. Qualified expenses are paid tax-free. Owners of high-deductible health plans who are not qualified for a Health Savings Account can use an HRA, but they do not own the money in an HRA, and HRAs are not portable.

Health Savings Account

Plan that allows you to contribute pre-tax money to be used for qualified medical expenses. HSAs, which are portable, must be linked to a high-deductible health insurance policy.

Hold-Harmless Agreement 

A risk transfer mechanism whereby one party assumes the liability of another party by contract

Home insurance

 

Insurance that protects the home and personal property of the policyholder against damage from certain perils, or causes of loss, and covers the homeowner’s personal liability for covered injuries or damages to others.

Home inventory

A list of personal property created by a homeowner.

Home-based business

 

A business run primarily out of a dwelling. The property of such businesses may not be covered under a homeowners insurance policy; the business owner may want to consider purchasing a separate business insurance policy.

Homeowner Insurance

Insurance that protects the dwelling and personal property of the policyholder and covers the homeowner’s personal liability for covered injuries or damage to others.

Hospital Indemnity Coverage 

Coverage that provides a pre-determined, fixed benefit or daily indemnity for contingencies based on a stay at a hospital or intensive care facility.

Hull Insurance 

Coverage for damage to a vessel or aircraft and affixed items.

Hurricane/named storm deductible

Depending on the state of residence, if a policy includes coverage for wind and hail, a separate deductible for insuring damages caused by a hurricane or named storm may be required. Special terms, conditions and deductibles may apply in certain states.

Hybrid electric vehicle

An automobile operating on two or more sources of energy, usually gasoline and electricity. Typically, the electric motor operates when the car is stopped, thus using less gasoline.

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IBNR

Incurred but not reported losses. This is for losses which have occurred during a stated period, usually a calendar year, but have not yet been reported to the insurer.

Identity restoration coverage

A type of insurance coverage that provides expense reimbursement for out-of-pocket expenses, such as lost wages, mailing costs, and notary fees due to an incident of identity theft. This coverage may be an add-on to a homeowners or auto policy, depending on the insurer.

Identity theft coverage

Identity theft coverage pays for expenses as a direct result of any identity theft or fraud discovered during the policy period.

Immediate annuity

This type of annuity requires a single purchase payment upon which you’ll begin receiving regular payments for the time period specified in your contract, which could last your lifetime. It is typically purchased by those entering retirement who want a predictable, steady stream of income, regardless of market activity. Also known as an income annuity.

In force

A term used to describe a policy on which the premium is paid and the insured has met the policy conditions regarding coverage.

Income loss coverage

A type of insurance that helps replace a landlord’s lost earnings for the period in which a tenant is unable to occupy the insured property due to a loss covered by the policy.

Incontestability Provision 

A life insurance and annuity provision limiting the time within which the insurer has the legal right to void the contract on grounds of material misrepresentation in the policy application.

Incontestable Clause

A policy provision in which the company agrees not to contest the validity of the contract after it has been in force for a certain period of time, usually two years.

Incurred But Not Reported (IBNR) 

(Pure IBNR) claims that have occurred but the insurer has not been notified of them at the reporting date. Estimates are established to book these claims. May include losses that have been reported to the reporting entity but have not yet been entered into the claims system or bulk provisions. Bulk provisions are reserves included with other IBNR reserves to reflect deficiencies in known case reserves. IBNR can sometimes include estimates of incurred but Not Enough Reported (IBNER)

Incurred Claims 

Paid claims plus amounts held in reserve for those that have been incurred but not yet paid.

Incurred Losses 

Sustained losses, paid or not, during a specified time period. Incurred losses are typically found by combining losses paid during the period plus unpaid losses sustained during the time period minus outstanding losses at the beginning of the period incurred in the previous period.

Indemnification

Insurance principle which states that the insured, after a loss, should be restored in whole or in part by payment, repair or replacement by the insurer.

Indemnity

Compensation for a loss intended to restore an individual or entity to the approximate financial position prior to the loss.

Indemnity, Principle of 

A general legal principle related to insurance that holds that the individual recovering under an insurance policy should be restored to the approximate financial position he or she was in prior to the loss. Legal principle limiting compensation for damages be equivalent to the losses incurred.

Independent Adjuster

An adjuster hired by the insurer to investigate and settle claims on behalf of the insurance company.

Independent Agent 

 

A representative of multiple insurance companies who sells and services policies for records which they own and operate under the American Agency System.

Index Annuity 

 

An interest bearing fixed annuity tied to an equity index, such as the Dow Jones Industrial Average or S & P 500

Indirect Loss

A loss resulting from a peril but not caused directly by that peril.

Individual Annuities – Deferred Variable 

An annuity contract that provides an accumulation based fund where the accumulation varies in accordance with the rate of return of the underlying investment portfolio selected by the policyholder. Must include at least one option to have the accumulation vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder and may include at least one option to have the series of payments vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder. This annuity contract provides for the initiation of payments at some designated future date.

Individual Annuities – Immediate Variable 

An annuity contract that provides for the first payment of the annuity at the end of the fixed interval of payment after purchase. The interval may vary, however the annuity payouts must begin within 13 months. The amount varies with the value of equities (separate account) purchased as investments by the insurance companies.

Individual Annuities – Special 

Contracts with certain noteworthy attributes.

Individual Annuities- Deferred Non-Variable 

An annuity contract that provides an accumulation based on funds that accumulate based on a guaranteed crediting interest rate or additional interest rate. This annuity contract provides for the initiation of payments at some designated future date.

Individual Credit – Credit Disability 

Makes monthly loan/credit transaction payments to the creditor upon the disablement of an insured debtor.

Individual Credit – Life 

Contracts sold in connection with loan/credit transactions or other credit transactions, which do not exceed a stated duration and/or amount and provide insurance protection against death.

Individual Health 

Health insurance where the policy is issued to an individual covering the individual and/or their dependents in the individual market. This includes conversions from group policies.

Individual policy

 

A home or vehicle insurance policy sold directly to an individual. Individual policies do not require people to be members of an employment-based group, association or special group insurance trust.

Individual Retirement Account (IRA)

A type of savings plan that helps you save for retirement during your working years by allowing you to make contributions up to a certain limit each year and offers certain tax advantages. Two types of IRAs are: (1) traditional IRA, which allows for tax deductible contributions and (2) a non-deductible IRA, which has non-deductible contributions.

Industrial Life 

Industrial life insurance, also called “debit” insurance, is insurance under which premiums are paid monthly or more often, the face amount of the policy does not exceed a stated amount, and the words “industrial policy” are printed in prominent type on the face of the policy.

Inflation

The rate at which the price of goods and services rises as purchasing power declines. Most countries’ central banks attempt to keep inflation around 2 to 3 percent per year. Inflation rates in the U.S. are tracked using the Consumer Price Index and published by the U.S. Bureau of Labor Statistics.

Inflation Protection

An optional property coverage endorsement offered by some insurers that increases the policy’s limits of insurance during the policy term to keep pace with inflation.

Inland Marine 

Coverage for property that may be in transit, held by a bailee, at a fixed location, a movable good that is often at different locations (e.g., off road constructions equipment), or scheduled property (e.g., Homeowners Personal Property Floater) including items such as live animals, property with antique or collector’s value, etc. This line also includes instrumentalities of transportation and communication, such as bridges, tunnels, piers, wharves, docks, pipelines, power and phone lines, and radio and television towers.

Inland marine coverage

A type of business insurance coverage that helps protect mobile goods, such as cargo transported by motor carriers.

Inspection

Verification of a vehicle’s physical condition.

Insurable interest

A consideration of value that is insured under a policy. A person with insurable interest will suffer a genuine hardship if a loss should occur to the person or property they’ve insured. For instance, people have an insurable interest in their own lives and property, but generally do not have insurable interest in their neighbor’s life or property. Insurable interest must be present in order for an insurance contract to be legal and valid.

Insurance

Insurance is a system in which groups of people who have similar chances of suffering a loss transfer their risk of loss to an insurer who pools the risk of many people together. In exchange for payment of premium, the insurer promises to reimburse the person for their covered losses.

Insurance Card

See Insurance ID Card.

Insurance fraud

Any act a person commits in order to obtain a payment falsely from an insurance company.

Insurance Holding Company System 

Consists of two or more affiliated persons, one or more of which is an insurer.

Insurance ID Card

 

Also known as an Insurance Card, this card is issued by your insurer and contains basic information about your insurance policy. Some states require you to keep an insurance ID card in your vehicle.

Insurance Regulatory Information System (IRIS) 

A baseline solvency screening system for the National Association of Insurance Commissioners (NAIC) and state insurance regulators established in the mid-1970s.

Insurance Score

A number representing a combination of factors that can help determine a person’s likelihood to incur losses.

Insurance to Value 

Amount of insurance purchased vs. the actual replacement cost of the insured property expressed as a ratio.

Insured

One who is covered by an insurance policy. Also called an assured in some instances, the two terms are synonymous.

Insured (life insurance)

The person whose life is covered by the policy purchased.

Insurer

An insurer or reinsurer authorized to write property and/or casualty insurance under the laws of any state.

Interest rate (debt)

The percentage of money you pay on the amount you owe on debt such as credit cards, mortgages and loans.

Interest rate (earnings)

The percentage of money you earn on your investment.

Interest-Crediting Methods

There are at least 35 interest-crediting methods that insurers use. They usually involve some combination of point-to-point, annual reset, yield spread, averaging, or high-water mark.

Intermediary

A person, corporation or other business entity (not licensed as a medical provider) that arranges, by contracts with physicians and other licensed medical providers, to deliver health services for a health insurer and its enrollees via a separate contract between the intermediary and the insurer.

International 

Includes all business transacted outside the U.S. and its territories and possessions where the appropriate line of business is not determinable.

Internet Liability Insurance/Cyber Insurance 

Coverage for cyber commerce including copyright infringement, libel, and violation of privacy.

Investigation

As part of our standard process, we may review the details of your accident, contact witnesses and assess the damages.

Investment

An item purchased with the hope that it will generate income or increase in value in the future. In economics, investments are current purchases of goods that are not consumed, but retained to create future wealth. In finance, one purchases an investment with the expectation that it will increase in value and provide future income.

Investment grade 

The obligation has been determined to be in one of the top four generic lettered rating classifications by a securities rating agency acceptable to the commissioner, that the obligation has been identified in writing by such a rating agency to be of investment grade quality, or, if the obligation has not been submitted to any such rating agency, that the obligation has been determined to be investment grade (Class 1 and Class 2) by the Securities Valuation Office of the National Association of Insurance Commissioners.

Investment Income Accrued 

Investment income earned as of the reporting date but not legally due to be paid to the reporting entity until subsequent to the reporting date.

Investment Income Due 

Investment income earned and legally due to be paid to the reporting entity as of the reporting date.

Investment Income Gross 

Shall be recorded as earned and shall include investment income collected during the period, the change in investment income due and accrued, the change in unearned investment income plus any amortization (e.g., discounts or premiums on bonds, origination fees on mortgage loans, etc.)

Investment property

Real estate, such as a house or apartment building, purchased with the intent of earning a return on investment. That return can originate either through rents, the property’s appreciation in value, or both.

Irrevocable Beneficiary 

A life insurance policy beneficiary who has a vested interest in the policy proceeds even during the insured’s lifetime because the policy owner has the right to change the beneficiary designation only after obtaining the beneficiary’s consent.

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Joint and Last Survivor Annuity –

Retirement plan that continues to payout so long as at least one, of two or more, annuitants is alive.

Joint Underwriting Association (JUA) 

A loss-sharing mechanism combining several insurance companies to provide extra capacity due to type or size of exposure.

Joint-Life Annuity 

An annuity contract that ceases upon the death of the first of two or more annuitants.

Judicial Bond

A bond required in civil and criminal court actions.

Junk title

 

A branded certificate of title that is issued by a state department of motor vehicles when the vehicle is not safe for use on the road. A vehicle with a junk title typically has no resale value except as a source of parts and can usually not be re-titled for road use without overcoming significant state inspection hurdlesLandlord

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Key-Persons Insurance 

A policy purchased by, for the benefit of, a business insuring the life or lives of personnel integral to the business operations.

Kidnap/Ransom Insurance

Coverage for ransom or extortion costs and related expenses.

Kit Car

A type of automobile that is typically sold and made up of separate components that are assembled by the buyer. Kit cars usually require specialized car insurance.

Laddering

Purchasing bond investments that mature at different time intervals.

Landlord

The owner of a building who rents the building, or portions of it, to tenants.

Landlord insurance

A type of insurance purchased by property owners that covers risks typical to landlords.

Lapse

A period of time when someone goes without insurance coverage.

Lapse Rate

The rate at which life insurance policies terminate because of failure to pay the premiums. When policies are lapsed before enough premium payments are made to cover early policy expenses, the company must make up this loss from remaining policyholders. Therefore, the lapse rate will affect the cost of the policy.

Law of Large Numbers

States that the larger the number of risks or exposures, the more closely the actual loss experience will approach the expected loss experience.

Lease

A contract granting use or occupation of property during a specified period, in exchange for a specified rent.

Leased Vehicle

A vehicle rented under a long-term contract (lease). The leasing company retains ownership of the vehicle and must be shown on your insurance policy as an insured.

Leaseholder

An individual who possesses or has use of property through a lease.

Least Expensive Alternative Treatment

The amount an insurance company will pay based on its determination of cost for a particular procedure.

Legal Hazard

Characteristics of the legal system that increase the frequency or severity of losses.

Legal Insurance

Prepaid legal insurance coverage plan sold on a group basis.

Legal Liability

Liability imposed by law, as opposed to liability arising from an agreement or contract.

Legislated

Determined by law.

Lender’s Policy

When you take out a mortgage, the lender seeks protection for their investment by requiring lender’s title insurance against losses resulting from claims made by others against your new home. This policy does not protect you nor does the seller’s title insurance policy protect you.

Lessee

One who leases or rents property but does not own it. In real estate, such a person is commonly known as a tenant.

Level Premium Insurance 

Life insurance policy for which the cost is equally distributed over the term of the premium period, remaining constant throughout.

Liability

A certain or probable future sacrifice of economic benefits arising from present obligations of a particular entity to transfer assets or to provide services to other entities in the future as a result of a past transactions(s) or event(s). three essential characteristics:

      i.        It embodies a present duty or responsibility to one or more other entities that entails settlement by probable future transfer or use of assets at a specified or determinable date, on occurrence of a specified event, or on demand;

     ii.        The duty or responsibility obligates a particular entity, leaving it little or no discretion to avoid the future sacrifice; and

    iii.        The transaction or other event obligating the entity has already happened.

Liability (Auto)

Coverage for a policyholder’s legal liability resulting from injuries to other persons or damage to their property as a result of an auto accident.

Liability coverage

Covers losses that an insured person is legally liable for due to negligence or other situations outlined in a home or vehicle insurance policy. Liability coverage applies to both home and vehicle insurance.

Liability Examiner

The liability examiner handles the investigation of the accident. These examiners’ responsibilities can include collision payments, property damage payments, and bodily injury settlements. In some states, these examiners may also handle the medical portion of your claim.

Liability Insurance

 

Coverage for all sums that the insured becomes legally obligated to pay because of bodily injury or property damage, and sometimes other wrongs, to which an insurance policy applies.

Liability Investigation

The process of gathering information to determine the cause of an accident.

Lien

A creditor’s claim against an owner’s assets to secure an unpaid debt.

Lienholder

 

A person or organization with a legal claim, or lien, against a property, typically because that person or organization has loaned money or performed services for the owner of the property. The lien holder generally has the right to seize the associated property if payment is unsatisfactory and can impose certain restrictions on the borrower, such as insurance requirements on a vehicle.

Life – Endowment 

Insurance that pays the same benefit amount should the insured die during the term of the contract, or if the insured survives to the end of the specified coverage term or age.

Life – Flexible Premium Adjustable Life 

A group life insurance that provides a face amount that is adjustable to the certificate holder and allows the certificate holder to vary the modal premium that is paid or to skip a payment so long as the certificate value is sufficient to keep the certificate in force, and under which separately identified interest credits (other than in connection with dividend accumulation, premium deposit funds or other supplementary accounts) and mortality and expense charges are made to individual certificates while providing minimum guaranteed values.

Life Expectancy

The probability of an individual living to a certain age according to a particular mortality table. This is the beginning point in calculating the pure cost of life insurance and annuities and is reflected in the basic premium.

Life Insurance

Life insurance is a financial safety net for your family. If you pass away, your life insurance policy will pay a lump sum of money to your beneficiaries. There are a few common types of life insurance: term, final expense and permanent. See more on the different types of life insurance.

Life Settlements 

A contract or agreement in which a policyholder agrees to sell or transfer ownership in all or part of a life insurance policy to a third party for compensation that is less than the expected death benefit of a policy.

Lifetime Disability Benefit 

A provision in some disability income policies to recoup lost wages for the term of disability or remainder of insured’s life in case of permanent disability.

Lifetime Reserve Days

Sixty additional days Medicare pays for when you are hospitalized for more than 90 days in a benefit period. These days can only be used once during your lifetime. For each lifetime reserve day, Medicare pays all covered costs except for a daily coinsurance amount.

Limit

Maximum amount a policy will pay either overall or under a particular coverage.

Limited Benefit 

Policies that provide coverage for vision, prescription drug, and/or any other single service plan or program. Also include short-term care policies that provide coverage for less than one year for medical and other services provided in a setting other than an acute care unit of the hospital.

Limited Payment Life Insurance 

A form of whole-life insurance with a pre-defined number of premiums to be paid.

Limited Policies 

Health insurance coverage for a certain ailment, such as cancer.

Limits

 

A coverage limit determines the most an insurance company will pay for a covered loss under a particular coverage. Some limits apply to each person or occurrence, or to an item or group of items.

Limits of insurance

The amount an insurance company will pay for a covered loss, as stated in the policy.

Limits of Liability

The amount specified in your policy up to which the insurance company will protect you.

Line of Business 

Classification of business written by insurers.

Liquid/Liquidity

An asset’s ability to be bought or sold in the market without affecting the asset’s price. Assets that can be easily bought or sold are known as liquid assets.

Liquor Liability 

Coverage for the liability of an entity involved in the retail or wholesale sales of alcoholic beverages, or the serving of alcoholic beverages, to persons who have incurred bodily injury or property damage arising from an intoxicated person.

Living benefits Rider 

This feature allows you, under certain circumstances, to receive the proceeds of your life insurance policy before you die. Such circumstances include terminal or catastrophic illness, the need for long-term care, or confinement to a nursing home. Also known as “accelerated death benefits.”

Living trust

An agreement that names a trustee who holds legal possession of a fund or an asset for the benefit of another person or entity, known as the beneficiary. A person creates a living trust while alive, often to help seamlessly transfer assets to beneficiaries upon the person’s death.

Lloyds of London 

Association offering membership in various syndicates of wealthy individuals organized for the purpose of writing insurance for a particular hazard.

Loan Value

The amount which can be borrowed at a specified rate of interest from the issuing company by the policyholder, using the value of the policy as collateral. In the event the policyholder dies with the debt partially or fully unpaid, then the amount borrowed plus any interest is deducted from the amount payable.

Loan/lease payoff coverage

Loan/lease payoff coverage, sometimes called “gap” coverage, pays the difference between what you owe on your vehicle and what your insurance pays if your vehicle is declared a total loss or stolen and not recovered, minus your comprehensive or collision deductible. Learn more about loan/lease payoff coverage.

Loan-backed Securities 

Pass-through certificates, collateralized mortgage obligations (CMOs), and other securitized loans not included in structured securities where payment of interest and/or principal is directly proportional to the interest and/or principal received by the issuer from the mortgage pool or other underlying securities.

Long Duration Contracts 

Contracts, excluding financial guaranty contracts, mortgage guaranty contracts and surety contracts, that fulfill both of the following conditions: (1) the contract term is greater than or equal to thirteen months and (2) the insurer can neither cancel nor increase the premium during the contract term.

Long-Term Care Insurance

Policies that provide coverage for not less than one year for diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital, including policies that provide benefits for cognitive impairment or loss of functional capacity. This includes policies providing only nursing home care, home health care, community-based care, or any combination. The policy does not include coverage provided under comprehensive/major medical policies, Medicare Advantage, or for accelerated heath benefit-type products.

Long-Term Disability Income Insurance 

Policy providing monthly income payments for insureds who become disabled for an extensive length of time, typically two years or longer.

Long-term investment vehicle

An investment that you do not plan to use for at least 10 or more years.

Loss

An undesired and unplanned reduction of financial value.

Loss Adjustment Expense (LAE) 

Expected payments for costs to be incurred in connection with the adjustment and recording of losses. Can be classified into two broad categories: Defense and Cost Containment (DCC) and Adjusting and Other (AO). Can also be separated into (Allocated Loss Adjustment Expense) and (Unallocated Loss Adjustment Expense for ratemaking purposes.

Loss assessment coverage

Coverage providing reimbursement for extra fees assessed by a condominium or homeowners association. It is subject to a deductible and the limit stated in the policy.

Loss Control

The process of identifying and acting upon situations which may lead to losses.

Loss Frequency 

Incidence of claims on a policy during a premium period.

Loss history

A history of a person’s automobile or property losses.

Loss of business income coverage

A type of business insurance protection that covers the loss of business revenue due to a covered peril that causes the business to shut down or limit operations. This coverage is subject to certain time and other limitations and helps provide income until the insured business owner can get the damage repaired and get the business back into operation.

Loss of Use

 

In property insurance, a type of coverage that can help by reimbursing you for reasonable increases in living expenses when a covered loss makes your home uninhabitable. This may include payments for the cost of rent, hotel, food and other expenses. Loss of use coverage in a property policy may refer to additional living expense (homeowners, renters or condo insurance) or fair rental value (landlord insurance policy).

Loss of use (property)

Coverage that pays additional expenses when a policyholder has to move out of their residence while repairs are made, as a result of damage caused by a covered loss.

Loss of Use coverage/Additional Living Expenses (ALE)

Your policy may pay your Additional Living Expenses (ALE), the necessary increases in your normal day-to-day expenses that you incur if your property is determined to be uninhabitable due to a loss covered under your policy. Loss of use coverage may be available only for the period of time reasonably required to make your home habitable, or if a replacement home is purchased, the time reasonably required for you to move in.

Loss of Use Insurance 

Policy providing protection against loss of use due to damage or destruction of property.

Loss Payable Clause 

Coverage for third party mortgagee in case of default on insured property, secured by a loan, that has been lost or damaged.

Loss Ratio 

A formula used by insurers to relate loss expenses to earned premiums.

The percentage of incurred losses to earned premiums.

Loss Reserve

An estimate of liability or provision in an insurer’s financial statement, indicating the amount the insurer expects to pay for losses incurred but not yet reported or reported claims that haven’t been paid.

Losses Incurred 

Includes claims that have been paid and/or have amounts held in reserve for future payment

Losses Incurred but Not Reported (IBNR) 

An estimated amount set aside by the insurance company to pay claims that may have occurred, but for some reason have not yet been reported to the insurance company.

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Major Medical 

A hospital/surgical/medical expense contract that provides comprehensive benefits as defined in the state in which the contract will be delivered.

Malicious mischief

Deliberate damage or destruction of another person’s property. For insurance purposes, it is typically covered under vandalism.

Intentional damage of personal property with malice of forethought.

Malpractice 

Alleged misconduct or negligence in a professional act resulting in loss or injury.

Managed Care 

System of health care delivery that attempts to influence the utilization, quality, and cost of services provided.

Mandated benefits 

Insurance required by state or federal law.

Manufactured home

A home dwelling unit assembled in a factory and shipped to the building site. Manufactured homes may also be referred to as prefabricated, or prefab, homes and have a permanently attached, wheeled chassis, which allows them to be moved from the manufacturer to the site, or from site to site.

Manufactured home insurance

A type of insurance policy that provides protection for a manufactured home.

Manufacturers Output Policies 

Provides broad form coverage of personal property of an insured manufacturer including raw material, goods in process, finished goods and goods shipped to customers.

Margin Premium 

A deposit that an organization is required to maintain with a broker with respect to the Futures Contracts purchased or sold.

Marine Insurance

Coverage for goods in transit and the vehicles of transportation on waterways, land, and air.

Market Value 

Fair value or the price that could be derived from current sale of an asset.

Material Damage

 

All property-related damage losses covered by the policy. This includes the following: property damage (PD), comprehensive damage (COMP), collision damage (COLL), Fire/Theft Combined Additional Coverage (FTCA), rental reimbursement (RR), or uninsured motorist property damage (UMPD).

Mechanical Breakdown Insurance

Premiums attributable to policies covering repair or replacement service, or indemnification for that service, for the operational or structural failure of property due to defects in materials or workmanship, or normal wear and tear. (May cover motor vehicles, mobile equipment, boats, appliances, electronics, residual structures, etc.)

Medicaid

Policies issued in association with the Federal/State entitlement program created by Title XIX of the Social Security Act of 1965 that pays for medical assistance for certain individuals and families with low incomes and resources.

Medical & Hospital Expenses (Benefits or Claims) 

Total expenditures for health care services paid to or on behalf of members.

Medical Claim Examiner

The medical claim examiner is responsible for reviewing all medical bills, replacement/essential services, and lost wages submitted to the company for injuries sustained by you and/or the passengers in your vehicle (depending upon the state in which you live and the coverage on your policy).

Medical Malpractice 

Insurance coverage protecting a licensed health care provider or health care facility against legal liability resulting from the death or injury of any person due to the insured’s misconduct, negligence, or incompetence, in rendering or failure to render professional services.

Medical Only 

Line of business that provides medical only benefits without hospital coverage. An example would be provider-sponsored organizations where there is no coverage for other than provider (non-hospital) services. Does not include self-insured business, FEHBP, Medicare and Medicaid programs, or dental only business.

Medical payments (auto)

Coverage for reasonable medical expenses to you and others in the event of an accident, regardless of who is at fault. In your policy, this may be referred to as medical expenses or medical benefits.

Medical payments (MedPay) coverage

 

A type of auto insurance coverage that typically provides payment, up to specified coverage limits, for the insured, covered family members and covered passengers for their reasonable and necessary medical treatment for bodily injury or funeral expenses caused by a covered car accident.

Medical payments to others (property)

This coverage may provide payment for medical expenses resulting from an accident on your property. “Med pay” is intended for the immediate medical treatment of guests on your premises, without determining fault. This coverage is subject to specific dollar limits per incident, and availability may vary.

Medical Professional Liability 

Insurance coverage protecting a licensed health care provider or health care facility against legal liability resulting from the death or injury of any person due to the insured’s misconduct, negligence, or incompetence in rendering professional services. Medical Professional Liability is also known as Medical Malpractice.

Medicare 

A state assistance program, passed under Title XVIII of the Social Security Amendments of 1965, to provide hospital and medical expense insurance to those over 65 years of age.

Medicare + Choice 

A major initiative in the Balanced Budget Act of 1997 (also called Medicare Part C), under which Medicare beneficiaries may select from among several managed care options or a Medicare system.

Medicare Advantage Plan 

An HMO, PPO, or Private Fee-For Service Plan that contracts with Medicare Advantage Prescription Drug Plan also includes drug benefits. The plan may provide extra coverage such as vision, hearing, dental, and/or health and wellness programs. Medicare pays a fixed amount for insured’s care every month to the companies offering Medicare Advantage plans.

Medicare Cost 

Contract with Center for Medicare and Medicaid Services (CMS) for Medicare coverage. These contracts with CMS provide reimbursement through pre-determined monthly amount per member based on a total estimated budget. The beneficiary may use providers outside the provider network. Does not include stand-alone Medicare Part D Plans.

Medicare Part D – Stand-Alone 

Stand-alone Part D coverage written through individual contracts; stand-alone Part D coverage written through group contracts and certificates; and Part D coverage written on employer groups where the reporting entity is responsible for reporting claims to the Centers for Medicare & Medicaid Services (CMS).

Medicare Supplement 

Insurance coverage sold on an individual or group basis to help fill the “gaps” in the protections granted by the federal Medicare program. This is strictly supplemental coverage and cannot duplicate any benefits provided by Medicare. It is structured to pay part or all of Medicare’s deductibles and co-payments. It may also cover some services and expenses not covered by Medicare. Also known as Medigap” insurance.

Medigap 

Supplementary private health insurance products to Medicare insurance benefits.

Member 

A person who has enrolled as a subscriber or an eligible dependent of a subscriber and for whom the health organization has accepted the responsibility for the provision of health services as may be contracted for.

Minimum Premium Plan 

An arrangement under which an insurance carrier will, for a fee, handle the administration of claims and insure against large claims for a self-insured group. The employer self-funds a fixed percentage (e.g. 90%) of the estimated monthly claims, and the insurer covers the remainder.

Misrepresentation

False or misleading statements.

To make written or verbal statements that are untrue or misleading.

Misstatement of Age

The falsification of the applicant’s birth date on the application for insurance. When discovered, the coverage will be adjusted to reflect the correct age according to the premium paid in.

Mitigation

Steps taken to prevent or reduce the amount or likelihood of loss.

Mobile home

A term often applied to manufactured homes; however, the terms should not be used interchangeably. “Mobile home” is the term used for homes built before the introduction of the federal Manufactured Home Construction and Safety Standards (also known as HUD Code). Starting in 1976, “manufactured homes” are required to be built to these construction and safety standards. Some insurers may offer insurance policies for manufactured homes but not for mobile homes.

Mobile Homes – Homeowners 

Homeowners insurance sold to owners occupying the described mobile home.

Mobile Homes under Transport 

Coverage for mobile homes while under transport for personal or commercial use.

Modal factors

A multiplier used by a life insurance company to determine your premium payment based on how often you wish to pay-monthly, quarterly or annually.

Modified Guaranteed 

An annuity that contains a provision that adjusts the value of withdrawn funds based on a formula in the contract. The formula reflects market value adjustments.

Money market fund

The lowest-risk type of mutual fund that invests in Treasury bills, negotiable certificates of deposit and similar short-term investments.

Moral Hazard

Dishonesty or character defects that increase the chance of loss.

Personality characteristics that increase probability of losses. For example, not taking proper care to protect insured property because the insured knows the insurance company will replace it if it is damaged or stolen.

Morale Hazard

 

Carelessness or indifference to a loss because of the existence of insurance.

Morbidity

The frequency or severity of disease or illness within a subset of the population.

Morbidity Risk 

The potential for a person to experience illness, injury, or other physical or psychological impairment, whether temporary or permanent. Morbidity risk excludes the potential for an individual’s death, but includes the potential for an illness or injury that results in death.

Morbidity Table 

A statistical record of the rate of illness among the defined age groups.

Mortality

The incidence of death at each attained age; frequency of death.

Mortality and Expense Risk Fees

A charge that covers such annuity contract guarantees as death benefits.

Mortality Table 

Chart that shows the death rates of a particular population at each age displayed as the number of deaths per thousand.

Mortgage 

A note used to secure a loan for real property.

Mortgage calculator

An automated tool that helps estimate mortgage payments. Some companies such as financial and consumer credit institutions offer calculators on websites where mortgage shoppers can quickly estimate their loan payment by entering variables such as home cost, interest rate and length of the loan.

Mortgage Guaranty

Insurance that indemnifies a lender for loss upon foreclosure if a borrower fails to meet required mortgage payments.

Mortgage Insurance 

A form of life insurance coverage payable to a third-party lender/mortgagee upon the death of the insured/mortgagor for loss of loan payments.

Mortgage-Backed Securities

A type of asset-backed security that is secured by a mortgage or collection of mortgages. These securities must also be grouped in one of the top two ratings as determined by an accredited credit rating agency, and usually pay periodic payments that are similar to coupon payments. Furthermore, the mortgage must have originated from a regulated and authorized financial institution.

Mortgagee

If you have a mortgage (or other similar lien) on your property, the mortgage company (or mortgagee) has a financial interest in your property. Claim payments, related to building damage or losses, are typically required to be made out to you and the mortgagee. Your mortgage company may require documentation that the repairs have been performed before endorsing the check. Contact them as soon as possible to learn their requirements to avoid delays.

Mortgagee clause

 

A provision on a homeowners insurance policy that lists any lenders, or mortgagees, on a home. Should the insured void the policy by some act, such as arson, this clause can help protect the lender’s investment.

Motor vehicle insurance

Insurance that covers risks associated with cars, trucks, motorcycles, and other road vehicles. The definition of a motor vehicle may vary by state. A policy may include liability coverage (which helps cover damages caused as a result of the driver’s negligence); comprehensive and/or collision coverage, for damage to the motor vehicle itself; medical payments coverage; and/or uninsured motorist coverage.

Motor vehicle repair estimate

A document that provides a description of the services performed, parts used to repair, and the estimated cost for parts and labor necessary to repair the vehicle.

Motor Vehicle Report (MVR)

 

A report from the agency that issues your driver’s license, listing accidents and violations that appear on your driving record. This report is used to verify information provided by insurance applicants and policyholders.

The record of a person’s driving history, including details of any accidents or violations, as reported to a state’s department of motor vehicles.

Motorcycle insurance

A type of financial protection that covers the owner of a motorcycle against financial loss arising from use of or damage to the vehicle.

Motorhome insurance

A type of insurance that helps protect a self-propelled vehicle equipped for living arrangements. The following coverages may be offered in a motorhome insurance policy: liability, collision, comprehensive, personal property, medical payments and personal injury protection.

Multi-Car Discount

Available to policyholders who insure more than one vehicle at the same location.

Multi-Peril Insurance 

Personal and business property coverage combining several types of property insurance in one policy.

Municipal Bond Guarantee Insurance 

Coverage sold to municipalities to guarantee the principle payment on bonds issued.

Municipal Liability 

Liability coverage for the acts of a municipality.

Municipal obligation bond 

Any security, or other instrument, including a state lease but not a lease of any other governmental entity, under which a payment obligation is created, issued by or on behalf of a governmental unit to finance a project servicing a substantial public purpose, and 1) Payable from tax revenues, but not tax allocations, within the jurisdiction of such governmental unit; 2) Payable or guaranteed by the United States of America or any agency, department or instrumentality thereof, or by a state housing agency; 3) Payable from rates or charges (but not tolls) levied or collected in respect of a non-nuclear utility project, public transportation facility (other than an airport facility) or public higher education facility; or 4) With respect to lease obligations, payable from future appropriations.

Mutual Insurance Holding Company 

A privately held insurer owned by its policyholders, operated as a non-profit that may or may not be incorporated.

A company organized as a mutual and owning a capital stock insurer or insurers for the benefit of pooling risk for many people, typically those in the same industry.

Mysterious disappearance (off premises)

An event in which one loses a piece of personal property while away from the covered home. Coverage would likely be triggered if the only possible explanation for the loss was theft.

Named Insured

The person in whose name the insurance policy is issued.

Named non-owner coverage/policy (NNO)

Written for someone who does not own a private passenger or commercial automobile, but would otherwise meet the qualifications for an auto policy with Nationwide. Situations may include employer-furnished vehicles, borrowing cars from friends or relatives, or frequent use of rental cars.

Named Peril Coverage 

Insurance for losses explicitly defined in the policy contract.

Named peril policy

 

An insurance policy that helps protect against only certain perils or causes of loss, which are stated in the policy.

Named perils

Covered hazards that are listed in an insurance policy. Also known as specified or named perils.

Named Schedule Bond

A fidelity bond providing coverage for persons listed or scheduled on the bond.

National Association of Insurance Commissioners (NAIC) 

The U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S.

National Insurance Crime Bureau (NICB)

A not-for-profit organization that partners with insurers and law enforcement agencies to facilitate the identification, detection, and prosecution of insurance criminals. The NICB receives support from over 1,000 property/casualty insurance companies.

Nationally Recognized Statistical Rating Organization (NRSRO) 

Refers to rating organizations so designated by the SEC whose status has been confirmed by the Securities Valuation Office. Examples are: Moody’s Investors Service, Inc., Standard & Poor’s (S&P), A.M. Best Company (A.M. Best) and Fitch Ratings and Dominion Bond Rating Service (DBRS).

Negligence

Failure to exercise reasonable consideration resulting in loss or damage to oneself or others.

Net Admitted Assets 

Total of assets whose values are permitted by state law to be included in the annual statement of the insurer.

Net Income 

Total revenues from an insurer’s operations less total expenses and income taxes

Net Premiums Earned 

Premiums on property/casualty or health policies that will not have to be returned to the policyholder if the policy is cancelled.

Net worth

The difference between assets and liabilities. This number, which applies to both individuals and businesses, is a key measure of how much an entity or a person possesses. In business, net worth is also known as book value or shareholders’ equity.

NFIP – National Flood Insurance Program

Flood insurance and floodplain management for personal and business property administered under the National Flood Act of 1968. Encourages participation by private insurers through a flood insurance pool.

No-fault insurance

 

A type of car insurance under which the insurer will help pay to cover damages incurred by an insured as a result of an accident, regardless of fault.

Non-admitted Assets 

Assets having economic value other than those which can be used to fulfill policyholder obligations, or those assets which are unavailable due to encumbrances or other third-party interests and should not be recognized on the balance sheet.

Non-admitted Insurer 

Insurance company not licensed to do business within a given state.

Noncancellable

Contract terms including costs can never be changed.

Non-controlled stock insurers 

Insurers in which a parent company has: 1) a financial interest represented by the direct or indirect ownership of less than 50% of voting shares, and 2) does not have the ability to exercise control over the insurer, e.g., through voting stock or management contract

Non-Forfeiture

One of the choices available if the policy owner discontinues premium payments on a policy with a cash value. Options available are to take the cash value in cash or to use it to purchase extended term insurance or reduced paid-up insurance.

Non-Participating

A life insurance policy in which the company does not distribute to policyowners any part of its surplus.

Non-proportional Reinsurance 

Reinsurance that is not secured on individual lives for specific individual amount of reinsurance, but rather reinsurance that protects the ceding company’s overall experience on its entire portfolio of business, or at least a broad segment of it. The most common forms of non-proportional reinsurance are stop loss and catastrophe.

Non-Recourse Mortgage

A home loan in which the borrower can never owe more than the home’s value at the time the loan is repaid.

Non-renew insurance

 

An insurance company’s decision not to renew a home or auto insurance policy after the current policy term ends. Companies must appropriately notify policyholders prior to nonrenewing coverage.

Non-Renewal

When an insurer decides not to renew a policy at the end of its policy period.

Non-standard carrier

An auto insurance provider with underwriting standards that accept high-risk drivers.

Notional Value 

The principal value upon which future payments are based in a derivative transaction as at a specific period in time (the “as of” reporting date) in the reporting currency.

Nuclear Energy Liability 

Coverage for bodily injury and property damage liability resulting from the nuclear energy material (whether or not radioactive) on the insured business’s premises or in transit.

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Obligee

Broadly, anyone in whose favor an obligation runs. Frequently used in surety bonds, this refers to the person, firm or corporation protected by the bond.

Obligor

Commonly called “principal,” one bound by an obligation. Under a bond, strictly speaking, both the principal and the surety are obligers.

Occasional driver

A driver who is not the usual or most frequent driver of the vehicle listed on an auto policy.

Occupancy

Number of people living in the property.

Occurrence

 

An event, or repeated exposure to conditions, which unexpectedly causes injury or damage during the policy period.

Ocean Marine 

Coverage for ocean and inland water transportation exposures; goods or cargoes; ships or hulls; earnings; and liability.

Officer

A president, vice-president, treasurer, actuary, secretary, controller and any other person who performs for the company functions corresponding to those performed by the foregoing officers.

Open peril

A term describing an insurance policy that covers losses caused by any peril unless it is specifically excluded or limited in the policy. Also known as “all-risk.”

Option

An agreement giving the buyer the right to buy or receive, sell or deliver, enter into, extend or terminate, or effect a cash settlement based on the actual or expected price, level, performance or value of one or more Underlying Interests.

Ordinance or law coverage

Coverage providing increased cost to a covered loss resulting from an ordinance or law.

Original equipment manufacturer (OEM)

 

Auto parts that come from the manufacturer, as opposed to aftermarket or salvage companies. An OEM endorsement ensures that aftermarket replacement parts won’t be used to repair your vehicle. Policyholders must have comprehensive and/or collision coverage to add this option. See after-market parts.

Other Accident and Health 

Accident and health coverages not otherwise properly classified as Group Accident and Health or Credit Accident and Health (e.g., collectively renewable and individual non-cancelable, guaranteed renewable, non-renewable for stated reasons only, etc.). Include all Medicare Part D Prescription Drug Coverage, whether sold on a stand-alone basis or through a Medicare Advantage product and whether sold directly to an individual or through a group.

Other Considerations 

Unallocated annuity considerations and other unallocated deposits that incorporate any mortality or morbidity risk and are not reported as direct premiums, direct annuity considerations or deposit-type contract funds.

Other Liability 

Coverage protecting the insured against legal liability resulting from negligence, carelessness, or a failure to act resulting in property damage or personal injury to others.

Other structures coverage

A type of coverage that helps protect buildings or structures on an insured residential property that are separate from the home, such as detached garages, storage sheds and fences.

Other Underwriting Expenses 

Allocable expenses other than loss adjustment expenses and investment expenses.

Out-of-Pocket Limit

A predetermined amount of money that an individual must pay before insurance will pay 100% for an individual’s health-care expenses.

Overseas Insurance

Auto and Property Insurance for those living abroad is available from American International Underwriters through GEICO’s subsidiary, International Insurance Underwriters.

Own Occupation

Insurance contract provision that allows policyholders to collect benefits if they can no longer work in their own occupation.

Owner (life insurance)

The same as the insured if no other person is named in the application as the owner. The owner controls the policy during the lifetime of the insured.

Owner Occupied 

Homeowners insurance sold to owners occupying the described property.

Owner’s Policy

Since a lender’s policy does not protect your financial interests, an owner’s title insurance policy is worth serious consideration. If someone has a claim against your new home and you are not insured, the result could be financial disaster. Many insurers offer discounts when both the lender and owner policies are purchased at the same time.

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P&C

Property and Casualty Insurance.

Package Policy 

Two or more distinct policies combined into a single contract.

Paid-Up Additional Insurance

An option that allows the policyholder to use policy dividends and/or additional premiums to buy additional insurance on the same plan as the basic policy and at a face amount determined by the insured’s attained age.

Paid-up life insurance

A type of contract that establishes a point in time when premium payments cease, but coverage does not.

Par Value 

The nominal or face value of a stock or bond.

Participating Policy

A life insurance policy under which the company agrees to distribute to policyowners the part of its surplus that its Board of Directors determines is not needed at the end of the business year. The distribution serves to reduce the premium the policyowners had paid.

Participation Rate

In equity-indexed annuities, a participation rate determines how much of the gain in the index will be credited to the annuity. For example, the insurance company may set the participation rate at 80%, which means the annuity would only be credited with 80% of the gain experienced by the index.

Passive Restraint System

A passenger safety system, such as an air-bag, that activates automatically in the event of an accident.

Payment Class

Your payment class is determined by the information in your application and a medical exam. The amount you pay for your annual premium is based in part on your payment class.

Payment Plans

Your auto insurance premium can be paid using one of our installment payment plans; you make several smaller payments but incur a service fee.

Payment Recovery

If your car is damaged because of another driver’s negligence and you ask GEICO to settle the claim for damage to your vehicle, we will seek to recover your deductible and our payments from the other party. This process of payment recovery is also called subrogation.

Payment Recovery Examiner

The Payment Recovery Examiner is responsible for recovering your deductible from the other party’s insurance company.

Pension

A benefit, usually funded by an employer which provides employees a stream of income during retirement.

Peril

 

Something that causes a loss. Fires, hurricanes and theft are examples of perils. It’s important to understand exactly which perils your coverage covers.

Period Certain

When annuitizing a deferred annuity, or when buying an immediate annuity, it is one of several options that define how you want to take your stream of income payments. Period certain means you choose to take them for a special time rather than over your lifetime.

Permanent Life Insurance

A type of policy that does not expire during the life of the insured and combines a death benefit with a savings portion that can build cash value. It is typically more expensive than term life insurance.

Permissive use

Granting someone the right to use your vehicle.

Personal Auto Policy 

Coverage designed to insure private passenger automobiles and certain types of trucks owned by an individual or husband and wife.

Personal Earthquake 

Earthquake property coverage for personal, family or household purposes.

Personal effects (RV insurance)

Optional coverage to fix or replace personal property inside your RV that has been lost or damaged.

Personal Flood 

Separate flood insurance policy sold for personal, family or household purposes.

Personal GAP Insurance 

Credit insurance that insures the excess of the outstanding indebtedness over the primary property insurance benefits in the event of a total loss to a collateral asset.

Personal injury (Homeowners insurance)

Provides coverage for the personal injury to others, such as false arrest, libel (written), slander (verbal), or invasion of privacy.

Personal Injury Liability 

Liability coverage for those who have been discriminated against, falsely arrested, illegally detained, libeled, maliciously prosecuted, slandered, suffered from identity theft, mental anguish or alienation of affections, or have had their right of privacy violated.

Personal injury protection (PIP) coverage

Pays basic expenses for an insured and his or her family in states with no-fault auto insurance. No-fault laws generally require drivers to carry both liability insurance and personal injury protection coverage to pay for basic needs of the insured, such as medical expenses, in the event of an accident.

Personal property

 

All other property not classified as real property, and which is easily moved. This includes furniture, clothing and household goods.

Personal property coverage

Insurance that provides protection against covered losses for damage to personal property.

Personal Umbrella Policy

An extra layer of liability protection for your assets if there’s a serious auto accident or accident on your property and damages exceed the limits of your auto or homeowner’s coverage limits.

Personal watercraft

A watercraft, typically smaller than a boat, that is powered by a jet drive engine. These vehicles are often covered under boat insurance policies.

Pet insurance

Pet insurance covers veterinary bills and medication for your cat and dog by reimbursing you for all or a portion of your out of pocket costs.

Pet Insurance Plans 

Veterinary care plan insurance policy providing care for a pet animal (e.g., dog or cat) of the insured owner in the event of its illness or accident.

Phishing scam

A swindle in which the perpetrator sends an email that purports to be from a lawful business, for example a person’s bank. The recipient is directed to a fraudulent website that instructs the person to enter personal information, such as a Social Security number or bank account number. The perpetrator then uses this information to commit identity theft.

Physical Damage

Damage to property.

Physical Hazard

A physical condition that increases the chance of loss.

Point-of-Service Plan

Health insurance policy that allows the employee to choose between in-network and out-of-network care each time medical treatment is needed.

Policy

A contract between you and the insurance company.

Policy Change

Any change made to your insurance policy during the period that the policy is in force.

Policy Dividend 

A refund of part of the premium on a participating life insurance policy. Amount of payment is determined by subtracting the actual premium expense from the premium charged. The payment can be taken as cash, applied to a purchase an increment of paid-up insurance, left on deposit with the insurance company or applied to purchase term insurance for one year.

Policy expiration date

 

Your current insurance policy ends on your policy expiration date, which is found on your current policy documents, declarations page (dec page), insurance identification card or recent cancellation notice. This date should not be confused with payment due dates.

Policy Limit

The maximum amount a policy will pay, either overall or under a particular coverage.

The maximum amount your insurance will pay for a loss. The insurance company will not pay beyond the policy limit, even if your loss total was more than that.

Policy Limits/Sublimits

Depending on your homeowner policy’s limits, it may not reimburse you for the full amount of your loss. And items such as jewelry, silverware, coins or cash may need to be insured using specific endorsements or separate policies. You’ll also want to revisit your policy annually to make sure that it provides sufficient coverage to rebuild your home. Over time, economic changes (such as labor or material costs) could increase the cost.

Policy or Sales Illustration

Material used by an agent and insurer to show how a policy may perform under a variety of conditions and over a number of years.

Policy owner (life insurance)

The person who has the right to all privileges under the contract of insurance and controls the policy. Generally, the owner and the insured are the same person.

Policy period

Time period during which insurance coverage is in effect.

Policy Proceeds

The amount actually paid on a life insurance policy at death or when the policyowner receives payment at surrender or maturity.

Policy Reserve 

The amount of money allocated specifically for the fulfillment of policy obligations by a life insurance company; reserves are in place to safeguard that the company is able to pay all future claims.

Policy Service Representative

Also called PSR; they are responsible for premium rating and issuing policy files.

Policy term

The length of time for which an insurance policy is valid, unless renewed.

Policy value (life insurance)

The total of your premiums paid plus interest minus any policy charges. If you surrender your policy, the value is reduced by any withdrawals, outstanding loans and surrender charges.

Policyholder

The person or entity specifically identified as the named insured in an insurance policy. This person is also referred to as the named insured.

Policyholders Surplus 

Assets in excess of the liabilities of a company or net income above any monies indebted to legal obligation.

Policyowner

 

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.

Pollution

Environmental contamination.

Pool

An association organized for the purpose of absorbing losses through a risk-sharing mechanism thereby limiting individual exposures.

Pooling

The method by which each member of an insurance pool shares in every risk written by other pool members.

Power of Attorney

Authority given one person or corporation to act for and obligate another, to the extent laid down in the instrument creating the power.

Power sports

A term used to describe vehicles that are not automobiles. Power sports equipment typically includes motorcycles, off-road vehicles, recreational vehicles, watercraft and snowmobiles. Specialized insurance policies can be purchased to help protect a power sports vehicle.

Pre-accident Condition

The state of the vehicle before the accident, including damage not related to the accident, mileage, options, and other factors.

Pre-Existing Condition

A coverage limitation included in many health policies which states that certain physical or mental conditions, either previously diagnosed or which would normally be expected to require treatment prior to issue, will not be covered under the new policy for a specified period of time.

Preferred Provider Organization (PPO) 

Network of medical providers which charge on a fee-for-service basis, but are paid on a negotiated, discounted fee schedule.

Preferred Risk 

Insured, or applicant for insurance, who presents likelihood of risk lower than that of the standard applicant.

Premises

The location or property, building(s) or land owned by the policyholder for example, that insurance coverage will apply to.

Premises and Operations 

Policies covering the liability of an insured to persons who have incurred bodily injury or property damage on an insured’s premises during normal operations or routine maintenance, or from an insured’s business operations either on or off of the insured’s premises.

Premium

 

The payment, or one of the periodic payments, a policyowner agrees to make for an insurance policy. Depending on the terms of the policy, the premium may be paid in one payment or a series of regular payments, e.g., annually, semi-annually, quarterly or monthly. The premium charged reflects the expectation of loss, expenses and profit contingencies.

Premium Auditor

Person that reviews charges to ensure that the premium paid is fair for the coverage furnished.

Premium Financing

A policyholder contracts with a lender to pay the insurance premium on his/her behalf. The policyholder agrees to repay the lender for the cost of the premium, plus interest and fees.

Premiums Earned 

The portion of premium for which the policy protection or coverage has already been given during the now-expired portion of the policy term.

Premiums Net 

Is the amount calculated on the basis of the interest and mortality table used to calculate the reporting entity’s statutory policy reserves.

Premiums Written 

Total premiums generated from all policies (contracts) written by an insurer within a given period of time.

Pre-tax contribution

A type of contribution made to a retirement plan. You do not pay taxes on the contributions in the year they are made, but defer taxes until you begin withdrawing from the plan. Usually, pre-tax contributions are made to traditional IRAs and most 401(k)s.

Primary driver

The person indicated on an auto insurance application as the person who will drive the insured vehicle most often.

Primary driver

The person who drives the vehicle most often. Also referred to as the principal driver.

Primary Insurance 

Coverage that takes precedence when more than one policy covers the same loss.

Primary Insurance

 

Insurance that must be maintained as a condition of the Personal Umbrella Policy (PUP). Primary insurance acts as the first layer of coverage on common types of losses. This usually includes auto, motorcycle and homeowner insurance, but may also include boat insurance or some other policy. Please check your insurance policy documents for more detailed information.

Primary Policy

If you have multiple insurance policies covering the same situation, the company holding the primary policy will generally lead the claims handling process.

Primary policyholder

The person to whom an insurance policy is issued.

Primary residence

A primary residence is the place where you’ll live for the majority of your policy period.

Primary residence

The location where a policyholder lives most of the time.

Primary use

Primary use is how you mainly use your vehicle. Primary use options include to/from work, business, pleasure or farm use.

Primary use (auto)

This is the vehicle’s typical use. “Work” refers to a vehicle that is primarily used for commuting to and from work or school. “Pleasure” refers to a vehicle primarily used for personal errands, trips or vacations.

Principal

A person or organization whose obligation are guaranteed by a bond.

Principal

The amount of money you invest.

Principal driver

The person who drives the car most often is the principal driver.

Prior Approval Law 

A state regulatory requirement for pre-approval of all insurance rates and forms.

Private Insurance

Voluntary programs that are available from the government or private firms.

Private Passenger Auto (PPA) 

Filings that include singularly or in any combination coverage such as the following: Auto Liability, Personal Injury Protection (PIP), Medical Payments (MP), Uninsured/Underinsured (UM/UIM); Specified Causes of Loss, Comprehensive, and Collision.

Producer

An individual who sells, services, or negotiates insurance policies either on behalf of a company or independently.

Product Liability 

Insurance coverage protecting the manufacturer, distributor, seller, or lessor of a product against legal liability resulting from a defective condition causing personal injury, or damage, to any individual or entity, associated with the use of the product.

Professional Errors and Omissions Liability 

Coverage available to pay for liability arising out of the performance of professional or business-related duties, with coverage being tailored to the needs of the specific profession. Examples include abstracters, accountants, insurance adjusters, architects, engineers, insurance agents and brokers, lawyers, real estate agents, stockbrokers.

Professional Liability Insurance

Insurance that covers damages that come because of mistakes in your work, such as if you mishandle tax planning for a client, or poorly design a product. This is also known as errors and omissions insurance.

Proof of insurance card

A document from an insurance company with policy information, such as the name of the policyholder, the insured property, the policy number and the name of the insurance company providing coverage, that may be used as evidence of insurance.

Proof of Loss

A statement made regarding the extent of the claim; it may be requested in accordance with the conditions of the policy.

Property

Anything that has value. There are two types: real property and personal property.

Property

Coverage protecting the insured against loss or damage to real or personal property from a variety of perils, including but not limited to fire, lightening, business interruption, loss of rents, glass breakage, tornado, windstorm, hail, water damage, explosion, riot, civil commotion, rain, or damage from aircraft or vehicles.

Property coverage insurance

Protects your home and personal property against loss or damage, as outlined in a home insurance policy.

Property Damage

Damage to another person’s property. The purpose of liability insurance is to cover property damage to a third party resulting from the negligent or intentional acts of an insured.

Property damage liability coverage

A term used to describe a type of liability coverage that helps financially protect the insured against damages he or she accidentally cause to another person’s property. This type of coverage is typically found in various types of insurance policies, including homeowners, renters and auto.

Property Damage Liability Coverage

Pays for damage to someone else’s property resulting from an accident for which you are at fault and in most cases provides you with a legal defense. This coverage is subject to the terms, limits and conditions of your policy contract.

Property damage liability coverage (auto)

Coverage for damage to someone else’s property as the result of a covered accident for which you are responsible. It may help cover the expense of repairing or replacing a car, fence or other property damaged during the covered incident.

Property damage liability coverage (PD)

If an insured person is legally liable for an accident, PD coverage pays for damage to others’ property resulting from the accident. PD also pays for legal defense costs if you’re sued.

Property fire wall

A physical wall with qualities of fire resistance and structural stability. It controls the spread of a fire.

Pro-rata (proportional) Reinsurance 

Portion of the losses and premium reinsurer shares with the ceding entity.

Pro-Rata Cancellation

When the policy is terminated midterm by the insurance company, the earned premium is calculated only for the period coverage was provided. For example: an annual policy with premium of $1,000 is canceled after 40 days of coverage at the company’s election. The earned premium would be calculated as follows: 40/365 days X $1,000=.110 X $1,000=$110

Prospectus

A legal document which is required by and filed with the Securities and Exchange Commission. It provides details and facts about an investment offering for sale to the public so that a consumer can make an informed decision at purchase.

Protected Cell 

An insurance-linked security retained within the insurance or reinsurance company and is used to insulate the proceeds of the securities offering from the general business risks of the insurer, granting an additional comfort level for investors of the securitized instrument.

Protection and Indemnity (P&I) Insurance

A broad form of marine legal liability insurance coverage.

Protective devices

Safety equipment designed to prevent, protect or notify you in the event of an emergency, such as fire extinguishers, dead-bolt locks, fire alarms, smoke alarms and burglar alarms.

Provider Sponsored Network (PSN)

Formal affiliations of providers, sometimes called “integrated delivery systems”, organized and operated to provide an integrated network of health care providers with which third parties, such as insurance companies, HMOs, or other Health Plan Companies, may contract for health care services to covered individuals. Some models of integration include Physician Hospital Organizations, Management Service Organizations, Group Practices Without Walls, Medical Foundations, and Health Provider Cooperatives.

Provisions

Contingencies outlined in an insurance policy.

Proximate Cause

An act or omission initiating an unbroken sequence of events resulting in injury to a person or damage to property.

Event covered under insured’s policy agreement.

The immediate or actual cause of loss or damage.

Public Adjuster

Hired by the insured, an adjuster who operates independently from insurance companies to investigate and settle claims.

Independent claims adjuster representing policyholders instead of insurance companies.

Pure Premium

That portion of the premium equal to expected losses void of insurance company expenses, premium taxes, contingencies, or profit margin.

Pure Risk

Circumstance including possibility of loss or no loss but no possibility of gain.

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Qualified Actuary

A person who meets the basic education, experience and continuing education requirements (these differ by line of business) of the Specific Qualification Standard for Statements of Actuarial Opinion, NAIC Property and Casualty Annual Statement, as set forth in the Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States, promulgated by the American Academy of Actuaries, and is in good standing of the American Academy of Actuaries who has been approved as qualified for signing casualty loss reserve opinions by the Casualty Practice Council of the American Academy of Actuaries.

Qualified High-Deductible Health Plan

A health plan with lower premiums that covers health-care expenses only after the insured has paid each year a large amount out of pocket or from another source. To qualify as a health plan coupled with a Health Savings Account, the Internal Revenue Code requires the deductible to be at least $1,000 for an individual and $2,000 for a family. High-deductible plans are also known as catastrophic plans.

Qualified Higher Education Expenses

Expenses for which money in 529 plans may be used tax-free. Generally, these are tuition, room and board, mandatory fees, and books and computers, if required. Pre-paid plans cover tuition and mandatory fees only, though some provide options.

Qualified Versus Non-Qualified Policies

Qualified plans are those employee benefit plans that meet Internal Revenue Service requirements as stated in IRS Code Section 401a. When a plan is approved, contributions made by the employer are tax deductible expenses.

Quote

A statement of the premium that will be charged for insurance coverages based on specific information provided by the person requesting the quote including drivers, vehicles, and driving record.

An estimate of the cost of insurance, based on information supplied to the insurance company by the applicant.

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Rate

Often used as a synonym for premium but actually refers to the base rating units that are used to determine the final premium.

Value of insured losses expressed as a cost per unit of insurance.

Rate of return

The amount of money an investment generates over a given period of time as a percentage of the amount of principal originally invested.

Rating

The basis for an additional charge to the standard premium because the person insured is classified as a greater than normal risk usually resulting from impaired health or a hazardous occupation.

Rating Plan

 

The rules that determine the cost of your insurance premium. These rules modify the base rates by applying discounts and surcharges based on your personal characteristics, for example, using your seat belt, insuring more than one car.

Real or tangible property

Land, as well as anything permanently attached to, embedded in or growing on it.

Real property

Land and the permanent things on it, such as buildings, outdoor fixtures, machinery and equipment.

Rebalancing

The changing of the percentages of different types of investments in a portfolio.

Rebate

A refund of part or all of a premium payment.

Rebuilt/Reconstructed title

A branded certificate of title, issued by the state, to inform consumers that the named vehicle had previously been deemed a salvaged vehicle, but has been rebuilt or restored to an operational state and has passed the state’s department of motor vehicle inspection standards. Most states insist that rebuilt vehicles meet rigorous standards prior to issuance of a rebuilt or reconstructed title.

Reconstruction Costs

Your dwelling policy limits are based on the estimated cost of rebuilding your home, but over time, economic changes (such as labor or material costs) could make rebuilding more expensive than initially anticipated. You’ll want to revisit your policy annually to make sure that it provides sufficient protection.

Reduced Paid-up Insurance

A form of insurance available as a non-forfeiture option. It provides for continuation of the original insurance plan, but for a reduced amount, without further premiums.

Re-Entry

Re-entry, which is the allowance for level-premium term policyowners to qualify for another level-premium period, generally with new evidence of insurability.

Reimbursement level

Often associated with health and pet insurance, your level of reimbursement is the amount of money you receive from an insurer in repayment for a covered expense.

Reinspection

 

A review of an estimate or appraisal done by an adjuster during or after repairs to a vehicle. This is done to guarantee the accuracy of staff or independent auto damage personnel, and to guarantee that the work required in an estimate or appraisal is being completed by the body shop.

Re-Inspector

Person who double-checks the work of the original adjuster.

Reinstatement

Restoring a lapsed policy to its original premium paying status, upon payment by the policy owner, with interest, of all unpaid premiums and policy loans, and presentation of satisfactory evidence of insurability by the insured.

The restoring of a lapsed policy to full force and effect. The reinstatement may be effective after the cancellation date, creating a lapse of coverage. Some companies require evidence of insurability and payment of past due premiums plus interest.

Reinsurance

A transaction between a primary insurer and another licensed (re) insurer where the reinsurer agrees to cover all or part of the losses and/or loss adjustment expenses of the primary insurer. The assumption is in exchange for a premium. Indemnification is on a proportional or non-proportional basis.

Reinsurer

Company assuming reinsurance risk.

Release

Legally binding contract stating that all obligations past, present or future arising from a particular accident or occurrence have been fulfilled.

Renewable Term Insurance 

Insurance that is renewable for a limited number of successive terms by the policyholder and is not contingent upon medical examination.

Renewal Date

The date that your insurance policy expires and the date that your renewed policy will begin.

Rental coverage

Additional coverage purchased from the rental company to cover the renter of a vehicle against damage to the rented vehicle and/or liability arising from an incident that occurs while he or she is in possession of the rented vehicle. A driver’s personal auto policy generally provides liability coverage and may cover damage to the rented vehicle and the renter’s own comprehensive and collision coverage may cover damage to the rented vehicle. However, if he or she does not carry auto insurance or enough coverage, the driver may need to buy coverage from the rental car company.

Rental reimbursement (auto)

 

An optional coverage available with an auto insurance policy that pays a set amount per day for a specific period of time, to rent a vehicle while the insured vehicle is in the process of being repaired or replaced as a result of a covered loss.

Renters coverage

See “Renters Insurance”

Renters Insurance 

 

Liability coverage for contents within a renter’s residence. Coverage does not include the structure but does include any affixed items provided or changed by the renter.

Renters Policy (also known as Tenants Policy)

An insurance policy that covers a tenant and some of their personal possessions.

Repatriation of Remains

A type of travel insurance that will pay to prepare and return a person’s remains to their home country if they die on a trip.

Replacement cost

The cost to repair or replace an insured item. Some insurance only pays the actual cash or market value of the item at the time of the loss, not what it would cost to fix or replace it. If you have personal property replacement cost coverage, your insurance will pay the full cost to repair an item or buy a new one once the repairs or purchases have been made.

Replacement Parts

 

Several types of parts may be used when your vehicle is repaired: new parts, both original equipment manufacturer and after-market; and recycled parts. New or after-market parts will be used if we can’t find like-kind and quality recycled parts. A 5-year-old car, for instance, would be repaired with parts at least as good as the parts that had been in the car. We guarantee the after-market parts used for these repairs for as long as you own the car.

Replacement Value

The cost to replace damaged property. If a piece of equipment breaks, you likely will need to buy a brand-new one. A policy that covers replacement value will pay for this full cost, even if the actual value of your property is lower because of depreciation.

Reported Losses 

Includes both expected payments for losses relating to insured events that have occurred and have been reported to the insurance company, but not yet paid.

Reserve

A portion of the premium retained to pay future claims

Reserve Credit 

Reduction of reserve amounts for reinsurance ceded. Reductions may include the claim reserve and/or the unearned premium reserve.

Reserves

The funds an insurance company sets aside to pay for reported but outstanding claims.

Residence

The domicile location of a member as shown by his or her determination as a resident.

Residence premises

The physical location of the property for which insurance protection is provided. This is also known as the insured location.

Resident Adjuster

Staff adjuster who handles claims in remote areas of a region.

Residual Benefit

In disability insurance, a benefit paid when you suffer a loss of income due to a covered disability or if loss of income persists. This benefit is based on a formula specified in your policy and it is generally a percentage of the full benefit. It may be paid up to the maximum benefit period.

Residual Market Plan 

Method devised for coverage of greater than average risk individuals who cannot obtain insurance through normal market channels.

Retained Limit

 

In umbrella insurance, retained limit is similar to a deductible in other types of insurance. The retained limit is the amount of damages for which the policyholder is responsible before the umbrella coverage begins to cover a loss.

Retention

A mechanism of internal fund allocation for loss exposure used in place of or as a supplement to risk transfer to an insurance company.

Retention Limit

Maximum amount of medical and hospital expense an insurer will carry on its own. The limit can be for an individual claim and/or for the insurer’s total claims, depending upon the terms of the reinsurance contract.

Retrocession

The portion of risk that a reinsurance company cedes or amount of insurance the company chooses not to retain.

Retrospective Rating 

The process of determining the cost of an insurance policy based on the actual loss experience determined as an adjustment to the initial premium payment.

Rider 

An endorsement to an insurance policy that modifies clauses and provisions of the policy, including or excluding coverage.

See “Endorsement.”

Risk

Uncertainty concerning the possibility of loss by a peril for which insurance is pursued.

Risk Avoidance

Avoiding the risk altogether.

Risk Based Capital (RBC) Ratio

Ratio used to identify insurance companies that are poorly capitalized. Calculated by dividing the company’s capital by the minimum amount of capital regulatory authorities have deemed necessary to support the insurance operations.

Risk Classification

 

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

Risk Control

Techniques used to control the frequency and magnitude of losses.

Risk Control Consultant

A person with expertise in risk management techniques that reduce the frequency and severity of losses.

Risk Management

The identification of loss exposures and treatments for those exposures.

Risk Retention

Retaining or bearing the risk.

Risk Retention Act 

A 1986 federal statute amending portions of the Product Liability Risk Retention Act of 1981 and enacted to make organization of Risk Retention Groups and Purchasing Groups more efficient.

Risk Retention Group 

Group-owned insurer organized for the purpose of assuming and spreading the liability risks to its members.

Risk Transfer

Transferring the financial consequences of a loss to another party, such as an insurance company.

Roadside Assistance

Optional coverage for when you need a tow, run out of gas or have a flat tire. Learn more.

Roadside assistance coverage

Roadside assistance provides services such as towing, flat tire change, locksmith service and battery jump-start to customers, who can elect the service for an additional premium if it’s not already included with their insurance policy.

Rollover IRA

A type of individual retirement account that you fund with a lump-sum distribution from your IRA, employer’s retirement plan such as a 401(k), when you change jobs or when you retire. The lump-sum distribution must be deposited in an IRA rollover account within 60 days of job separation to avoid taxes.

Roth IRA

A type of individual retirement account that you make with non-deductible contributions up to a certain limit throughout your working life where earnings grow tax-deferred. Unlike traditional IRAs, withdrawals are tax-free but contributions are not deductible.

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Salvage

Damaged property which is taken over by the insurance company after payment of a claim.

Salvage titles

 

A branded, state-issued title to a vehicle indicating that, in the past, it had damage exceeding a certain percentage of its value. A state will issue such a title to a vehicle after it is repaired and passes a safety inspection, so as to warn potential new owners of its previous damage.

State laws determine if a vehicle requires a salvage title.

·         Some states base salvage titles on the extent of damage a vehicle have sustained. For example, in Louisiana, damage to a vehicle must equal or exceed 75% of the vehicle’s retail value in order for it to require a salvage title, according to state law.

·         Other states, such as Florida, require a vehicle to have a salvage title if the insurance company declared the vehicle a total loss. These titles generally indicate whether the vehicle is “rebuildable” (can be repaired and driven on the road) or “not rebuildable” (must be sold for parts).

·         Other states “brand” or “notate” the vehicle’s title when the estimate of damages reaches a certain percentage of the vehicle’s retail value (in New York, for example, it is 75 percent), even if the vehicle hasn’t been declared a total loss and is able to be repaired.

·         Other states have no guidelines for issuing salvage titles.

Salvage vehicle

A vehicle for which a state has issued a salvage title. Such a title is generally issued when a vehicle is repaired and passes a state-recognized safety inspection after being declared a “total loss” by an insurance company, typically due to damage whose cost to repair would exceed a certain percentage of the vehicle’s worth. A salvage title alerts potential buyers of the vehicle of its past damage.

Scheduled Personal Property

Additional optional insurance coverage for high-value appraised personal property that can be added to a homeowners, renters or condo policy.  This can include jewelry, furs, or cameras.

Scheduled personal property coverage

Extended optional insurance coverage for high-value appraised personal property that can be added to a homeowners, renters or condo policy.

Scooter insurance

Insurance coverage that helps protect a motorized scooter, which resembles a small motorcycle. Scooters are often covered by motorcycle insurance policies.

Second home

A residence that is not the homeowner’s primary residence.

Second named insured

 

The named insured or listed agent/broker on a policy may request to designate any other person listed on the policy as a second named insured. The second named insured has the same coverage under the policy as the named insured.

Secondary driver

A person who is not the primary driver of a vehicle. Adding a secondary driver to your auto policy may affect your premium rates.

Secondary Market

The secondary market is populated by buyers willing to pay what they determine to be fair market value.

Section 1035 Exchange

This refers to a part of the Internal Revenue Code that allows owners to replace a life insurance or annuity policy without creating a taxable event.

Section 7702

Part of the Internal Revenue Code that defines the conditions a life policy must satisfy to qualify as a life insurance contract, which has tax advantages.

Securitization of Insurance Risk 

A method for insurance companies to access capital and hedge risks by converting policies into securities that can be sold in financial markets.

Security 

A share, participation, or other interest in property or in an enterprise of the issuer or an obligation of the issuer.

Self-Insurance 

Type of insurance often used for high frequency low severity risks where risk is not transferred to an insurance company but retained and accounted for internally.

Separate Account

A separate account is an investment option that is maintained separately from an insurer’s general account. Investment risk associated with separate-account investments is borne by the contract owner.

Settlement Options

The several ways, other than immediate payment in cash, in which a policyholder or beneficiary may choose to have policy benefits paid. These options typically include the following:

·         Interest Option – death benefit left on deposit at interest with the insurance company with earnings paid to the beneficiary annually.

  • Fixed Amount Option – death benefit paid in a series of fixed amount installments until the proceeds and interest earned terminate.
  • Fixed Period Option – death benefit left on deposit with the insurance company with the death benefit plus interest paid out in equal payments for the period of time selected.
  • Life Income Option – death benefit plus interest paid through a life annuity. Income continues under a straight life income option for as long as the beneficiary lives or whether or not the beneficiary lives, under a life income with period certain option.

Severity of Loss

Refers to the size or cost of the loss to the organization.

Sewer backup

An event that occurs when water or waste water overflows from a sewer in your home (for example a toilet bowl) or backs-up from a drain in your home (for instance a floor drain or sinks), plumbing or other waterways in the home (for example, a bathtub). Sewer backups can occur for a variety of reasons, such as a clog in the homeowner’s drain or other plumbing issues.

Sewer backup coverage

Insurance that helps protect against damage caused by the backup of sewers into a home. This is generally not standard in a home owners policy, but typically can be added on.

Short-Rate Cancellation

When the policy is terminated prior to the expiration date at the policyholder’s request. Earned premium charged would be more than the pro-rata earned premium. Generally, the return premium would be approximately 90 percent of the pro-rata return premium. However, the company may also establish its own short-rate schedule.

Short-term Disability 

A company standard defining a period of time employees are eligible for short-term disability coverage, typically for 2 years or less.

Short-Term Medical –

Policies that provide major medical coverage for a short period of time, typically 30 to 180 days. These policies may be renewable for multiple periods.

Sign coverage

A type of business insurance coverage that helps protect owned and lighted signs.

Situs of Contract 

The jurisdiction in which the contract is issued or delivered as stated in the contract.

Snowmobile insurance

A type of insurance protection for a snowmobile, which is a motorized vehicle that runs over the snow or ice on tracks and typically carries up to two people.

Social Insurance 

Compulsory insurance plan administered by a federal or state government agency with the primary emphasis on social adequacy.

Soft Market 

A buyer’s market characterized by abundant supply of insurance driving premiums down.

Solicitor

A licensed employee of a fire and casualty agent or broker who may act for the agent or broker in some circumstances.

Special revenue bond 

Any security, or other instrument under which a payment obligation is created, issued by or on behalf of a governmental unit to finance a project serving a substantial public purpose and not payable from the sources in connection with the payment of municipal obligation bonds.

Specialty Auto Insurance (also known as Powersports)

Coverage available for other vehicles you own that are not automobiles, such as motorcycles, recreational vehicles, boats, snowmobiles, and all-terrain vehicles.

Specified Disease Coverage 

Coverage that provides primarily pre-determined benefits for expenses of the care of cancer and/or other specified diseases.

Specified/Named Disease 

Policies that provide benefits only for the diagnosis and/or treatment of a specifically named disease or diseases. Benefits can be paid as expense incurred, per diem or as a principal sum.

Spoilage coverage

An additional protection sometimes included in a business insurance policy to help cover, up to a certain limit, the cost of food that spoils in a refrigerator due to a power outage caused by a covered peril.

Sprinkler Insurance

Coverage for property damage caused by untimely discharge from an automatic sprinkler system.

SR-22

An SR-22 is a document required by the court that demonstrates proof of financial responsibility for persons convicted of certain traffic violations.

SR-22 form

A form that is filed with a state department of motor vehicles to show that the insured meets the state’s minimum liability insurance requirements. SR-22 requirements vary by state, but often, states require an SR-22 of drivers convicted of certain offenses, such as driving without insurance.

SR-22, Certificate of Financial Responsibility (CFR)

A legal document filed if you are convicted of certain traffic violations or driving under the influence of alcohol or drugs. The state may require you to file an SR-22/FR-44 to verify that you maintain auto liability coverage. Both forms are official documents showing proof of financial responsibility, but use different titles based on your state of residence. If an SR-22/FR-44 should expire or be canceled, an insurance company will issue an SR-26/FR-46 form, which certifies the cancellation of the policy.

SR-26 form

A form filed by an insurer to cancel an SR-22 when that form is no longer needed or the policy is cancelled or is not renewed. Requirements vary by state.

Stackable coverage

A type of uninsured/underinsured motorist coverage in which policyholders can “stack,” or combine the limits of the uninsured/underinsured motorist coverage they purchase for each of their insured vehicles to help cover the cost of damage from an accident caused by an uninsured or underinsured driver. For example, if you have uninsured/underinsured motorist coverage with limits of $100,000 on two policies on your two vehicles, and you’re injured when an uninsured motorist hits one of your vehicles, if your policy is “stackable,” your costs would be covered up to the combined limit of $200,000. Coverage for stacking varies by policy and by state law. States allowing stacking may allow insurers to limit stacking through policy wording.

Standard Risk 

A person who, according to a company’s underwriting standards, is considered a normal risk and insurable at standard rates. High or low risk candidates may qualify for extra or discounted rates based on their deviation from the standard.

State Children’s Health Insurance Program 

Policies issued in association with the Federal/State partnership created by title XXI of the Social Security Act.

State of Domicile 

The state where a company’s home office is located.

State Page 

Exhibit of Premiums and Losses for each state a company is licensed. The state of domicile receives a schedule for each jurisdiction the company wrote direct business, or has amounts paid, incurred or unpaid.

Statement Type 

Refers to the primary business type under which the company files its annual and quarterly statement, such as Life, Property, Health, Fraternal, Title.

Statement Value 

The Statutory Accounting Principle book value reduced by any valuation allowance and non-admitted adjustment applied to an individual investment or a similar group of investments, e.g., bonds, mortgage loans, common stock.

Statutory Accounting Principles (SAP) 

Method of accounting standards and principles used by state regulatory authorities to measure the financial condition of regulated companies and other insurance enterprises. This method tends to be more conservative than the Generally Accepted Accounting Principles used by most businesses. Compliance with solvency and other standards is determined using financial documents prepared in accordance with Statutory Accounting Principles.

Stock

An investment that represents ownership in a corporation.

Stock Insurance Company 

Business owned by stockholders.

Stop Loss/Excess Loss 

Individual or group policies providing coverage to a health plan, a self-insured employer plan, or a medical provider providing coverage to insure against the risk that any one claim or an entire plan’s losses will exceed a specified dollar amount.

Structured Securities 

Loan-backed securities that have been divided into two or more classes of investors where the payment of interest and/or principal of any class of securities has been allocated in a manner that is not proportional to interest and/or principal received by the issuer from the mortgage pool or other underlying securities.

Structured Settlements 

Periodic fixed payments to a claimant for a determinable period, or for life, for the settlement of a claim.

Subaccount Charge

The fee to manage a subaccount, which is an investment option in variable products that is separate from the general account.

Sub-limit

A specified amount less than the maximum limits on a home insurance policy. Sub-limits are noted for specified coverages or types of property.

Subrogation

If your car is damaged because of another driver’s negligence and you ask your insurance provider to settle the claim for damage to your car, your insurance provider will seek payment recovery (including your deductible) from the other party. This process of payment recovery is called subrogation.

Subrogation Clause 

Section of insurance policies giving an insurer the right to take legal action against a third party responsible for a loss to an insured for which a claim has been paid.

Subsequent Event 

Events or transactions that occur subsequent to the balance sheet date, but before the issuance of the statutory financial statements and before the date the audited financial statements are issued, or available to be issued.

Substandard Risk 

The classification of a person applying for a life insurance policy who does not meet the requirements set for the standard risk. An additional premium is charged on substandard risks to provide for the probability that such a person will have a shorter life span than a standard risk.

Successive Periods

In hospital income protection, when confinements in a hospital are due to the same or related causes and are separated by less than a contractually stipulated period of time, they are considered part of the same period of confinement.

Superfund 

Federal act mandating retroactive liability for environmental pollution where responsible party maintains accountability for environmental clean-up regardless of length of time since polluting event occurred.

Supplement/Supplemental Estimate

Used to cover damage not included in the original estimate.

Supplemental health insurance

A type of insurance designed to cover various out-of-pocket expenses beyond your regular health insurance coverage.

Supplemental heating device

 

A fuel-burning appliance used as secondary heating source. Includes wood, coal and pellet stoves, cook stoves, freestanding stoves, freestanding fireplaces and fireplaces with inserts. To be insured, all units must have a separate flue, instead of sharing the flue of the primary heat source. A small, portable space heating unit is not considered a supplemental heating device.

Supplementary Contract 

An agreement between a life insurance company and a policyowner or beneficiary in which the company retains at least part of the cash sum payable under an insurance policy and makes payment in accordance with the settlement option chosen.

Surcharge

An extra charge applied by the insurer. For automobile insurance, a surcharge is usually for accidents or moving violations.

Surety

An arrangement whereby one party becomes answerable to a third party for the acts of a second party. Customarily an insurance company, the party in a suretyship arrangement who holds himself responsible to one person for the acts of another.

Surety Bond

A three-party agreement whereby a guarantor (insurer) assumes an obligation or responsibility to pay a second party (obligee) should the principal debtor (obligor) become in default.

Suretyship

Stated in its simplest terms, suretyship embraces all forms of obligation to pay debts or answer for the default of another.

Surplus 

Insurance term referring to retained earnings

Surplus Line

Specialized property or liability coverage available via non-admitted insurers where coverage is not available through an admitted insurer, licensed to sell that particular coverage in the state.

Surrender

To terminate or cancel a life insurance policy before the maturity date. In the case of a cash value policy, the policyholder may exercise one of the non-forfeiture options at the time of surrender.

Surrender Charge

Fee charged to a policyholder when a life insurance policy or annuity is surrendered for its cash value. This fee reflects expenses the insurance company incurs by placing the policy on its books, and subsequent administrative expenses.

Surrender Period

A set amount of time during which you have to keep the majority of your money in an annuity contract. Most surrender periods last from five to 10 years. Most contracts will allow you to take out at least 10% a year of the accumulated value of the account, even during the surrender period. If you take out more than that 10%, you will have to pay a surrender charge on the amount that you have withdrawn above that 10%.

Swap

An agreement to exchange or net payments as the buyer of an Option, Cap or Floor and to make payments as the seller of a different Option, Cap or Floor.

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Target-date fund

A type of mutual fund that is designed with a specific year in mind and takes care of asset allocation and rebalancing for you.

Tax-deferred

Earnings on an investment taxed at a later point in time, usually when the money is withdrawn. Typically associated with earnings from Traditional IRAs and annuities.

Tax-exempt

Some investments are tax-exempt, which means you don’t have to pay income tax on the earnings they produce.

Tax-filing date

The last date in which your tax preparation paperwork can be sent to the government for review—usually April 15 unless an extension is secured.

Tax-free

No taxes are due. With a Roth IRA, for example, no taxes are due on earnings or withdrawals if certain conditions are met.

Tax-qualified

An account, such as a 401(k), that qualifies for favorable tax treatment from the IRS. It typically is in the form of a deferred or reduced tax liability.

Team and Vehicle Insurance

Includes insurance against loss through damage or legal liability for damage, to property caused by the use of teams or vehicles other than ships, boats, or railroad rolling stock, whether by accident or collision or by explosion of engine, tank, boiler, pipe, or tire of the vehicle, and insurance against the theft of the whole or part of such vehicle (California Insurance Code, Section 115).

Tenants

Homeowners insurance sold to tenants occupying the described property.

Term

Period of time for which policy is in effect.

Term Insurance

An affordable type of policy that provides coverage for a limited period of time, or “term.”

Testamentary trust

A trust, usually established through instructions in a person’s will or through the provisions of a living trust, that becomes effective upon an individual’s death.

Theft

The unlawful taking of another’s property with the intent to permanently deprive the owner of its use or possession.

Third Party

Person other than the insured or insurer who has incurred losses or is entitled to receive payment due to acts or omissions of the insured.

Third Party Claim

Claims for injury or damage to property of a third party alleged to have been caused by the insured.

Time horizon

The amount of time an individual anticipates leaving their money invested.

Title

A legal document or certificate showing ownership of a vehicle.

Title Homeowners Fee

The fee paid for the portion of the title insurance policy that protects the buyer of the home for a purchase. Not applicable in case of refinance.

Title Insurance

Coverage that guarantees the validity of a title to real and personal property. Buyers of real and personal property and mortgage lenders rely upon the coverage to protect them against losses from undiscovered defects in existence when the policy is issued.

Title Lenders Fee

The fee paid for the portion of the title insurance policy that protects the lender for purchase.

Tort

A private or civil wrong or injury, other than breach of contract, which violates a person’s legally protected right(s), and for which the law may permit a remedy in the form of money damages.

Tortfeasor

One who commits a tort (see above).

Total Annual Loan Cost

The projected annual average cost of a reverse mortgage including all itemized costs.

Total Liabilities

Total money owed or expected to be owed by the insurance company.

Total loss

A vehicle is generally declared a total loss when the cost to repair a vehicle is close to or exceeds its actual cash value. Or, some states may mandate for a lesser amount such as when the cost to be repaired is 75% of the vehicle’s actual cash value.

Total Revenue 

Premiums, revenue, investment income, and income from other sources.

Totaled car

Term commonly used to describe a vehicle deemed a total loss.

Towing and Labor Coverage

Provides insurance if your auto needs to be towed or requires roadside assistance.

Traditional IRA

A type of individual retirement account where contributions may be tax deductible and earnings grow tax-deferred. Withdrawals may be subject to income tax.

Travel Coverage 

Covers financial loss due to trip cancellation/interruption; lost or damaged baggage; trip or baggage delays; missed connections and/or changes in itinerary; and casualty losses due to rental vehicle damage.

Travel insurance

Travel insurance covers you against unexpected trip cancellations and interruptions, plus lost or delayed luggage and medical emergencies.

Treaty

A reinsurance agreement between the ceding company and reinsurer.

Trust

A legal arrangement whereby control over property is transferred to a person or organization (the trustee) for the benefit of someone else (the beneficiary). Trusts are created for a variety of reasons, including tax savings and improved asset management.

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Umbrella and Excess (Commercial)

Coverage for the liability of a commercial venture above a specific amount set forth in a basic policy issued by the primary insurer; or a self-insurer for losses over a stated amount; or an insured or self-insurer for known or unknown gaps in basic coverages or self-insured retentions.

Umbrella and Excess (Personal)

Non-business liability protection for individuals above a specific amount set forth in a basic policy issued by the primary insurer; or a self-insurer for losses over a stated amount; or an insured or self-insurer for known or unknown gaps in basic coverages or self-insured retentions.

Umbrella Insurance

Insurance that covers losses that are higher than the policy limits on your other insurance plans. Once your other policy has paid to its limit, the umbrella insurance could cover any remaining costs.

Unallocated Loss Adjustment Expense (ULAE)

Loss adjustment expenses that cannot be specifically tied to a claim.

Unauthorized Reinsurance 

Reinsurance placed with a company not authorized in the reporting company’s state of domicile.

Underinsured Motorist Coverage (UIM)

Policy option for bodily injury or property losses caused by a motorist with coverage insufficient to cover total dollar amount of losses. Compensation for the injured party is equal to the difference between the losses incurred and the liability covered by the motorist at fault.

Underlying Interest 

The asset(s), liability(ies) or other interest(s) underlying a derivative instrument, including, but not limited to, any one or more securities, currencies, rates indices, commodities, derivative instruments, or other financial market instruments.

Underwriter

An insurance professional who evaluates a potential risk for insurance coverage. The term may also refer to an employee of a bank or other financial institution that issues and distributes securities.

Underwriting Assistant

Assists the underwriter. Also called underwriting technician or underwriting associate.

Underwriting Risk 

Section of the risk-based capital formula calculating requirements for reserves and premiums.

Unearned Premium 

Amount of premium for which payment has been made by the policyholder but coverage has not yet been provided.

Uniform Gift to Minors Act

Act in which an irrevocable gift is made by the parent to the child. For children younger than 14, the first $800 of annual investment earnings is tax-free and the next $800 is taxed at the child’s rate. Once the child reaches the age of majority (in most states this is 18 or 21), the child can use the money in that account as desired.

Uninsured and/or underinsured bodily injury coverage

Coverage which may protect against drivers without insurance, and/or drivers with insufficient policy limits to reimburse you for damages they caused. This coverage typically pays the difference between the amount recovered from the other driver and the amount of the damages, up to the limit of the policy.

Uninsured motorist coverage (UM)

If a driver or owner of a vehicle does not have insurance and is legally liable for an accident, you can use UM coverage for injuries, including death, that you, your resident relatives, and occupants of your insured vehicle sustain, up to the limits you select.

Uninsured/underinsured motorist property damage (UMPD) coverage

If a driver or owner of a vehicle is legally liable for an accident but doesn’t have any or enough insurance, you can use UMPD to cover damage to your insured vehicle, up to the limits you select. In some states, UMPD is available as an alternative to collision coverage.

Universal Life Insurance 

Universal life is a type of permanent life insurance. Universal life combines a savings component (called cash value) with a lifelong death benefit; as long as you pay the premium, coverage lasts as long as you live. Universal life typically offers flexible premium and death benefit options.

Unpaid Losses 

Claims that are in the course of settlement. The term may also include claims that have been incurred but not reported.

Unscheduled personal property coverage

Protection under a homeowners or renters insurance policy for possessions, such as clothing, appliances, artwork and other movable property, located in a home or apartment. If the item is not specifically listed on the homeowners or renter’s policy, it is referred to as unscheduled personal property. When a loss occurs, it may be covered up to the total limit under this section of the policy. Sublimits may apply to certain categories of unscheduled personal property.

Usual, Customary and Reasonable Fees

An amount customarily charged for or covered for similar services and supplies which are medically necessary, recommended by a doctor or required for treatment.

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Valued Policy 

An insurance contract for which the value is agreed upon in advance and is not related to the amount of the insured loss.

Valued Policy Law 

State legislation which specifies that the insured shall receive the face amount of the policy in the event of a total loss to a dwelling rather than the actual cash value regardless of the principle of indemnity.

Vandalism and malicious mischief

The willful and intentional destruction of another’s property. This is typically a named peril on a homeowners insurance policy. Destruction or defacement of property. Destruction or spoiling of property for criminal intent.

Variable Annuitization

The act of converting a variable annuity from the accumulation phase to the payout phase.

Variable annuity

This type of annuity is an insurance company product that is designed to accumulate tax-deferred retirement savings and allows you to participate in the markets. The return fluctuates positively or negatively based on the market performance of the underlying investment options, sometimes called investment portfolios or subaccounts. Variable annuities are sold by prospectus.

Variable Life Insurance 

Life insurance whose face value and/or duration varies depending upon the value of underlying securities.

Variable universal life insurance

This type of permanent life insurance policy offers death benefit coverage with the potential to accumulate cash value. Flexibility is available with premium payments, payment schedules and death benefits. Your premium payments are invested in your choice of a variety of options known as sub-accounts. This effectively increases the cash value accumulation potential as well as the risk.

Vehicle history report

A document, often made available by car dealers, that shows if and when a specific used car was involved in an accident or suffered some other type of damage. An auto purchaser may also purchase a vehicle history report independently.

Vehicle identification number (VIN)

17-characters made from unique set of numbers and letters to each vehicle. The components of the 17-character code are used to identify the vehicle and include information about the manufacturer, year, model, body type and serial number. Each vehicle manufactured in the United States after 1980 is assigned this 17-digit number for the purpose of the identification and is located and visible on the driver’s side of the dashboard and can be viewed from outside the vehicle.  It can also be located on the driver’s side door jamb and may be in several other places on a vehicle.

      i.        The first character is where the vehicle was built,

     ii.        The second and third character will identify the manufacture,

    iii.        The 4th through 8th character describes the model, body type, safety system, transmission type and engine code.

    iv.        The 9th character is a mathematical formula developed by the U.S. Department of Transportation used to detect invalid VINs.

     v.        The 10th character is the model year. Using numbers and letter will outline what year the vehicle was manufactured.

 

A=’80

B=’81

C=’82

D=’83

E=’84

F=’85

G=’86

H=’87

J=’88

K=’89

L=’90

M=’91

N=’92

P=’93

R=’94

S=’95

T=’96

V=’97

W=’98

X=’99

Y=’00

1=’01

2=02

3=’03

4=’04

5=’05

6=’06

7=’07

8=’08

9=’09

A=’10

B=’11

C=’12

D=’13

E=’14

F=’15

G=’16

H=’17

J=’18

K=’19

L=’20

M=’21

N=’22

P=’23

R=’24

S=’25

T=’26

V=’27

W=’28

    vi.        The 11th character is the manufacturing plant where the vehicle was assembled. Each manufacturing plant has its own plant code.

   vii.        The last six numbers are the actual serial number.

Viatical Settlements 

Contracts or agreements in which a buyer agrees to purchase all or a part of a life insurance policy.

Viator

The terminally ill person who sells his or her life insurance policy.

Vision 

Limited benefit expense policies. Provides benefits for eye care and eye care accessories. Generally, provides a stated dollar amount per annual eye examination. Benefits often include a stated dollar amount for glasses and contacts. May include surgical benefits for injury or sickness associated with the eye.

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Waiting Period

A period of time set forth in a policy which must pass before some or all coverages begin. Also see “elimination period.”

Waiver

Relinquishment of a legal right to act.

Waiver of Subrogation

This prevents your business and your insurance company from seeking a share of any damages paid to a third party responsible for the loss for a paid claim.

Warrant 

An agreement that gives the holder the right to purchase an underlying financial instrument at a given price and time or at a series of prices and times according to a schedule or warrant agreement.

Warranty

 

Coverage that protects against manufacturer’s defects past the normal warranty period and for repair after breakdown to return a product to its originally intended use. Warranty insurance generally protects consumers from financial loss caused by the seller’s failure to rectify or compensate for defective or incomplete work and cost of parts and labor necessary to restore a product’s usefulness. Includes but is not limited to coverage for all obligations and liabilities incurred by a service contract provider, mechanical breakdown insurance and service contracts written by insurers.

Water backup coverage

A type of insurance protection that covers the insured against damages caused by sudden and accidental overflow of water/waste water from sewers or drains in the home and/or overflow of water from a sump pump.

Whole Life

Life insurance that may be kept in force for a person’s entire life and that pays a benefit upon the person’s death, whenever that may be.

Whole Life Insurance 

Life insurance that may be kept in force for the duration of a person’s life and pays a benefit upon the person’s death. Premiums are made for same time period.

Will

A legal document containing a person’s wishes for his or her property and assets upon death. Unlike trusts, wills are subject to probate proceedings and become public at time of death.

Wind/hurricane deductible

A separate deductible that applies only to covered wind or hurricane losses.

Windstorm or hail coverage

Coverage for losses as a result of windstorm or hail. This coverage may be subject to special terms, conditions and deductibles. On some policies, these perils may be excluded entirely.

Workers Comp Insurance

Insurance that covers your employees in case they get hurt on the job. These policies pay employee medical bills and replace their income when they are disabled from a workplace injury. The rules vary by state.

Written Premium 

 

The contractually determined amount charged by the reporting entity to the policyholder for the effective period of the contract based on the expectation of risk, policy benefits, and expenses associated with the coverage provided by the terms of the insurance contract.

Switch & Save $478 on Average

Additional discounts and savings for bundling you home and auto. I can not promise a number.

Switch & Save $478 on Average

Additional discounts and savings for bundling you home and auto. I can not promise a number.

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