AAA Insurance: Help on the Road and Beyond, AAA is well known for their roadside services including towing as well as their trip planning tools. Today AAA offers a wide range of insurance products. Accident: Is an unforeseen, unexpected, or unintended event. Accidental Bodily Injury: Is the physical injury caused to someone resulting from an accident. Accidental Death Benefit: For a life insurance policies this is an additional death benefit paid to the beneficiary, when the death happens because of an accident. There are usually exclusions including time and age limits. Act of God: Is a Peril beyond the human control and not caused by humans. Such things as earthquakes, lightning, or windstorms, are Acts of God. When an Act of God causes damage the insured can not possibly be responsible, however the insured may have a responsibility to mitigate the damages. Actual Cash Value, ACV: is the specific and actual cost to replace personal property that has been damaged or destroyed with similar property, less the amount of depreciation. For example, a 10-year-old television would not be replaced at current full value because of it's depreciated value. Actuary: is a specialist professionally trained in the technical aspects of insurance and related fields. An Actuary uses complex mathematical methods, computer programs and data, to analyze losses and other statistics. The Actuary develops a system to determine premiums. Adjuster: An adjuster is a representative of the insurance company who's job is to determine the extent of the insurance companies liability for an insured and covered loss. When an insured suffers a loss they will submit a claim and the adjuster works with the insured to determine what the insurance company will and will not cover and how much. Agent: An insurance agent is a person who sells and services insurance policies. There are two basic classifications of Insurance Agents:
All-Terrain Vehicle (ATV): Insurance Anyone with an ATV needs insurance to protect against the unique dangers faced while enjoying time on the back of an ATV. Amendment: Is a document that changes the original provisions of an insurance contract Attached to the policy and signed by the insurance company and the individual policyholder. Application: Is the initial and first statement of facts. This is the personal information provided to the insurance company by a person when applying for a new insurance policy. Information is collected and in some cases an insurance policy is bound for a specific period of time. The Insurance company uses this time to double check all the application information and decide if the risk outlined by the applicant is an acceptable risk for the insurance company and the underwriters to take. Appraisal: An appraisal is a scientific or educated survey done in order to determine a personal property's insurable value. Appreciation: Is the amount by which personal property has increased in value based on any factors that add to the value. Approval: Is the legal acceptance from an insurance company of risks as outlined in the insurance application, or the acceptance of a specific request from an applicant or policyholder for new insurance, reinstatement of a terminated policy, a policy loan, or other request. Arbitration: is the procedure in which an insurance company and the insured policy holder agree to settle a claim dispute by accepting a decision made by an uninvolved third party. Assets: are All the personal property and income resources of a business or person. Attachment: Is a rider, endorsement, or any other modification made to an insurance policy that changes, broadens, restricts, or clarifies the basic insurance coverage provided in the policy itself. Auto Insurance Policy: There are basically five different types of coverages. Some states may require some insurance by law and others may be optional. They are:
Benefit Period: A health insurance term used to define the number of days benefits will be paid for claims made by named insured and other dependents covered on the policy. Binder: A Binder is a temporary authorization of insurance coverage issued in advance of the actual insurance policy. Blanket Insurance: Is insurance coverage for more than one type of property at the same location or one type of property at multiple locations. Boat (Personal Watercraft) Insurance: Personal watercraft insurance in some cases can be added by an endorsement to a Homeowner Insurance policy, and many auto insurance companies also provide watercraft insurance. Depending on the size, speed and insurance company some personal watercraft or small boats may require their own insurance policy. Bodily Injury Liability Coverage: Is the first part of the standard Auto Insurance Policy. BI insurance covers the injuries the insured policyholder may cause to another person. Book of Business: Is a phrase used to describe the total amount of insurance business an insurance company or an agent has issued and on "the books" at a given point in time. Broker: Insurance salesperson and agent who searches the marketplace in the interest of clients, not insurance companies. Brokers serve as an intermediary between a customer and an insurance company. Burglary and Theft Insurance: This Insurance covers when there is a loss of property because of a burglary, robbery or due to larceny. It's typically included with the standard Homeowners policy and in many business multiple Peril policies. Business Income Insurance (also known as Business Interruption Insurance): Is a commercial coverage that will reimburse an insured business owner for the lost profits and continuing fixed expenses if the business must be closed during repairs because of physical damage caused by a covered Peril. Businessowners Policy or BOP: This is an insurance policy combining property, liability and business interruption insurance coverage. This type of policy is ideal for small to medium sized businesses. The insurance coverage is usually less expensive in a Package then if purchased as separate insurance policies. Captive Agent: is a licensed insurance agent who represents only one insurance company and is limited by contract agreement from submitting new business to any other insurance company, unless or until the agent's captive company rejects the business. Casualty Insurance: is the type of insurance product concerned with the losses caused by injuries to other people and/or the legal liability of the insured for any injury or property damage caused to other people. Catastrophe: is the word used for recording statistical information referring to a single event or a series of closely related events which cause severe loss in property damage. In order for an incident or event to be considered a catastrophe loss the property damage must total more than a determined amount. At this time, the amount is currently $25 million dollars. Claim: is the demand made by an insurance policyholder, or a beneficiary, for the payment of the benefits defined in the insurance policy. COBRA: Is the acronym for Omnibus Budget Reconciliation Act. COBRA is a federal law requiring employers with 20 or more employees to offer a continuation of health plan coverage to the employee and their dependents when the employee leaves the position. The employee is responsible for the full premium payments with coverage extending for up to 18 months, with some exceptions to surviving dependents where coverage may be extended longer. Coinsurance: has two important and different meanings in insurance. For property insurance, it requires the insurance policyholder to carry coverage limits equal to a specific percentage of the value for the property--in order to receive a full payment for a loss. For health insurance, coinsurance represents a percentage the insured must pay for every claim after the deductible has been paid by the policyholder. If the health insurance policy has a coinsurance clause of 20%, the policyholder would pay a deductible plus an additional 20% of covered claims. There is generally a specific ceiling, where the insurance company will start paying 100% of loss. Collision Auto Insurance: is the insurance coverage which pays for your own auto damage caused by anything not covered under comprehensive insurance or another insurance policy.
Comprehensive Auto Insurance: is the insurance coverage which pays for your own auto damage caused by anything not covered under collision insurance or another insurance policy. Fire damage or a cracked window would be covered under comprehensive. Compulsory Auto Insurance: or state financial responsibility--there may be other names this coverage is called but, compulsory insurance is the amount of auto liability insurance required under a the auto insurance state law. These laws generally require every driver to show proof of insurance in the event of an accident or that they can pay for damages up to the state minimum requirements. In compulsory liability states proof of insurance is often required before a person can legally drive or register a car. Coverage: is the protections outlined and provided for under the terms of the insurance policy. For property insurance, the coverage may list the perils covered and insured against, the location and description of the properties covered, the named individual insured, and the limits of indemnification. For life insurance, living and death benefits would be listed. In the business of insurance "Coverage" is a synonym for "Insurance." Co-payment: is the flat fee a health insurance policyholder pays for health-care services. A co-payment is an out-of-pocket payment generally based on a per office visit charge. Credit Score: Your credit history and insurance history are important in most financial aspects of your life. Your credit score determines the interest rates you may pay, and your ability to obtain credit. Insurance is all about financial planning and personal risk management. It should make sense that insurance companies consider your credit score as well. Crime Insurance: refers to any property coverage to protect from the losses of burglary, theft and robbery. Declaration: is an important part of any property or liability insurance policy. The declaration is generally the page of an insurance policy that outlines the important details and information. The name, address and property covered on the insurance policy including the policy period, and premium amounts. Insurance agents and customer service representatives often refer to the declaration as the "dec page." Declination: is the insurance term used in life insurance when a company rejects a life insurance application. Most often life insurance declination happened due to health or employment risks. Deductible:is the amount an insurance policyholder pays first before insurance pays for any covered losses. Usually the deductible is stated as a certain dollar amount, or a certain percentage of the total claim amount. Sometimes the deductible may be a specified amount of time that must elapse (pass) before the insurance benefits will be paid. In many cases the higher the deductible, the lower the cost for insurance premiums. Directors and Officers Liability Insurance: (D&O) is a type of liability insurance covering directors and officers of a company for negligent acts or omissions and/or for misleading statements resulting in lawsuits filed against the company. There are many forms of D&O coverage. Disability: is when an insured policyholder is unable to work because of an injury or illness. Every disability insurance policy will define the specifics of a disability that are required in order for the insurance policy to pay benefits. Disability Benefit: is an added feature with some life insurance policies that provides a waiver of premium, and in some cases will pay a monthly income, when an insured policyholder becomes permanently and totally disabled. Disability Income Insurance or Disability Insurance: is a type of health insurance that may compensate an insured policyholder a percentage of any lost income due to a disabling injury or illness. Dog Bite Liability: Dogs have become a security concern because attacks are now the single largest cause of homeowner insurance claims. Domestic Insurance Company: is the term used to identify any insurance company incorporated in a state. A Domestic Insurance Company is a company incorporated in that state. A company may be domestic in the incorporated state and do business in other states where it would not be considered a domestic insurance company. Duplication: of coverage is a situation where coverage for the same loss may be available under two or more insurance policies. Earthquake Insurance: policies are much the same as a homeowners policies but without personal liability coverage. Generally, homeowners add the earthquake coverage as an endorsement to their homeowners policy. It is however most often a separate policy included as part of the homeowner package. The deductibles and percentage of coverage is generally different than the homeowners policy. Effective Date: is the specific date when an insurance policy takes effect and coverage begins. The effective date should be clearly listed on your insurance policy declaration page. Eligibility: date is the date a member of an insured group applies for insurance usually used for employer provided health insurance policies. The eligibility period is a specific period of time after the eligibility date when a member of a group may apply for insurance without evidence of insurability. Encumbrance: is a property claim where the interest of the property owner is reduced in the same amount as the encumbrance. The most common encumbrance is a mortgage, where the bank or finance company holds an encumbrance in the amount of a loan. Other encumbrance examples include liens for contract work and materials, or a right of dower. Endorsements: are written forms attached to an existing insurance policy. When there is any kind of change made to an insurance policy which changes the policy's coverage, terms, conditions or exclusions an endorsement must be made to the original policy. Often endorsements are called riders. Escrow Accounts: are the funds a lender collects in order to pay mortgage and homeowners insurance. Some escrow accounts also collect property taxes. Exclusions: are the same as exceptions. Every insurance policy should include sections outlining any conditions or circumstances where insurance coverage will not provide benefits. Exposure: is a measurement of risk and vulnerability to loss. Exposure is generally expressed in dollar amounts or units. Extended Replacement: Cost is an option with personal property policies such as homeowner insurance extending the replacement cost loss coverage to include specific things or provide inflation or replacement value coverage. FAIR Access To Insurance Requirements Plans: FAIR PLANS Are Insurance pools selling property insurance coverage to customers who are unable to purchase insurance in the commercial market due to high risks they may have no control over. There are 28 states with FAIR Plans covering fire, vandalism, riot and windstorm losses. Some of the Fair Plans offer Homeowners insurance including Liability. The Plans offered vary by state, and require property insurers licensed in that state to participate in the pool by sharing a portion of the profits and losses. Federal Insurance Administration (FIA): is the Federal agency in charge of oversight and administration of the National Flood Insurance Program. It doesn't regulate the insurance industry. Each state regulates their own insurance industry. Financial Responsibility Law: also known as Compulsory Auto Insurance is require in some states driving laws. In a state requires compulsory insurance or financial responsibility all drivers must show proof can pay for damages up to a stated minimum amount if there is an accident. The laws vary from one state to another. Fire Insurance: is insurance coverage that offers protection for property from losses caused by a fire or lightning. Fire Insurance is also known as a Dwelling Policy and is the foundation for homeowners and commercial Multiple Peril Policies. Floater: are separate policies offered to cover the value of goods or personal property over and above the basic coverage offered in a standard policy. A Floater added to a standard renters insurance policy may include personal property such as jewelry or sports equipment. Flood Insurance: is property insurance coverage for the named peril of flood. Flood Insurance can be purchased from any licensed insurance agent but is only offered from federal government under the National Flood Insurance Program. Flood damage is not covered under homeowners policies and many commercial property policies. Flood damage to a car is covered under the comprehensive portion an auto insurance policy. Form: An insurance form is the policy structure and contract paperwork an insurance company has submitted and approved with a state. A common look at how Insurance Forms might vary is with the Homeowner policies. Fraud: is the intentional lying or concealment by an insurance policyholder in order to receive a claim payment that would otherwise not be paid. Insurance fraud includes, any lying or misrepresentation by the insurance company managers, employees, agents and brokers for financial gain. General Liability Insurance: is an insurance product designed to protect a business owner and operator from a variety of liability exposures. Generic Auto Parts: or after market auto parts are those produced by companies that are not associated with car manufacturer. Most insurance companies will consider certified parts to be at least as good as those that come from the original manufacturer (OEM). Glass Insurance: is an insurance coverage for glass breakage caused by all risks. In some policies glass insurance will exclude damage caused by fire and war. Glass insurance products can be purchased for windows, structural glass, leaded glass and mirrors. Grace Period: The term Grace Period applies to the payment of premiums during a specific period of time after a premium payment due date within which time the renewal premium can be paid without penalty. The length of the grace period is specified in a grace period provision that is found in a life insurance, health insurance, or annuity policy. There may also be premium payment grace periods for policyholders making monthly payment arrangements. Graduated Drivers Licenses: are licenses for youthful drivers allowing them to improve their skills. Each state establishes their own regulations and some states restrict driving hours, number of people in the auto as well as other conditions. A young driver receives a learner's permit, and then follows the provisions before they can graduate and receive a standard driver's license. Group Insurance: refers to a single policy covering a group of people. Most common as an employee benefit or for members of the same association and their dependents. Coverage occurs under a master policy issued to the employer or association. The most common group insurance policy is group health. Group Life Insurance: is a form of life insurance issued on a whole group of people insured under a single master policy. Commonly offered by employers in employee benefits packages or to the members of an association. Group life policy's often don't require a medical examination Guaranteed Replacement Cost Coverage: as part of a Homeowners insurance policy guaranteed replacement cost coverage pays the cost to replace or repair a damaged or destroyed home, even when that actual cost is more then the policy limit. This type of insurance may also be called extended replacement coverage. Hard Market: is a term that refers to a seller's market when insurance is more expensive and is more difficult to obtain. A hard market is considered part of the property and casualty insurance cycle. Health Insurance: is an insurance product that offers benefits as a result of accident, illness, or injury. Health Insurance policies usually include coverage for claims resulting from accident, medical expense, disability, or accidental death and dismemberment. Health Maintenance Organization (HMO): An HMO is an organization providing comprehensive health care services for a specified group for a fixed periodic prepayment HMO's offer their policyholders low co-payments, minimal paperwork, and coverage for preventive-care and health improvement programs. High Risk Pools: also known as FAIR PLANS are state plans providing insurance coverage those unable to purchase insurance on the open market due to high risk factors. Some states have high-risk pools for health and auto insurance and FAIR Plans for personal property. Homeowners Insurance Policy: A standard homeowners insurance policy covers the house, attached and unattached garages as well as other structures built on the insured property. Homeowner insurance policies also cover personal property kept inside the home from losses caused by a wide variety of perils including windstorms, fire and theft. There are several forms for homeowner insurance, the perils covered depends on the type of policy. Some homeowner policies also cover additional living expenses known as Loss of Use. This protection will reimburses the policyholder for any extra cost of living someplace else during the time the home is being restored following a claim. Homeowner policies generally include a liability portion which will cover the homeowner for accidental injuries caused to third parties and/or their property. Most homeowner policies include guest medical to avoid costly liability claims. Homeowner policies do not include coverage for Flood and/or Earthquake damage insurance for these risks must be purchased separately. (See also: Flood insurance; Earthquake insurance and Homeowner Forms). Hurricane Deductible: is a percentage or specific dollar amount added to homeowner insurance policy to limit an insurance company's exposure to the losses caused by a hurricane. In areas where there is a higher risk of hurricanes deductibles are higher. These higher deductibles are instituted more of the in coastal regions. Increasing Term Life Insurance: is a type of term life insurance that provides a death benefit which increases by a specified amount and/or percentage during stated intervals of time during the policy term. This is in contrast to decreasing term life insurance policies. Indemnify: means to provide financial compensation for losses, the core concept of insurance is to indemnify policyholders for insured losses. Independent Agent: is a licensed self-employed insurance agent, paid on commission, from several insurance companies the agent is appointed with to represent. An Independent agent is free to place your insurance with any of the companies represented based on their underwriting and business agreement with the agent. Individual Retirement Account (IRA): is tax-deductible savings plan for qualified people: Self-employed, People with earnings below a certain level, or People with employers who don't offer other retirement plans. Inflation Guard Clause: is an added provision to a homeowners policy automatically adjusting coverage limits on the dwelling at the time of renewal. The Inflation Guard Clause is designed to keep pace with the current cost of construction. Inflation Protection: is an optional endorsement policyholders can add to increase the policy limits of insurance during the policy term in order to keep up with inflation. Inland Marine Insurance: is a broad type of insurance coverage originally designed for shipments not involving an ocean voyage. Inland Marine Insurance covers property in transit by all means of land and air transportation and includes coverage on bridges, in tunnels as well as other means of transportation and communication. Floaters covering an expensive personal item, fine art and jewelry are included in the category of inland marine insurance. Insurable Interest: is a person with an insurable interest in a possible loss if the person with the interest suffers an economic loss when an insured event occurs. If there is no insurable interest, an insurance contract can not formed and, thus, is not a valid contract. In other words you can't put insurance on your neighbor's car, you don't have an insurable interest in your neighbor's car, only your neighbor does. Insurable Risks: are those risks where it's somewhat easy to obtain insurance coverage. An Insurance company must be able to determine a reasonable price for the premiums. An Insurable risk must meet certain criteria including: Something definable, Accidental in nature, and part of a group of related risks large enough to make the losses predictable. Insurance: is a system designed to help make a large financial loss more affordable. This is done by pooling the risks of many people and businesses and then managing these risks by transferring it to an insurance company or group in return for an insurance premium. Insurance Credit Score: uses confidential consumer credit information and claims history to rank insurance customers. Intermediate Driver's License:: See Youthful Driver. Jettison: is an insurance term used in Marine Insurance to describe the act of throwing a ships cargo overboard in order to lighten the load in an effort to save the ship from sinking. Jettison is an insured peril when covered under the correct marine insurance coverage. Jewelers Block: is an all risk insurance policy covering a wide range of perils for jewelers and similar shops. Jewelers Block coverage may also be written for the manufacturers of jewelry. Jewelry: includes all of the personal jewelry owned by an individual. This kind of personal property is best insured under an all risk homeowner policy or floater. Joint and Survivor Annuity: is an annuity with two annuitants, typically the spouses. Payments under this annuity would continue until the death of both even after one has died. Junk Bonds: are corporate bonds with credit ratings of BB or less. Junk Bonds tend to pay a higher yield than many other types of investments, but they have a higher default risk. Junk bonds typically involve risk that could force investors, to sell off the bonds at a much lower value. States place limits on insurance company investments in junk bonds, because property/casualty insurance companies may face huge claims following a disaster, and their investments have got to be liquid in order to pay out the claims.
Insurance Terms: K
Kidnap and/or Ransom Insurance: is insurance coverage up to a stated limit to cover the cost of ransom or extortion payments and the related expenses. Kidnap and Ransom insurance is most often purchased by international corporations in order to insure employees. These policies usually have expensive deductibles and often exclude certain geographic areas of the world. In some cases these policies require a policyholder not to reveal they have this type of insurance coverage to anyone.
Knock for Knock Agreement: is an agreement used to simply the recovery of claims between two or more insurance companies. Most common between two auto insurance companies whereby an agreement is made that each insurance company will pay the repair costs for their own policyholder's auto damage no matter who was responsible for an accident. Law Of Large Numbers: is the basis of the Business of Insurance. The theory of probability based on the premise that the larger the group of units or items that are insured, for example Dodge Minivans, the more Minivans insured the more accurate the predictions of loss will be. Legal Liability: is liability imposed by the law. legal liability is different than the kind of liability that might result from an agreement or contract--legal liability is spelled out in the law. Leased Vehicle: is basically a long term contract (lease) for a rental car. The leasing company maintains full ownership of the auto and the lease company will require the customer to list them as a loss payee or lien holder on the auto insurance policy. In some cases, a lease company will require certain minimum levels of insurance coverage or deductibles. Liability: is the cause of damage to someones property and/or bodily injury to another person caused as a result of negligence of a person. Liability Insurance: covers a policyholder when they are legally obligated to pay another due to bodily injury and/or property damage caused to another person. Liability insurance may provide coverage for individuals or businesses. Lien: is a bill, claim, charge, or encumbrance placed on property as a form of security held for payment of a debt. Lien Holder: is a person, company, or organization with a financial interest (invested money) in the personal property or security a person has used in order to borrowed money. The lien holder claims up to the amount of money loaned or still owed on the property if a total loss occurs. The lien holder is generally paid first. Life Insurance: is an insurance contract with an insurance company that makes a promise to pay a certain and specific death benefit when or if the person insured on the life insurance policy dies. There are many types of life insurance policies. The primary purpose of any life insurance policy should be to protect against economic loss in the event of death. Limits: Generally, limits are listed as a maximum amount of insurance that will be paid for a covered loss. The limits are the maximum amount of insurance protection purchased by the policyholder for each specific policy and coverage. Limits of Liability: is the specific amount listed on your insurance policy to protect liability exposures. The most the insurance company will pay for a liability claim made against the policyholder. Line: is the insurance term used to describe the type or kind of insurance product someone needs or has. Two primary kinds of insurance lines are "Personal Lines" and "Life and Health" lines of insurance. Liquor Liability: is liability insurance coverage for claims of bodily injury and/or property damage caused by someone who was served liquor (drunk driving) by the insurance policyholder. Long-Term Care Insurance (LTC): pays for the services to assist qualified insured policyholders with certain activities of daily living. LTC is available as individual insurance policy or may be offered with an employer supported plan. Long-Term Disability Income Insurance: is a type of disability income insurance providing disability income benefits after short-term disability income benefits have terminated. Long-Term Disability Income Insurance generally continues until; the date an insured person returns to work, dies, or when the insured person is eligible for pension benefits. Loss: A loss is defined in insurance as a reduction in the quality and/or value of property, and/or a legal liability claim. Loss of Use: is a provision in most Homeowners and Renters insurance policies that offers the policyholder reimbursement for extra living expenses cause to needing to live some place else while and insured home is under restoration following a disaster. Marine Insurance: is insurance coverage on goods while they are in transit, and the commercial vehicle insurance for the vehicle transporting goods, over water and over land. Marine Insurance is a term that may be used referring to Inland Marine Insurance but generally Marine Insurance applies to ocean marine insurance. Marine Insurance may include coverage for damage or destruction of a ship's hull and cargo and the perils of collision, sinking, capsizing, stranded, fire, piracy, and jettison of cargo in order to save the ship. McCarrin-Ferguson Act: is the federal law established in 1945 where Congress decided each state would continue to regulate the insurance business of their own state. The McCarrin-Ferguson Act gives insurance companies a limited exemption from federal antitrust legislation. Mediation: is a nonbinding procedure where an uninvolved third party tries to help resolve a conflict between two other people. Medicaid: is a federal and/or state funded public assistance program. Medicaid was created in 1965 and is a program administered by each state for people living in that state with income and resources defined as insufficient in order to cover the costs of health care. Medical Payments Insurance: is a type of insurance coverage in where the insurance company reimburses the policyholder and/or others to the policy limits for medical or funeral costs. Due to bodily injury or death caused by an accident. Usually the Medical payments are covered that pays regardless of fault. Commonly seen in some states Auto Insurance Medical Payments Insurance Coverage. Medicare: is a federal public assistance program for people 65 years and older. Medicare is insurance coverage that will pay a portion of hospitalization, surgery, doctors' bills, home health care, and skilled-nursing care costs. Medicare Supplement Insurance: is also commonly called Medigap, us a health insurance coverage that will pay benefits for services not covered under the government's basic public assistance Medicare plan. Medigap plans cover may offer coverage for prescription drugs. Moral Hazard in the Business of Insurance: Moral Hazards are what is known as the possibility that a person may act dishonestly in an insurance transaction. Mortgage Guarantee Insurance: is insurance coverage for the mortgagee or finance company insuring their interest in the property in the event the mortgage or loan holder defaults on the financing or loan agreement. Often called Private Mortgage Insurance (PMI). Mortgage Insurance: is a form of decreasing Term Life insurance covering the life of a person entering a mortgage or loan agreement. The death benefits pay the balance of the loan due at the time of death. The amount of coverage decreases as the loan is paid down. There are many options and types of term life mortgage insurance products. Medical Savings Account (MSA): also known as Health Savings Accounts (HSA) are tax-deferred trust or savings account, where money is set aside to cover routine, out-of-pocket health care costs. These plans are often offered as part of an employment benefit plan. Multiple Peril Policy: is an insurance term that implies package policy including several risks and covered perils. Homeowner Insurance Policies and Business Insurance Policy, are examples of policies providing insurance coverage against several different types of perils. Most often these policies will also include a combination of property insurance and liability coverage. Originally insurance policies separated property and liability coverage. Today, Multiple Peril Policies are common. Mutual Insurance Company: is an insurance company owned by the policyholders. Mutual Insurance companies return a portion of the profits to policyholders as a dividend. The surplus is held by the insurance company in case of large, unexpected losses, and claims. Named Peril: is a Peril specifically listed as covered peril in an insurance policy. National Association of Insurance Commissioners, (NAIC): is a national organization of state officials responsible for regulating insurance. The NAIC has no official control or power but, hold great influence. National Flood Insurance Program: is the federally sponsored program where homeowners and businesses can purchase flood insurance. No-Fault Auto Insurance: covers each driver for their own injuries no matter which driver is at fault. No-fault insurance may vary from one state to another state. In some state No-Fault Liability insurance is the system because it reduces lawsuits to only the most serious cases. No-Fault insurance is designed to help speed up claims reimbursements and to reduce litigation. No-Fault Medical: is a type of accident insurance coverage offered under Homeowners policies. No-Pay, No-Play: is the thought that those people who don't buy insurance coverage shouldn't get insurance benefits. This idea prohibits uninsured drivers from receiving claims for damages from insured drivers. Non-Renewal Clause: is a provision written in an insurance policy that states any circumstances that the insurance company my decide to not renew a customers insurance policy. Non-Renewal Notice: is a notice sent to a policyholder when the insurance company has decided to not offer renewal of the insurance policy. Often these come with corrective measures a policyholder can make, or with an offer for a different insurance product or policy in the same company. Nonstandard Auto: otherwise known as High Risk Auto or Substandard Auto. These are terms used to describe Insurance for people who have a bad driving record or for those cancelled or refused insurance. Usually the premiums are much higher than standard auto insurance policies because of the added risk to the insurance company. Notice of Loss: is a written notice insurance companies require as soon as an accident or loss occurs This is one of the the standard responsibilities of a policyholder after a loss takes place. Occurrence Policy Insurance: is an insurance contract that will pay claims for liabilities or situations that took place while the policy was enforce even when the claim is filed years after the incident too place. Ocean Marine Insurance Coverage: defines all types insurance policies covering vessels and watercraft, for losses and property damage to the vessel and cargo. Insurance risks covered often include such things as piracy and jettison. Lines of insurance also include coverage for marine liabilities. War coverage can also be added as an insured risk with some insurers. Omissions: by the strictest definitions is the act of omitting information. Omission is the neglect and failure to do something required by propriety and duty. Omissions are one part of malpractice many professionals including insurance agents must consider an insurance policy protecting them from liability claims caused by their errors or omissions while conducting their professional service. Open Competition States: are states where the insurance companies can set new rates without obtaining prior approval, from the state in advance. The insurance commissioner of the state generally has the power to disallow the rate changes it considered unreasonable and inadequate or are discriminatory. Options Contracts: is a contract which will allow, but do not obligate, the buying or selling of property or assets on a specific date at a specific price. Ordinance or Law Coverage: in an endorsement attached to property insurance policy which will pay the extra costs of rebuilding in order to comply with changes in ordinances or laws. Typically these involve building code changes made since the original construction of the structure. Homeowners with this endorsement would have insurance to cover any additional costs new building codes might cause in the event of a loss. Ordinary Life Insurance: is a life insurance policy that remains in force for the lifetime of a policyholder. Original Equipment Manufacturer Parts (OEM): are the sheet metal auto parts made by the original manufacturer of the vehicle. Outbuilding: An outbuilding is a separate structure associated with another main building but not connect in any physical way to each other. Out-Of-Pocket Expenses: are the expenses a person incurs for either business or personal needs. Outpatient: is a health insurance term that defines a patient who is not hospitalized but receives medical care in another place like a doctor's office, clinic, or day surgery center. Outpatient care may also be called ambulatory care. Partial Loss: is an insured loss involving less than the full value insured. A claim where less than the maximum amount of insurance coverage is needed. Performance Bond: In general performance bonds are surety bonds that guarantee the performance of a contract. Performance bonds are common with construction work, but possible for nearly any contract. Peril: is the specific risk or cause of loss covered by an insurance policy. Fire, windstorm, flood, or theft are each perils. A named-peril policy will cover only for the risks named on the policy. An all-risk policy covers all perils of loss except the ones that are specifically excluded. Personal Injury Protection Coverage (PIP): is the part of an auto insurance policy that will cover medical treatment for any injuries to the driver or passengers in the policyholder's vehicle. Personal Lines Insurance: is property and casualty types of insurance products. These lines of insurance are usually designed for individuals and include homeowners, personal auto, and liability policies. Personal Property: usually defined property other than real property such as the structure of a house. Personally property are those things put inside of the house. Pet Insurance: is life and health insurance policies for animals including pets, and some livestock. Policy: is the written contract for insurance made between an insurance company and a policyholder. The policy is the written agreement spelling out all of the details of the insurance coverage. Policyholder: is the person purchasing an insurance policy and the name of the person the policy is issued to. Preferred Auto: is a line of Auto insurance coverage offered to drivers with clean driving records. Preferred Provider Organization (PPO): are networks of medical providers agreeing to charge on a fee-for-service basis, and willing to negotiate for payment on a discounted fee schedule. Premises: is the exact location of the property designated in an insurance policy. Premium: is the cost of insurance required for the insurance company to agree to issue a policy on the risk. Most premiums are determined annually or every six-months. Professional Liability Insurance: is insurance coverage for professionals protection them from negligence and errors or omissions that may injure a customer or client. Proof of Loss: is the written documents showing an insurance company a loss occurred. Property and Casualty Insurance: are lines of insurance protecting policyholders from the loss or damage of property and legal liability for damages caused to other people or their property. Qualified Annuity: is a form of an annuity purchased with pretax dollars as a part of a retirement plan benefiting from a special tax arrangement like a 401(k) plan. Qualified High-Deductible Health Plans: are health plan with lower premiums that cover expenses after the insured has met the large deductible for out of pocket health care costs. High-deductible plans may also be called catastrophic medical plans. Qualifying Event: is an occurrence that triggers insurance coverage, generally the event leading to a claim. Quick Assets: are those assets which can be converted quickly into actual cash.
Insurance Terms: R
Rate Regulation: is the process states have in place to monitor insurance companies' rate changes. Usually regulations are handled by prior approval or open competition models.
Recreational Vehicles (RV): A motor home or an RV is a huge investment it is important to to consider specialty insurance specifically designed to cover RV's.
Reinstatement: is the process of having an insurance company puts back into force an insurance policy. Reinstatement generally happen because a policy has been terminated for nonpayment of premiums.
Reinsurance: is the insurance purchased by insurers and insurance companies. The reinsurer assumes part of the risk and part of the premiums collected. Reinsurers don't pay claims to the actual policyholders; they reimburse original insurers or insurance company for any claims paid.
Renters Insurance: is a form of insurance covering personal property against perils such as fire, theft, windstorm, hail, explosion, vandalism, riots, and others. Renters Insurance will also provide personal liability coverage, loss-of-use coverage and may include coverage for property improvements. Personal property can be insured for replacement cost or the actual cash value.
Replacement Cost: is insurance coverage that will pay to replace damaged personal property at the price it is today without depreciation the way actual cash value would pay.
Rider: is an attachment or amendment to an insurance policy altering the coverage or terms of the coverage in some way. Also known as an endorsement.
Risk: is the chance there will be a loss or a person or entity that is covered on the insurance policy.
Risk Management: is the management of the risks a business or person is exposed to. Risk management looks at the exposed risks and analyzes the exposures to consider the chance of loss and decide which options to put into place in order manage or minimize loss. Risk Management Options include:
Schedule: is a list of the items or group of items that are covered on one policy. A schedule may also be a list of specific assets, benefits, account charges and credits, or other specific items. Self-Insurance: is the act of assuming financial risk rather than obtaining insurance from an insurance company. This may be common with large business, for example Portland Oregon's mass transit bus system Tri-Met self insures. Meaning claims are paid directly from Tri-Met without an insurance company involved. Self-insurance may also refer to employers who take on all or part of the health insurance claims of their employees. Severity: is the insurance measurement of the size of a loss and may be used to calculate premium rates. Sewer Back-Up Coverage: is an optional coverage Homeowners may add to provide insurance for sewer back-up. Short-Term Disability Income Insurance: is a type of disability income coverage providing disability income benefits for a specified benefit period, usually one to five years. Solvency: is an insurance companies' ability to pay out on the claims of policyholders. State insurance regulations often require insurance companies to maintain a minimum capital and surplus in order to meet claims needs in the event of catastrophe. There are also specific accounting conventions and limits in place for insurance company investment and corporate activities. Insurance companies must undergo financial ratio tests, and provide financial disclosure. Special Risk Insurance: is coverage for special, unusual and/or hazardous risks. SR-22: is required in many states used to notify the DMV that a driver has auto insurance. Required for high-risk drivers most often DUI, DUII convicted drivers or those with other serious or numerous driving violations. SR-22's will require the insurance company to send notice to the DMV of any cancellation or lapse of coverage so the DMV may revoke the license if and when the insurance is no longer valid. Standard Risk Class: Is an underwriting classification for a proposed insured who meets the criteria of an average risk within the definition of the insurance companies underwriting practices. A Standard risk class will be entitled to purchase an insurance policy without paying extra premium charges or being subject to restrictions for discounts. State of Domicile: is the state an insurance company is headquartered, incorporated or chartered. Stop Loss: is any provision within an insurance policy designed to end the insurance company's losses for a claim at a given point. Subrogation: is the legal process an insurance company uses after paying a claim to recover the amount of a portion of the amount paid out on the loss from another party legally liable for it. Substandard Premium Rates: are the premium rates charged to policyholders who are classified as substandard risks. Sometimes known as a special class rate. Substandard Risk Class: is the insurance underwriting practice to identify a group of proposed insureds who are considered as significantly greater risks than the standard to suffer a loss. Supplemental Coverage: is an amount of insurance coverage added to the basic insurance coverage specified in the policy. Surcharge: is an additional charge, cost, fee or tax. Surety Bond: is a contract guaranteeing the performance of a specific obligation. A surety insurance policy is responsible for making sure the work is completed or paying for the loss up to the bond "penalty" if the contract fails to be completed. Also see Completion Bonds Surplus Lines: is property and casualty insurance coverage that's not available with insurance companies licensed in the state where the insurance is needed. Surrender Charge: is a fee for withdrawals from an annuity contract taken before a specific surrender charge period, usually five to seven years. Term Rider: is insurance that may be added to a whole life insurance policy. Territorial Rating: is the method of classifying risks based on the geographic location. When the specific location of the insured or insured property may have an impact on the cost of losses and claims. For example with Auto insurance it the statistical chance of an accident or theft is higher in an urban area than in a rural one, the auto insurance may be rated based on the territory. Terrorism Coverage: is often included in standard commercial insurance policies. Prior to September 11, 2001 this coverage was nearly free and included automatically but, since 9/11 the costs of this insurance has increased substantially to reflect the current level of higher risk. Third-Party Coverage: is liability coverage a policyholder may purchase to protection against possible lawsuits filed by a third party. The policyholder and insurance company are the first and second parties to the insurance contract and the claimant is the third party. Title Insurance: is insurance that indemnifies the owner of real estate property in the event clear ownership of property is challenged by the discovery of faults in the real estate title. Tort: is a legal term referring to a wrongful act resulting in injury or damage to another person who may take civil court action, or other legal action. Tort Laws: are the laws governing negligence, intentional interference, and other wrongful acts of which civil action can be initiated. Total Disability: as disability insurance defines is an insured's disability meeting the requirements of the definition of total disability. After a disability has existed for a certain time period, total disability may exist if an insured can no longer work in any occupation the insured is reasonably educated, trained or experienced. Total Loss: is when the condition of an auto or other property is damaged so extensively that repair costs exceed the value of the vehicle or property. Towing and Labor Coverage: is generally offered as an optional coverage on Auto insurance policy to cover the towing and labor charges in case of roadside breakdown. Travel Accident Insurance: are policies which are issued as a limited contract to cover an accident that happens only during the time an insured person is traveling on business for an employer. Travel Insurance: is coverage for problems related to traveling. Typically travel insurance may include coverage for trip cancellation caused by illness, lost luggage and other incidents that may take place while in travel. Twisting: is the illegal insurance sales practice whereby an agent misrepresents the features of an insurance contract in order to convince the contract owner to replace his current contract, usually to disadvantage of the policyholder either by type and amount of coverage or costs of premiums. Umbrella Policy: is additional insurance coverage for losses that exceed the liability limit of underlying policies such as homeowners and auto insurance. Underinsurance: results when a policyholder fails to purchase enough insurance coverage. The policyholder may be entitled to receive only a portion of the cost to replace or repair damages to covered items. Underwriter: is the company receiving the insurance premium and assuming the responsibility of fulfillment of the insurance policy contract. An underwriter may also be an employee with the authority to decide which risks the insurance company should assume. In many cases an agent who sells the insurance policy may have underwriting authority. Underwriting: is the act of examining, accepting, or rejecting an insurance risk. Than determining the appropriate premiums for those risks which are accepted. Unearned Premium: is the amount of premium received by the insurance company in advance of the protection provided by the insurance policy. The full premium for a policy period is not earned until policy expires. Uninsured and Underinsured Motorists Coverage (UM/UIM): pays bodily injury costs caused by an uninsured or underinsured motorist. Some states require UM/UIM coverage, typically the limits are the same as the bodily injury portion of the auto liability coverage. UM/UIM coverage may also supplement the benefits under a No-fault system. Universal Life Insurance: is a flexible premium policy combining protection against premature death with a savings method, known as a cash value account.
Insurance Terms: V
Variable Life Insurance: is a form of life insurance where the face value fluctuates depending upon the value of the dollar, securities or other equity products supporting the policy at the time the payments are due.
Variable Universal Life Insurance: is a combination of variable life insurance and universal life insurance written under the same insurance contract. The benefits are variable based on the value of underlying equity investments, and premiums. The benefits are adjustable by option of the policyholder.
Volcano Coverage: is usually included under most homeowners policies. Waiting Period: Under a health insurance policy, the waiting period is the time that has to pass from the policy issue date until the date the benefits become payable. In some cases, the waiting period may also be called an "elimination period" or a "probationary period." Waiver: is the surrender of a right or privilege. With life insurance, a waiver will set provisions and include certain conditions. Waiver of Premium: is a provision set with some insurance contracts enabling a waiver of the premium payment and allowing policy to remain in force when the insured person is unable to work because of an accident or injury. Water-Damage Insurance Coverage: is a type of insurance protection included with most Homeowners Insurance policies. This coverage insures against the peril of sudden and accidental water damage, caused by a burst pipe or other incidental risks for water damage. This coverage doesn't cover damage from a lack of proper maintenance like dripping air conditioner units or damage caused by Flood. The federal government provides Flood Insurance policies. Weather Insurance: is business interruption insurance compensating the policyholder for the financial loss caused by adverse weather conditions. Whole Life Insurance: is a form of life insurance designed to remain in force for the lifetime of the policyholder. The whole life policy pays benefits when the insured policyholder dies no matter when that time might be. Whole life insurance is the oldest type cash value life insurance combining protection against premature death and a method to build a savings account. The premiums are set at a fixed rate and guaranteed and remain level throughout lifetime of the policy. Workers Compensation Insurance: is insurance that will pay the medical care bills and for physical rehabilitation when a worker is injured. Workers compensation insurance will help replace lost wages while the worker is not able to work. The state laws, vary greatly, however every state has worker compensation laws which govern the amount of benefits paid and the specific provisions and limits of compensation. Write: is the insurance lingo for insuring someone. Insurance agents "write" new business. Underwrite write the policy contract, and the insurance company accepts an application for insurance.
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