Absolute Liability Liability for damages even though fault or negligence cannot be proven.
Accident An event or occurrence which is unforeseen and unintended.
Accidental Bodily Injury Injury to the body as the result of an accident.
Accounting The process of recording, summarizing, and allocating all items of income and expense of the company and analyzing, verifying, and reporting the results.
Act of God A flood, earthquake or other non preventable accident resulting from natural causes that occur without any human intervention.
Activities of Daily Living A list of activities, normally including mobility, dressing, bathing, toileting, transferring, and eating which are used to assess degree of impairment and determine eligibility for some types of insurance benefits.
Actual Cash Value (ACV) 1) The cost of replacing or restoring property at prices prevailing at the time and place of the loss, less depreciation, however caused; 2) replacement cost minus depreciation.
Actuarially Fair The price for insurance which exactly represents the expected losses.
Actuary A person professionally trained in the technical aspects of pensions, insurance and related fields. The actuary estimates how much money must be contributed to an insurance or pension fund in order to provide future.
Additional insured A person, company or entity protected by an insurance policy in addition to the insured.
Adjuster A person who investigates and settles losses for an insurance carrier.
Adjusting The process of investigating and settling losses with or by an insurance carrier.
Adjustment Bureau Organization for adjusting insurance claims that is supported by insurers using the bureau’s services.
Administrative Services Only (AS0) Plan An arrangement under which an insurance carrier or an independent organization will, for a fee, handle the administration of claims, benefits and other administrative functions for a self-insured group.
Advance Premium Mutual Mutual insurance company owned by the policyowners that does not issue assessable policies but charges premiums expected to be sufficient to pay all claims and expenses.
Adverse Selection The tendency of persons who present a poorer-than-average risk to apply for, or continue, insurance to a greater extent than do persons with average or better-than-average expectations of loss.
Age Limits Stipulated minimum and maximum ages below and above which the company will not accept applications or may not renew policies.
Agent An insurance company representative licensed by the state who solicits, negotiates or effects contracts of insurance, and provides service to the policyholder for the insurer.
Aggregate Deductible Deductible in some property and health insurance contracts in which all covered losses during a year are added together and the insurer pays only when the aggregate deductible amount is exceeded.
Aggregate Indemnity The maximum dollar amount that may be collected for any disability or period of disability under the policy.
Alien Insurer An insurance company domiciled in another country.
All-risks Policy Coverage by an insurance contract that promises to cover all losses except those losses specifically excluded in the policy. See also: Risks of direct loss to property.
Allied Lines A term for forms of property insurance allied with fire insurance, covering such perils as windstorm, hail, explosion, and riot.
Allocated Benefits Benefits for which the maximum amount payable for specific services is itemized in the contract.
Amendment A formal document changing the provisions of an insurance policy signed jointly by the insurance company officer and the policy holder or his authorized representative.
Amortization Paying an interest-bearing liability by gradual reduction through a series of installments, as opposed to one lump-sum payment.
Annual Statement The annual report, as of December 31, of an insurer to a state insurance department, showing assets and liabilities, receipts and disbursements, and other financial data.
Application A signed statement of facts made by a person applying for life insurance and then used by the insurance company to decide whether or not to issue a policy. The application becomes part of the insurance contract when the policy is issued.
Arbitration A form of alternative dispute resolution where an unbiased person or panel renders an opinion as to responsibility for or extent of a loss.
Arson The willful and malicious burning of, or attempt to burn, any structure or other property, often with criminal or fraudulent intent.
Assessment Association An insurer that does not charge a fixed premium for insurance, but rather assesses its members periodically to pay its losses. Assessment insurers usually collect an advance premium which is estimated to cover losses and expenses, but reserve the right to make additional assessments whenever the premium collected is insufficient.
Assessment Mutual Mutual insurance company that has the right to assess policyowners for losses and expenses.
Assets All funds, property, goods, securities, rights of action, or resources of any kind owned by an insurance company. Statutory accounting, however, excludes non-admitted assets, such as deferred or overdue premiums, that would be considered assets under generally accepted accounting principles (GAAP).
Assignment The legal transfer of one person’s interest in an insurance policy to another person.
Association Captive Type of captive insurer owned by members of a sponsoring organization or group, such as a trade association.
Association Group A group formed from members of a trade or a professional association for group insurance under one master health insurance contract.
Assumption of Risk Doctrine Defense against a negligence claim that bars recovery for damages if a person understands and recognizes the danger inherent in a particular activity or occupation.
Attractive Nuisance Condition that can attract and injure children. Occupants of land on which such a condition exists are liable for injuries to children.
Automatic Reinsurance An agreement that the insurer must cede and the reinsurer must accept all risks within certain explicitly defined limits. The reinsurer undertakes in advance to grant reinsurance to the extent specified in the agreement in every case where the ceding company accepts the application and retains its own limit.
Automobile Insurance Plan One of several types of “shared market” mechanisms where persons who are unable to obtain such insurance in the voluntary market are assigned to a particular company, usually at a higher rate than the voluntary market. Formerly called “Assigned Risk.”
Automobile Liability Insurance Protection for the insured against financial loss because of legal liability for car-related injuries to others or damage to their property.
Automobile Physical Damage Insurance Coverage to pay for damage to or loss of an insured automobile resulting from collision, fire, theft, or other perils.
Automobile Reinsurance Facility One of several types of “shared market” mechanisms used to make automobile insurance available to persons who are unable to obtain such insurance in the regular market.
Average Indexed Monthly Earnings (AIME) Under the OASDI program, the person’s actual earnings are indexed to determine his or her primary insurance amount (PIA).
Aviation Insurance Aircraft insurance including coverage of aircraft or their contents, the owner’s liability, and accident insurance on the passengers.Beneficiary: The person designated or provided for by the policy terms to receive any benefits provided by the policy or plan upon the death of the insured.
Avoidance see Loss Avoidance.
Bailees Customers Policy Policy that covers the loss or damage to property of customers regardless of a bailee’s legal liability.
Basic Form see Dwelling Property 1.
Basis An amount attributed to an asset for income tax purposes; used to determine gain or loss on sale or transfer; used to determine the value of a gift.
Benefits The amount payable by the insurance company to a claimant, assignee or beneficiary under each coverage.
Binder A written or oral contract issued temporarily to place insurance in force when it is not possible to issue a new policy or endorse the existing policy immediately. A binder is subject to the premium and all the terms of the policy to be issued.
Binding Receipt A receipt given for a premium payment accompanying the application for insurance. If the policy is approved, this binds the company to make the policy effective from the date of the receipt.
Blanket Medical Expense A provision which entitles the insured person to collect up to a maximum established in the policy for all hospital and medical expenses incurred, without any limitations on individual types of medical expenses.
Boat Owners Package Policy A special package policy for boat owners that combines physical damage insurance, medical expense insurance, liability insurance, and other coverage’s in one contract.
Boiler and Machinery Insurance Coverage for loss arising out of the operation of pressure, mechanical, and electrical equipment. It covers loss of the boiler and machinery itself, damage to other property, and business interruption losses.
Bond A certificate issued by a government or corporation as evidence of a debt. The issuer of the bond promises to pay the bondholder a specified amount of interest for a specified period and to repay the loan on the expiration (maturity) date.
Book of Business the number, size and type of accounts (policyholders) that an agent “owns.”
Branch Office System Type of life insurance marketing system under which branch offices are established in various areas. Salaried branch managers, who are employees of the company, are responsible for hiring and training new agents.
Break in Service A calendar year, plan year or other consecutive 12-month period designated by the plan during which a plan participant does not complete more than 500 hours of service.
Broad Form see Dwelling Property 2; Homeowners 2 Policy.
Broker A marketing specialist who represents buyers of property and liability insurance and who deals with either agents or companies in arranging for the coverage required by the customer.
Burglary Breaking and entering into another person’s property with felonious intent.
Burglary and Theft Insurance Coverage against property losses due to burglary, robbery, or larceny.
Business Insurance A policy which primarily provides coverage of benefits to a business as contrasted to an individual. It is issued to indemnify a business for the loss of services of a key employee or a partner who becomes disabled.
Business Interruption Insurance Protection for a business owner against losses resulting from a temporary shutdown because of fire or other insured peril. The insurance provides reimbursement for lost net profits and necessary continuing expenses.
Business Life Insurance Life insurance purchased by a business enterprise on the life of a member of the firm. It is often bought by partnerships to protect the surviving partners against loss caused by the death of a partner, or by a corporation to reimburse it for loss caused by the death of a key employee.
Buy-Sell Agreement An agreement made by the owners of a business to purchase the share of a disabled or deceased owner. The value of each owner’s share of the business and the exact terms of the buying-and-selling process are established before death or the beginning of disability.
Cancellation The discontinuance of an insurance policy before its normal expiration date, either by the insured or the company.
Capacity The amount of capital available to an insurance company or to the industry as a whole for underwriting general insurance coverage or coverage for specific perils.
Capital Gain Profit realized on the sale of securities. An unrealized capital gain is an increase in the value of securities that have not been sold.
Capital Retention Approach A method used to estimate the amount of life insurance to own. Under this method, the insurance proceeds are retained and are not liquidated.
Captive Insurance Company A company owned solely or in large part by one or more non- insurance entities for the primary purpose of providing insurance coverage to the owner or owners.
Captive Insurer Insurance company established and owned by a parent firm in order to insure its loss exposures while reducing premium costs, providing easier access to a reinsurer, and perhaps easing tax burdens. See also Association captive; Pure captive.
Cargo Insurance Type of ocean marine insurance that protects the shipper of the goods against financial loss if the goods are damaged or lost.
Casualty Insurance Insurance concerned with the insider’s legal liability for injuries to others or damage to other persons’ property; also encompasses such forms of insurance as plate glass, burglary, robbery and workers’ compensation.
Catastrophe Event which causes a loss of extraordinary magnitude, such as a hurricane or tornado.
Causes-of-loss Form Form added to commercial property insurance policy that indicates the causes of loss that are covered. There are four causes-of-loss forms: basic, broad, special, and earthquake.
Cede To transfer all or part of a risk written by an insurer (the ceding, or primary company) to a reinsurer.
Certificate of Insurance A statement of coverage issued to an individual insured under a group insurance contract, outlining the insurance benefits and principal provisions applicable to the member.
Certified Financial Planner (CFP) Professional who has attained a high degree of technical competency in financial planning and has passed a series of professional examinations by the College of Financial Planning.
Certified Insurance Counselor (CIC) Professional in property and liability insurance who has passed a series of examinations by the Society of Certified Insurance Counselors.
Cession: Amount of the insurance ceded to a reinsurer by the original insuring company in a reinsurance operation.
Chartered Property and Casualty Underwri Professional who has attained a high degree of technical competency in property and liability insurance and has passed ten professional examinations administered by the American Institute for Property and Liability Underwriters.
Choice no-fault Allows auto insureds the choice of remaining under the tort system or choosing no-fault at a reduced premium.
Claim A request for payment of a loss which may come under the terms of an insurance contract.
Claim-made policy A liability insurance policy under which coverage applies to claims filed during the policy period.
Claims Adjustor Person who settles claims: an agent, company adjustor, independent adjustor, adjustment bureau, or public adjustor.
Class Rating Rate-making method in which similar insureds are placed in the same underwriting class and each is charged the same rate. Also called manual rating.
Coinsurance 1) A provision under which an insured who carries less than the stipulated percentage of insurance to value, will receive a loss payment that is limited to the same ratio which the amount of insurance bears to the amount required; 2) a policy provision frequently found in medical insurance, by which the insured person and the insurer share the covered losses under a policy in a specified ratio, i.e., 80 percent by the insurer and 20 percent by the insured.
Collateral Source Rule Under this rule, the defendant cannot introduce any evidence that shows the injured party has received compensation from other collateral sources.
Collision Insurance Protection against loss resulting from any damage to the policyholder’s car caused by collision with another vehicle or object, or by upset of the insured car, whether it was the insured’s fault or not.
Combined Ratio Basically, a measure of the relationship between dollars spent for claims and expenses and premium dollars taken in; more specifically, the sum of the ratio of losses incurred to premiums earned and the ratio of commissions and expenses incurred to premiums written. A ratio above 100 means that for every premium dollar taken in, more than a dollar went for losses, expenses, and commissions.
Commercial General Liability Policy (CGL Commercial liability policy drafted by the Insurance Services Office containing two coverage forms, an occurrence form and a claims-made form.
Commercial Lines Insurance for businesses, organizations, institutions, governmental agencies, and other commercial establishments.
Commercial Multiple Peril Policy A package of insurance that includes a wide range of essential coverages for the commercial establishment.
Commercial Package Policy (CPP) A commercial policy that can be designed to meet the specific insurance needs of business firms. Property and liability coverage forms are combined to form a single policy.
Commission The part of an insurance premium paid by the insurer to an agent or broker for his services in procuring and servicing the insurance.
Commissioner A state officer who administers the state’s insurance laws and regulations. In some states, this regulator is called the director or superintendent of insurance.
Common Stock Securities that represent an ownership interest in a corporation.
Community Property A special ownership form requiring that one half of all property earned by a husband or wife during marriage belongs to each. Community property laws do not generally apply to property acquired by gift, by will, or by descent.
Company Adjustor Claims adjustor who is a salaried employee representing only one company.
Comparative Negligence Under this concept a plaintiff (the person bringing suit) may recover damages even though guilty of some negligence. His or her recovery, however, is reduced by the amount or percent of that negligence.
Completed Operations Liability arising out of faulty work performed away from the premises after the work or operations are completed. Applicable to contractors, plumbers, electricians, repair shops, and similar firms.
Comprehensive Automobile Insurance Protection against loss resulting from damage to the insured auto, other than loss by collision or upset.
Comprehensive Personal Liability Insuran Protection against loss arising out of legal liability to pay money for damage or injury to others for which the insured is responsible. It does not include automobile or business operation liabilities.
Compulsory Auto Liability Insurance Insurance laws in some states required motorists to carry at least certain minimum auto coverages. This is called “compulsory” insurance.
Compulsory Insurance Any form of insurance which is required by law.
Compulsory Insurance Law Law protecting accident victims against irresponsible motorists by requiring owners and operators of automobiles to carry certain amounts of liability insurance in order to license the vehicle and drive legally within the state.
Concealment Deliberate failure of an applicant for insurance to reveal a material fact to the insurer.
Concurrent Causation Legal doctrine that states when a property loss is due to two causes, one that is excluded and one that is covered, the policy provides coverage.
Conditional Receipt A receipt given for premium payments accompanying an application for insurance. If the application is approved as applied for, the coverage is effective as of the date of the prepayment or the date on which the last of the underwriting requirements, such as a medical examination, has been fulfilled.
Conditions Provisions inserted in an insurance contract that qualify or place limitations on the insurer’s promise to perform.
Consequential Loss Financial loss occurring as the consequence of some other loss. Often called an indirect loss.
Conservation The attempt by the insurer to prevent the lapse of a policy.
Consideration One of the elements for a binding contract. Consideration is acceptance by the insurance company of the payment of the premium and the statement made by the prospective policyholder in the application.
Consideration Clause The clause that stipulates the basis on which the company issues the insurance contract. In health policies, the consideration is usually the statements in the application and the payment of premium.
Contents Broad Form See Homeowners 4 policy.
Contingent Liability Liability arising out of work done by independent contractors for a firm. A firm may be liable for the work done by an independent contractor if the activity is illegal, the situation does not permit delegation of authority, or the work is inherently dangerous.
Contract A binding agreement between two or more parties for the doing or not doing of certain things. A contract of insurance is embodied in a written document called the policy.
Contractual Liability Legal liability of another party that the business firm agrees to assume by a written or oral contract.
Contribution by Equal Shares Type of other insurance provision often found in liability insurance contracts that requires each company to share equally in the loss until the share of each insurer equals the lowest limit of liability under any policy or until the full amount of loss is paid.
Contributory A group insurance plan issued to an employer under which both the employer and employee contribute to the cost of the plan. Seventy-five percent of the eligible employees must be insured. (See Noncontributory.)
Contributory Negligence Negligence of the damaged person that helped to cause the accident. Some states bar recovery to the plaintiff if the plaintiff was contributory negligent to any extent. Others apply comparative negligence.
Convertible Bond A bond that offers the holder the privilege of converting the bond into a specified number of shares of stock.
Cost Basis An amount attributed to an asset for income tax purposes; used to determine gain or loss on sale or transfer; used to determine the value of a gift.
Coverage The scope of protection provided under a contract of insurance; any of several risks covered by a policy.
Coverage for Damage to Your Auto: That part of the personal auto policy insuring payment for damage or theft of the insured automobile. This optional coverage can be used to insure both collision and other-than-collision losses.
Covered A person covered by a pension plan is one who has fulfilled the eligibility requirements in the plan, for whom benefits have accrued, or are accruing, or who is receiving benefits under the plan.
CPCU See Chartered Property and Casualty Underwriter.
Credibility A statistical measure of the degree to which past results make good forecasts of future results.
Credibility Factor The weight given to an individual insured’s past experience in computing premiums for future coverage.
Credit Insurance A guarantee to manufacturers, wholesalers, and service organizations that they will be paid for goods shipped or services rendered. Applies to that part of working capital which is represented by accounts receivable.
Crop-hail Insurance Protection against damage to growing crops as a result of hail or certain other named perils
Cross Purchase Agreement Specifies the terms for the surviving partners or shareholders to buy a deceased’s share of the business’s ownership.
CSR Customer service representatives support the work of insurance agents with a variety of tasks that must be done within a company or agency to deliver services to and handle requests from clients.
Currently Insured Status of a covered person under the Old-age, survivors, and Disability Insurance (OASDI) program who has at least six quarters of coverage out of the last thirteen quarters, ending with the quarter of death, disability, or entitlement to retirement benefits.
Damage to Property of Others Damage covered up to $500 per occurrence for an insured who damages another’s property. Payment is made despite the lack of legal liability. Coverage is included in Section II of the homeowners policy.
Debenture A bond that is backed only by the general credit of the issuing corporation. No specific property is pledged as security behind the loan.
Declarations Statements in an insurance contract that provide information about the property or life to be insured and used for underwriting and rating purposes and identification of the property or life to be insured.
Declination The insurer’s refusal to insure an individual after careful evaluation of the application for insurance and any other pertinent factors.
Deductible An amount which a policyholder agrees to pay, per claim or per accident, toward the total amount of an insured loss.
Dental Insurance Individual or group plan that helps pay costs of normal dental care as well as damage to teeth from an accident.
Dependent Benefits Social Security benefits available to the spouse or children of a Social Security beneficiary.
Deposit Premium The premium deposit paid by a prospective policy holder when an application is made for an insurance policy. It is usually equal, at least, to the first month’s estimate premium and is applied toward the actual premium when billed.
Depreciation A decrease in the value of property over a period of time due to wear and tear or obsolescence. Depreciation is used to determine the actual cash value of property at time of loss. (See Actual Cash Value)
Difference in Conditions Insurance (DIC) “All-risks” policy that covers other perils not insured by basic property insurance contracts, supplemental to and excluding the coverage provided by underlying contracts.
Direct Loss Financial loss that results directly from an insured peril.
Direct Placement Sale of an entire issue of bonds or stock by the issuer to one or a few large institution customers such as an insurance company without trying to market the issue publicly.
Direct Premiums Written Property and casualty insurance premiums written (less return premiums), without any allowance for premiums for assumed or ceded reinsurance.
Direct Response System A marketing method where insurance is sold without the services of an agent. Potential customers are solicited by advertising in the mail, newspapers, magazines, television, radio, and other media.
Direct Writer The industry term for a company which uses its own sales employees to write its policies. Sometimes refers to companies which contract with exclusive agents.
Directors’ and Officers’ Liability The exposure of corporate managers to claims from shareholders, government agencies, and employees, and others alleging mismanagement.
Disability A physical or a mental impairment that substantially limits one or more major life activities of an individual. It may be partial or total. (See Partial Disability; Total Disability.)
Disability Benefit Periodic payments, usually monthly, payable to participants under some retirement plans, if such participants are eligible for the benefits and become totally and permanently disabled prior to the normal retirement date.
Disability Income Insurance A form of health insurance that provides periodic payments to replace income when an insured person is unable to work as a result of illness, injury, or disease.
Disappearing Deductible Deductible in an insurance contract that provides for a decreasing deductible amount as the size of the loss increases, so that small claims are not paid but large losses are paid in full.
Dismemberment Loss of body members (limbs), or use thereof, or loss of sight due to injury.
Disposable Personal Income The personal income less personal tax and nontax payments. It is the income available to people for spending and saving.
Dividend A return of part of the premium on participating insurance to reflect he difference between the premium charged and the combination of actual mortality, expense and investment experience. Such premiums are calculated to provide some margin over the anticipated cost of the insurance protection.
Dollar Threshold In no-fault auto insurance states with the dollar threshold, it prevents individuals from suing in tort to recover for pain and suffering unless their medical expenses exceed a certain dollar amount.
Domestic Insurer An insurance company is a domestic company in the state in which it is incorporated.
Donor The person making a gift.
Dramshop Law Law that imputes negligence to the owner of a business that sells liquor in the case that an intoxicated customer causes injury or property damage to another person. Usually excluded from general liability policies.
Dread Disease Insurance Insurance providing an unallocated benefit, subject to a maximum amount, for expenses incurred in connection with the treatment of specified diseases, such as cancer, poliomyelitis, encephalitis and spinal meningitis.
Driver Education Credit Student discount or reduction in premium amount for which young drivers become eligible on completion of a driver education course.
Dwelling Property 1 Property insurance policy that insures the dwelling at actual cash value, other structures, personal property, fair rental value, and certain other coverages. Covers a limited number of perils.
Dwelling Property 2 Property insurance policy that insures the dwelling and other structures at replacement cost. It adds additional coverages and has a greater list of covered perils than the Dwelling Property 1 policy.
Dwelling Property 3 Property insurance policy that covers the dwelling and other structures against direct physical loss from any peril except for those perils otherwise excluded. However, personal property is covered on a named-perils basis.
Early Retirement Retirement of a participant prior to the normal retirement date, usually with a reduced amount of annuity. Early retirement is generally allowed at any time during a period of 5 to 10 years preceding the normal retirement date.
Earned Income Employment income derived from salary, wages, commissions, or fees.
Earned Premium The part of the total property/casualty policy premium which applies to the portion of the policy period which has already expired.
Earnings Test (retirement test) Determination of the amount of Social Security benefits payable to a beneficiary after adjusting for earnings. The amount of earnings allowed before his or her benefits is indexed annually; benefits are reduced by $1 for every $3 of earnings (beginning in 1990) above the earnings test threshold.
Economic Loss The estimated total cost, both insured and uninsured, of mishaps (such as motor vehicle accidents, work accidents, and fires); includes such factors as property damage, funeral expenses, wage loss, insurance administration costs, and medical, hospital and legal costs.
Effective Date The date on which the insurance under a policy begins.
Elements of a Negligent Act Four elements an injured person must show to prove negligence: existence of a legal duty to use reasonable care, failure to perform that duty, damages or injury to the claimant, and proximate cause relationship between the negligent act and the infliction of damages.
Elimination Period A period of time between the period of disability and the start of disability income insurance benefits, during which no benefits are payable. (See Waiting Period.)
Embezzlement Fraudulent use or taking of another’s property or money which has been entrusted to one’s care.
Employee Dishonesty Coverage Form Commercial crime insurance form drafted by the Insurance Services Office that covers the loss of money, securities, and other covered property because of any dishonest act of a covered employee or employees.
Employee Retirement Income Security Act Legislation passed in 1974 applying to most private pension and welfare plans that requires certain minimum standards to protect participating employees.
Endorsement An amendment of the policy usually by means of a rubber stamp or rider.
Endorsements An additional piece of paper, not a part of the original contract, which cites certain terms and which, when attached to the original contract, becomes a legal part of that contract.
Enrolled Actuary A person who performs actuarial service for a plan and who is enrolled with the Federal Joint Board for the Enrollment of Actuaries.
Environmental Impairment Liability Insur A form of insurance designed to cover losses and liabilities arising from damage to property by pollution.
Equities Investments in the form of ownership of property, usually common stocks, as distinguished from fixed income bearing securities, such as bonds or mortgages.
Equity in the Unearned Premium Reserve Amount by which an unearned premium reserve is overstated because it is established on the basis of gross premium rather than net premium.
ERISA See Employee Retirement Income Security Act.
Errors and Omissions Insurance Liability insurance policy that provides protection against loss incurred by a client because of some negligent act, error, or omission by the insured.
Estate The assets and liabilities of a person left at death.
Estate Planning Developing a plan to transfer all of your property from one generation to the next or within a generation.
Estoppel Legal doctrine that prevents a person from denying the truth of a previous representation of fact, especially when such representation has been relied on by the one to whom the statement was made.
Excess and Surplus Insurance (1) Insurance to cover losses above a certain amount, with losses below that amount usually covered by a regular policy. (2) Insurance to cover an unusual or one-time risk, e.g., damage to a musician’s hands or the multiple perils of a convention, for which coverage is unavailable in the normal market. (See also “Umbrella liability” and “surplus lines.”)
Exclusion or Exception Specified conditions or circumstances, listed in the policy, for which the policy will not provide benefits.
Exclusions Specific conditions or circumstances listed in the policy for which the policy will not provide benefit payments.
Exclusive Agent An agent who is employed by one and only one insurance company and who solicits business exclusively for that company.
Exclusive Remedy Doctrine Doctrine in workers compensation insurance which states that workers compensation benefits should be the exclusive or sole source of recovery for workers who have a job related accident or disease; doctrine has been eroded by legal decisions.
Expense Loading See Loading.
Expense Ratio The ratio of a company’s operating expenses to premiums.
Experience A term used to describe the relationship, usually expressed as a percent or ratio, of premium to claims for a plan, coverage, or benefits for a stated time period.
Experience Modification Factor Used in workers compensation rating to reflect the degree to which a particular employer has experience that is better or worse that expected for that industry. Weighted by employer’s credibility factor.
Experience Rating The process of determining the premium rate for a group risk, wholly or partially on the basis of that group’s experience.
Experience Refund A provision in most group policies for the return of premium to the policyholder because of lower than anticipated claims.
Exposure Unit Unit of measurement used in insurance pricing.
Extended Coverage Insurance Protection for the insured against property damage caused by windstorm, hail, smoke, explosion, riot, riot attending a strike, civil commotion, vehicle and aircraft. This is provided in conjunction with the fire insurance policy and the various “package” policies.
Extended Non owned Coverage Endorsement that can be added to an automobile liability insurance policy that covers the insured while driving any non owned automobile on a regular basis.
Extended Reporting Period An additional period of time after policy expiration during which valid claims will be paid under a claims-made policy of liability insurance
Extended Reporting Period Endorsement Added to a claims-made policy of liability insurance to provide additional period of time during which valid claims will be paid
Extended Term Insurance: A form of insurance available as a non forfeiture option. It provides the original amount of insurance for a limited period of time.
Extended Unemployment Insurance Benefits Additional cash benefits paid by federal state unemployment insurance programs to workers who are involuntarily unemployed and who have exhausted their regular weekly cash benefits during periods oh high unemployment.
Extortion Surrender of property away from the premises as a result of a threat to do bodily harm to the named insured, relative, or invitee who is being held captive.
Extra Expense Insurance Type of business income insurance that covers the extra expenses incurred to continue operations after a loss has occurred.
Facility A pooling mechanism for insureds not able to obtain insurance in the voluntary market. Insurers write and issue policies but cede premium and losses on those policies to a central pool in which all insurers share.
Factory Mutual Mutual insurance company insuring only properties that meet high underwriting standards. Emphasizes loss prevention.
Facultative Reinsurance A type of reinsurance in which the reinsurer can accept or reject any risk presented by an insurance company seeking reinsurance.
FAIR Plan A facility, operating under a program of the government and the insurance industry, to make fire insurance and other forms of property insurance readily available to persons and businesses for whom such insurance is not easily available or affordable.
Fair Rental Value Amount payable to an insured homeowner for loss of rental income due to damage that makes the premises uninhabitable.
Family Purpose Doctrine Concept that imputes negligence committed by immediate family members while operating a family car to the owner of the car.
Farm Mutual Local mutual insurance company that insures farm property in a limited geographical area primarily through assessable policies.
Farm owners- Ranch owners Policy A package policy for a farm or a ranch, providing property and liability coverages against personal and business losses.
Federal Crime Insurance Insurance against burglary, larceny, and robbery losses offered by the federal government where the Federal Insurance Administration has determined that an insurance availability problem exists.
Federal Crop Insurance Comprehensive coverage at rates subsidized by the federal government for unavoidable crop losses, including those that result from hail, wind, excessive rain, drought, freezes, plant disease, snow, floods, and earthquake.
Federal Flood Insurance Insurance sold by private insurers with rates subsidized by the federal government to persons who reside in flood zones and whose community joins the program and agrees to establish and enforce flood control and land use measures.
Federal servant Doctrine Common law defense blocking an injured employee from collecting workers compensation benefits if he or she sustained an injury caused in any way by the negligence of a fellow worker.
Federal Surety Bond Type of surety bond required by federal agencies that regulates the actions of business firms. It guarantees that the bonded party will comply with federal standards, pay all taxes or duties accrued, or pay any penalty if the bondholder fails to pay.
Fidelity Bond A form of protection which reimburses an employer for losses caused by dishonest or fraudulent acts of employees.
Fiduciary  A person who holds something in trust for another.
Financial Responsibility Law A state law which may require motorists to furnish evidence, either before or after involvement in an auto accident (depending on the individual state’s law), of ability to pay for damages up to certain minimum dollar limits. These requirements commonly are met by carrying auto liability insurance with specified minimum limits or more.
Fire A combustion accompanied by a flame or glow, which escapes its normal confines to cause damage.
Fire Insurance Coverage for losses caused by fire and lightning, plus resultant damage caused by smoke and water.
Fire Legal Liability Liability of a firm or person for fire damage caused by negligence of and damage to property of others. First party claim: a demand made by a policyholder reporting an insured event directly to his company.
First Party Coverage An insurance coverage under which the policyholder collects compensation for losses from the insured’s own insurer rather than from the insurer of the person who caused the accident.
Flat Schedule A type of schedule in group insurance under which everyone is insured for the same benefits regardless of salary, position, or other circumstances.
Flex rating Law Type of rating law in which prior approval of the rates is required only if the rates exceed a certain percentage above and below the rates previously filed.
Floaters Insurance policies that cover property that can be moved from one location to another for both transportation perils and perils affecting property at a fixed location.
Flood Insurance Coverage against loss resulting from the flood peril, widely available at low cost under a program developed by the private industry and the federal government.
Foreign Insurer An insurer is a foreign company in any state other than the one in which it is incorporated.
Forgery or Alteration Coverage Form Commercial crime insurance form by the Insurance Services Office that covers loss resulting from the forgery or alteration of checks, drafts, bills of exchange, promissory notes, and similar instruments.
Fortuitous Loss Unforeseen and unexpected loss that occurs as a result of chance.
Franchise Deductible Deductible commonly found in marine insurance contracts in which the insurer has no liability if the loss is under a certain amount, but once this amount is exceeded, the entire loss is paid in full.
Franchise Insurance A form of insurance in which individual polices are issued to the employees of a common employer or the members of an association under an arrangement by which the employer or association agrees to collect the premiums and remit them to the insurer.
Fraternal Insurance A cooperative type of insurance provided by social organizations for their members.
Fraternal Society A social organization that provides insurance for its members.
Fronting Company A domestic insurance company that provides claims or administrative services to a captive.
Fully Insured Insured status of a covered person under the Old-Age, Survivors, and Disability Insurance (OASDI) program if he or she meets certain criteria: forty quarters of coverage or has one quarter of coverage for each year after 1950 (or after age twenty-one, if later) up to the year of death. disability. Or attainment of age sixty-two.
Future Increase Option A provision found in some policies that allows the insured to purchase additional disability income insurance at specified future dates regardless of the insured’s physical condition.
Future Service Benefits Benefits accruing for service after the effective date of coverage under the plan.
General Agency System Type of life insurance marketing system in which the general agent is an independent businessperson who represents only one insurer, is in charge of a territory, and is responsible for hiring, training, and motivating new agents.
General Average In ocean marine insurance, a loss incurred for the common good that is shared by all parties to the venture.
General Damages Damages awarded to an injured person for intangible loss which cannot be measured directly by dollars. Popularly known as “pain and suffering.” General damages are distinguished from special damages which are awarded for actual economic loss, such as medical costs, loss of income, etc.
General Liability Insurance Coverage that pertains, for the most part, to claims arising out of the insured’s liability for injuries or damage caused by ownership of property, manufacturing operations, contracting operations, sale or distribution of products, and the operation of machinery, as well as professional services.
Generally Accepted Accounting Principles Principles of accounting and reporting business results developed by the American Institute of Public Accountants.
Glass Insurance Protection for loss of or damage to glass and its appurtenances.
Good Student Discount Reduction of automobile premium for a young driver at least sixteen who ranks in the upper 20 percent of his or her class, has a B or 3.0 average, or is on the Dean’s list or honor roll. It is based on the premise that good students are better drivers.
Grace Period A specified period after a premium payment is due, in which the policyholder may make such payment, and during which the protection of the policy continues.
Graded Commission Scale A commission scale providing for payment of a high first year commission and lower renewal commissions.
Gross estate All of the assets and liabilities owned at death.
Gross Negligence The intentional failure to perform a manifest duty in reckless disregard of the consequences as affecting the life or property of another
Gross Premium The premium paid by the policyholder.
Gross Rate The sum of the pure premium and a loading element.
Group Contract A contract of insurance made with an employer or other entity that covers a group of persons identified as individuals by reference to their relationship to the entity.
Group Insurance Insurance written on a number of people under a single master policy, issued to their employer or to an association with which they are affiliated.
Guaranteed Renewable Contract A contract that the insured person or entity has the right to continue in force by the timely payment of premiums for a substantial period of time, during which period the insurer has no right to make unilaterally any change in any provision of the contract, while the contract is in force, other than a change in the premium rate for classes of policyholders.
Guaranty Fund A fund, derived from assessments against solvent insurance companies, to absorb losses of claimants against insolvent insurance companies.
Hard Market That part of the insurance sales cycle in which competitive pricing is at a minimum as companies charge the premiums necessary to meet their underwriting losses in order to avoid insolvency and boost capacity; usually associated with a sharp decline in capacity (see “Soft market”).
Hazard Condition that creates or increases the chance of loss.
Health Maintenance Organization (HMO) An organization that provides a wide range of comprehensive health care services for a specified group at a fixed periodic payment. The HMO can be sponsored by the government, medical schools, hospitals, employers, labor unions, consumer groups, insurance companies, and hospital medical plans.
Hedging Technique for transferring the risk of unfavorable price fluctuations to a speculator by purchasing and selling options and futures contracts on an organized exchange.
High Risk Automobile Insurer Company that specializes in insuring motorists who have poor driving records or have been canceled or refused insurance.
Hold Harmless Clause Clause written into a contract by which one party agrees to release another party from all legal liability, such as a retailer who agrees to release the manufacturer from legal liability if the product injures someone.
Homeowners Policy A package of insurance providing home owners with a broad range of property and liability coverages.
Hull Insurance (1) Class of ocean marine insurance that covers physical damage to the ship or vessel insured. Typically written on an “all-risks” basis. (2) Physical damage insurance on aircraft- similar to collision insurance in an automobile policy.
Hurricane A tropical storm marked by extremely low barometric pressure and circular winds with a velocity of 75 miles an hour or more.
Imputed Negligence Case in which responsibility for damage can be transferred from the negligent party to another person, such as an employer.
Incurred Claims Incurred claims equal the claims paid during the policy year plus the claim reserves as of the end of the policy year, minus the corresponding reserves as of the beginning of the policy year. The difference between the year end and beginning of the year claim reserves is called the increase in reserves and may be added directly to the paid claims to produce the incurred claims.
Incurred-but-not-reported (IBNR) reserve Liability account on an insurer’s balance sheet reflecting claims that are expected based upon statistical projections but which have not yet been reported to the insurer.
Indemnification Compensation to the victim of a loss, in whole or in part, by payment, repair, or replacement.
Indemnity Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss.
Independent Adjustor Claims adjustor who offers his or her services to insurance companies and is compensated by a fee.
Independent Agency System Type of property and liability insurance marketing system, sometimes called the American agency system, in which the agent is an independent businessperson representing several companies. The agency owns the expirations or renewal rights to the business, and the agent is compensated by commissions that vary by line of insurance.
Independent Agent An independent business person who usually represents two or more insurance companies in a sales and service capacity and who is paid on a commission basis.
Indirect Loss See Consequential Loss.
Individual Insurance Policies which provide protection to the policyholder and/or his/her family. Sometimes called Personal Insurance as distinct from group and blanket insurance.
Individual Retirement Account (IRA) An account to which an individual can make annual contributions of 100% of earnings up to $2,000 ($2,250 for a one-income married couple). These contributions are tax deductible for most workers.
Industrial Life Insurance Life insurance issued in small amounts, usually less than $1,000, with premiums payable on a weekly or monthly basis. The premiums are generally collected at the home by an agent of the company. Sometimes referred to as debit insurance.
Inflation-Guard Endorsement Endorsement added at the insured’s request to a homeowners policy to increase periodically the face amount of insurance of the dwelling and other policy coverages by a specified percentage.
Inheritance tax A tax on the right of an heir to receive property at the death of another.
Initial Past Service Liability The actuarial value (single sum) of the past service benefits as of the effective date of the establishment of the plan, or at the date of the latest liberalization. The maximum annual past service contribution allowable for tax deduction is the amount necessary to amortize past service liabilities and other supplementary pension or annuity credits over 10 years. Funding of the past service liability over a period of 30 years (40 in some cases) is required by the Internal Revenue Service under ERISA.
Injury Independent of All Other Means An injury resulting from an accident, provided that the accident was not caused by an illness.
Inland Marine Insurance A broad form of insurance, generally covering articles in transit as well as bridges, tunnels and other means of transportation and communication. Besides goods in transit (generally excepting trans-ocean), it includes numerous “floater” policies, such as those covering personal effects, personal property, jewelry, furs, fine arts, and other items.
Insolvent Having insufficient financial resources (assets) to meet financial obligations (liabilities).
Inspection Report A report (usually written) of an investigation of an applicant, conducted by an independent agency that specializes in insurance investigations. The report covers such matters as occupation, financial status, health history, and moral problems.
Insurability Acceptability to the company of an applicant for insurance.
Insurable Risk The conditions that make a risk insurable are (a) the peril insured against must produce a definite loss not under the control of the insured, (b) there must be a large number of homogeneous exposures subject to the same perils, (c) the loss must be calculable and the cost of insuring it must be economically feasible, (d) the peril must be unlikely to affect all insureds simultaneously, and (e) the loss produced by a risk must be definite and have a potential to be financially serious.
Insurance A system under which individuals, businesses, and other organizations or entities, in exchange for payment of a sum of money (a premium), are guaranteed compensation for losses resulting from certain perils under specified conditions.
Insurance Commissioner The top insurance regulatory official in a state.
Insurance Company An organization chartered to operate as an insurer.
Insurance Examiner The representative of a state insurance department assigned to participate in the official audit and examination of the affairs of an insurance company.
Insurance Exchange Term used to describe a facility that exists in a few states to provide a market for reinsurance and for the insurance of large and unusual domestic and foreign risks that are difficult ot insure in the normal markets. Examples are the New York Insurance Exchange, the Insurance Exchange of the Americas, and the Illinois Insurance Exchange.
Insurance Guaranty Funds State Funds that provide for the payment of unpaid claims of insolvent insurers.
Insurance Services Offices (ISO) Major rating organization in property and liability insurance that drafts policy forms for personal and commercial lines of insurance and provides rate data on loss costs for property and liability insurance lines.
Insured A person or organization covered by an insurance policy, including the “named insured” and any other parties for whom protection is provided under the policy terms.
Insurer The party to the insurance contract who promises to pay losses or benefits. Also, any corporation engaged primarily in the business of furnishing insurance to the public.
Insuring Agreement That part of an insurance contract that states the promises of the insurer.
Insuring Clause The clause which sets forth the type of loss being covered by the policy and the parties to the insurance contract.
Integration A coordination of pension, disability or other benefit with the other sources of income, such as Social Security benefit, through a specific formula designed to ensure reasonable income replacement.. Qualified plans must integrate so that total benefits are non-discriminatory between rank and file employees and owners, officers or highly compensated employees.
Inter vivos Trust A trust created while the creator of the trust is living. Also known as a living trust.
Interest Money paid for the use of money.
Interest Option Life insurance settlement option in which the principal is retained by the insurer and interest is paid periodically. Intestate: Without a will.
Investment Income The income generated by a company’s portfolio of investments (such as in bonds, stocks, or other financial ventures).
Investment Only Contract Type of funding instrument that uses only the investment services of an insurer.
IPG Plan See Immediate Participation Guarantee Plan.
IRA See Individual Retirement Account.
ISO See Insurance Services Office.
Joint Tenants A form of joint property ownership with right of survivorship, i.e., in which the survivors automatically own the share of a deceased co-owner.
Joint Underwriting Association One of several types of “shared market” mechanisms used to make automobile insurance available to persons who are unable to obtain such insurance in the regular market. JUAs also have been created in some states to help alleviate availability problems in the fields of medical malpractice and commercial insurance.
Joint-and-Several Liability A legal principle that permits the injured party in a tort action to recover the entire amount of compensation due for injuries from any tort feasor who is able to pay, regardless of the degree of that party’s negligence.
Judgment Rating Rate-making method for which each exposure is individually evaluated and the rate is determined largely by the underwriter’s judgment.
Judicial Bond Type of surety bond used for court proceedings and guaranteeing that the party bonded will fulfill certain obligations specified by law, for example, fiduciary responsibilities.
Jumbo Risk A risk involving exceptionally high benefits.
Kenney Rule Concept permitting a property liability insurer to write $2 of new net premiums for each $1 of policyowners’ surplus.
Keogh (HR 10) Account An account to which a self-employed person can make annual tax deductible contribution of the lesser of 25% of income or $30,000.
Key-Person Insurance Insurance designed to protect a business firm against the loss of income resulting from the death or disability of a key employee.
Labor-Management Relations Act of 1947 ( This law controls conditions under which an employer may pay any money to a representative of employees.
Lapse The termination or discontinuance of an insurance policy due to non-payment of a premium.
Lapsed Policy A policy terminated for non-payment of premiums. The term is sometimes limited to a termination occurring before the policy has a cash or other surrender value.
Larceny-theft The unlawful taking, carrying, leading or riding away of another person’s property.
Last Clear Chance Rule Statutory modification of the contributory negligence law allowing the claimant endangered by his or her own negligence to recover damages from a defendant if the defendant has a last clear chance to avoid the accident but fails to do so.
Law of Large Numbers Concept that the greater the number of exposures, the more closely will actual results approach the probable results expected from an infinite number of exposures.
Legal Reserve The minimum reserve which a company must keep to meet future claims and obligations as they are calculated under the state insurance code.
Level Commission Scale A commission scale providing for payment of commissions at the same rate every year the policy is in force.
Level Premium A premium which remains unchanged throughout the life of a policy.
Liability Any legally enforceable obligation.
Liability Insurance Insurance covering the policyholder’s legal liability resulting from injuries to other persons or damage to their property.
Liability Limits The stipulated sum or sums beyond which an insurance company is not liable to protect the insured.
Liability Without Fault Principle on which workers compensation is based, holding the employer absolutely liable for occupational injuries or disease suffered by workers, regardless of who is at fault.
License and Permit Bond Type of surety bond guaranteeing that the person bonded will comply with all laws and regulations that govern his or her activities.
Lifetime Disability Benefit A benefit to help replace income lost by an insured person as long as he/she is totally disabled, even for a lifetime.
Limited Policy A contract which covers only certain specified diseases or accidents.
Liquidation Dissolving a company by selling its assets for cash.
Liquor Liability Law See Dramshop Law.
Living Trust A trust created while the creator of the trust is living. Also known as an inter vivos trust.
Loading The amount that must be added to the pure premium for expenses, profit, and a margin for contingencies.
Long-Term Disability Income Insurance Insurance issued to an employer (group) or individual to provide a reasonable replacement of a portion of an employee’s earned income lost through serious and prolonged illness or injury during the normal work career. (See also Integration.)
Loss The happening of the event for which insurance pays.
Loss Avoidance A risk management technique whereby a situation or activity that may result in a loss for a firm is avoided or abandoned.
Loss control Any conscious action (or decision not to act) intended to reduce the frequency, severity, or unpredictability of accidental losses.
Loss Expense – Allocated Handling expenses, such as legal or independent adjuster fees, paid by an insurance company in settling a claim which can be definitely charged to that particular claim.
Loss Expense – Unallocated Salaries and other expenses incurred in connection with the operation of a claim department of an insurance carrier which cannot be charged to individual claims.
Loss Payable Clause Means of protecting a mortgagee’s interest in property by directing the insurer to make a loss payment to the mortgagee in the event of a loss.
Loss Prevention Any measure which reduces the probability or frequency of a particular loss but does not eliminate completely all possibility of that loss.
Loss Ratio The ratio of claims to premiums. It may be calculated in several different ways, using paid premiums or earned premiums, and using paid claims with or without changes in claim reserves and with or without changes in active life reserves.
Loss Reserve The amount set up as the estimated cost of a claim. (See IBNR Reserve)
Mail Order Insurer Type of insurance company that sells policies through the mail or other mass media, eliminating need for agents.
Major Medical Insurance Health insurance to finance the expense of major illness and injury. Characterized by large benefit maximums ranging up to $250,000 or no limit, the insurance, above an initial deductible, reimburses the major part of all charges for hospital, doctor, private nurses, medical appliances, prescribed out-of-hospital treatment, drugs, and medicines. The insured person as coinsurer pays the remainder.
Malingering The practice of feigning illness or inability to work in order to collect insurance benefits.
Malpractice Improper care or treatment by a physician, hospital, or other provider of health care.
Malpractice Insurance Coverage for a professional practitioner, such as a doctor or a lawyer, against liability claims resulting from alleged malpractice in the performance of professional services.
Managed Care Health care systems that integrate the financing and delivery of appropriate health care services to covered individuals by arrangements with selected providers to furnish a comprehensive set of health care services, explicit standards for selection of health care providers, formal programs for ongoing quality assurance and utilization review, and significant financial incentives for members to use providers and procedures associated with the plan.
Manual Rate The premium rate developed for a group insurance coverage from the company’s standard rate tables normally referred to as its rate manual or underwriting manual.
Manuscript Policy Policy designed for a firm’s specific needs and requirements.
Marine Insurance A form of insurance primarily concerned with means of transportation and communication, and with goods in transit (see “Inland Marine Insurance” and “Ocean Marine Insurance”).
Marital deduction A reduction of an estate for estate tax purposes, which is available if the decedent is survived by his or her spouse, can be as large as the administrator or executor elects so long as it does not exceed the value of qualifying property passing to the surviving spouse.
Market Price (or Market Value) The price at which a security can be bought or sold at any particular time.
Master Policy A policy that is issued to an employer or trustee, establishing a group insurance plan for designated members of an eligible group.
Master Policy (or Master Contract) The policy issued to a group policyholder setting forth the provisions of the group insurance plan. The individuals insure under the policy are then issued certificates of insurance.
Material Damage Insurance against damage to a vehicle itself. It includes automobile comprehensive, collision, fire and theft. Material damage and physical damage are terms that often are used inter-changeably.
Maximum family benefit The largest amount in Social Security benefits that will be paid to any family unit.
McCarran-Ferguson Act Federal law passed in 1945 stating that continued regulation of the insurance industry by the states is in the public interest and that federal antitrust laws apply to insurance only to the extent that the industry is not regulated by state law.
Medicaid State programs of public assistance to persons whose income and resources are insufficient to pay for health care. Title XIX of the federal Social Security Act provides matching federal funds for financing state Medicaid programs, effective January 1, 1966.
Medical Examination The examination given by a qualified physician to determine to the insurability of an applicant. A medical examination may also be used to determine whether an insured claiming disability is actually disabled.
Medical malpractice Improper care or treatment by a physician, hospital, or other provider of health care.
Medical Payments Insurance A coverage, available in various liability insurance policies, in which their insurer agrees to reimburse the insured and others, without regard for the insureds liability, for medical or funeral expenses incurred as the result of bodily injury or death by accident under specified conditions.
Medicare A program of Hospital Insurance (Part A) and Supplementary Medical Insurance (Part B) protection provided under the Social Security Act.
Medigap A term sometimes applied to private insurance products that supplement Medicare insurance benefits.
Minimum Group The least number of employees permitted under a state law to effect a group for insurance purposes; the purpose is to maintain some sort of proper division between individual policy insurance and the group forms.
Minimum Premium Plan (MPP) 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.
Miscellaneous Expenses Expenses in connection with hospital insurance, hospital charges other than room and board, such as X-rays, drugs, laboratory fees, and other ancillary charges. (Sometimes referred to as ancillary charges.)
Misrepresentation A false, incorrect, improper, or incomplete statement of a material fact, made in the application for a policy.
Mode of Premium Payment The frequency with which premiums are paid monthly, quarterly, semiannually, or annually.
Moral Hazard Hazard arising from any nonphysical, personal characteristic of a risk that increases the possibility of loss or may intensify the severity of loss for instance, bad habits, low integrity, poor financial standing.
Morbidity The incidence and severity of sicknesses and accidents in a well-defined class or classes or persons.
Morbidity Table A table showing how many members of a group, starting at a certain age, will be alive at each succeeding age. It is used to calculate the probability of dying in, or surviving through, any period, and for the valuation of an annuity. To be appropriate for a specific group, it should be based on the experience of individuals having common characteristics, such as sex or occupation.
Multi-Employer Plan A plan maintained according to a collective bargaining agreement, to which more than one employer contributes. Under ERISA, at the beginning of the plan, no single employer may contribute as much as 50% of the total, and thereafter as much as 75%. An employee may change employers within the group without losing retirement benefits unless a break in service (under the plan) cancels credits earned before the break.
Multi-Peril Policy A package policy which provides protection against a number of separate perils. Multi-peril policies are not necessarily multiple line policies, since the combined perils may be all within one insurance line.
Multiple Employer Trust (MET) A legal trust established by a plan sponsor that brings together a number of small, unrelated employers for the purpose of providing group medical coverage on an insured or self-funded basis.
Mutual Insurance Company An insurance company in which the ownership and control is vested in the policyholders and a portion of surplus earnings may return to policyholders in the form of dividends. No capital stock exists.
Named Perils Coverage in a property policy that provides protection against loss from only the perils specifically listed in the policy rather than protection from physical loss. Examples of named perils are fire, windstorm, theft, smoke, etc.
National Association of Insurance Commis The association of insurance commissioners of various states formed to promote national uniformity in the regulation of insurance.
Negligence Failure to use the care that a reasonable and prudent person would have used under the same or similar circumstances.
Net Premium The portion of the premium rate which is designed to cover benefits of the policy, but not expenses, contingencies, or profit. The term is also used to describe the portion of the premium remitted to the home office by an agent after deduction of the agent’s commission.
Net written premiums Premium income retained by insurance companies, directly or through reinsurance, after payments made for reinsurance.
No-Fault A type of auto insurance mechanism whereby the right to sue another party for damages caused by negligence is limited and, in exchange, expanded first party benefits are offered.
No-fault Automobile Insurance A form of insurance by which a person’s financial losses resulting from an automobile accident are paid by his or her own insurer regardless of who was at fault.
Non-admitted Insurance Company An insurance company not licensed to do business in a particular state; such a company, however, may sell excess and surplus insurance in that state if admitted insurers lack the capacity or expertise.
Noncancellable A contract that the insured has the right to continue in force by the timely payments of premiums set forth in the contract (1) until at least age 50 or (2) in the case of a policy issued after age 44 for at least five years from its date of issue, during which period the insurer has no right to make unilaterally any change in any provision of the contract while the contract is in force.
Noncancellable Guaranteed Renewable Poli An individual policy which the insured person has the right to continue to force until a specified age, such as to age 65, by the timely payment of premiums. During this period, the insurer has no right to unilaterally make any changes in any provision of the policy while it is in force.
Nonconfining Sickness A sickness that disables the insured person but does not confine him to his home or a hospital.
Noncontributory A term applied to employee benefit plans under which the employer bears the full cost of the benefits for the employees. One hundred percent of the eligible employees must be insured.
Nondisabling Injury An injury which may require medical care, but does not result in loss of working time or income.
Nondisabling Injury Benefit A benefit in some disability income policies providing payment for medical expense due to injury when medical care is necessary but the insured is not totally disabled.
Nonforfeiture Option One of the choices available if the policyholder discontinues premium payments on a policy with a cash value. This, if any, may be taken in cash, as extended term insurance or as reduced paid-up insurance.
Nonmedical Limit The maximum face value of a policy that a given company will issue without the applicant taking a medical examination.
Nonoccupational Policy Contract which insures a person against off-the-job accident or sickness. It does not cover disability resulting from injury or sickness covered by Workers’ Compensation. Group accident and sickness policies are frequently non- occupational.
Nonparticipating Insurance Plan of insurance under which the policy-holder is not entitled to share in the dividend distribution of the company.
Nonprofit Insurers Persons organized under special state laws to provide hospital, medical, or dental insurance on a nonprofit basis. The laws exempt them from certain types of taxes.
Occupational Hazards Occupations which expose the insured to greater than normal physical danger by the very nature of the work in which the insured is engaged, and the varying periods of absence from the occupation, due to the disability, that can be expected.
Occurrence An accident, including continuous or repeated exposure to substantially the same general, harmful conditions, that results in bodily injury or property damage during the period of an insurance policy.
Occurrence policy A liability insurance policy that covers claims arising out of occurrences that take place during the policy period, regardless of when the claim is filed.
Ocean Marine Insurance Insurance for sea-going vessels, including liabilities connected with them, and their cargoes.
Operating Ratio The sum of expenses and losses expressed as a percent of earned premium.
Over-the Counter Market A means of buying and selling securities that are not listed on a stock exchange. Negotiations are carried out by telephone or computer network.
Overhead Insurance A type of short-term disability income contract that reimburses the insured person for specified, fixed monthly expenses, normal and customary in the operation and conduct of his/her business or office.
Overriding Commission (Overwrite) A commission paid to general agents or agency managers in addition to the commission paid the soliciting agent or broker.
Package Policy A combination of two or more individual polices or coverages into a single policy. A homeowners policy, for example, is a package combining property, liability and theft coverages for the homeowner.
Paid-up Insurance Insurance on which all required premiums have been paid. The term is frequently used to mean the reduced paid-up insurance available as a nonforfeiture option.
Partial Disability The result of an illness or injury which prevents an insured from performing one or more of the functions of his/her regular job.
Participating Insurance Insurance issued by an insurance company providing participation in dividend distribution.
Participating Policy One under which the policy owner is entitled to receive shares of the divisible surplus of the insurer. Such shares are commonly called dividends.
Pension Benefit Guaranty Corporation (PB The Federal body responsible for administering the plan termination insurance program under ERISA.
Pension Plan A plan established and maintained by an employer, group of employers, union or any combination, primarily to provide for the payment of definitely determinable benefits to participants after retirement.
Peril The cause of a possible loss, such as fire, windstorm, theft, explosion, or riot.
Persistency A term used to refer to the length of time insurance remains continuously in force.
Personal Articles Floater A form of coverage designed to meet the needs for insurance on property of a moveable nature. The coverage usually protects against all physical loss, subject to special exclusions and conditions. Examples of property covered include jewelry, furs, silverware, fine arts.
Personal Injury Protection (PIP) First-party no-fault coverage in which an insurer pays, within the specified limits, the wage loss, medical, hospital and funeral expenses of the insured.
Personal Lines Those types of insurance, such as auto or home insurance, for individuals or families rather than for businesses or organizations.
Personal representative A person appointed through the will of a deceased or by a court to settle the estate of one who dies.
Physical Damage Damage to or loss of the auto resulting from collision, fire, theft or other perils.
Plan Administrator The person or persons controlling the money or property contributed to the plan, usually designated in the plan agreement.
Point-of-Service Plans Often known as open-ended HMOs or PPOs, these plans permit insureds to choose providers outside the plan yet are designed to encourage the use of network providers.
Policy The printed legal document stating the terms of the insurance contract that is issued to the policyholder by the company.
Policy Dividend A refund of part of the premium on a participating life insurance policy reflecting the difference between the premium charged and actual experience.
Policy Loan A loan made by a life insurance company from its general funds to a policyholder on the security of the cash value of a policy.
Policy Reserves The measure of the funds that a life insurance company holds specifically for fulfillment of its policy obligations. Reserves are required by law to be so calculated that, together with future premium payments and anticipated interest earnings, they will enable the company to pay all future claims.
Policy Term: That period for which an insurance policy provides coverage.
Policyholder 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.
Policyholders’ Surplus Sum left after liabilities are deducted from assets. Sums such as paid-in capital and special voluntary reserves are also included in this term. This surplus is an additional financial protection to policyholders in the event a company suffers unexpected or catastrophic losses. In effect, it is the financial base that permits a company to sell insurance.
Pollution Liability Exposure to lawsuits for injury or cleanup costs that result from pollution damage
Pool An organization of insurers or reinsurers through which particular types of risk are underwritten and premiums, losses and expenses are shared in agreed upon amounts.
Preferred Stock Evidence of ownership which entitles the owners to receive dividends from the corporation before the common stockholders and which usually also provides a prior claim to corporate assets if the corporation is dissolved.
Premium The sum paid by a policyholder to keep an insurance policy in force.
Premium finance Allows the insured to pay part of the premium when coverage takes effect and pay the rest during the policy period.
Premium Loan A policy loan made for the purpose of paying premiums.
Premium Tax A tax, imposed by each state, on the premium income of insurers doing business in the state.
Primary Beneficiary See Beneficiary.
Primary Insurance Insurance that pays compensation for a loss ahead of any other insurance coverages the policyholder may have.
Probate The court supervised process of validating or establishing a distribution for assets of a deceased including the payment of outstanding obligations.
Probate estate That portion of the assets and liabilities whose distribution is supervised by the courts in the probate process.
Probationary Period A period from the policy date to a specified time, usually 15 to 30 days, during which no sickness coverage is effective. It is designed to eliminate a sickness actually contracted before the policy went into effect.
Product Liability Legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage resulting from the use of its product.
Product Liability Insurance Protection against financial loss arising out of the legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage resulting from the use of a covered product.
Professional Review Organization (PRO) An organization in which practicing physicians assume responsibility for reviewing the propriety and quality of health care services provided under Medicare and Medicaid.
Proof of Loss Documentation presented to the insurance company by the insured in support of a claim so that the insurer can determine its liability under the policy.
Property Damage Coverage An agreement by an insurance carrier to protect an insured against legal liability for damage by an insured automobile to the property of another.
Property Insurance Insurance providing financial protection against the loss of, or damage to, real and personal property caused by such perils as fire, theft, windstorm, hail, explosion, riot, aircraft, motor vehicles, vandalism, malicious mischief, riot and civil commotion, and smoke.
Proration The adjustment of benefits paid because of a mistake in the amount of the premiums paid or the existence of other insurance covering the same accident or disability.
Prototype Plan A standardized plan, approved and qualified as to its concept by the Internal Revenue Service, which is made available by life insurance companies, banks and mutual funds for employers’ use.
Provision A part (clause, sentence, paragraph, etc.) of an insurance contract that describes or explains a feature, benefit, condition, requirement, etc. of the insurance protection afforded by the contract.
Proximate Cause The dominating cause of loss or damage; an unbroken chain of events between the occurrence and damage.
Punitive Damages A court awarded amount that exceeds the economic losses and general damages of a defendant and is intended solely to punish the plaintiff
Qualification Period The period during which the insured must be totally disabled before becoming eligible for residual disability benefits.
Qualified Impairment Insurance A form of substandard or special class insurance, which restricts benefits for the insured person’s particular condition.
Qualified Plan A plan which the Internal Revenue Service approves as meeting the requirements of Section 401(a) of the 1954 Internal Revenue Code. Such plans receive tax advantages.
Qualified terminable interest property A category of property, created by the Economic Recovery Tax Act, which by a deceased spouse’s will entitles the surviving spouse to all income from the property for life, with that income payable at least annually, and precludes anyone including the spouse from appointing the property to anyone else during the spouse’s life.
Rate The pricing factor upon which the insurance buyer’s premium is based.
Rated Policy Sometimes called an “extra risk” policy, an insurance policy issued at a higher-than-standard premium rate to cover the extra risk where, for example, an insured has impaired health or a hazardous occupation.
Ratemaking The statistical process by which insurers determine risks and pricing for the basic classes of insurance.
Rating Territory A geographical grouping in which like hazards tend to equalize and permit the establishment of an equitable rate for the territory.
Reasonable and Customary Charge A charge for health care, which is consistent with the going rate or charge in a certain geographical area for identical or similar services.
Rebating Giving any valuable consideration, usually all or part of the commission, to the prospect or insured as an inducement to buy or renew. Rebating is prohibited by law.
Reduced Paid-up Insurance A form of insurance available as a nonforfeiture option. It provides for continuation of the original insurance plan, but for a reduced amount.
Regulation Supervision of business practices by a governmental entity.
Rehabilitation (1) Restoration of a totally disabled person to a meaningful occupation, (2) a provision in some long- term disability policies that provides for continuation of benefits or other financial assistance while a totally disabled insured is retraining or attempting to resume productive employment.
Reimbursement The payment of the expenses actually incurred as a result of an accident or sickness, but not to exceed any amount specified in the policy.
Reinstatement The resumption of coverage under a policy which has lapsed.
Reinsurance Assumption by one insurance company of all or part of a risk undertaken by another insurance company.
Reinsurance Facility An alternative mechanism to service those insureds that cannot obtain insurance in the voluntary market. Premiums and losses for the business that is ceded to the facility are pooled and all insurers share according to their proportion of the voluntary market.
Renewal Continuance of coverage under a policy beyond its original term by the insurer’s acceptance of the premium for a new policy term.
Renter’s Policy A package type of insurance that includes coverage similar to a homeowners policy to cover the personal property of a renter or tenant in a building.
Replacement The substitution of health insurance coverage from one policy contract to another.
Replacement Cost The cost to repair or replace property at construction costs prevailing at time of loss; the cost to repair or rebuild property without considering depreciation. (See Actual Cash Value)
Replacement ratio The percentage of income before retirement that is required to be replaced to maintain the same standard of living after retirement.
Representation Statements made by an applicant in the application, which he represents as being substantially true to the best of his knowledge and belief, but which are not warranted as exact in every detail.
Rescission Termination of an insurance contract by the insurer on the grounds of material misstatement on the application for insurance. The action of rescission must take place within the contestable period or Time Limit on Certain Defenses but takes effect as of the date of issue of the policy, thus voiding the contract from its inception.
Reservation of Rights An arrangement whereby an insurer defends a case without commitment to provide coverage in the event that the facts disclosed during the trial reveal that the occurrence is not covered.
Reserve (1) An amount representing liabilities kept by an insurer to provide for future commitments under policies outstanding. (2) An amount allocated for a special purpose. Note that a reserve is usually a liability and not an extra fund.
Residual Disability A period of partial disability that immediately follows a period of total disability. Benefits for residual disability are paid on a pro-rata basis, depending on the percentage of earnings loss.
Residual Disability Benefits A provision in an insurance policy that provides benefits in proportion to a reduction of earnings as a result of disability, as opposed to the inability to work full-time.
Residual Market (1) A system through which insurance is made available to buyers that represent unusually high risks. (2)A source of insurance available to applicants who are unable to obtain insurance through ordinary methods in the voluntary market. (See AIP, JUA, Facility)
Retention (1) The net amount of risk retained by an insurance company for its own account or that of specified others, and not reinsured. (2) The amount of the risk kept for oneself, as opposed to the amount it insures (or reinsures) with another.
Retrocession The process by which a reinsurer obtains reinsurance from another company.
Retrospective Date The first date for which claims will be paid under a claims-made policy of liability insurance.
Retrospective Rating Rating procedure which allows adjustment of an insured’s final rate on the basis of the insured’s own loss experience.
Revocable Trust A trust that can be terminated or revoked by its creator.
Rider (1) A document which amends the policy or certificate. It may increase or decrease benefits, waive the condition of coverage or in any other way amend the original contract. (2) A special policy provision or group of provisions that may be added to a policy to expand or limit the benefits otherwise payable. (3) A document that modifies the policy. It may increase or decrease benefits, waive a condition or coverage, or in any other way amend the original contract.
Right of Survivorship At the death of one co-owner of property, that person’s interest in the property automatically passes to the surviving joint tenant or tenants.
Risk The chance of loss. Also used to refer to the insured or to property covered by a policy. (2) Any chance of loss. (3) A term used to refer to a person or the peril insured.
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. (See: Underwriting)
Risk control Any conscious action (or decision not to act) intended to reduce the frequency, severity, or unpredictability of accidental losses.
Risk Retention Group An alternative form of insurance in which members of a similar profession or business band together to self insure their risks.
Robbery The taking of property from a person by force or threat of violence.
Rollover Transfer of IRA or other qualified pension funds from one financial institution (trustee) to another.
Salvage Recovery made by an insurance company by the sale of property which has been taken over from the insured as a part of loss settlement.
Self-Insurance (1) A program for providing group insurance with benefits financed entirely through the internal means of the policyholder, in place of purchasing coverage from commercial carriers. (2) A form of risk financing through which a firm assumes all or a part of its own losses.
Senior Citizen Policies Contracts insuring persons 65 years of age or more. In most cases, these policies supplement the coverage afforded by the government under the Medicare program.
Service-Type Plans Plans that provide their benefits in the form of services rendered rather than cash (for example, Blue Cross and Blue Shield).
Settlement Options The several ways, other than immediate payment in cash, which a policyholder or beneficiary may choose to have policy benefits paid.
Short-Term Disability Income Insurance The provision to pay benefits to a covered disabled person as long as he/she remains disabled up to a specified period not exceeding two years.
Skip Person A beneficiary who is at least two generations younger than the person making the transfer.
Social Security Freeze A long- term disability policy provision which establishes that the offset from benefits paid by Social Security will not be changed regardless of subsequent changes in the Social Security law.
Social Security Option An option under which the employee may elect that monthly payments of an annuity before a specified age (62 or 65) be increased, and that payments thereafter be decreased to produce, as nearly as practical, a level total annual annuity to the employee, including Social Security benefits when they become due.
Soft Market That part of the insurance sales cycle in which competition is at a maximum as insurance companies use their excess capacity to sell more policies at lower prices (see “Hard market”).
Special Damages Compensation awarded for actual economic losses, such as medical expenses and lost wages. (See general damages)
Special Risk Insurance Coverage for risks or hazards of a special or unusual nature.
Spouse’s Benefit Payments to the surviving spouse of a deceased employee, usually in the form of a series of payments upon meeting certain requirements and usually terminating with the survivor’s remarriage or death.
Standard Insurance Insurance written on the basis of regular morbidity underwriting assumption used by an insurance company and issued at normal rates.
Standard Market Insurance companies for which the vast majority of people qualify.
Standard Provision Those contract provisions generally required by state statutes until superseded by the uniform policy provision. (2)A set of policy provisions prescribed by former laws setting forth certain rights and obligations of both the insured and the company under an individual policy of health insurance. These were originally introduced in 1912 and have now been replaced by the Uniform Provisions.
Standard Risk A person who, according to a company’s underwriting standards, is entitled to purchase insurance protection without extra rating or special restrictions.
State Disability Plan A plan for accident and sickness, or disability insurance required by state legislation of those employers doing business in that particular state.
State Fund A fund set up by a state government to provide a specific line or lines of insurance. Some state permit private insurers to compete with the state fund.
State Insurance Department A department of a state government whose duty is to regulate the business of insurance and give the public information on insurance.
State-of-the-Art Defense An argument used in product liability cases that the technology needed to avoid the loss in a particular case did not exist at the time of the product’s manufacture
Statutory Accounting Special accounting practices for insurance companies required by state law and designed to provide greater protection for the public against potential insolvency of these essential institutions.
Statutory Accounting Principles (SAP) Principles required by statute which must be followed by an insurance company when submitting its financial statements to the various state insurance departments. Such principles differ from the Generally Accepted Accounting Principles (GAAP).
Statutory Underwriting Profit or Loss Premiums earned less losses and expenses.
Step-Rate Premium A rating structure in which the premiums increase periodically at pre-determined times such as policy years or attained ages.
Step-up in basis An increase in the tax basis of property to the value claimed in the taxable estate of a decedent.
Stock Company A company organized and owned by stockholders, as distinguished from the mutual form of company which is owned by its policyholders.
Stock Exchange An organization that provides a facility for buyers and sellers of listed securities to come together to make grades in those securities.
Stock Insurance Company A company in which the legal ownership and control is vested in the stockholders.
Stockholder (or shareholder) A person who owns shares of stock in a corporation.
Strict Liability Liability for damages even though fault or negligence cannot be proven.
Subrogation Process by which one insurance company seeks reimbursement from another company or person for a claim it has already paid.
Substandard (Impaired Risk) A risk that cannot meet the normal health requirements of a standard health insurance policy. Protection is provided in consideration of a waiver, a special policy form, or a higher premium charge. Substandard risks may include those persons who engage in certain sports and persons who are rated because of poor habits or morals.
Substandard Insurance Insurance issued with an extra premium or special restriction to those persons who do not qualify for insurance at standard rates. Substandard Risk: An individual, who, because of health history or physical limitations, does not measure up to the qualification of a standard risk.
Surety Bond An agreement providing for monetary compensation in the event of a failure to perform specified acts within a stated period. The surety company, for example, becomes responsible for fulfillment of a contract if the contractor defaults.
Surplus (1)The net worth of a company, i.e. the amount by which assets exceed liabilities. Adequate net worth is necessary for the protection of policyholders against unforeseen losses. (2)The amount by which the value of an insurer’s assets exceeds its liabilities.
Surplus Lines (1) A risk or a part of a risk for which there is no normal insurance market available. (2) Insurance written by non-admitted insurance companies.
Tax Basis The cost from which your profits or losses are calculated for income tax purposes.
Taxable estate The value upon which estate taxes are calculated by the federal government.
Tenants in common A form of joint property ownership in which the owners may have unequal shares and which does not involve a right of survivorship.
Testamentary trust A trust created through the will of its creator.
Third Party The claimant under a liability policy. So called because the person making the claim is not one of the two parties, insured and insurer, to the insurance contract.
Third party claim A demand made by a person against a policyholder of another company and any payment that will be made by that company.
Third-party over suit A lawsuit where a third party tries to recover damages assessed against that party by bringing suit against the employer.
Threshold (No-Fault) The point, measured in money, time or other ways, beyond which tort liability can be established. Until that point is reached, reparations must be paid within the provisions of the no-fault plan, with no recourse to the courts.
Time Limit The period of time during which a notice of claim or proof of loss must be filed.
Tornado A whirling wind over land, accompanied by a funnel-shaped cloud. It is usually very violent and destructive in a narrow path, often for many miles.
Tort A civil wrong, other than a breach of contract, for which a court of law will afford legal relief, i.e. harming another by an act of negligence in driving an auto.
Total Disability An illness or injury which prevents an insured person from continuously performing every duty pertaining to his/her occupation or engaging in any other type of work. (This wording varies among insurance companies.)
Travel Accident Policy A limited contract covering only accidents while an insured person is traveling, usually on a commercial carrier.
Treaty An agreement between a reinsurer and a ceding insurer setting forth details of the reinsurance arrangement.
Trust A legal instrument allowing one party to control property for the benefit of another.
Turnover Rate The rate at which employees terminate covered service other than by death or retirement. Expected future turnover can be taken into account in translating contributions into benefits.
Twisting The practice of inducing by misrepresentation, or inaccurate or incomplete comparison, a policyholder in one company to lapse, forfeit or surrender his insurance for the purpose of taking out a policy in another company.
Umbrella Liability Insures losses in excess of amounts covered by other liability insurance policies; also protects the insured in many situations not covered by the usual liability polices.
Underwriter (1) a company that receives the premiums and accepts responsibility for the fulfillment of the policy contract; (2) the company employee who decides whether or not the company should assume a particular risk; (3) the agent who sells the policy.
Underwriting The process of selecting risks for insurance and determining in what amounts and on what terms the insurance company will accept the risk.
Underwriting Profit or Loss The amount of money which an insurance company gains or loses as a result of its insurance operations. It excludes investment transactions and federal income taxes.
Unearned Premium The portion of a premium that a company has collected but has yet to earn because the policy still has unexpired time to run.
Uniform Premium A rating structure in which one premium applies to all insureds, regardless of age, sex, or occupation.
Uninsurable Risk One not acceptable for insurance due to excessive risk.
Uninsured/Underinsured Motorist Coverage A form of insurance that pays the policy holder and passengers in his/her car for bodily injury caused by the owner or operator of an uninsured or inadequately insured automobile.
Verbal Threshold In no-fault auto insurance states with a verbal threshold, victims are allowed to sue in tort only if their injuries meet certain verbal descriptions of the types of injuries that render one eligible to recover for pain and suffering.
Vested Commissions Renewal commissions payable to the writing agent or his estate, whether or not he remains with the company.
Vesting A provision that a pension participant will, after meeting certain requirements, retain a right to all or part of the accrued benefits, even though the employee may leave the job before retirement.
Viatical Settlement Payment of a portion of the proceeds from life insurance to an insured who is terminally ill.
Voluntary Market The market where one seeking insurance obtains insurance in the open market with no help from the state, through an insurer of his or her own selection.
Waiting Period The length of time an employee must wait from his/her date of employment or application for coverage, to the date his/her insurance is effective.
Waiver An agreement attached to a policy which exempts from coverage certain disabilities or injuries that otherwise would be covered by the policy.
Waiver of Premium A provision in some policies to relieve the insured of premium payments falling due during a period of continuous total disability that has lasted for a specified length of time, such as three or six months.
Will The legal statement of a person’s wishes concerning the disposal of his or her property after death.
Workers Compensation A system established under state law that provides payments, without regard to fault, to employees injured in the course and scope of their employment.
Workers’ Compensation Insurance Insurance against liability imposed on certain employers to pay benefits and furnish care to employees injured, and to pay benefits to dependents of employees killed in the course of or arising out of their employment.
Written Premiums The entire amount of premiums due in a year for all polices issued by an insurance company.