Glossary

A form of insurance that pays damages equal to the replacement value of damaged property minus depreciation. (See Replacement Cost)

An individual employed by a property/casualty insurer to evaluate losses and settle policyholder claims. These adjusters differ from public adjusters, who negotiate with insurers on behalf of policyholders, and receive a portion of a claims settlement. Independent adjusters are independent contractors who adjust claims for different insurance companies.

Person or other legal entity designated to receive the assets from an account or policy when the owner(s) dies.

A security that obligates the issuer to pay interest at specified intervals and to repay the principal amount of the loan at maturity. In insurance, a form of surety ship. Bonds of various types guarantee a payment or a reimbursement for financial losses resulting from dishonesty, failure to perform and other acts.

Annuities and some life insurance policies will accrue a cash value. The cash value is the amount that will be paid to you in the event that you surrender your policy for cash. (See Surrender)

Term used for statistical recording purposes to refer to a single incident or a series of closely related incidents causing severe insured property losses totaling more than a given amount, currently $25 million.

In property insurance, it requires the policyholder to carry insurance equal to a specified percentage of the value of property to receive full payment on a loss. For health insurance, it is a percentage of each claim above the deductible paid by the policyholder. For a 20% health insurance coinsurance clause, the policyholder pays for the deductible plus 20% of his covered losses. After paying 80% of losses up to a specified ceiling, the insurer starts paying 100 percent of losses.

Percentage of each premium dollar a property/casualty insurer spends on claims and expenses. A decrease in the combined ratio means financial results are improving; an increase means they are deteriorating.

A fixed payment for a covered medical service, paid by an insured person each time a medical service is accessed. Also known as a copay.

Part of a property or liability insurance policy that states the name and address of policyholder, property insured, its location and description, the policy period, premiums, and supplemental information. Referred to as the “dec page.”

Toggle ContentThe amount of loss paid by the policyholder. Either a specified dollar amount, a percentage of the claim amount, or a specified amount of time that must elapse before benefits are paid. The bigger the deductible, the lower the premium charged for the same coverage.

Toggle The portion of premium that applies to the expired part of the policy period. Insurance premiums are payable in advance but the insurance company does not fully earn them until the policy period expires.

The length of time between when an injury or illness begins and receiving benefit payments from an insurer. Also known as the “waiting” or “qualifying” period.

A written form attached to an insurance policy that alters the policy’s coverage, terms, or conditions. Sometimes called a rider.

A provision in an insurance policy that eliminates coverage for certain risks, people, property classes, or locations.

Percentage of each premium dollar that goes to insurers’ expenses including overhead, marketing, and commissions.

Record of losses.

A statement sent by a health insurance company to covered individuals explaining what medical treatments and/or services were paid for on their behalf.

Possibility of loss.

Toggle ContentAttached to a policy, a floater insures movable property, covering losses wherever they may occur. Among the items often insured with a homeowners floater are expensive jewelry, musical instruments, and furs. It provides broader coverage than a regular homeowners policy for these items.

A general and temporary condition where two or more acres of normally dry land or two or more properties are inundated by water or mudflow.

Number of times a loss occurs. One of the criteria used in calculating premium rates.

Equal to 365 days of insured coverage for a single dwelling. It is the standard measurement for homeowners insurance.

Provide financial compensation for losses.

Insurance written in an amount approximating the value of the insured property.

Insurance for what the policyholder is legally obligated to pay because of bodily injury or property damage caused to another person.

Maximum amount of insurance that can be paid for a covered loss.

Type or kind of insurance, such as personal lines or commercial lines.

A reduction in the quality or value of a property, or a legal liability.

Reports provided by the insurance company that document the claim activity on each of your policies.

Percentage of each premium dollar an insurer spends on claims.

Any medical plan that meets the Affordable Care Act requirement for having health coverage. To avoid the penalty for not having insurance you must be enrolled in a plan that qualifies as minimum essential coverage (sometimes called “qualifying health coverage”).

Peril specifically mentioned as covered in an insurance policy.

Auto insurance coverage that pays for each driver’s own injuries, regardless of who caused the accident. No-fault varies from state to state. It also refers to an auto liability insurance system that restricts lawsuits to serious cases. Such policies are designed to promote faster reimbursement and to reduce litigation.

A written notice required by insurance companies immediately after an accident or other loss. Part of the standard provisions defining a policyholder’s responsibilities after a loss.

A period of time in which individuals can openly choose an alternate insurance plan, without being re-assessed for insurability.

A specific risk or cause of loss covered by an insurance policy, such as a fire, windstorm, flood, or theft. A named-peril policy covers the policyholder only for the risks named in the policy in contrast to an open-perils policy (or all-risk policy), which covers all causes of loss except those specifically excluded.

The price of an insurance policy, typically charged annually, semiannually, or monthly.

A state tax on premiums paid by its residents and businesses and collected by insurers.

The sum of the face amounts, plus dividend additions, of life insurance policies outstanding at a given time.

The total premiums on all policies written by an insurer during a specified period of time, regardless of what portions have been earned. Net premiums written are premiums written after reinsurance transactions.

Documents showing the insurance company that a loss occurred.

Insurance that pays the dollar amount needed to replace damaged personal property or dwelling property without deducting for depreciation but limited by the maximum dollar amount shown on the declarations page of the policy.

An attachment to an insurance policy that alters the policy’s coverage or terms.

Management of the varied risks to which a business firm or association might be subject. It includes analyzing all exposures to gauge the likelihood of loss and choosing options to better manage or minimize loss. These options typically include reducing and eliminating the risk with safety measures, buying insurance, and self-insurance.

A list of individual items or groups of items that are covered under one policy or a listing of specific benefits, charges, credits, assets or other defined items.

The legal process by which an insurance company, after paying a loss, seeks to recover the amount of the loss from another party who is legally liable for it.

A full cancellation of a life insurance policy or annuity. You are allowed to surrender your policy at any time.

A legal term denoting a wrongful act resulting in injury or damage on which a civil court action, or legal proceeding, may be based.

The body of law governing negligence, intentional interference, and other wrongful acts for which civil action can be brought, except for breach of contract, which is covered by contract law.

Refers to legislation designed to reduce liability costs through limits on various kinds of damages and through modification of liability rules.

The result of the policyholder’s failure to buy sufficient insurance. An underinsured policyholder may only receive part of the cost of replacing or repairing damaged items covered in the policy.

Examining, accepting, or rejecting insurance risks and classifying the ones that are accepted, in order to charge appropriate premiums for them.

The portion of a premium already received by the insurer under which protection has not yet been provided. The entire premium is not earned until the policy period expires, even though premiums are typically paid in advance.

Products—such as dental, life, disability, critical-illness and accident insurance, as well as ID theft protection, legal services and financial counseling—offered through an employer but paid for partially or solely by workers through payroll deferral.