Glossary
Accelerated Benefits
In the special case of terminal illness or catastrophic circumstances, this allows a portion of a life insurance policy’s death benefit to be paid out.
Acceleration Clause
Accident
An unanticipated occurrence or condition that may result in damage or injury.
Accident Forgiveness
Accident Insurance
Accident Only
An insurance contract that provides coverage, singly or in combination, for death, dismemberment, disability, or hospital and medical care caused by or necessitated as a result of accident or specified kinds of accident.
Accident Only or AD&D
Policies providing coverage, singly or in combination, for death, dismemberment, disability, or hospital and medical care caused by or necessitated as a result of accident or specified kinds of accidents. Types of coverage include student accident, sports accident, travel accident, blanket accident, specific accident or accidental death and dismemberment (AD&D).
Accidental Bodily Injury
Unexpected injury to a person.
Accidental Death & Dismemberment
An insurance contract that pays a stated benefit in the event of death and/or dismemberment caused by accident or specified kinds of accidents.
Accidental Death Benefit
In a life insurance policy, benefit in addition to the death benefit paid to the beneficiary, should death occur due to an accident. There can be certain exclusions, as well as time and age limits.
Accidental death coverage
An added rider to some life insurance policies that pays upon the named insured’s death, but only if that death is caused by an accident. If the named insured dies from natural causes, there is no coverage under this rider.
Accumulation Period
Period of time insured must incur eligible medical expenses at least equal to the deductible amount in order to establish a benefit period under a major medical expense or comprehensive medical expense policy.
Active Participant
Person whose absence from a planned event would trigger a benefit if the event needs to be canceled or postponed.
Activities of Daily Living
Bathing, preparing and eating meals, moving from room to room, getting into and out of beds or chairs, dressing, using a toilet.
Actual Cash Value (ACV)
Replacement cost minus depreciation. For example, if a mattress was destroyed in a fire and the cost to replace that item was $2,000.00 but you owned the mattress for 5 years. The value of the item is scheduled to last for 20 years, it has depreciated $500.00 the actual cash value is $1500.00.
Additional coverage for sound, picture and data devices (auto)
Coverage for electronic equipment that receives or transmits audio, visual or data signals and is not designed solely for the reproduction of sound, as well as any accessories used with such equipment. These devices do not need to be permanently installed in the vehicle, but are attached to a component of the vehicle.
Additional insured
A person, company or entity who is protected by an insurance policy owned by another party. For example, a person purchases or leases a car with bank financing, the lienholder is named as Additional Insured to protected its interest for any liability caused by purchaser of the Auto. The leaseholder requires protection because it has a financial interest in the vehicle.
Additional Living Expense
A type of protection provided in a homeowners and renters an insurance policy that can pay for reasonable extra costs that result when a policyholder is dislocated because of a covered peril. For example, if you are forced to relocate from your home due to a fire into a hotel. You would have to eat out rather than cook meals for you and your family. The additional living expenses protection would be provided for the cost difference between your regular grocery bills and eating out. Cost of eating out for the month $600.00, cost of purchasing groceries $325.00, the additional expense is $275.00.
Adjustable Rate Mortgage (ARM)
A, adjustable-rate mortgage (ARM), is a mortgage loan with the interest rate that is periodically adjusted based on an index the lender uses to borrow on the credit markets. The loan may be the lender’s standard variable rate above their base rate. It can be a direct and defined link to the lenders underlying index, but lenders may not offer any specific connection to an underlying market or index, then it is the lenders discretion to change the rate as it feels fit. The term “variable-rate mortgage” is also used.
Adjuster
An insurance professional who assigned to investigate coverage and the evidences of a loss to administer the compensation an insurance company pays its insured, or a third-party making a claim. Other names are, field adjuster, an independent adjuster or a claims examiner.
Admission
Hospital inpatient care for any medical condition.
Admitted Assets
Insurer assets which can be valued and included on the balance sheet to determine financial viability of the company.
Admitted Company
An admitted company is an insurance company that is domiciled or headquartered in one state and is allowed to conduct business in another state. Each state governs all Insurance licenses; therefore, all insurance company must be licensed in the state is does business in and abide by its rules and regulations.
Advance Premiums
The term used to describe an initial payment of premium or sometimes referred to as a deposit to bind an insurance policy. Advance premium can also refer to pre-paid premiums, in which the policyholder makes a premium payment before policy has started. For example, a gas bill or other utility bill is paid for service already provided whereas, an advance premium is paid for services to be provided.
Adverse Carrier
Term used to refer to the other party’s insurance company. For example, if you get into an accident and your insurance company is Geico and the other person in the accident has Progressive Insurance.
Adverse Selection
Adverse selection has different meanings depending on the industry. In the insurance industry the person purchasing insurance has withheld information about themselves or their business to gain insurance coverage at a lower cost than the true risk to insure that person or business. For example, if you are seeking an auto insurance policy and has children of legal driving age with a license to drive and reside in your home but do not disclose the children live in the home is adverse selection. The additional youth driver poses a high risk than their parents.
Advisory Organization
A group of member companies whose main function is to gather and publish loss statistics trending loss costs.
Affiliate
A person or entity that directly, or indirectly, through one or more other persons or entities, controls, is controlled by or is under common control with the insurer.
After-Market Parts
Aftermarket parts, are not made by the original manufacturer, are occasionally used to replace damaged parts in a vehicle.
Agent
A person who acts as a representative for the insurance company to sell its insurance products on a commission basis. There are ‘exclusive’, ‘non-exclusive’ and independent agent.
Aggregate
The maximum dollar amount or total amount of coverage an insurance covers for a single loss, or multiple losses, during a policy period, or on a specific project. For example, if you have a policy with 1 million for any single occurrence.
Agreed Value Policy
Agreed value is a provision in the coverage where policyholder and the insurance company agree upon the value of your vehicle when you purchase the policy. … No other changes in the policy will be affected and ion the event of a covered loss, you’ll be compensated the smaller of the repair cost to fix the vehicle or the agreed value, regardless of any depreciation. For example, if you own a classic car that cannot be replaced and has special meaning to the owner. The owner and the insurance carrier agree to value the car at $500,000.00 then the premium will be adjusted to reflex the agreed value.
Aircraft
Coverage for aircraft (hull) and their contents; aircraft owners’ and aircraft manufacturers liability to passengers, airports and other third parties.
Aircraft Insurance
Coverage for the insured in the event that the insured’s negligent acts and/or omissions result in losses in connection with the use, ownership, or maintenance of aircraft.
ALAE
Allocated loss adjustment expenses (ALAE) are attributed to the processing of a specific insurance claim. ALAE is part of an insurer’s expense reserves. It is one of the largest expenses for which an insurer has to set aside funds—along with contingent commissions
Alien Company
An alien insurer is an insurance provider offering coverage in a country other than the company’s home country. When the policy is sold in a country other than where the insurer is headquartered or domiciled, the provider is considered “alien.” This is different than an admitted company, which is an insurer from another state. For example, a policy from Lloyds of London sold in Florida would be an “Alien Company”.
All other perils not enumerated
All causes of loss not listed on an insurance policy.
Allied Lines
Coverages which are generally written with property insurance, e.g., glass, tornado, windstorm and hail; sprinkler and water damage; explosion, riot, and civil commotion; growing crops; flood; rain; and damage from aircraft and vehicle, etc.
All-Risk
Also known as open peril, this type of policy covers a broad range of losses. The policy covers risks not explicitly excluded in the policy contract.
All-terrain vehicle (ATV) insurance
Insurance designed to cover off-road, all-terrain classes of vehicles.
Alternative Workers’ Compensation
Other than standard workers’ compensation coverage, employer’s liability and excess workers’ compensation (e.g., large deductible, managed care).
Ambulatory Services
Health services provided to members who are not confined to a health care institution. Ambulatory services are often referred to as “outpatient” services.
Amendment
A change to the basic policy contract. An amendment alters the policy; an endorsement adds to it.
Annual Administrative Fee
Charge for expenses associated with administering a group employee benefit plan.
Annual Crediting Cap
The maximum rate that the equity-indexed annuity can be credited in a year. If a contract has an upper limit, or cap, of 7% and the index linked to the annuity gained 7.2%, only 7% would be credited to the annuity.
Annual percentage rate (APR)
The amount of interest charged each year for borrowing or achieved through investment expressed as a single percentage. The APR is the actual yearly cost of the amount financed. For example, a credit card company may claim that it only charges 2 percent per month, but that translates to an APR of 24 percent (2 percent at 12 months).
Annual percentage yield (APY)
The total yearly rate of return on an investment, accounting for the compounding of interest. This allows for the comparison of varying interest-rate agreements by expressing yield in an annualized percentage number.
Annual Statement
An annual report required to be filed with each state in which an insurer does business. This report provides a snapshot of the financial condition of a company and significant events which occurred throughout the reporting year.
Annuitant
The beneficiary of an annuity payment, or person during whose life and annuity is payable.
Annuitization
Process by which you convert part or all of the money in a qualified retirement plan or non-qualified annuity contract into a stream of regular income payments, either for your lifetime or the lifetimes of you and your joint annuitant. Once you choose to annuitize, the payment schedule and the amount is generally fixed and can’t be altered.
Annuitization Options
Choices in the way to annuitize. For example, life with 10-year period certain means payouts will last a lifetime, but should the annuitant die during the first 10 years, the payments will continue to beneficiaries through the 10th year. Selection of such an option reduces the amount of the periodic payment.
Annuities – Immediate Non-variable
An annuity contract that provides for the fixed payment of the annuity at the end of the first interval of payment after purchase. The interval may vary, however the annuity payouts must begin within 13 months.
Annuity
A type of insurance vehicle issued by an insurance company where contributions and earnings are tax-deferred. There are several types of annuities: fixed, variable, immediate, deferred, indexed and equity linked. As an annuity owner, you have control over how long the annuity is invested, when you receive benefits and how often you are paid.
Annuity Certain
A contract that provides an income for a specified number of years, regardless of life or death.
Anti-lock Braking System (ABS)
An automated vehicle braking system that helps prevent a vehicle’s wheels from locking up in order to help improve driver control. ABS automatically pumps the brake system to avoid wheel lockup. Most recent-model commercial and personal autos come equipped with ABS.
Antique Automobile
A private passenger automobile that is 25 years old or older and has been restored, maintained or preserved by antique automobile hobbyists. Antique, vintage and classic automobiles can be covered with classic car insurance.
Anti-Theft Device
There are essentially two types of anti-theft devices: passive and active. Passive devices require no action or activation and automatically arm themselves when the vehicle is turned off, the ignition key is removed or a door is shut. Active devices require some action or activation, such as pushing a button or placing a “lock” somewhere in your car. Typically, with active devices, you must re-activate them every time you set them or they won’t work. Keep in mind that you could get a discount for having an anti-theft device in your car.
Applicant
Prospective policyholder; completes and signs the insurance application.
Application
A statement of information made by a person applying for life insurance. It helps the life insurance company assess the acceptability of risk. Statement made in the application are used to decide on an applicant’s underwriting classification and premium rates.
Appraisal
A process by which an insurance carrier and a homeowner arrive at an agreed value for a loss covered by a homeowners insurance policy. In auto insurance, an appraisal is a process by which a body shop employee or auto damage appraiser estimates the cost to repair a damaged vehicle.
Arbitration
A process of settling a dispute through an impartial party. It is used as an alternative to litigation.
Arrestee
A person in custody whose release may be secured by posting bail.
Arson
Intentional and malicious burning of property.
Assessed Value
Estimated value for real or personal property established by a taxing entity
Asset
Any item a person owns or is paying for over time. This can include real estate, personal property, automobiles or other personal possessions. In addition to such tangible items, assets can also be intangible, such as patents or copyrights the insured may own.
Asset allocation
The strategy of investing your money among several different areas, such as stocks, bonds and cash instruments, to balance risk and return in your portfolio based on your goals, risk tolerance and time horizon. Asset allocation programs do not assure a profit or protect against loss in a declining market.
Asset class
A set of securities that are standardized and act similarly in the financial marketplace. The main financial asset classes are stocks, bonds and money market funds. However, classes can include real property (such as buildings and land) and personal property (such as office furnishings).
Asset Risk
In the risk-based capital formula, risk assigned to the company’s assets.
Assets
The items on a balance sheet showing the value of property owned.
Assigned Risk (AIP)
A driver or vehicle owner who cannot qualify for insurance in the regular market. He or she must get coverage through a state assigned risk plan which specifies that each company must accept a proportionate share of these drivers/owners.
Assumed Reinsurance
The assumption of risk from another insurance entity within a reinsurance agreement or treaty.
Assuming Company
An insurance company that accepts the risk transferred from another insurance company in a reinsurance transaction.
Assured
The driver who caused an accident, either fully or partially.
At-Fault
The driver who caused an accident, either fully or partially.
Attained Age
Insured’s age at a particular time. For example, many term life insurance policies allow an insured to convert to permanent insurance without a physical examination at the insured’s then attained age. Upon conversion, the premium usually rises substantially to reflect the insured’s age and diminished life expectancy.
Authorized Company
An insurer licensed or admitted to do business in a particular state.
Authorized Control Level Risk Based Capital
Theoretical amount of capital plus surplus an insurance company should maintain.
Authorized Reinsurance
Reinsurance placed with a reinsurer who is licensed or otherwise allowed to conduct reinsurance within a state
Auto Damage (AD)
Division of the claims department that handles auto claims.
Auto Damage Adjuster
The auto damage adjuster is responsible for writing the repair estimate for your vehicle. This adjuster will also answer your questions about the repair process, your rental vehicle, or your total loss settlement.
Auto Insurance
Auto Insurance provides protection from losses resulting from owning and operating an auto. The insurance covers losses to the insured’s property and losses for which the insured is liable as a result of owning or operating an auto.Auto Insurance provides protection from losses resulting from owning and operating an auto. The insurance covers losses to the insured’s property and losses for which the insured is liable as a result of owning or operating an auto.
Auto Liability
Coverage that protects against financial loss because of legal liability for motor vehicle related injuries (bodily injury and medical payments) or damage to the property of others caused by accidents arising out of ownership, maintenance or use of a motor vehicle (including recreational vehicles such as motor homes). Commercial is defined as all motor vehicle policies that include vehicles that are used primarily in connection with business, commercial establishments, activity, employment, or activities carried on for gain or profit. No Fault is defined by the state concerned.
Auto loan calculator
An automated tool that helps estimate auto loan payments. Some companies such as financial and consumer credit institutions offer auto loan calculators on their websites for consumers so they can estimate their car payments by entering variables such as vehicle cost, interest rate and the length of the loan.
Auto Physical Damage
Motor vehicle insurance coverage (including collision, vandalism, fire and theft) that insures against material damage to the insured’s vehicle. Commercial is defined as all motor vehicle policies that include vehicles that are used in connection with business, commercial establishments, activity, employment, or activities carried on for gain or profit.
Auto safety ratings
An analysis of how vehicles stand up under various types of crash testing. The National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute for Highway Safety (IIHS) are two organizations that conduct and track vehicle crash-test data and provide vehicle safety ratings that detail the ability of vehicles to withstand various types of collisions.
Auto Theft
The theft of an auto is a type of loss that is covered under comprehensive coverage.
Automatic Deposit
A regularly scheduled electronic deposit to an account. Also known as direct deposit.
Automobile Insurance
Coverage on the risks associated with driving or owning an automobile. It can include collision, liability, comprehensive, medical, and uninsured motorist coverages.
Automobile Liability Insurance
Coverage if an insured is legally liable for bodily injury or property damage caused by an automobile.