Service Area:


    A
  • ACTUAL CASH VALUE

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

  • APPRAISAL

    A survey to determine a property's insurable value, or the amount of a loss.

  • AUTO INSURANCE POLICY

    There are basically six different types of coverages. Some may be required by law. Others are optional. They are: 1.Bodily injury liability, for injuries the policyholder causes to someone else. 2.Medical payments or Personal Injury Protection (PIP) for treatment of injuries to the driver and passengers of the policyholder's car. 3.Property damage liability, for damage the policyholder causes to someone else's property. 4.Collision, for damage to the policyholder's car from a collision. 5.Comprehensive, for damage to the policyholder's car not involving a collision with another car (including damage from fire, explosions, earthquakes, floods, and riots), and theft. 6.Uninsured motorists coverage, for costs resulting from an accident involving a hit-and-run driver or a driver who does not have insurance.

  • B
  • BALANCE SHEET

    Provides a snapshot of a company’s financial condition at one point in time. It shows assets, including investments and reinsurance, and liabilities, such as loss reserves to pay claims in the future, as of a certain date. It also states a company’s equity, known as policyholder surplus. Changes in that surplus are one indicator of an insurer’s financial standing.

  • BINDER

    Temporary authorization of coverage issued prior to the actual insurance policy.

  • BLANKET COVERAGE

    Coverage for more than one type of property at one location or one type of property at more than one location. Example: chain store

  • BODILY INJURY LIABILITY COVERAGE

    Portion of an auto insurance policy that covers injuries the policyholder causes to someone else.

  • BOILER AND MACHINERY INSURANCE

    Often called Equipment Breakdown, or Systems Breakdown insurance. Commercial insurance that covers damage caused by the malfunction or breakdown of boilers, and a vast array of other equipment including air conditioners, heating, electrical, telephone and computer systems.

  • BOND

    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 suretyship. Bonds of various types guarantee a payment or a reimbursement for financial losses resulting from dishonesty, failure to perform and other acts.

  • BROKER

    An intermediary between a customer and an insurance company. Brokers typically search the market for coverage appropriate to their clients. They work on commission and usually sell commercial, not personal, insurance. In life insurance, agents must be licensed as securities brokers/dealers to sell variable annuities, which are similar to stock market-based investments.

  • BUSINESS INCOME AND EXTRA EXPENSE INSURANCE (also known as BUSINESS INTERRUPTIONINSURANCE)

    Commercial coverage that reimburses a business owner for lost profits and continuing fixed expenses during the time that a business must stay closed while the premises are being restored because of physical damage from a covered peril, such as a fire. It also may cover financial losses that may occur if civil authorities limit access to an area after a disaster and their actions prevent customers from reaching the business premises. Depending on the policy, civil authorities coverage may start after a waiting period and last for two or more weeks.

  • BUSINESSOWNERS POLICY / BOP

    A policy that combines property, liability and business interruption coverages for small- to medium-sized businesses. Coverage is generally cheaper than if purchased through separate insurance policies.

  • C
  • CLAIMS MADE POLICY

    A form of insurance that pays claims presented to the insurer during the term of the policy or within a specific term after its expiration. It limits liability insurers' exposure to unknown future liabilities. (See Occurrence policy)

  • COINSURANCE

    In property insurance, 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 percent health insurance coinsurance clause, the policyholder pays for the deductible plus 20 percent of his covered losses. After paying 80 percent of losses up to a specified ceiling, the insurer starts paying 100 percent of losses

  • COLLISION COVERAGE

    Portion of an auto insurance policy that covers the damage to the policyholder's car from a collision.

  • COMMERCIAL GENERAL LIABILITY INSURANCE / CGL

    A broad commercial policy that covers all liability exposures of a business that are not specifically excluded. Coverage includes product liability, completed operations, premises and operations, and independent contractors.

  • COMMERCIAL LINES

    Products designed for and bought by businesses. Among the major coverages are boiler and machinery, business income, commercial auto, comprehensive general liability, directors and officers liability, fire and allied lines, inland marine, medical malpractice liability, product liability, professional liability, surety and fidelity, and workers compensation. Most of these commercial coverages can be purchased separately except business income, which must be added to a fire insurance (property) policy. (See Commercial multiple peril policy)

  • COMPLETED OPERATIONS COVERAGE

    Pays for bodily injury or property damage caused by a completed project or job. Protects a business that sells a service against liability claims

  • COMPREHENSIVE COVERAGE

    Portion of an auto insurance policy that covers damage to the policyholder's car not involving a collision with another car (including damage from fire, explosions, earthquakes, floods and riots), and theft.

  • CRIME INSURANCE

    Term referring to property coverages for the perils of burglary, theft and robbery.

  • D
  • DECLARATION

    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.”

  • DEDUCTIBLE

    The 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.

  • DIMINUTION OF VALUE

    The idea that a vehicle loses value after it has been damaged in an accident and repaired.

  • DIRECTORS AND OFFICERS LIABILITY INSURANCE/D&O

    Directors and officers liability insurance (D&O) covers directors and officers of a company for negligent acts or omissions and for misleading statements that result in suits against the company. There are a variety of D&O coverages. Corporate reimbursement coverage indemnifies directors and officers of the organization. Side-A coverage provides D&O coverage for personal liability when directors and officers are not indemnified by the firm. Entity coverage, for claims made specifically against the company, is also available. D&O policies may be broadened to include coverage for employment practices liability.

  • E
  • EARNED PREMIUM

    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.

  • EARTHQUAKE INSURANCE

    Covers a building and its contents, but includes a large percentage deductible on each. A special policy or endorsement exists because earthquakes are not covered by standard homeowners or most business policies.

  • EMPLOYEE DISHONESTY COVERAGE

    Covers direct losses and damage to businesses resulting from the dishonest acts of employees. (See Fidelity bond)

  • EMPLOYER’S LIABILITY

    Part B of the workers compensation policy that provides coverage for lawsuits filed by injured employees who, under certain circumstances, can sue under common law. (See Exclusive remedy)

  • EMPLOYMENT PRACTICES LIABILITY COVERAGE

    Liability insurance for employers that covers wrongful termination, discrimination and other violations of employees’ legal rights.

  • ENDORSEMENT

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

  • ERRORS AND OMISSIONS COVERAGE / E&O

    A professional liability policy covering the policyholder for negligent acts and omissions that may harm his or her clients

  • EXPERIENCE

    Record of losses.

  • EXPOSURE

    Possibility of loss.

  • F
  • FIDELITY BOND

    A form of protection that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. It usually insures a business for losses caused by the dishonest acts of its employees.

  • FIDUCIARY BOND

    A type of surety bond, sometimes called a probate bond, which is required of certain fiduciaries, such as executors and trustees, that guarantees the performance of their responsibilities.

  • FIDUCIARY LIABILITY

    Legal responsibility of a fiduciary to safeguard assets of beneficiaries. A fiduciary, for example a pension fund manager, is required to manage investments held in trust in the best interest of beneficiaries. Fiduciary liability insurance covers breaches of fiduciary duty such as misstatements or misleading statements, errors and omissions.

  • FLOOD INSURANCE

    Coverage for flood damage is available from the federal government under the National Flood Insurance Program but is sold by licensed insurance agents. Flood coverage is excluded under homeowners policies and many commercial property policies. However, flood damage is covered under the comprehensive portion of an auto insurance policy.

  • FRAUD

    Intentional lying or concealment by policyholders to obtain payment of an insurance claim that would otherwise not be paid, or lying or misrepresentation by the insurance company managers, employees, agents and brokers for financial gain.

  • FREQUENCY

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

  • G
  • GRAMM-LEACH-BLILEY ACT

    Financial services legislation, passed by Congress in 1999, that removed Depression era prohibitions against the combination of commercial banking and investment banking activities. It allows insurance companies, banks and securities firms to engage in each other's activities and own one another.

  • GROSS ANNUITY COST

    A monetary amount equal to the present value of future periodic income payments under an annuity contract, calculated on a gross basis, with a specific provision for expense loading. Contrast with net annuity cost.

  • GROUP INSURANCE

    A single policy covering a group of individuals, usually employees of the same company or members of the same association and their dependents. Coverage occurs under a master policy issued to the employer or association.

  • GUARANTEE PERIOD

    Period during which the level of interest specified under a fixed annuity is guaranteed.

  • GUARANTY FUND

    The mechanism by which solvent insurers ensure that some of the policyholder and third-party claims against insurance companies that fail are paid. Such funds are required in all 50 states, the District of Columbia and Puerto Rico, but the type and amount of claim covered by the fund varies from state to state. Some states pay policyholders’ unearned premiums—the portion of the premium for which no coverage was provided because the company was insolvent. Some have deductibles. Most states have no limits on workers compensation payments. Guaranty funds are supported by assessments on insurers doing business in the state.

  • I
  • IDENTITY THEFT INSURANCE

    Coverage for expenses incurred as the result of an identity theft. Can include costs for notarizing fraud affidavits and certified mail, lost income from time taken off from work to meet with law-enforcement personnel or credit agencies, fees for reapplying for loans and attorney's fees to defend against lawsuits and remove criminal or civil judgments.

  • INCURRED BUT NOT REPORTED LOSSES / IBNR

    Losses that are not filed with the insurer or reinsurer until years after the policy is sold. Some liability claims may be filed long after the event that caused the injury to occur. Asbestos-related diseases, for example, do not show up until decades after the exposure. IBNR also refers to estimates made about claims already reported but where the full extent of the injury is not yet known, such as a workers compensation claim where the degree to which work-related injuries prevents a worker from earning what he or she earned before the injury unfolds over time. Insurance companies regularly adjust reserves for such losses as new information becomes available.

  • INCURRED LOSSES

    Losses occurring within a fixed period, whether or not adjusted or paid during the same period.

  • INDEMNIFY

    Provide financial compensation for losses.

  • INLAND MARINE INSURANCE

    This broad type of coverage was developed for shipments that do not involve ocean transport. Covers articles in transit by all forms of land and air transportation as well as bridges, tunnels and other means of transportation and communication. Floaters that cover expensive personal items such as fine art and jewelry are included in this category. (See Floater)

  • INSOLVENCY

    Insurer’s inability to pay debts. Insurance insolvency standards and the regulatory actions taken vary from state to state. When regulators deem an insurance company is in danger of becoming insolvent, they can take one of three actions: place a company in conservatorship or rehabilitation if the company can be saved or liquidation if salvage is deemed impossible. The difference between the first two options is one of degree – regulators guide companies in conservatorship but direct those in rehabilitation. Typically the first sign of problems is inability to pass the financial tests regulators administer as a routine procedure.

  • INSURABLE INTEREST

    In insurance, a person exhibits an insurable interest in a potential loss if that person will suffer a genuine economic loss if the event insured against occurs. Without the presence of insurable interest, an insurance contract is not formed for a lawful purpose and, thus, is not a valid contract.

  • INSURABLE RISK

    Risks for which it is relatively easy to get insurance and that meet certain criteria. These include being definable, accidental in nature, and part of a group of similar risks large enough to make losses predictable. The insurance company also must be able to come up with a reasonable price for the insurance.

  • INSURANCE

    A system to make large financial losses more affordable by pooling the risks of many individuals and business entities and transferring them to an insurance company or other large group in return for a premium.

  • INSURANCE-TO-VALUE

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

  • L
  • LIABILITY INSURANCE

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

  • LIMITS

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

  • LIQUIDITY

    The ability and speed with which a security can be converted into cash.

  • LIQUOR LIABILITY

    Coverage for bodily injury or property damage caused by an intoxicated person who was served liquor by the policyholder.

  • LOSS

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

  • LOSS RATIO

    Percentage of each premium dollar an insurer spends on claims.

  • LOSS RESERVES

    The company’s best estimate of what it will pay for claims, which is periodically readjusted. They represent a liability on the insurer’s balance sheet.

  • M
  • MALPRACTICE INSURANCE

    Professional liability coverage for physicians, lawyers, and other specialists against suits alleging negligence or errors and omissions that have harmed clients.

  • N
  • NATIONAL FLOOD INSURANCE PROGRAM

    Federal government-sponsored program under which flood insurance is sold to homeowners and businesses.

  • NEGLIGENCE

    Failure to act with the legally required degree of care for others, resulting in harm to them.

  • NO-FAULT

    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.

  • NON-ADMITTED INSURER

    Insurers licensed in some states, but not others. States where an insurer is not licensed call that insurer non-admitted. They sell coverage that is unavailable from licensed insurers within the state.

  • O
  • OCCUPATIONAL DISEASE

    Abnormal condition or illness caused by factors associated with the workplace. Like occupational injuries, this is covered by workers compensation policies. (SeeWorkers compensation) )

  • OCCURRENCE POLICY

    Insurance that pays claims arising out of incidents that occur during the policy term, even if they are filed many years later. (See Claims-made policy)

  • OPERATING EXPENSES

    The cost of maintaining a business’s property, includes insurance, property taxes, utilities and rent, but excludes income tax, depreciation and other financing expenses.

  • OPTIONS

    Contracts that allow, but do not oblige, the buying or selling of property or assets at a certain date at a set price.

  • ORDINANCE OR LAW COVERAGE

    Endorsement to a property policy, including homeowners, that pays for the extra expense of rebuilding to comply with ordinances or laws, often building codes, that did not exist when the building was originally built. For example, a building severely damaged in a hurricane may have to be elevated above the flood line when it is rebuilt. This endorsement would cover part of the additional cost.

  • P
  • PERSONAL INJURY PROTECTION COVERAGE / PIP

    Portion of an auto insurance policy that covers the treatment of injuries to the driver and passengers of the policyholder’s car.

  • POLLUTION INSURANCE

    Policies that cover property loss and liability arising from pollution-related damages, for sites that have been inspected and found uncontaminated. It is usually written on a claims-made basis so policies pay only claims presented during the term of the policy or within a specified time frame after the policy expires. (See Claims-made policy )

  • PREMISES

    The particular location of the property or a portion of it as designated in an insurance policy.

  • PREMIUM TAX

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

  • PRODUCT LIABILITY

    A section of tort law that determines who may sue and who may be sued for damages when a defective product injures someone. No uniform federal laws guide manufacturer’s liability, but under strict liability, the injured party can hold the manufacturer responsible for damages without the need to prove negligence or fault.

  • PRODUCT LIABILITY INSURANCE

    Protects manufacturers’ and distributors’ exposure to lawsuits by people who have sustained bodily injury or property damage through the use of the product.

  • PROFESSIONAL LIABILITY INSURANCE

    Covers professionals for negligence and errors or omissions that injure their clients.

  • PROOF OF LOSS

    Documents showing the insurance company that a loss occurred.

  • PROPERTY/CASUALTY INSURANCE

    Covers damage to or loss of policyholders’ property and legal liability for damages caused to other people or their property. Property/casualty insurance, which includes auto, homeowners and commercial insurance, is one segment of the insurance industry. The other sector is life/health. Outside the United States, property/casualty insurance is referred to as nonlife or general insurance.

  • R
  • RATE

    The cost of a unit of insurance, usually per $1,000. Rates are based on historical loss experience for similar risks and may be regulated by state insurance offices.

  • RATING BUREAU

    The insurance business is based on the spread of risk. The more widely risk is spread, the more accurately loss can be estimated. An insurance company can more accurately estimate the probability of loss on 100,000 homes than on ten. Years ago, insurers were required to use standardized forms and rates developed by rating agencies. Today, large insurers use their own statistical loss data to develop rates. But small insurers, or insurers focusing on special lines of business, with insufficiently broad loss data to make them actuarially reliable depend on pooled industry data collected by such organizations as the Insurance Services Office (ISO) which provides information to help develop rates such as estimates of future losses and loss adjustment expenses like legal defense costs.

  • RECEIVABLES

    Amounts owed to a business for goods or services provided.

  • REINSTATEMENT

    The process by which an insurer puts back into force an insurance policy that has either been terminated for nonpayment of premiums or continued as extended term or reduced paid-up coverage.

  • REINSURANCE

    Insurance bought by insurers. A reinsurer assumes part of the risk and part of the premium originally taken by the insurer, known as the primary company. Reinsurance effectively increases an insurer's capital and therefore its capacity to sell more coverage. The business is global and some of the largest reinsurers are based abroad. Reinsurers have their own reinsurers, called retrocessionaires. Reinsurers don’t pay policyholder claims. Instead, they reimburse insurers for claims paid.

  • REPLACEMENT COST

    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.

  • RETENTION

    The amount of risk retained by an insurance company that is not reinsured.

  • RISK

    The chance of loss or the person or entity that is insured.

  • RISK MANAGEMENT

    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.

  • S
  • SALVAGE

    Damaged property an insurer takes over to reduce its loss after paying a claim. Insurers receive salvage rights over property on which they have paid claims, such as badly-damaged cars. Insurers that paid claims on cargoes lost at sea now have the right to recover sunken treasures. Salvage charges are the costs associated with recovering that property.

  • SCHEDULE

    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.

  • SELF-INSURANCE

    The concept of assuming a financial risk oneself, instead of paying an insurance company to take it on. Every policyholder is a self-insurer in terms of paying a deductible and co-payments. Large firms often self-insure frequent, small losses such as damage to their fleet of vehicles or minor workplace injuries. However, to protect injured employees state laws set out requirements for the assumption of workers compensation programs. Self-insurance also refers to employers who assume all or part of the responsibility for paying the health insurance claims of their employees. Firms that self insure for health claims are exempt from state insurance laws mandating the illnesses that group health insurers must cover.

  • SEVERITY

    Size of a loss. One of the criteria used in calculating premiums rates.

  • SOLVENCY

    Insurance companies’ ability to pay the claims of policyholders. Regulations to promote solvency include minimum capital and surplus requirements, statutory accounting conventions, limits to insurance company investment and corporate activities, financial ratio tests, and financial data disclosure.

  • SUBROGATION

    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.

  • SURETY BOND

    A contract guaranteeing the performance of a specific obligation. Simply put, it is a three-party agreement under which one party, the surety company, answers to a second party, the owner, creditor or “obligee,” for a third party’s debts, default or nonperformance. Contractors are often required to purchase surety bonds if they are working on public projects. The surety company becomes responsible for carrying out the work or paying for the loss up to the bond “penalty” if the contractor fails to perform.

  • T
  • TERRITORIAL RATING

    A method of classifying risks by geographic location to set a fair price for coverage. The location of the insured may have a considerable impact on the cost of losses. The chance of an accident or theft is much higher in an urban area than in a rural one, for example.

  • TERRORISM COVERAGE

    Included as a part of the package in standard commercial insurance policies before September 11, 2001 virtually free of charge. Since September 11, terrorism coverage prices have increased substantially to reflect the current risk.

  • TORT

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

  • TORT REFORM

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

  • TOTAL LOSS

    The condition of an automobile or other property when damage is so extensive that repair costs would exceed the value of the vehicle or property.

  • U
  • UMBRELLA POLICY

    Coverage for losses above the limit of an underlying policy or policies such as homeowners and auto insurance. While it applies to losses over the dollar amount in the underlying policies, terms of coverage are sometimes broader than those of underlying policies.

  • UNDERINSURANCE

    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.

  • UNDERWRITING

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

  • UNEARNED PREMIUM

    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.

  • UNINSURABLE RISK

    Risks for which it is difficult for someone to get insurance. (See Insurable risk )

  • UNINSURED MOTORISTS COVERAGE

    Portion of an auto insurance policy that protects a policyholder from uninsured and hit-and-run drivers.

  • V
  • VANDALISM

    The malicious and often random destruction or spoilage of another person’s property.

  • VOID

    A policy contract that for some reason specified in the policy becomes free of all legal effect. One example under which a policy could be voided is when information a policyholder provided is proven untrue.

  • W
  • WORKERS COMPENSATION

    Insurance that pays for medical care and physical rehabilitation of injured workers and helps to replace lost wages while they are unable to work. State laws, which vary significantly, govern the amount of benefits paid and other compensation provisions.

  • WRAP-UP INSURANCE

    Broad policy coordinated to cover liability exposures for a large group of businesses that have something in common. Might be used to insure all businesses working on a large construction project, such as an apartment complex.