Insurance Dictionary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z #

Select the first letter of the word from the list above to jump to appropriate section of the glossary. If the term you are looking for starts with a digit or symbol, choose the '#' link.

 


- A -

Abandonment -Surrender to insurer of all interest in insured property after occurrence of peril. This is not permitted in most property contracts.

Accident-An unforeseen, unpremeditated, unintended event, generally sudden, and definite in time and place.

Accidential Bodily Injury-Physical injury to, or incapacity of, person, accidentally sustained, directly and independently of all other causes.

Accidental Death- Under life insurance contracts, death resulting from accident as defined. This has the effect of doubling (Double Indemnity) the payment to the Beneficiary.

Accidential Death Benefit, Automobile- Supplementary coverage under automobile policies which provide payment to a beneficiary in the event of the death of an Insured.

Acts of God- Events caused by forces of nature, without human intervention, and not preventable by reasonable care, i.e. Flood, Hurricane, Tidal Waves.

Additional Living Expenses- Additional expense of providing a home following damage to property insured necesitating abandonment, i.e. the extra cost of living in a motel.

Agent-One who acts for another. One whose actions can "bind" his principal. Specifically, a representative of an insurance company with authority to solicit insurance contracts.

Agreed Amount-An amount of insurance specified in the contract as being sufficient to nullify the effect of coinsurance or similar classes.

All-Risk- Insurance that covers loss caused by all physical damage perils, other than those specifically excluded in the policy contract.

Annuities- Life insurance contract that provides income for a specified period of time to an annuitant(s).

Appraisal- A determination of the value of property, or extent of damage, by an impartial expert.

Appurtenant Structures- Buildings or structures other than the insured's residence dwelling, i.e. a garage, barn, shed.

Assigned Risk-An inter-company agreement to insure, on a prearranged basis of assignment, certain Automobile or Workers Compensation accounts which are normally unacceptable in traditional underwriting practice. A voluntary underwriting plan to prevent undue hardship in securing insurance coverage.



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- B -

Bail- To deliver goods to another, to be held in trust.

Bailee- One to whom goods have been delivered to be held in trust.

Bailee Risk- Insurance covering goods entrusted to another under a "bailment contract".

Bailment-Condition of goods delivered to another in trust or for safekeeping. Under terms of the contract of bailment, the bailee's responsibility of the bailee may be "gratuitous" or "for hire", depending upon the circunstances.

Binder-The act of binding insurance coverage. A state in the insurance transaction; a temporary contract of insurance.

Boiler Insurance- An insurance contract covering against physical damage resulting from accidents to boilers or pressure vessels; electrical devices or machinery; liability for bodily injury and property damage to others, resulting from an accident.

Bid Bond-A bond required from a contractor when submitting a bid, attesting to his competency to bid and secure a performance bond.

Bond, Labor & Material- A bond which prevents a construction job from being help up by leins for unpaid labor and materials.

Bond, Maintenance- A bond required of a contractor who has entered into a contract to maintain a building or structure in good condition.

Bond, Penalty- The face amount of the bond, or the limit for each individual under a bond is called the penalty.

Bond, Performance- A bond required of a contractor for the completion of a building or structure per the architect's specifications and the contract with the owner.

Bond, Supply- A bond required of a contractor or dealer who has entered into a contract to furnish materials or supplies.

Bonds, Contract- In general, a bond guarantees the faithful performance of a contract by the principal or contractor.

Broker- A representative of the insured assisting in the placement of insurance with carriers. While an agent is an authorized representative of an insurance company, a broker represents the insured.

Builders RiskInsurance against loss to buildings or structures in the course of construction, including materials incidental to construction.

Business Interruption- A form of insurance which "indemnifies' against profits prevented from being earned, and necessary continuing expenses, during a period that business is shut down because of an insured peril, such as fire, and boiler explosion.


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- C -

Cancellation- The termination of an insurance contract before the normal end of the policy period, by an insured or an insurer, in accordance with the contract terms.

Cash Surrender Value- The amount available in cash upon voluntary termination of a Life insurance policy before it becomes payable by death or maturity.

Cash Value, Actual- The cost of replacing or restoring property to its condition prior to a loss, less depreciation.

Coinsurance- An arrangement under which the insured shares in losses, to the propertionate extend that his insurance is less than the specified percentage.

Collision- The impact between a vehicle and another vehicle or object.

 
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- D -

Death and Dismemberment- Coverage under a health insurance oicy against death, loss of members of the body, or loss of sight.

Debris Removal- A coverage in property insurance that provides payment for the cost of removng debris which resulted from an insured peril.

Deductible-A clause in an insurance contract which states that the insured will pay a specified amount for a covered loss prior to the insurance company issuing payment. The insurance company will pay only that part of a loss which exceeds the specified "deductible" amount.

Depreciation- A decline in the value of property caused by accident, wear and tear, obsolescence and deterioration.

Disability- An injury or impairment of faculty which prevents the injured person from performing certain, or all, functions of his normal occupation.

Disability Income, Life Insurance- A clause in a life insurance policy which provides payment of monthly income, if the insured becomes totally and permanently disabled.

Disability Insurance- A form of health insurance which provides for periodic income during the time that the injured person is unable to work because of a disabling injury.

Disability Waiver- A provision in a life insurance policy which permits the insured to omit payment of the premiums due during a period of total and permanent disability, without impairing the face value of the policy.

Dividends, Life Insurance- Funds authorized to be distributed by a life insurance company to their policyholders, representing monetary accumulations in excess of amounts needed for reserves, casualties, administration and surplus.


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- E -

Employers Liability- A form of liability insurance which protects the employer against claims or suits brought by an employee alleging injury during the course of employment.

Errors & Omissions-Failure to perform contractually or otherwise, because of doing work improperly, or neglecting to perform certain prescribed functions.

Excess- Under certain insurance contracts, where two or more policies provide coverage, the policy designated as "escess" pays after, or above, the policy designated as "primary".

Exclusions-Provisions in an insurance contract which outline those situations, perils, losses, persons or things for which insurance coverage is not afforded.

Extra Expense-A "time element" contract that provides the additional costs necessary to continue the insured's business without interruption, or to expedite loss settlement.

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- F -

FAIR Plan- An acronym for Free Access to Insurance Requirements. A joint insurance plan involving the States, the Federal Government and the insurance industry, whereby persons may secure fire coverages.

Fidelity Bond- An instrument that provides indemnity against loss of property, real or personal, caused by the dishonest act of an employee.

Financial Responsibility- A law which requires an owner or operator of a motor vehicle to give evidence of financial ability to meet claims for damages, in order to obtain license to drive a motor vehicle or to have it registered.

Fire Insurance- An insurance contract against the occurrence of Fire, which also includes the perils of Lightning and Removal.

Floater- Property subject to relatively frequent removal from site to site, or during transportation. Movable property in general. A type of policy which covers such property.

Flood Insurance- A joint Federal Government-insurance industry program which makes insurance available to persons and business to insure against losses from flood, rising water, wind driven water, mud-slides, and other forms of water damage. This coverage is only available in communities which have been declared eligable by the Federal Government.


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- G -

Garage Liability- A combination liability insurance contract that covers permises and operations, automotive equipment and products-completed operations, as well as Garagekeepers Legal Liability and Medical Payments.

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- H -

Health Insurance- Insurance against loss by sickness or accidental bodily injury.

Homeowners Policy- A mutiple peril contract for owners or occupants of dwellings generally including fire, theft and liability coverage. A homeowners policy is a package policy combining many additional coverages not included in a basic Fire policy.

Hospilization Insurance- A health insurance contract covering all or part of the cost of hospital care and incidentals.

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- I -

Improvements & Betterments- Additions or improvements made by a tenant to the landlord's property, at his own expense, subject to legal claim by landlord of acquiring title to the same. A form of insurance against loss or damage to such enhanced property.

Indemnity- Repair, replacement or payment of the value of a loss.

Insured- A person in whose name the contract of insurance has been issued (a named insured) and other parties to whom the benefits of the contract ma be extended, by mutual agreement.

Insuring Agreements- Promises by the insurer to indemnify, or to pay on behalf of, the insured, in the event of a loss.

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- J -

Joint Loss- The procedure relating to the apportionment of loss when two or more insurance contracts may be called upon to contribute, generally when the separate insurances are in different fields.

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- L -

Lapse- The termination of an insurance policy, subject to a grace period and reinstatement clauses.

Level Term/Level Premium- A life insurance contract where the cost of the insurance is distributed over the period during which premiums are due. The premium remains the same from year to year, although it is more than the actual cost of protection in the earlier years of the policy, and less than the actual cost in the later years. The excess paid in the early years builds up the reserve.

Liability- A legal obligation, usually financial, to respond in damages in the event of an accident or occurrence. It may be either imposed by law, or assumed under contract.

Liability- Split Limit- Expression of the extent of coverage separately as to: per accident/per person (or occurrence ) for Bodily Injury; Per Accident (or occurrence) for Property Damage.

Liability - Combined Single Limit-Expression of the extent of coverage in a lump-sum, whereby the entire amount expressed is available either per person or per accident, regardless of whether the claim is for Bodily Injury or Property Damage or both.

Life Insurance- A contract of insurance which undertakes to pay at maturity stated in the contract, or at death, the sum specified as the face value. The policy may also cover certain payments in the event of disability.



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- M -

Major Medical- A form of Health insurance that provides substantially larger amounts of coverage, generally intended to be in the nautre of "excess" over underlying coverage. Generally, characterized by a deductible plus a co-insurance feature.

Malpractice- Improper or illegal treatment, as in medicine or surgery.

Maturities, Life Insurance- Terminations of period, statistically or by contract terminology, of Life insurance contracts, requiring payment of the stated amount.

Medical Expense- Cost of paying medical bills for physicians, surgeons, technicians, nurses, etc.

Minimum Premium- The least amount of premium for which a policy or coverage may be issued or initiated.



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- N -

Named Insured- The principal contracting party designated as the policyholder. Named insured may, under some contracts, automatically include the spouse as well.

Non-Owned Automobiles- In Automobile liability and Physical Damage insurance, vehicles other than the one(s) owned by the Named Insured to which coverage of the policy may be extended, under contract conditions.




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- O -

Occupational Disease- Sickness or disease, usually of specified types, related to the occupation of the employee, compensable under Workers Compensation statutes.

Occurrence- An accidental event, proximately resulting not only from a specific and definable cause of injury, but also injurious exposure to conditions neither expected nor intended from the standpoint of the insured.

Owned Automobiles- in automobile liability insurance, the vehicle owned and operated by the Named Insured and spouse.




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- P -

Peril- The cause of loss.

Personal Articles Floater- A combination of inland marine floater which includes one or more of the following: Furs, Jewelry, Fine Arts, Musical Instruments, and similar types of coverage.

Physical Damage - Automobile - One of the forms of coverage under an automobile policy which protects an insured's vehicle for against damage. Comprehensive and/or collision coverage may commonly be referred to as physical damage coverage.

Primary - The policy whose limits are drawn upon or exhausted first, where other contributing insurance is designated as "excess".

Private Passenger Vehicle - In automobile insurance, generally a vehicle of the private passenger type, but by extension including jeep, station wagons and light weight trucks or utility type vehicles.

Proceeds left at Interest - A life insurance option, with regard either to settlement or dividends, or both, whereby the insured or beneficiary directs the insurance company to retain the proceeds of poicy or dividend at a stipulated rate of interest. The isnterest is to be paid periodically, and the basic amount subject to withdrawl at any time.

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- Q -

 
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- R -

Recreational Vehicle - Gasoline powered and operated vehicle specifically designed for sports use, or for travel over unusual type of terrain, i.e. Dune Buggy, Snowmobile.

Rental Value - Fair rental value of the building or parts thereof, as furnished and equipped by the owner, whether actually rented or not; a form of insurance against the loss of rents or rental value of the property.

Replacement Cost - The total cost of labor, materials and services necessary to replace property in its entirety, with material sof like kind and quality, without allowance for increased cost resulting from legislation regarding construction.



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- S -

Securities - In crime insurance, all negotiable or non-negotiable instruments or contracts represnting either money or other property. It includes stamps, tokens and tickets, but does not include money.

State Fund - State supported or subsidized insurance carrier, created by legislative action and responsible to the State government. A form of insurance provided to meet the need for coverage not readily available in private enterprise markets, i.e. automobile, workers compensation, fire, flood.

Subrogation - Substitution of one party for another in the attribution or assignment of rights; in insurance, a preliminary process to the recovery of funds advanced on behalf of an insured who has sustained damage alleged to have been caused by another party.

Suicide Clause - In life insurance, and in some forms of health insurance, a provision that self-destruction will void, restrict or limit recovery as to the insured's estate or beneficiary. In life insurance, usually negated after a stipulated period.




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- T -

Term Life Insurance - Life insurance issued for a specified term, such as five, ten, fifteen years. Insurance is payable to the beneficiary at the death of the insured on if such death occurs prior to the expiration of the term, unless otherwise extended, renewed or converted.

Tort- Any private or civil wrong by act or imission.

Total Disability - Such complete incapacity of the insured that he is not able to perform the duties of his occupation.

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- U -

Umbrella Liability - A form of excess liability insurance that provides very substantial limits of coverage over and above the limits of an underlying liability policy. Generally, a self-insured retention, or deductible applies.

Uninsured Motorists - A motorist who fails to carry insurance or similar protection against bodily injury accidents.

Unoccupancy - Condition in which the dwelling or building is not currently occupied by persons, but the customary contents remain within such building.



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- V -

Vacancy - A condition in which the dwelling or building is not currently occupied by persons, and the contents usual to the premises have been removed.

Valuable Papers and Records Policy - A form of insurance issued by insurance carriers, providing "all-risk" protection in the event of loss of or damage to deeds, plans or other valued documents.

Vandalism and Malicious Mischief - Violent and malicious damage to or destruction of property by a person or persons, with willful intent and generally by a lesser number than that which would constitute a riot.


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- W -

Waiting Period - A period, usually a number of days, during which benefits for claims are denied, as in Health insurance, Workers Compensation, and some forms of Group Insurance.

Whole-Life Insurance - Life insurance payable to a beneficiary at the death of an insured whenever that event occurs.

Workers Compensation - A form of insurance provided in compliance with Workers Compensation statutes, coterminous with such legislation, or the ruling of Industrial Accident Commissions, or similar bodies appointed to administer the statue.


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This page was last updated on 12/20/99