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A B C D
E F G
J K L
M N O P
Q R S T
U V W
Accounts Receivable Insurance
Coverage which protects businesses
against their liability to collect their accounts receivable because of
the loss of supporting records which have been destroyed by a covered
cause of loss. Also covered are the extra collection expenses which are
incurred because of such loss or damage and other reasonable expenses
incurred to re-establish records of accounts receivable after a loss or
Person whose absence from a planned
event would trigger a benefit if the event needs to be canceled or
Activities of Daily Living
Any activity necessary on
a daily basis. Bathing, preparing and eating meals, moving from room to
room, getting into and out of chairs or beds, dressing, using a toilet.
Actual Cash Value
Cost of replacing damaged or destroyed property
with comparable new property, minus depreciation and obsolescence. For
example, a 10-year-old couch will not be replaced at current full value
because of depreciation.
A specialist in the mathematics
of insurance who calculates rates, reserves, dividends and other
An interest rate that changes from
time to time, based on changes in a published market-rate index.
A representative of the insurer who seeks to determine the
extent of the insurer�s liability for loss when a claim is submitted.
Assets of an insurance company which are included
on their financial statement. These assets are an important factor when
regulators measure insurance company solvency. They include mortgages,
stocks, bonds and real estate. Every state has discretion over insurance
laws, but these items are typically standard.
Admitted or Not
Indicates the company is approved (or not disapproved)
to write certain lines of insurance in the state.
individual who sells and services insurance policies in either of two
1.Independent agent represents multiple insurance
companies and services clients by searching the market for the most
advantageous price for the most coverage.
2.Direct agent represents
only one company and sells only its policies.
Refers to the amount of coverage that the insured has under the contract
for a specific period of time, usually the contract period, no matter how
many separate accidents might occur. If the limit is 2 Million, and the
insured already filed a claim for 1 Million and 500,000 if they have
another 1 Million dollar loss, only $500,000 will be covered since that
exhausts the limit.
Annual Administrative Fee
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 5 percent and the index linked to the annuity gained 6 percent,
only 5 percent would be credited to the annuity.
Process by which you convert part or all of the money in a qualified
retirement plan or nonqualified 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.
Choices in the way to annuitize. For example, life with a
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 in a direct proportion to the certain
An agreement by an insurer to make
periodic payments that continue during the survival of the annuitant(s) or
for a specified period.
Assault & Battery
This coverage is used
to protect against bodily injury and property damage arising our of
alleged acts of assault and battery. Depending on the insurance company
providing the coverage, assault and battery can be defined differently in
the insurance policy. Generally, an assault being an act which creates
fear of an imminent battery, and the battery is an unlawful touching.
Assets refer to �all the available properties of every kind
or possession of an insurance company that might be used to pay its
debts.� There are three classifications of assets: invested assets, all
other assets, and total admitted assets. Invested assets refer to things
such as bonds, stocks, cash and income-producing real estate. All other
assets refer to non-income producing possessions such as the building the
company occupies, office furniture, and debts owed, usually in the form of
deferred and unpaid premiums. Total admitted assets refer to everything a
company owns. All other plus invested assets equals total admitted assets.
By law, some states don�t permit insurance companies to claim certain
goods and possessions, such as deferred and unpaid premiums, in the all
other assets category, declaring them �non-admissible.�
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.
Coverage if an insured is legally liable for bodily injury or
property damage caused by an automobile. These limits are usually subject
to a state minimum.
Bailees Liability Coverages
This type of
coverage is designed for a bailee to provide coverage for liability for
the property of customers in that bailee�s care, custody or control.
Although this coverage was designed to cover the bailee�s liability
exposure, it can often be endorsed or have options exist to provide a
no-fault coverage to protect the customer�s property against any damage,
whether or not there is negligence and subsequent liability.
In health insurance, the number of days for which
benefits are paid to the named insured and his or her dependents. For
example, the number of days that benefits are calculated for a calendar
year consist of the days beginning on Jan. 1 and ending on Dec. 31 of each
Boiler and Machinery Insurance (B&M)
loss from disruption of boilers and machinery by an insured peril: loss to
the boiler and machinery itself, damage to other property, business
interruption losses, or all three. Also known as machinery breakdown
An independent agent who represents the buyer,
rather than the insurance company, and tries to find the buyer the best
policy by comparison shopping.
insurance salesperson who represents particular insurers but also might
function as a broker by searching the entire insurance market to place an
applicant�s coverage to get the most coverage at the best price. This
person is licensed as an agent and a broker.
is a special type of insurance which indemnifies against
damage to buildings while they are under construction. Builder�s risk
insurance is coverage that protects a person�s or organization�s insurable
interest in materials, fixtures and/or equipment being used in the
construction or renovation of a building or structure should those items
sustain physical loss or damage from a covered cause.
Personal Property Coverage
A commercial property coverage which can be
used to cover buildings, personal property, and personal property of
Business Income Insurance
A time element coverage which
pays for loss of earnings or income when business operations are
interrupted, curtailed or suspended due to property loss as a result of an
insured cause of loss. Also covered are loss of rents and rental value.
Extra expense incurred to continue operations at another location are
included as long as they reduce the total amount of loss.
The portable property which is owned by an insured
business entity, including goods for sale, fixtures, equipment, machines,
materials (raw through finished), and similar property. Such property must
be used by the business operation.
Liability or loss
resulting from an accident.
That type of
insurance that is primarily concerned with losses caused by injuries to
persons and legal liability imposed upon the insured for such injury or
for damage to property of others. It is often called liability insurance.
It also includes other items such as plate glass, insurance against crime,
robbery, burglary and forgery, boiler and machinery insurance (B & M) and
A request made by the insured, or the
insured�s beneficiary, for payment of the benefit contracted by the
insurance company from an insurable event that occurred.
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%
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% of losses. For
property insurance, it is the amount of coverage you need for the
insurance company to pay all of the losses. For example, if you have a
structure which is going to cost $100,000 to rebuild, and you have $80,000
in replacement cost coverage, the insurance company will pay the costs to
rebuild. However if you have less coverage, say $50,000, then the
insurance company will only give you $50,000 to rebuild.
A type of auto insurance coverage. Collision Insurance will
reimburse the insured for any damage sustained to their personal
automobile that is due to the fault of the insured driver. This type of
insurance is often added as an extension of a basic policy.
Commercial Blanket Bond
A fidelity bond which insures an employer
against a loss from dishonest acts committed by employees, covering all
employees in the regular service of the employer during the term of the
bond. The bond is issued for a fixed amount which is the maximum sum
payable for any one embezzlement, whether one or more employees are
Commercial Crime Policy
This policy incorporates most
commercial crime coverages into one policy. It is an ala Carte policy
which starts with insuring agreements but can be expanded to include up to
eleven additional insuring agreements. The insured can choose one or more
Refers to insurance for
businesses, professionals and commercial establishments.
An �all risk� Auto insurance coverage providing
damage protection in the event of physical damage (other than collision)
or theft of the insured car, but not collision or upset which may be
added. For example, collision with something other than a vehicle, fire
damage, a cracked windshield, would be covered under the comprehensive
section. This is offered as an extra on your insurance policy.
Computer Fraud Coverage Form
A crime coverage form designed to protect
against loss of money, securities and property when conversion occurs via
In hospital income
protection, when a patient is confined to a hospital due to more than one
injury and/or illness at the same time, benefits are paid as if the total
disability resulted from only one cause.
1: A liability which may be incurred by an insured as a result of
negligence on the part of independent persons engaged to perform work. The
most common example is the contingent liability of a principal contractor,
which may result from construction operations undertaken by
sub-contractors. Also applies to the liability of a principal for the acts
of an agent or servant.
2: In property insurance, the possibility
of a financial loss to a policy holder resulting from damage or loss to
the property of another, such as a supplier or a customer.
Contractors� Tools and Equipment Floater
An Inland marine form which
insures the equipment, tools, and materials of a contractor
Contractual Liability Insurance
Insurance coverage to provide
protection for the additional liability exposure an insured has assumed in
a contract. Only specified contractual liability exposures are covered in
standard liability policies for items such as leases and related types of
contracts because the assumption of such liability in a contract is not
only voluntary, but may be extensive. When contractual liability insurance
is purchased, the contracts covered must be individually elevated for the
type and amount of exposure posed.
The scope of
protection provided under an insurance policy. In property insurance,
coverage lists perils insured against, properties covered, locations
covered, individuals insured, and the limits of indemnification. In life
insurance, living and death benefits are listed.
Term life insurance coverage that can be converted into permanent
insurance regardless of an insured�s physical condition and without a
medical examination. The individual cannot be denied coverage or charged
an additional premium for any health problems.
predetermined, flat fee an individual pays for health-care services, in
addition to what insurance covers. For example, some insurance plans
require a $15 copayment for each office visit, regardless of the type or
level of services provided during the visit. Copayments are usually made
in a straight dollar amount, not a percentage.
An adjustment made to Social Security and
supplemental security income in order to adjust benefits to counteract the
effects of inflation. COLAs are generally equal to the percentage increase
in the consumer price index for urban wage earners and clerical workers
(CPI-W) for a specific period.
region covered by travel insurance
means that benefits provided by other drug plans are at least as good as
those provided by the new Medicare Part D program. This may be important
to people eligible for Medicare Part D but who do not sign up at their
first opportunity because if the other plans provide creditable coverage,
plan members can later convert to Medicare Part D without paying higher
premiums than those in effect during their open enrollment period.
A generic term used to encompass the variety of crime
coverage forms available to protect against losses of money, securities
and property by such causes of loss as employee dishonesty, forgery,
theft, burglary, robbery, kidnap, extortion and fraud.
Insurance (Data Breach)
A special form of commercial insurance created
to protect businesses against cyber (internet) risks, such as hackers and
other breaches of computer system security.
limit of insurance or the amount of benefit that will be paid in the event
of the death of a covered person.
Amount of loss that
the insured pays before the insurance company is forced to pay. For
example, if the insured has a loss which will cost $10,000 and they have a
$1,000 deductible, the insurance company will pay $9,000 for the loss.
Directors and Officers Liability Insurance
Protects officers and
directors of a corporation against damages from claims resulting from
negligent or wrongful acts in the course of their duties. Also covers the
corporation (and even the officers and directors in some cases) for
expenses incurred in defending lawsuits arising from alleged wrongful acts
of officers and directors. These policies always require the insured to
retain part of the risk uninsured.
Drive Other Car Coverage
provision in an automobile policy designed to protect the policyholder
(and insureds other than the policyholder) when driving cars other than
the ones in the policy.
The amount of the
premium that as been paid for in advance that has been �earned� by virtue
of the fact that time has passed without claim. A three-year policy that
has been paid in advance and is six months old would have only partly
earned the premium.
damage by earthquakes and earth movement.
An �all-risk� policy which provides protection on
equipment, software and extra expenses incurred as a result of failure of
such equipment caused by a loss and loss of earnings. Coverage may be
extended to include liability claims alleging errors and omissions by data
Elimination Period (Waiting Period)
time which must pass after filing a claim before policyholder can collect
insurance benefits. Also known as waiting period.
Dishonesty / Fidelity Bond 1st and 3rd party
An insurance policy which
reimburses an employer for losses resulting from dishonest acts committed
by employees, covering all employees in the regular service of the
employer during the term of the bond. The bond is issued for a fixed
amount which is the maximum sum payable for any one embezzlement, whether
one or more employees are involved.
Employers Liability Insurance
Coverage against common law liability of an employer for accidents to
employees, as distinguished from liability imposed by a workers�
Employee Retirement Income Security Act of 1974
This act is sometimes called the �pension reform act.� One of
the purposes of this act is to force employers to protect the assets of
the business that have been designated as employee pension benefits.
A claim on property, such as a mortgage or a lien for
work and materials. The interest of the property owner is reduced by the
amount of the encumbrance.
Items or conditions that
are not covered by the general insurance contract.
Measure of vulnerability to loss, usually expressed in dollars or units.
Extended Replacement Cost
This option extends replacement cost
loss settlement to personal property and to outdoor antennas, carpeting,
domestic appliances, cloth awnings, and outdoor equipment, subject to
limitations on certain kinds of personal property; includes inflation
An insurance policy which
reimburses an employer for employee theft or embezzlement.
Fiduciary Liability Insurance
Protection for those who ad mister
pension and welfare funds, profit-sharing and other employee benefit
programs against loss for errors and omissions by the administrator. The
need for this coverage was created by the Employee Retirement Income
Security Act (ERISA) of 1974. Also known as pension trust liability
File-and-Use Rating Laws
State-based laws which
permit insurers to adopt new rates without the prior approval of the state
insurance department. Insurers submit their new rates with supporting
Fine Arts Insurance
A personal lines coverage
on works of art, usually written by inland marine underwriters on an �all
risk� and a �valued� basis. The commercial lines equivalent is most often
covered under a commercial articles floater which combines not only fine
arts coverage, but also camera and musical instruments in one coverage
Overflow of water from its natural boundaries. More
specifically defined by the National Flood Act of 1968 as �a general and
temporary condition of partial or complete inundation of normally dry land
areas from the overflow of land or tidal waters, or the unusual and rapid
accumulation of runoff of surface waters from any source.�
Coverage against damage from the rising or overflowing of a
body of water or �flood�
Forgery / Alteration
fraudulent making or altering of a written instrument. Also, the illegal
signing of another�s name to a document such as a check.
Keepers Legal Liability
Pays amounts an insured is legally obligated to
pay because of damage or loss to property of others that is in the
insured�s care, custody or control.
garage or service station operators, vehicle rental agencies, car washes,
auto or vehicle dealers and trailer or RV dealers for claims alleging
bodily injury or property damage caused by the operator�s negligence in
business operations and the sale and use of automobiles.
Insurance designed to protect business owners and
operators from a wide variety of liability exposures and third party
liability claim due to negligence. Exposures could include liability from
accidents resulting from onsite and jobsite accidents and operations,
products sold by the insured, operations completed by the insured, and
The length of time (usually
31 days) after a premium is due and unpaid during which the policy,
including all riders, remains in force. If a premium is paid during the
grace period, the premium is considered to have been paid on time. In
Universal Life policies, it typically provides for coverage to remain in
force for 60 days following the date cash value becomes insufficient to
support the payment of monthly insurance costs.
Life and health insurance provisions that guarantee
the insured the right to buy additional coverage without without proving
Guaranteed Issue Right
The right to purchase
insurance without physical examination; the present and past physical
condition of the applicant are not considered. This is common with group
A policy provision in many products
which guarantees the policy owner the right to renew coverage at every
policy anniversary date. The company does not have the right to cancel
coverage for any reason except for nonpayment of premiums by the policy
owner. The rates are subject to changes.
organization funded by life insurance companies within a state responsible
for covering the financial obligations of a member company that becomes
A condition or a situation that increases the
likelihood or probability of a loss. For example, storing gas cans next to
the furnace would increase the likelihood of a fire or explosion.
Bungee jumping, scuba diving, flying (non
commercial), horseback riding and other activities not generally covered
by standard insurance policies. For insurers that do provide cover for
such activities, it is unlikely they will cover liability and personal
accident, which should be provided by the establishment which is
organizing the activity.
(HMO)Health Maintenance Organization
corporation which is financed by insurance premiums and has member
physicians and professional staff who provide curative and preventive
medicine within a specific geographic and professional limits to policy
members and their families.
Health Reimbursement Arrangement
arrangement for individuals who are covered under high-deductible health
plans (HDHP) who are not qualified for a health savings account can use an
(HSA) Health Savings Account
An account created for
individuals who are covered under high-deductible health plans (HDHPs) to
save for medical expenses that HDHPs do not cover. Contributions are made
into the account by the individual or the individual�s employer and are
limited to a maximum amount each year. The contributions are invested over
time and can be used to pay for qualified medical expenses, which include
most medical care such as dental, vision and over-the-counter drugs.
A package of basic homeowners insurance that covers a
number of specified causes of direct losses to a residence, personal
property, and offers liability insurance to the insured. It responds to
several more causes of loss than a HO-1 form
package of homeowners insurance that with the exception of earthquake,
flood, military and nuclear activity, covers all direct losses to a
residence which is not specifically excluded. It also provides personal
property protection on a specified cause basis as well as liability
A package of basic homeowners insurance
which covers a number of specified causes of direct loss to personal
property and liability insurance. it responds similarly to a HO-2 form and
is designed for tenants.
A package of basic
homeowners insurance which covers a number of specified causes of direct
losses to certain types of structural and personal property and also
offers liability insurance. It also provides some coverage for structural
property that is under joint ownership and limited coverage for property
loss assessments. It responds similarly to an HO-2 form, and is designed
for condominium owners.
Hold Harmless Agreement
arrangement in which one party agrees to assume certain liability which
otherwise would be borne by the other party. For example, an insurer may
wish to pay a loss when it is uncertain whether it may be called upon a
second time to some other party. The payee may be asked to execute an
agreement whereby the company will be reimbursed or held harmless by the
payee if such request should happen. Another example is when the principal
in a large construction project frequently demands hold harmless
agreements from all subcontractors in respect to claims made against the
principal arising out of the subcontractors� negligence. The principal
often stipulates the purchase of a liability policy by the subcontractor
to support the hold harmless agreement.
package policy for dwelling and contents risks combining fire and allied
line coverage with comprehensive personal liability and theft insurance
for homeowners and tenants. This policy carries an indivisible premium in
that the premium is not separately stated or broken down for the various
hazards insured against. There are different homeowners forms, varying in
extent of coverage and cost from the broad cause of loss policy (HO-2) to
the special cause of loss policy (HO-3), to the renter�s policy (HO-4),
Amount you must pay out-of-pocket
before hurricane insurance will start paying. Many insurers in
hurricane-prone states issue homeowners insurance policies with percentage
deductibles for storm damage, instead of the traditional dollar
deductibles used for claims such as fire and theft. Percentage deductibles
vary from 1 percent of the loss to 15 percent, depending on many factors
that differ by state and insurer. This is one thing insurance companies
are doing to limit their risk in these areas.
Compensation to the victim of a loss by payment, repair or replacement.
An optional property coverage endorsement
offered by insurers that increases the policy�s limits of insurance during
the policy term to keep pace with inflation.
Protection for the installer of equipment against loss by specified perils
or on an �all-risk� basis to property in the course of installation.
Insured person derives a financial or other
kind of benefit from the continuous existence of the insured object. In
all insurance products, the insured would have to have something to lose
in order to insure something. Example, you do not have an insurable
interest in your neighbor�s car.
representative of the insurer who seeks to determine the extent of the
insurer�s liability for loss when a claim is submitted. Independent
insurance adjusters are hired by insurance companies on an �as needed�
basis and might work for several insurance companies at the same time.
Public adjusters work for the insured in the settlement of claims and
receive a percentage of the claim as their fee.
Business coverage for companies which conduct
businesses outside the USA. The scope of coverages available may include
but are not limited to: premises and product liability, automobile
liability, workers compensation and employers liability, property
including transit, kidnap and ransom, confiscation and civil war, crime,
business interruption, difference in limits and conditions, and endemic
Purchasing bond investments that mature at
different time intervals to avoid reinvestment risk.
Protection against the leasee�s (tenant�s) loss of value when
a lease is canceled because of a fire or other peril which renders the
property unusable. The value being the excess of the rental value of the
property over the rental payable in the lease. The Insurance against the
loss of such value is �leasehold� insurance against whatever perils may be
written. more popular with long leases in periods of rising rental values.
Obligated according to law. Responsible for an action or
Insurance that pays damages on the
behalf of an insured for loss arising out of his responsibility, due to
negligence, to others imposed by law or assumed by contract.
License Bond or Permit Bond
A surety bond often required by
municipalities and other public authorities to indemnify them against loss
from breach of any regulation or ordinance under which the license or
permit is issued.
The promise to pay at the death
of the insured, or at another determined time if earlier, an amount larger
than the accumulated value of the consideration paid for the promise.
Lifetime Reserve Days
Sixty days in addition to the normal benefit
which Medicare pays for when you are hospitalized for more than 90 days in
a benefit period. This reserve can only be used once in a lifetime.
Coinsurance costs still apply.
Liquor Liability Insurance
Coverage where the basis for legal liability is a dram shop, liquor
control, or alcoholic beverage law. The laws vary, but most provide that
the owner of an establishment which serves alcoholic beverages is liable
for injury or damage caused by an intoxicated person if it can be
established that the liquor licensee caused or contributed to the
intoxication of the person.
Living Benefits (accelerated death
This feature allows you to receive the proceeds of your life
insurance policy before you die if you suffer from a list of terminal
illnesses or circumstances such as, the need for long-term care, terminal
or catastrophic illness, or confinement to a nursing home.
Expenses incurred to investigate and settle losses
The ratio of incurred losses and loss-adjustment
expenses to net premiums earned. This ratio measures the insurer�s
underlying profitability, or loss experience.
Protection to pay the cost of medical care to an injured
party regardless of whether the policyholder is liable. Written in
conjunction with general and personal liability policies. A similar
coverage, automobile medical payments insurance is available in automobile
Vehicles not normally
designed for use on public roads and not normally required to be licensed.
Money and Securities Broad Form Policy
Insured�s a business against
�all risks� of loss or destruction of money and securities other than
employee dishonesty and forgery. Applies both inside and outside of the
policyholder�s premises. Also covers loss of other property and damage to
the premises by safe burglary and robbery. This policy has been replaced
with the Commercial Crime Coverage Form.
Mortgage Insurance Policy
In life and health insurance, a policy which pays off the balance due on a
mortgage upon the insured�s death, or to meet the payments due on a
mortgage in case of the insured�s death or disability.
and Motor Scooter Insurance
Physical damage and/or liability insurance
specifically to cover the exposures of motorcycles, motor scooters and
Motor Truck Cargo (Carrier�s form)
marine form indemnifies an owner of an operator of a motor truck on which
property of others is carried, against what the owner or operator may
become liable to pay to the owners of the property carried as the result
of loss or damage occurring while transporting the property. The
Interstate Commerce Commission as well as the laws of many states require
a common carrier to have such insurance before getting licensed.
Motor Truck Cargo (Owner�s form)
Insures the owner of a truck against
loss to owned property while being transported.
an insurance company which is owned entirely by its policyholders. Any
profits earned by a mutual insurance company are rebated to policyholders
in the form of dividend distributions or reduced future premiums. In
contrast, a stock insurance company is owned by investors who have
purchased company stock; any profits generated by a stock insurance
company are distributed to the investors without necessarily benefiting
Perils specifically covered on
Net Investment Income
Before tax income
received from investment assets such as bonds, stocks, mutual funds, loans
and other investments (less related expenses).
Coverage designed to compensate victims of automobile
accidents via their own insurance carriers, regardless of fault and
without the necessity of proving negligence on anyone�s part. No-fault
laws passed by different states vary greatly in their scope and
application. Most provide that a victim�s own insurance will allow a
victim to sue in tort, once expenses or injuries have passed a stipulated
threshold (monetary or otherwise).
Non-Owned / Hired Automobile
Coverage for the policyholder against liability
incurred while driving an automobile not owned or hired by the
policyholder or resulting from the use of someone else�s automobile on the
insured�s behalf, such as an employee using a personal car for the
employer�s business purposes. This coverage is automatically included in
personal and most commercial auto policies.
As used in automobile insurance, actual damage or loss to the
non-owned vehicle itself caused by collision, overturn, fire, theft,
vandalism, or malicious mischief.
Nonstandard Auto (High Risk Auto)
Insurance for motorists who have poor driving records, have been
canceled or refused insurance, or fall into a higher risk classification
due to age or other factors.
A home loan
in which the borrower is not personally liable for the loan. The loan is
secured by collateral and the risk is limited to the investment down
payment, and any cash investment in the property.
Contract terms, including costs that can never be changed or cancelled for
An event that results in an insured
loss. If you have $1,000,000 per occurrence $2,000,000 aggregate coverage,
you are covered for up to $1,000,000 for each occurrence until the
$2,000,000 limit is reached.
Ocean Marine Insurance
protection of ships, their cargo, and the freight, including protection
and indemnity insurance to cover ship owners� liabilities for loss of life
to any person, illness or injury to crew, damage to cargoes carried and
damages to fixed or floating objects.
Off-premises Service Coverage
Property and time element endorsements designed to cover the insured for
losses that result from the interruption of services by an insured cause
of loss. The current endorsements allow the insured to select coverage for
off-premises services, whether supplied by a private or public utility.
Protection may be purchased for the following options: water suppliers,
communication suppliers or power supplies.
Ordinance (law) coverage
A property endorsement which provides the insured the option to purchase
coverage for three types of common building ordinance or law requirements
that apply after an insured has suffered a physical damage loss such as
fire. These ordinances or law damages are normally excluded in standard
property coverage forms. The coverages available in this endorsement are
cost to demolish the undamaged portion of the building, cost to replace
with superior construction as required by law, and cost to clear the land
of debris after demolition.
Outdoor Signs/ Glass Insurance
Coverage against damage to outdoor signs or the breakage of glass.
A predetermined amount of money that an individual
must pay before insurance will pay 100% for an individual�s health-care
Owners and Contractors Protective Liability Insurance
A policy which provides liability coverage protects the insured against
the negligent acts of contractors and sub-contractors hired by the
insured. May also cover for their own negligent supervision of the work
Insurance contract provision that
allows policyholders to collect benefits if they can no longer work in
their own occupation.
Paid-Up Additional Insurance �
that allows the policyholder to use policy dividends and/or additional
premiums to buy additional insurance on the same plan as the basic policy
and at a face amount determined by the insured�s attained age.
The cause of loss is the event insured against. Examples-fire,
lightning, theft, etc. Perils can be specifically named in the policy, or
included unless they are specifically excluded from coverage.
Location / Jobsite Aggregate Limit
In a policy providing such an
aggregate limit, the maximum amount the insurer will pay during the policy
period regardless of how many claims, losses, suits, or insureds may be
involved. The aggregate amount applies per location or jobsite.
Permit Bond or License Bond
A surety bond often required by
municipalities and other public authorities to indemnify them against loss
from breach of any regulation or ordinance under which the license or
permit is issued.
Personal Injury Protection (PIP)
PIP is an
extension of car insurance which covers medical expenses and, lost wages,
additional living expenses, and other damages. PIP is sometimes referred
to as �no-fault� coverage, because the statutes enacting it are generally
known as no-fault laws, and PIP is designed to be paid without regard to
�fault,� or more properly, legal liability. PIP is also called �no-fault�
because, by definition, a claimant�s, or insured�s, insurance premium
should not increase due to a PIP claim.
PIP coverage may vary from
state to state in terms of both what is covered and what types of
treatments are considered customary and reasonable. For example, in Utah,
acupuncture is a
permissible medical treatment, while in California it
is not. Some states also allow for PIP claims even if
Compensation claim exists, while others do not.
PIP may cover,
within the specified dollar and time limits, the medical and funeral
expenses of the
insured, others in its vehicle at the time of the loss,
and pedestrians struck by its vehicle. The basic
coverage is for the
insured�s own injuries, on a first party basis, without regard to
liability. Again, it is
only available in certain states.
Personal Lines �
Insurance for individuals and families, such as auto,
homeowners, and renters insurance.
Personal Property of Others
Contents, business personal property, and any other property excluding
real property which is not owned by the insured.
A form of liability insurance protecting
policyholders for claims in excess of the limits of their primary personal
automobile, residential liability and recreational (boat, RV, Motorcycle,
etc.) liability policies. It also provides coverage for some sources of
loss which are not covered by their primary policies. Such cases are
subject to a deductible (or self insurance retention).
Point-of-Service Plan (POS)
Health insurance policy that allows the
employee to choose between in-network and out-of-network care each time
medical treatment is needed.
The written contract
effecting insurance, which includes all clauses, riders, endorsements, and
papers covered under the agreement.
coverage limitation included in many health policies which states that
certain physical or mental conditions, either previously diagnosed or
which would normally be expected to require treatment prior to issue, will
not be covered under the new policy for a specified period of time.
Auto coverage for drivers who have clean driving
records and operates vehicles according to law. Drivers which an insurance
company prefers to insure.
Preferred Provider Organization
health care organization composed of physicians, hospitals, or other
providers which provides health care services at a reduced fee. A PPO is
similar to an HMO, but care is paid for as it is received instead of in
advance in the form of a scheduled fee. PPOs may also offer more
flexibility by allowing for visits to out-of-network professionals at a
greater expense to the policy holder. Visits within the network require
only the payment of a small fee. There is often a deductible for
out-of-network expenses and a higher co-payment. A policy holder will have
a primary physician within the network who will handle referrals to
specialists that will be covered by the PPO. After any visit, the policy
holder must submit a claim, and will be reimbursed for the visit minus
The price of insurance protection
for a specified risk for a specified period of time.
The amount of the pre-paid premium which is earned. For example, you
paid $1,200 for a one year homeowners insurance policy, after 3 months
$300 is considered earned premium.
of the premium applicable to the unexpired part of the policy period. as
in the premium earned example, you paid $1,200 for a one year homeowners
insurance policy, after 3 months $900 is considered un-earned premium.
Private-Passenger Auto Insurance Policyholder Risk Profile
refers to the risk profile of auto insurance policyholders and can be
divided into three categories: standard, nonstandard and preferred.
Qualified High-Deductible Health Plan
A health plan with lower
premiums that covers health-care expenses only after the insured has paid
each year a large amount out of pocket or from another source. To qualify
as a health plan coupled with a Health Savings Account, the Internal
Revenue Code requires the deductible to be at least $1,000 for an
individual and $2,000 for a family. High-deductible plans are also known
as catastrophic plans.
Qualified plans are those
employee benefit plans that meet Internal Revenue Service requirements as
stated in IRS Code Section 401a. When a plan is approved, contributions
made by the employer are tax deductible expenses.
An occurrence that triggers an insured�s protection.
Insurance that an insurance company buys for its own
protection (insurance for the insurance company). The risk of loss is
spread so a disproportionately large loss under a single event doesn�t
fall on one company. Reinsurance enables an insurance company to expand
its capacity, stabilize its underwriting results, finance its expanding
volume and secure catastrophe protection against shock losses.
The automatic re-establishment of an in-force policy secured
by the payment of another premium.
Rental Reimbursement Coverage
An optional personal auto coverage endorsement to provide reimbursement
for the expenses incurred by an insured when a temporary replacement
vehicle is needed following a covered accident to the insured�s vehicle.
The actual 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 amount representing
actual or potential liabilities kept by an insurer to cover debts to
policyholders. A reserve is usually treated as a liability.
In disability insurance, a benefit paid when you
suffer a loss of income due to a covered disability or if loss of income
persists. This benefit is based on a formula specified in your policy and
it is generally a percentage of the full benefit. It may be paid up to the
maximum benefit period.
The grouping of insureds with
a similar level of risk. Typical risk classes are preferred, standard and
substandard, smoking and nonsmoking, male and female.
Management of the pure risks to which a company might be
subject. It involves analyzing all exposures to the possibility of loss
and determining how to handle these exposures through practices such as
avoiding the risk, retaining the risk, reducing the risk, or transferring
the risk. Transferring risk is easiest accomplished by insurance.
Risk Retention Groups �
Liability insurance companies owned by their
policyholders. Membership is limited to people in the same business or
activity, which exposes them to similar liability risks (example a trade
union, or a group of doctors). The purpose is to assume and spread
liability exposure to group members and to provide an alternative risk
financing mechanism for liability. These entities are formed under the
Liability Risk Retention Act of 1986. Under law, risk retention groups are
precluded from writing certain coverages, most notably property lines and
workers� compensation. They predominately write medical malpractice,
general liability, professional liability, products liability and excess
liability coverages. They can be formed as a mutual or stock company, or a
The secondary market are
buyers willing to pay what they determine to be fair market value for
Section 1035 Exchange
The section in the
Internal Revenue Code that allows owners to replace a life insurance or
annuity policy without creating a taxable event.
Part of the Internal Revenue Code that defines the conditions a life
policy must satisfy to qualify as a life insurance contract, which has tax
A separate account is an
investment option that is maintained separately from an insurer�s general
account. Investment risk associated with separate-account investments
belongs to the contract owner.
Sexual Abuse / Molestation Coverage
Abuse and Molestation insurance provides defense and indemnity protection
against claims arising from allegations of abuse and molestation. The
policy shields from claims of abuse and molestation typically excluded in
insurance policies. It provides protection for an employer against claims
made alleging molestation and abuse.
Liability in case you injure someone of damage someone�s property while
Having sufficient assets�capital, surplus,
reserves�and being able to satisfy financial requirements�investments,
annual reports, examinations�to be eligible to transact insurance business
and meet liabilities.
Insures damage to
perishable personal property and stock caused by a change in temperature
or humidity resulting from power failure or equipment failure. The
coverage may also include damage caused by contamination.
Auto insurance for average drivers with relatively good driving
records and average risk class.
Stock Insurance Company
incorporated insurer with capital contributed by stockholders, to whom
earnings are distributed as dividends on their shares.
A provision in a policy designed to cut off an insurer�s losses at a given
The fee to manage a subaccount, which
is an investment option in variable products that is separate from the
The right of an insurer who has
taken over another�s loss also to take over the other person�s right to
pursue remedies against a third party to recoup the damages they covered.
In hospital income protection, when confinements
in a hospital are due to the same or related causes and are separated by
less than a stated stipulated period of time, they are considered part of
the same period of benefits.
A written agreement
wherein one party, called the surety, obligates itself to a second party,
called the obligee or beneficiary, to answer for the default of a third
party, called the principal.
Fee charged to a
policyholder when a life insurance policy or annuity is surrendered for
its cash value.
A set amount of time during
which you have to keep the majority of your money in an annuity contract.
Most surrender periods last from five to 10 years. Most contracts will
allow you to take out at least 10% a year of the accumulated value of the
account, even during the surrender period. If you take out more than that
10%, you will have to pay a surrender charge on the amount that you have
withdrawn above that 10%.
Term Life Insurance
that provides protection for a specified period of time. Policy periods
are from one year to 30 years or until the insured reaches age 65 or 70.
You can get a 30 year term life policy at age 70. The policy doesn�t build
up any of the cash values associated with whole life policies.
A wrongful act, not including a breach of contract or trust,
thatresults in injury to another�s person, property, reputation, or
thelike, and for which the injured party is entitled to compensation. A
tort can be either intentional or unintentional, and liability insurance
is mainly purchased to cover unintentional torts.
loss of sufficient size that it can be said no value is left. The complete
destruction of the property. The maximum amount a policy will pay.
An extension of an automobile damage policy which
covers the cost of towing the insured car or providing emergency road care
Auto liability exposures
experienced by owners and operators of businesses designed to transport
the goods of others by land motor vehicles for a fee. Subject to
regulations by the Department of Transport (DOT) The insurance services
office has designed a special business automobile insurance for this
purpose, called truckers liability coverage form. Also available is the
motor truck carriers liability coverage form.
Coverage for losses above the limit of an underlying policy or policies
such as homeowners and auto insurance (excess insurance). Terms of
coverage are sometimes broader than those of underlying policies, and only
get paid out if another policy will not cover the loss, or another policy
Coverage an insured may purchase to
protect his or her own self from damage or injury caused by a negligent
party who does not have adequate limits of insurance to cover the loss.
An employee of the insurance company who evaluates the
risks, and determines the premiums payable.
process of selecting risks for insurance and classifying them according to
their degrees of insurability so that the appropriate rates may be
assigned. The process also includes rejection of those risks that do not
qualify to give the insurer a portfolio of risks which fit their model.
Expenses, including net commissions, salaries
and advertising costs, which are attributable to the production of net
The part of the pre-paid
premium applicable to the unexpired part of the policy period. The
opposite of Earned Premiums. Example: you paid $1,200 for a one year
policy, after 3 months $900 is considered unearned premium.
Uninsured Motorist Coverage
Endorsement to a personal automobile
policy that covers an insured collision with a driver who does not have
Uninsured / Under-insured Motorist Coverage
Under an auto policy, protection for the insured against bodily injury or
property damage (in some states) caused by the negligence of an uninsured
or under-insured motorist
Universal Life Insurance
A type of
flexible permanent life insurance offering the low-cost protection of term
life insurance as well as a savings element (like whole life insurance)
which is invested to provide a cash value buildup. The death benefit,
savings element and premiums can be reviewed and altered as a
policyholder�s circumstances change. In addition, unlike whole life
insurance, universal life insurance allows the policyholder to use the
interest from his or her accumulated savings to help pay premiums.
Usual, Customary and Reasonable Fees
An amount customarily charged for
or covered for similar services and supplies which are medically
necessary, recommended by a doctor or required for treatment.
Valuable Papers and Records Insurance
Provides coverage for the
replacement of a commercial operation�s valuable papers, records, forms,
and electronic media. Typically, coverage is limited to the cost of
recreating or restoring the lost or damaged documentation.
The act of converting a variable annuity from the
accumulation phase to the payout phase.
Variable Life Insurance
A form of life insurance whose face value fluctuates depending upon the
value of the dollar, securities or other equity products which the
insurance policy invests in.
Variable Universal Life Insurance �
A combination of the features of variable life insurance and universal
life insurance under the same contract. Benefits are variable based on the
value of underlying equity investments, and premiums and benefits are
adjustable at the option of the policyholder.
terminally ill person who sells his or her life insurance policy to get
money while they are still alive.
The time which
must pass after filing a claim before policyholder can collect insurance
Waiver of Premium
A provision in some insurance
contracts which enables an insurance company to waive the collection of
premiums while keeping the policy in force if the policyholder becomes
unable to work because of an accident or injury. The waiver of premium for
disability remains in effect as long as the ensured is disabled.
Waiver of Subrogation
A condition of an insurance policy which states
that the coverage will not be prejudiced if the insured has waived in
writing prior to any loss, any rights of recovery from a party responsible
for the loss.
Warehousepersons Legal Liability Policy
responsibility for loss or damage to property in the insured�s warehouse.
Whole Life Insurance
Life insurance with level premiums, which
might be kept in force for a person�s whole life and which pays a benefit
upon the person�s death, whenever that might be. It usually carries an
insurance and an investment component which grows tax deferred, which the
insured can borrow against. The insurance component pays a stated amount
upon death of the insured.
Workers Compensation Insurance
Protection which provides benefits to employees for any injury or
contracted disease arising out of and in the course of employment. All
states have laws which require such protection for workers and prescribe
the length and amount of such benefits provided. If you have employees,
you MUST have workers comp insurance. If you fail to have this coverage,
you could be sued for triple the amount in damages if an incident occurs.
1481 Oak Tre Rd.
Iselin, NJ 08830