Insurance Glossary (A - D)

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A

 

Abandonment: As used in property insurance, prohibits the insured from abandoning damaged property to the insurance company for repair or disposal

 

Accelerated Benefits Rider: An adjustment (rider) to a life insurance policy that allows for the early payment of some portion of the policy's face amount should the insured suffer from a terminal illness or injury.

 

Accidental Death Benefit Rider: An adjustment (rider) to a life insurance policy that provides for payment of an additional cash benefit when death occurs by accidental means. This amount depends on the value of the policy.

 

Accidental Death Insurance: An Insurance poicy that provides payment if the insured's death occurs as a results from an accident.

 

Accounts Receivable Coverage: Covers loss of sums owed to the insured by its customers that are uncollectible due to damage by an insured peril to accounts receivable records

 

Actual Cash Value (ACV): Cost to repair or replace damaged property with materials of like kind and quality, less depreciation

 

Additional Insured: A person or organization for whom insured status is arranged by endorsement

 

Advertising Injury: General liability coverage that insures against libel, slander, invasion of privacy, copyright infringement and misappropriation of advertising in connection with the insured's advertising of its goods or services

 

Agent: An authorized representative of an insurance company.

 

Aggregate: The maximum amount an insurance company will pay during the policy

 

All Risk Coverage: Property insurance covering loss arising from all causes of loss except those that are specifically excluded

 

Annually Renewable Term: Term insurance that provides coverage for one year and allows the policy owner to renew his or her coverage each year.

 

Application: A form with the information needed for an insurance company to underwrite and rate a specific policy

 

Assignment Assignment: The transfer of ownership of a Life Insurance policy from one person to another.

 

Attained Age: Your current age. Your attained age is a factor life insurance companies use to determine premiums.

 

Audit: A verification of the financial records, usually payroll or receipts, of an organization to determine exposures and premiums

 

Automobile: A land motor vehicle, trailer or semi-trailer designed for travel on public roads, not including 'mobile equipment'

 

B

 

Backdating: Making the effective date of a policy earlier than the date of application. Backdating is often used to make the age of the applicant lower than it actually was at the time of application so that he/she can get a lower premium. State laws often set limits to this.

 

Bailee Coverage: Coverage on property left in the care of the insured for storage, repair or servicing

 

Basic Cause of Loss Form: Property coverage for named perils: Fire, Lightening, Explosion, Smoke, Windstorm, Hail, Riot, Civil Commotion, Aircraft, Vehicles, Vandalism, Sprinkler Leakage, Sinkhold Collapse and Volcanic Action

 

Basic Limits: The minimum limits of liability that can be carried by an insured

 

Beneficiary: The designated person set to receive the death benefit if the insured should die.

 

Best's Rating: A rating system by A.M. Best Company giving the financial condition of insurance companies

 

Binder: A temporary insurance policy that expires at the end of a specific time period or when a permanent policy is written. A binder is given to an applicant for insurance during the time it takes the an insurance company to complete the policy paperwork.

 

Bodily Injury by Accident Limit: The most an insurer will pay under Part Two of a Workers' Compensation Policy for claims arising out of any one accident, regardless of how many employee claims arise out of the accident

 

Bodily Injury by Disease, Each Employee : The most an insurer will pay under Part Two of a Workers' Compensation Policy for damages due to bodily injury by disease to any one employee

 

Bodily Injury by Disease-Policy Limit : The most an insurer will pay under Part Two of a Workers' Compensation Policy employee bodily injury by disease claims during the policy period regardless of the number of employees who make such claims

 

Bodily Injury Liability Limit: The insured is legally liable for damages due to bodily injury, sickness, or disease, including resulting death

 

Boiler & Machinery Insurance: Coverage for loss caused by mechanical or electrical equipment breakdown, including damage to the equipment

 

Bond: A written agreement in which one party, the surety, guarantees the performance or honesty of a second party, the principal (obligor), to the third party (obligee) to whom the performance or debt is owed

 

Brands and Labels Endorsement: Property insurance coverage that allows the insured to remove labels from damaged goods or mark the items as 'salvage,' provided the goods are not damaged in the process

 

Broad Causes of Loss Form: Property coverage for the named perils: Fire, Lightening, Explosion, Smoke, Windstorm, Hail, Riot, Civil Commotion, Aircraft, Vehicles, Vandalism, Sprinkler Leakage, Sinkhole Collapse, Volcanic Action, Breakage of Building Glass, Falling Objects, Weight of Snow, Ice or Sleet, Water Damage (in the form of leakage from appliances) and Collapse from Specified Causes

 

Building Ordinance Coverage: Covers against loss caused by enforcement or ordinances or laws regulating construction and repair of damaged buildings

 

Burglary: Theft of property by forcible entry, which is evidenced by visible signs, in a premises, by a person

 

Business Auto Policy: Auto Policy for businesses that includes auto liability and auto physical damage coverages

 

Business Income Coverage: Insurance covering loss of income by a business when operations are interrupted due to property loss that is a covered cause of loss

 

Business Interruption Coverage: See Business Income Coverage

 

Business Owners Policy (BOP): A policy that combines property and liability coverages for special types of small businesses

 

C

 

Cancellation: The termination of an insurance policy usually before its expiration

 

Care, Custody or Control: An exclusion of liability insurance which eliminates coverage for damage to property in the insured's care, custody or control

 

Carrier: The insurance company which provides coverage

 

Cash Benefits: The Money that is paid to the policy holder upon settlement of a covered claim.

 

Cash Value: The equity amount or "savings" accumulation in a whole life insurance policy.

 

Casualty Insurance: Insurance that covers loss caused by injuries to persons and the legal liability imposed on the insured for injury or for damage to property of others

 

Catastrophe: A severe loss causing sizable financial loss

 

Causes of Loss Forms: The commercial property forms that define the covered causes of loss for which coverage is provided. Commonly, there are 3 Cause of Loss Forms: Basic, Broad and Special

 

Certificate of Insurance: A document providing evidence that insurance has been purchased

 

Claim: A request by a policyholder or a claimant for payment under a policy of insurance

 

Claim Expense: Expenses of settling or investigating a claim

 

Claimant: The person presenting a claim

 

Claims Reserve: An amount of money set aside to meet claims reported but not paid

 

Class: A group of businesses who have common or similar exposures and are grouped together for rating purposes

 

Classification: The arranging or establishing of business groups or categories for rating purposes

 

Coinsurance Provision: An insurance provision for property coverages in which the policyholder must carry an amount of insurance that is at least equal to a set percentage of the value of the property in order to receive full payment of a loss

 

Collapse: Collapse of a building and collapse of personal property within a building due to specified causes (such as weight of snow, ice or rain). Does not include collapse due to design error or due to faulty workmanship or materials if the collapse occurs after construction is complete

 

Collision Insurance: Provides for payment to a covered automobile resulting from the striking of another object by a moving vehicle

 

Commercial General Liability Policy (CGL): A coverage which protects business organizations against liability claims for bodily injury and property damage. Those claims may be the result of events at your place of business, from your business operations, the products or services you make or do, communications or advertisements your business broadcasts

 

Competitive State Funds: State-owned and operated facilities that write Workers' Compensation Insurance solely for that state

 

Completed Operations: A General Liability coverage for the work of the insured that has been completed away from the business premises

 

Comprehensive Auto Coverage: Covers an automobile for loss or damage for all causes except for those specifically excluded

 

Compulsory Insurance: Insurance that is required by law

 

Concealment: Failure to disclose facts which may void an insurance policy

 

Conditional Receipt: Given to policy owners when they pay a premium at the time of the application. These receipts bind the insurance company, provided your policy is approved, but are subject to any other conditions stated on the receipt.

 

Conditions: Things agreed upon in an insurance policy that state the rights and the requirements of the insured and the insurer

 

Consequential Loss: An indirect loss such as the reduction in value of property that is the result of a direct damage loss

 

Constructive Total Loss: Term used when damage to property is more than the value of the property

 

*Contestable Clause: A provision in an insurance policy setting forth the conditions or time period under which the insurance company may contest or void the policy. After this time has lapsed, typically two years, the policy cannot be contested. Example: Suicide.

 

Contingent Beneficiary: Person or persons designated to receive the value of an insurance policy in case the original beneficiary is not alive.

 

Contract: An agreement between two or more parties with characteristics of mutual assent, competent parties, a valid consideration and legal subject

 

*Coverage: Coverage is just another term for Insurance. It can be used to mean either the dollar amounts of insurance purchased ($500,000 of liability coverage), or the type of loss covered (coverage for theft).

 

Convertible Term: A policy that may be changed to another form by contractual provision and without evidence of insurability. Most term policies are convertible into permanent insurance.

 

Countersignature: The signature of a licensed agent or representative on a policy that is required to validate the policy

 

Cross-Purchase Plan: An agreement that provides that upon a business owner's death, surviving owners will purchase the deceased's interest, often with funds from life insurance.

 

Cumulative Injury: A type of injury which occurs from the repetition of tasks over an extended length of time

 

D

 

Data Processing or EDP Coverage: All risk property insurance for electronic data processing equipment (computers), computer programs and data including mechanical breakdown, electrical injury and changes in temperature and humidity

 

Death Benefit: The amount of money paid to the beneficiary when the insured person dies.

 

Decreasing Term Insurance: Term life insurance on which the face value slowly decreases in scheduled steps from the date the policy comes into force to the date the policy expires, while the premium remains level. The intervals between decreases are usually monthly or annually.

 

Debris Removal: The cost of removal of debris from covered property damaged by an insured peril

 

Deductible: The amount of loss which is paid or absorbed by the insured prior to determining the insurance company's liability

 

Deposit Premium: The amount of premium required at the beginning of a policy prior to the actual premium being determined

 

Depreciation: The reduction in value of property over a period of time. Usually as a result of age, wear and tear, or economic obsolescence

 

Direct Damage: Causes of loss that produce direct and straightforward property damage (without interruption in time or deviation in space) from the cause of the event to the damaged property

 

Double Indemnity: Payment of twice the basic benefit in the event of loss resulting from specified causes or under specified circumstances.

 

Driver Other Car Endorsement: An endorsement that can be added to an automobile policy that gives protection while the insured designated in the endorsement is driving a car other than the one named in the policy

 

Drop Down Provision: A clause used in Umbrella policies providing that the Umbrella will 'drop-down' over underlying policy aggregate limits when they have been reduced or exhausted

 

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