A:
Accident
An unexpected event which happens by in the normal course of events.
Accidental Death Insurance
A form of insurance that provides payment if the death of the insured
results from accident.
Accidental Health Insurance
Insurance, benefits under which are payable in case of disease, accidental
injury, or accidental death.
Accumulation
Percentage addition to policy benefit as reward to the insured for
continuous renewal.
Act of God
A sudden and violent act of nature which could not have been foreseen or
prevented.
Actuary
An insurance professional skilled in the analysis, evaluation, and
management of statistical information. Evaluates insurance firm's reserves,
determines rates and rating methods, and determines other business and
financial risks.
Additional Insurance
Additional insurance is insurance which is added to an already existing
policy. Unless it is agreed to by the company or it's duly authorized agent
the insurance is voided.
Adjuster
A person who investigates a loss and negotiates settlement with the
claimant on the Company's behalf.
Advance Premium
The payment made at the start of the period covered by the insurance
policy.
Adverse Selection
The tendency of those exposed to higher risk to seek more insurance
coverage than those at a lower risk.
Aero Insurance
Coverage against risks of flying.
Alienation
Where an owner or tenant has the right to dispose of his interests in real
or proposal property whether such right is voluntarily or compulsory.
All-Risk
Insurance
"All-risk" property policies, often called “special” policies, cover any
loss unless it is caused by an excluded peril listed in the policy.
Annuity
It is a method by which a person can receive a yearly sum, in return for
the payment to an insurance company of a sum of money.
Application
A form on which the prospective insured states facts requested by the
insurance company and on the basis of which the insurance company decides
whether or not to accept the risk, modify the coverage offered, or decline
the risk.
Arbitration
If a dispute arises between the insured and the company, or their
representatives, in regard to the amount of loss, the loss can be referred
to arbitration.
Arbitrator
One chosen to decide a controversy out of court.
Assets Insurance
Coverage for the creditor of his working capital, accounts receivable. used
in credit insurance.
Audit
A survey of the insured’s records to determine the premium which should be
paid the insurance company for the protection furnished.
Auditor
Individual who makes a formal examination & verification of records.
Authorization
The amount of insurance the underwriter says he will accept on a risk of a
given class or on specific property.
Automobile Insurance
Coverage on the risks associated with driving or owning an automobile. It
can include collision, comprehensive, medical, and uninsured motorist
overages.
Aviation Insurance
Contractual protection against losses connected with airline accidents on
domestic scheduled airplanes.
B:
Bailee
One who has temporary possession of property belonging to another.
Bailer
A person who entrusts goods to another.
Beneficiary
The person or financial instrument named in the policy as the recipient of
insurance money in the event of the policyholder’s death.
Blanket Rate
An insurance rate applied to more than one property or subject matter of
insurance.
Blanket Policy
Insurance with board coverage frequently used in burglary and fire
insurance.
Breach
The art of breaking used in such phrases as “breach of
peace”, “breach of promise”, “breach of trust”.
Broker
A sales and service representative who handles insurance for clients,
generally selling insurance of various kinds and for several companies.
Business Insurance
Accident and sickness coverage issued primarily to indemnify a business
against loss of time because of the disability of a key employee.
C:
Cancellation
Termination of an insurance coverage during the policy period by the
voluntary act of the insurance company or insured, effected in accordance
with provisions in the contract or by mutual agreement.
Cargo
Material or goods carried by ship, truck or airplane.
Cargo Insurance
Insurance against loss to cargo carried in ships by other means of
transportation.
Claim
A claim is a demand by a person or business who is seeking to recover for a
loss. A claim may be made against an insurance company, when an insured ask
the insurance company to pay for a loss that may be covered by an insurance
policy.
Clause
A term used to identify a particular part of a policy or endorsement.
Co-insurance
Arrangement by which the insurer and the insured share, in a specific
ratio, payment for losses covered by the policy, after the deductible is
met.
Combined Ratio
The sum of the loss ratio plus the expense ratio plus the policyholder
dividend ratio.
Commitments
A promise or pledge by an insurance company to accept certain risks.
Commission
Fee paid to an agent or insurance salesperson as a percentage of the policy
premium. The percentage varies widely depending on coverage, the insurer,
and the marketing methods.
Compulsory Insurance
Any form of insurance which is required by law.
Conditions
Provisions of an insurance policy which along with the insuring agreement
and exclusions complete the contract.
Consequential Loss
A loss which is an indirect result of an accident or fire, e.g. food
spoiled through breakdown of a refrigerator.
Convertible Insurance
Insurance that the insured has the right to convert to insurance of another
form.
Contribution
It is the right of an insurer to call upon others similarly but not
necessarily equally liable to the same insured to share the cost of an
indemnity payment.
Co-payment
Partial payment of medical expenses, emergency room services, or
prescription drugs required by an individual who is enrolled in a group
health insurance plan.
Cover
To insure.
D:
Damages
The estimated reparation in money for injury sustained.
Deductible
Amount that must be paid by the insured before benefits will be paid by the
insurer.
Declaration
A term used in insurance for the portion of the contract which contains
information such as the name and address of the insured, the property
insured, its location and description, the policy period, the amount of
insurance coverage, applicable premiums, and supplemental representations
by the insured.
Decreasing Term Insurance
Term insurance of which the death benefit decreases in steps from the date
the policy comes into force to the date the policy expires.
Diminution of Value
The idea that the vehicle loses value after it has been damaged in an
accident and repaired.
Direct Loss
A loss which is a direct consequence of a particular peril. Fire damage to
a refrigerator would be a direct loss.
Disability Insurance
Coverage which generally provides non-occupational weekly benefits payable
to employees for accidents and sicknesses not within the scope of workmen’s
compensation laws.
Disbursement
Marine term for expenses for certain labor and supplies which will be lost
if a ship is sunk.
E:
Earthquake Insurance
Insurance covering damage caused by an earthquake as defined in the
contract.
Educational Insurance
Insurance proceeds arranged to provide a child with a given income during
the educational period.
Employer Liability Insurance
Coverage against common law liability of an employer for accidents to
employees, as distinguished from liability imposed by a workers'
compensation law.
Endowment Insurance
Type of life insurance that pays upon the death of the insured within
covered period or at the end of the covered period if individual is still
alive.
Engineering
The cover is intended to provide compensation to the insured in the event
of the plant insured being damaged by some extraneous cause or its own
breakdown.
Excess Insurance
A policy or bond covering the insured against certain hazards, which
applies only to loss or damage in excess of a stated amount.
Exclusions (Exceptions)
Conditions and circumstances, listed in the policy, for which the insurer
will not provide benefits.
Expiration
The date upon which a policy will end.
Explosion Insurance
Types of business insurance coverage against loss of
property caused by explosion, doesn’t cover explosion of steam boilers,
pipes, or certain kinds of pressure vessels.
Exposure
Degree of hazard threatening a risk because of external or internal
physical conditions.
Extra Premium
An additional amount added to the basic premium which may be required
because the risk covered is usually hazardous.
F:
Family Income Insurance
Insurance that provides an income to the beneficiary to the end of a
specified period from the inception of the insurance if the insured dies
within that period.
Fire Insurance
Coverage for loss of or damage to a building and/or contents due to fire.
Flood Insurance
A form of insurance designed to reimburse property owners from loss due to
the defined peril of flood.
Franchise
If a loss is higher than a stated percentage then the entire loss is paid
by the insurance company.
Frequency
The number of mortgages in a class that go to claim over a given period of
time divided by the total original number of mortgages in that class.
Fright Insurance Policy
Type of insurance business protection against loss caused to
freight.
Full Coverage
Any form of insurance which provides for payment, without deduction, of all
losses occasioned by hazards covered.
Fundamental Risk
The risks which arise out of the nature of the society we live in or from
some physical occurrence beyond the control of the human like war,
inflation, typhoons& tidal wave.
G:
Gross Premium
The raw premium before subtracting costs for reinsurance or at times before
any return premium.
H:
Hail Insurance
Contract of insurance covering property against damage caused by hail and
hailstorms.
Health Insurance
Insurance against loss by sickness or accidental bodily injury.
Hospitalization Insurance
Various plans of coverage providing indemnity for hospital, nurse, surgical
and miscellaneous medical expenses due to bodily injuries or illness.
Hull Insurance
Type of business insurance coverage against loss to a vessel or its
machinery or equipment.
Hazards
A specific situation that increases the probability of the occurrence of
loss arising from a peril, or that may influence the extent of the loss.
I:
Indemnity
It is a mechanism by which insurer provide financial compensation in an
attempt to place the insured in the same pecuniary position after the loss
as he enjoyed immediately before it.
Insurance
Risk management plan that, for a price, offers the insured an opportunity
to share the costs of possible financial loss through an insurer.
Insurable Interest
The legal right to insure arising out of a financial relationship,
recognized at law between the insured & the subject matter of insurance.
Insurer
The insurance company.
Indirect Loss
Loss resulting from a peril, but not caused directly and immediately
thereby For example: Loss of property due to fire is a direct loss, while
the loss of rental income as the result of the fire would be an indirect
loss.
Interest Rate
The percentage of the principal sum charged for its true.
Intermediary
A broker of reinsurance.
L:
Liability Insurance
Refers to the form of coverage whereby the insured is protected against the
injury or damage claims from other parties.
Limits
Maximum amount a policy will pay either overall or under a particular
coverage.
Loss
The basis for a claim for indemnity or damages under the terms of an
insurance policy.
Loss Ratio
The ratio of losses incurred and loss expenses incurred to net premiums
earned.
Loss Reserve
That portion of the assets of an insurance company kept in a readily
available form to meet probable claims.
M:
Machinery Breakdown Insurance
Contract of indemnification against loss due to break down or failure of
machinery.
Marine Insurance
That form of coverage which is primarily concerned with the protection of
goods in transit and the means of transportation.
Material Fact
Every circumstance which would influence the judgment of a prudent insurer
fixing the premium or determining whether he will take the risk.
Maturity
The date at which the face value becomes payable either by death or
endowment.
Medical Expense Insurance
A form of health insurance that provides benefits for medical care.
Miscellaneous Expenses
Hospital charges other than board, room, and floor nursing.
Misrepresentation
The policyholder/applicant makes a false statement of any material
(important) fact on his/her application. For instance, the policyholder
provides false information regarding the location where the vehicle is
garaged.
Moral Hazards
A condition of morals or habits that increase the probability of a loss
from a peril.
Mortality Table
A statistical table showing the death rate at each age, usually expressed
as so many per thousands.
Mortgagee
The creditor to whom a mortgage is given and who lends money on the
security of the value of the property mortgaged.
Mortgage Insurance Policy
In life and health insurance, a policy the benefits from which are intended
to pay off the balance due on a mortgage or meet the payments on a mortgage
as they fall due upon or after the death or disability of the insured.
Mortgagor
The debtor who receives money and in turn grants a mortgage on his
property as security for a loan.
N:
Negligence
Failure to use that degree of care which an ordinary person of reasonable
prudence would use under the given circumstances. Negligence may be
constituted by acts of either omission or commission or both.
Net Premium
The original gross premium less return premiums and premiums for
reinsurance.
O:
Occurrence
An event that results in an insured loss.
Open Policy
An insurance contract covering all described types of cargo shipped by or
to the insured within the specified geographical area, the amounts being
reported as shipments are made by or notified to the insured.
P:
Particular Risk
The risk which has its origin in individual events & its impact is felt
locally.
Peril
Cause of a possible loss. For example, fire, theft, or hail.
Physical Damage
A generic term indicating actual damage to property.
Physical Hazards
The material, structural, or operational features of the risk itself, apart
from the morale or moral hazards of the persons owning or managing it.
Policy
The printed document issued to the policyholder by the company stating the
terms of the insurance contract.
Policyholder
The person who owns a life insurance policy. This is usually the insured
person, but it also may be a relative of the insured, a partnership or a
corporation.
Premium
The payment, or one of the regular periodic payments, that a policyholder
makes to own an insurance policy.
Prevention
Elimination of causes of loss.
Professional Liability Insurance
Liability insurance to indemnify professionals, doctors, lawyers,
architects, etc. for loss or expense resulting from claim on account of
bodily injuries because of any malpractice, error, or mistake committed or
alleged to have been committed by the insured in his profession.
Property Insurance
Property Insurance indemnifies an insured whose property is stolen,
damaged, or destroyed by a covered peril.
Proposal Form
A document which is drafted by the insurer & which will seek answers to the
main material aspects of the risk.
Property Insurance
Property Insurance indemnifies an insured whose property is stolen,
damaged, or destroyed by a covered peril. The term property insurance
includes direct or indirect property losses covered in several lines of
insurance.
Proximate Cause
The active, efficient cause that sets in motion a train of events which
brings about a result, without the intervention of any force started &
working actively from a new and independent source.
Pure Risk
Holds out the prospect of a loss or no loss.
Q:
Quota Share Reinsurance
Type of reinsurance contract in which a quota, which is a
percentage of very risk falling under terms of the agreement, is ceded.
R:
Rain Insurance
Insures against loss caused by a measured amount of rainfall within stated
period of time.
Recovery
Money or other valuables that the insurance company obtains from
subrogation, salvage or reinsurance.
Renewal
The continuation in full force and effect of something that is about to
expire. With an insurance policy it is made either by the issuance of a new
policy or renewal receipt or certificate, to take effect upon the
expiration of the old policy.
Reserves
Funds which are set aside by an insurance company for the purpose of
meeting obligations as they fall due.
Retention
The amount of liability retained on a given risk; the gross line less
reinsurance.
Retirement Income Insurance
Insurance payable on death before a special age, with provision of a life
annuity certain if the insured attains that age.
Return Premium
The amount due the insured if a policy is canceled, reduced in amount, or
reduced in rate.
Risk
Uncertainty of
financial loss, used to designate an insured or a peril insured against.
Reinsurance
Acceptance by one insurer (the reinsure) of all or part of the risk or loss
underwritten by another insurer (the ceding insurer).
Risk Management
Procedure to minimize the adverse effect of a possible financial loss. It
involves identifying potential sources of loss, measuring the financial
consequences of the loss, and using controls to minimize actual losses or
their financial consequences.
S:
Settlement
A policy benefits or claim payment.
Severity
Size of a loss. One of the criteria used in calculating
premiums rates.
Self Insurance
A program financed entirely by the employer for insuring employees instead
of purchasing coverage from a commercial carrier.
Short Term
An insurance contract for less than a year.
Speculative Risk
Holds out the prospect of a gain as well as loss or break even.
Subject Matter of
Insurance
It can be any form of property or an event that may result in a loss of a
legal right or creation a legal liability.
Subrogation
When an
insurance company seeks payment from a third party who caused injury to the
insured or damage to property.
T:
Term Assurance
The simplest and oldest form of assurance and provide for payment of the
sum assured on death, provided death occurs within the specified term.
Third Party Insurance
Protection of the insured against liability for damage to or destruction of
the bodies or property of others.
Total Loss
A loss of sufficient size so that it can be said there is nothing left of
value. The complete destruction of the property. The term is also used to
mean a loss requiring the maximum amount a policy will pay.
U:
Uninsurable
Risk
Risks for which it is difficult for someone to get insurance
such as: Crime, penalties…
Utmost Good Faith
A positive duty to voluntarily disclose, accurately& fully all facts
material to the risk being proposed whether asked for them or not.
W:
Warranties
Fundamental
condition in insurance contracts which goes to the root of the contract &
allow the aggrieved party to repudiate the contract.
War Risk Insurance
Coverage against damage or loss caused by enemies while at war.
commercially it is written by marine companies on vessels.
Whole Life Insurance
The sum assured is payable on the death of the assured
whenever it occurs. Premiums are payable throughout the life of the assured
or more normally, until retail of the assured at 60 or 65.
