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Abandonment - A relinquishing of ownership of lost or damaged property by the insured to the insurer so that a total loss may be claimed. Abandonment is prohibited in most other types of property insurance.
Abandonment Clause - A clause in fire insurance policies and other property forms that prohibits the insured from abandoning partially damaged property to the insurer in order to claim a total loss.
Absolute Assignment - Assignment by a policyowner of all control of and rights in the policy to a third party.
Absolute Liability - A type of liability that arises from extremely dangerous operations. An example would be in the use of explosives: A contractor would almost certainly be liable for damages caused by vibrations of the earth following an explosive detonation. With absolute liability it is usually not necessary for a claimant to establish that the operation is dangerous.
Accelerated Benefits - Riders on life insurance policies which allow the life insurance policy's death benefits to be used to offset expenses incurred in a convalescent or nursing home facility.
Accelerated Endowment - A dividend option allowing dividend accumulations to be applied to convert a life insurance policy into an endowment, or to shorten the endowment term.
Accelerated Option - A provision whereby an insured may use accumulated policy dividends and the cash value of a life insurance contract to pay up the policy or to mature it as an endowment.
Accelerative Endowment - An option to use life insurance policy dividends to mature a policy as an endowment before the regular maturity date.
Acceptance - In insurance acceptance occurs when an applicant for insurance receives the policy from the company and, in the case of general insurance, pays the premium. In life insurance, since the initial premium is almost always submitted with the application, issuance of the policy by the company constitutes acceptance.
Access - The availability of medical care to a patient. This can be determined by location, transportation, type of medical services in the area, etc.
Accident - A sudden unintentional event or happening that occurs unexpectedly, which may cause bodily injury or property damage.
Accident and Health Insurance - Coverage for accidental injury, accidental death or sickness. Benefits may include paid hospital expenses, medical expenses, surgical expenses, and income payments.
Accident and Sickness Insurance - An older name for health insurance.
Accident Frequency - The rate of the occurrence of accidents, often expressed in terms of the number of accidents over a period of time. It is one method used for measuring the effectiveness of loss prevention services. Contrast with Accident Severity.
Accident Insurance - A form of insurance against loss by accidental bodily injury to the insured.
Accident Medical Expense - Written to cover injuries suffered by a person engaged in a covered activity or event. May be written as excess of valid and collectible coverage or as primary coverage.
Accident Severity - A measure of the severity or seriousness of losses, rather than the number of losses. It is measured in terms of time lost from work rather than the number of individual accidents. It is another way of measuring the effectiveness of loss prevention services. Contrast with Accident Frequency.
Accident Year - A term used to describe the accounting of claims by the year in which the claim occurred. It is a much better way of analyzing how a particular prior year is developing than the calendar year method that measures claim activity during a given year, regardless of the year the claim occurred.
Accident Year Experience - Measures premiums and losses relating to accidents which occurred during a 12-month period.
Accidental Bodily Injury - Traumatic damage to the body, of external origin, unexpected and undesigned by the injured person. Contrast with Accidental Means.
Accidental Death and Dismemberment - A form of accident insurance which indemnifies or pays a stated benefit to the insured or their beneficiary in the event of bodily injury or death due to accidental means. A predetermined schedule of payment is used to compensate the insured or the beneficiary for their loss.
Accidental Death Benefit - In a life insurance policy, benefit in addition to the death benefit paid to the beneficiary should death occur due to an accident. In double indemnity, twice the face value of the policy will be paid to the beneficiary; in triple indemnity, three times the face value is payable. Accidental death caused by war and illegal activities are generally excluded. Time and age limits are usually applicable.
Accidental Death Insurance - A form that provides payment if the death of the insured results from an accident. It is often combined with dismemberment insurance in a form called accidental death and dismemberment.
Accidental Means - Unexpected or undesigned cause of an accidental bodily injury. Under a definition of accidental means, the mishap itself must be accidental, not just the resulting injury. An example would be an individual chopping wood: If the axe slipped out of his hand and cut his foot, it would have been accidental means. However, if his finger got in the way of the axe, it would not have been.
Accommodation Line - Business accepted from an agent or broker which would normally be rejected according to strict underwriting standards but which is accepted because of the overall profitability of the agent's or customer's other business. As an example, an insurer might accept coverage on property that would not normally meet its underwriting standards, if the other lines of insurance which it carries for the customer were profitable.
Account Analysis - The Account Analysis is an expert system advises underwriters of the risks associated with an account's financial and business profile. Trend analysis, market comparisons and review of several accounting schedules make up the knowledge base of rules designed to identify undesirable or unprofitable accounts. The existing knowledge base is tailored to Surety Bond Underwriting. Most of the financial analysis is standard accounting practice and may be applied as a base for other underwriting lines.
Account Current - A monthly financial statement provided to an agent by an insurer showing premiums written, cancellations, endorsements, and commissions.
Account Data Base - The Account Data Base is a strategic marketing system used to develop new business and to expand the existing book of business. The system reports activity on AIG Property and Casualty business throughout the world.
Account Premium Modification Plan - A rating plan for fire, property damage and time element coverages. The maximum credit or surcharge is 25%, and it is available to risks which develop a three-year premium of at least $5,000.
Account Value - The value inherent in an annuity to the annuitant if (s)he does not surrender the contract. Cash surrender value is that value net of penalties which is stated in the contract. These penalties usually last seven years -at the end of year seven, account value equals surrender value.
Accounts Receivable Insurance - Insurance against the loss that occurs when an insured is unable to collect outstanding accounts because of damage to or destruction of the accounts receivable records by a peril covered in the policy.
Accredited Service - All service, by an employee, recognized under a pension plan as being allowable or creditable in calculating the amount of benefits due.
Accrete - A Medicare term which means the process of adding new members to a health plan.
Accrued Benefit - The amount of retirement benefit accumulated on behalf of a participating employee.
Accrued Liability - The amount of money needed to offset the employee's accumulated benefits under a retirement plan. Accrued liability equals the difference between the present value of the future benefits and the present value of future contributions.
Accumulated Actuarial Benefit - The sum of benefits assigned to credited service before a specified date, and which is determined pursuant to the actuarial valuation method in use.
Accumulated Plan Benefit - That portion of a participant's retirement benefit that is attributable pursuant to the plan to the participant's period of credited service before a specified date.
Accumulation at Interest - A dividend option where interest is paid on accumulated dividends and compounded annually at a guaranteed minimum interest rate.
Accumulation Period - The period of time, prior to retirement, during which an annuitant is making payments or investments in an annuity. Such payments will accumulate on a tax deferred basis.
Accumulation Units - These are issued to owners of variable annuities during the accumulation period, as evidence of the annuitant's participation in the separate account.
Accumulation Value - A term used in universal life policies to describe the total of all premiums paid and interest credited to the account before deductions for any expenses, loans or surrenders.
Accumulations - Percentage additions to policy benefits when the contract is continuously renewed.
Acquisition Cost - The expenses incurred by an insurer or reinsurance company that are directly related to putting the business on the books of the company, including clerical work, medical examiners fees, inspection costs, etc. The largest portion of this cost is usually the agent's or sales representative's commission or bonus.
Act of God - An event arising out of natural causes with no human intervention which could not have been prevented by reasonable care or foresight. Examples are floods, lightning, and earthquakes.
Action - A lawsuit involving the right of one party to recover from another person in a court of law.
Active Fund Management Style - Fund manager actively analyzes and trades in securities that meet the overall objective of the fund. Generally, more aggressive than passive fund management style.
Active Malfunction - A products insurance term. If the product, instead of bringing a benefit to the user, actually damages the user's property, it is an active malfunction. An example is bug killer which, when applied to a crop, damages the crop. Active malfunctioning is covered.
Actively-At-Work - Most group health insurance policies state that if an employee is not actively at work on the day the policy goes into effect, the coverage will not begin until the employee does return to work.
Activities of Daily Living - Everyday living functions and activities performed by individuals without assistance. These functions would include mobility, dressing, personal hygiene and eating.
Activities of Daily Living Standards - Used to assess the ability of an individual to live independently, measured by the ability to perform unaided such activities as eating, bathing, toiletry, dressing, and walking. ADL standards are sometimes discussed as a way to measure or define eligibility for long-term care.
Actual Cash Value - The cost of repairing or replacing damaged property with property of the same kind and quality and in the same physical condition; commonly defined as replacement cost less depreciation.
Actual Charge - The actual amount charged by a physician for medical services rendered.
Actuarial - Having to do with insurance mathematics.
Actuarial Asset Value - The value assigned by the actuary to the assets of a plan for the purposes of an actuarial valuation.
Actuarial Equivalence - Two different series of payments or values are in actuarial evidence when they have an equal actuarial present value under a given set of actuarial assumptions.
Actuarial Experience Gain or Loss - The effect on the unfunded supplemental actuarial value of deviations between the past events that would have occurred according to the actuarial assumptions and those which actually occurred.
Actuarial Present Value - The single amount as of a given evaluation date that results from applying actuarial assumptions to an amount or series of amounts payable or receivable at various times; with the amount(s) referred to being adjusted where appropriate to reflect expected changes from the valuation date to the date of expected payment or receipt by reason of expected salary changes, cost of living adjustments, or other changes; and adjusted to reflect the time value of money (through discounts for interest) and the probability of payment (by means of decrements such as for death, disability, withdrawal or retirement) between the valuation date and the expected date of payment or receipt.
Actuarial Valuation Method - A procedure, using actuarial assumptions, for measuring the expected value of benefits and assigning such value to time periods.
Back-End Load Fund - An open- or closed-end investment company that charges a fee upon the redemption or sale of its fund shares. Typically, loads are reduced based on the value of the shares and/or the passage of time.
Backdating - A procedure for making the effective date of a policy earlier than the application date. Backdating is often used to make the age at issue lower than it actually was in order to get a lower premium. State laws often limit to six months the time to which policies can be backdated.
Bail Bond - A form of bond given to guarantee that a person released from legal confinement will appear as required in court, or the penalty of the bond will be forfeited to the court. In insurance policies, bail bond fees are covered under an automobile policy.
Bailee - A person or concern having possession of personal property entrusted to that person by the owner. An example would be a laundry which has custody of customers' clothing for washing or dry cleaning. Bailees are required to exercise the same care with the property of others as they would with their own property.
Bailees Customer Insurance - Insurance purchased by a bailee to protect the personal property of customers against loss caused by specific perils. An example would be a carpet cleaner who buys coverage to protect customers against loss or damage to their carpets while in the store's care.
Bailees Liability Coverage - Coverage that meets the needs of a bailee's liability. The bailee's legal responsibility is to exercise care appropriate to the circumstances of the bailment. In addition, most bailees want to carry enough insurance to make good any loss to property in their custody whether or not they are legally liable.
Bailment - The personal property of one person being held by another with the intent of its being returned to the original owner. Cars in a garage for repairs would be an example of a bailment.
Bailor - A person who owns property which has been entrusted to another. The owner of a fur coat who has entrusted it to a furrier for storage would be a bailor.
Balance Sheet - An accounting term which refers to a listing of the assets, liabilities, and surplus of a company or individual as of a specific date.
Balanced Mutual Fund - A mutual fund that purchases common stock, preferred stock, and bonds. Such funds tend to be less volatile than all-equity funds, outperforming them in a declining market but underperforming them in a rising market.
Bank Owned Life Insurance - This product enables banks to purchase single premium policies on the lives of its officers, specifically to fund benefits. The policies are owned by the bank and the policy cash value is shown on the bank’s balance sheet as a long-term tax deferred asset.
Bankers Blanket Bond - A type of insurance coverage purchased by banks to pay for losses to the dishonesty of employees as well as losses caused by people other than employees due to burglary, robbery, larceny, theft, forgery, and mysterious disappearance.
Barratry - A fraudulent breach of duty on the part of a master of a ship causing loss to the owner of the ship or the owner of the cargo.
Base - Describes a Campaign resulting in the issuance of new policies, rather than Campaigns which involve the solicitation of existing policy holders (e.g., an up-sell or cross-sell) in any line of business.
Base Capitation - The total amount which covers the cost of health care per person, minus any mental health or substance abuse services, pharmacy, and administrative charges.
Base Rate - In loss cost states, the rate prior to modification for expense load and profit margin.
Baseline Performance - Process performance as it is/was operating at the initiation of an improvement project (prior to solutions).
Basic - The basic premium factor in a retro is the sum of three components: expenses, the net insurance charge, and profit and contingencies. It is expressed as a percentage of the standard premium.
Basic AD&D - The double indemnity portion of a life policy. Also known as carve out AD&D.
Basic Auto Policy - Once used to insure commercial vehicles, motorcycles, motorscooters, and a variety of substandard risks. This policy had broad eligibility rules, but the scope of coverage was narrower than modern auto policies. Most automobile risks today are insured by business or personal auto policies, with appropriate endorsements.
Basic Coverage Form - Any of the commercial or personal lines property forms which provide basic coverages. These forms generally provide the most limited coverage, which is surpassed by broad forms and special forms.
Basic Extended Reporting Period - An automatic "tail" for reporting claims after expiration of a "claims-made" liability policy. It is provided without charge and consists of two parts: a mini-tail covers claims made within 60 days after the end of the policy; a midi-tail covers claims made within five years after the end of the policy period arising out of occurrences reported not later than 60 days after the end of the policy.
Basic Form - For Commercial Property policies written under the Basic Form, covered causes of loss include the following: fire, lightning, explosion, windstorm or hail, smoke, aircraft or vehicles, riot or civil commotion, vandalism, sprinkler leakage, sinkhole collapse and volcanic action.
Basic Form Rates - Under the latest commercial lines program, Basic Form Rates are arrived at by adding Group I and Group II rates together. Refer to Group I Rates and Group II Rates.
Basic Hospital Expense Insurance - Hospital coverage providing benefits for room and board and miscellaneous hospital expenses for a specified number of days during hospital confinement.
Basic Limit - Usually refers to liability policies and indicates the lowest amount for which a policy can be written. This amount is either prescribed by law or company policy.
Basic Limits Coverage - For Commercial Property policies written under the Basic Form, covered causes of loss include the following: fire, lightning, explosion, windstorm or hail, smoke, aircraft or vehicles, riot or civil commotion, vandalism, sprinkler leakage, sinkhole collapse and volcanic action.
Basic Limits of Liability - Minimum amounts of insurance. The term is usually used in reference to bodily injury and property damage limits that are either the lowest amounts which can be written at the published or manual rates, the minimum amount of insurance an insurer is willing to underwrite, or the minimum amount of insurance required by law, e.g., automobile insurance financial responsibility laws.
Basic Medical Insurance - Insurance that provides coverage for normal hospital expenditures, surgical expenses, and other miscellaneous expenses. Only expenses that are incurred while the insured is in the hospital are covered.
Basic Rate - The manual rate from which discounts are taken or to which charges are added to reflect the individual circumstances of a risk.
Basis of Acceptance - A crucial feature of every reinsurance agreement, the Basis of Acceptance defines how a reinsurer will participate in covered losses and allocated expenses. There are a number of variations, but all fall under two basic concepts, Pro-Rata (or Proportional) and Excess of Loss (Non-Proportional).
Bed Days/1,000 - The number of inpatient hospital days per 1,000 members of the health plan.
Below Market Loan - A demand loan with interest paid below the federal rate; typically, part of an executive loan program provided by an employer.
Bench Error - A term used in products insurance which describes a loss that occurs in the production process. For instance, if production workers mistakenly use the wrong ingredients in a chemical formula, a bench error has occurred. Bench errors are covered.
Beneficiary - A person who may become eligible to receive or is receiving benefits under an insurance policy other than a participant.
Benefit - The amount to be paid to a participant of a retirement plan or to the participant's beneficiary at retirement, at death, or at termination of service.
Benefit Levels - The maximum amount a person is entitled to receive for a particular service or services as spelled out in the contract with a health plan or insurer.
Benefit Package - A description of what services the insurer or health plan offers to those covered under the terms of a health insurance contract.
Benefit Period - Defines the period during which a Medicare beneficiary is eligible for Part A benefits. A benefit period is 90 days which begins the day the patient is admitted to a hospital and ends when the individual has not been hospitalized for a period of 60 consecutive days.
Benefit, Flat Dollar - A certain monthly benefit which is given to all employees regardless of length of service or standard of living. Everybody receives the same amount.
Benefit, Flat Percentage - A monthly pension benefit which is determined by a fixed percentage of compensation. Although recognizing the employee's standard of living, it still ignores the employee's length of service.
Benefits - The financial reimbursement and other services provided insureds by insurers under the terms of an insurance contract. An example would be the benefits listed under a life or health insurance policy or benefits as prescribed by a workers compensation law.
Beta Coefficient - Measure of a stock's relative volatility. The beta is the covariance of a stock in relation to the rest of the stock market. The Standard & Poor's 500 Stock Index has a beta coefficient of 1. Any stock with a higher beta is more volatile than the market, and any with a lower beta can be expected to rise and fall more slowly than the market.
Bid Bond - A bond filed with a bid for a construction or other project which guarantees that if the contractor has the low bid and is awarded the job, the required performance bond will be furnished.
Billed Claims - The amounts submitted by a health care provider for services provided to a covered individual.
Binder - An agreement executed by an agent or insurer (usually the latter) putting insurance into force before the contract has been written or the premium paid. This term is not usually used in life insurance.
Binder of Reinsurance - A record of reinsurance arrangements pending the issunce of a formal reinsurance contract (which then replaces the binder).
Birth Rate - The number of births related to the total population in a given group during a period of time. It is usually expressed as births per 100,000 people in one year.
Birthday Rule - One method of determining which parent's medical coverage will be primary for dependent children: the parent whose birthday falls earliest in the year will be considered as having the primary plan.
Blackout Period - The period of time during which a surviving spouse no longer receives survivors benefits (after the youngest child is no longer eligible) and before he or she is eligible for retirement benefits.
Blanket - Coverage for a whole group of persons without identifying each individual. Or insuring a whole category of risks, or one hazard in a number of locations, without identifying each. For example, a policy issued to cover a number of individuals such as an athletic team, passengers in a certain airplane, etc.
Blanket Average Rate - Rate established for blanket coverage. It is computed by multiplying the rate for each risk location by the value at that location declared by the insured, and then dividing the sum of the results by the total value.
Blanket Bond - A type of fidelity bond which covers losses caused by the dishonesty of all employees as opposed to bonds which specifically identify only certain employees to be covered.
Blanket Coverage - Coverage under a single amount of insurance for two or more properties or exposures; i.e., a single amount of insurance applies to two or more building risks, or a building and contents of one or more building risks.
Blanket Crime Policy - A policy that once provided a package of coverages for employee dishonesty, loss of money and securities inside and outside the premises, depositor's forgery, loss of money orders, and loss due to counterfeit paper currency. This has been replaced by modern commercial crime coverage forms.
Blanket Insurance - A contract of health insurance that covers all of a class of persons not individually identified in the contract.
Blanket Medical Expense - A policy or provision in a health insurance contract that pays all medical costs, including hospitalization, drugs, and treatments, without limitation on any item except possibly for a maximum aggregate benefit under the policy. It is often written with an initial deductible amount.
Blanket Position Bond - A Blanket Fidelity Bond in which the amount of coverage applies separately to each position covered. Contrast with Commercial Blanket Bond, which provides a single amount of coverage for any one loss, regardless of the number of employees involved in the loss.
Blanket Rated Risks - Those risks for which blanket coverage is provided. A single rate is calculated based on a Statement of Values, or by use of the highest rate applicable to any individual item.
Blasting and Explosion Exclusion - Exclusion of liability for damages from blasting or explosions. Rates for the types of construction work followed by the letter "X" in the manual exclude this coverage. If it is desired, an additional rate must be charged.
Block Policy - An open perils (all risk) policy which derives its name from the French term en bloc meaning "all together." It provides coverage on stock, property being transported, property in bailment, and the property of the insured on the premises of others.
Blowout and Cratering - These are industry terms having to do with accidents that can arise from drilling operations. Generally, they are either excluded under the liability policy or can be added by endorsement for an additional premium, depending upon the judgment of the underwriter.
Blue Chip Stock - The common or preferred stock of well-known, major corporations that is traded on a national stock exchange. Blue chip status is derived from long periods of earnings growth, dividend payments, and financial stability.
Blue Cross - An independent, non-profit membership corporation providing protection on a service basis against the cost of hospitalization in a limited geographical area.
Blue Cross - Blue Cross plans are hospital expense prepayment plans designed primarily to provide benefits for hospitalization coverage, with certain restrictions on the type of accommodations to be used.
Blue Plan - A generic designation for those companies, usually writing a service rather than a reimbursement contract, who are authorized to use the designation Blue Cross or Blue Shield and the insignia of either.
Blue Shield - An independent, non-profit membership corporation providing protection on a service basis against the cost of surgical and medical care in a limited geographical area.
Blue Shield - Blue Shield plans are prepayment plans offered by service organizations covering medical and surgical expenses.
Board Certified - A physician or other professional who has passed an examination which certifies him or her as a specialist in a particular medical area.
Board Eligible - A professional person or physician who is eligible to take a specialty examination.
Bobtailing - Using the truck-tractor after unloading the trailer and not driving for trucking purposes.
Bodily Injury - Typically means bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.
Bodily Injury Liability - A legal liability that may arise as a result of the injury or death of another person.
Bodily Injury Liability Insurance - Protection against loss arising out of the liability of the insured for damages because of bodily injury, sickness, disease or death suffered by another person or persons.
Boiler and Machinery Insurance - Insurance against the sudden and accidental breakdown of boilers, machinery, and electrical equipment. Coverage is provided on (1) damage to the equipment, (2) expediting expenses, (3) property damage to the property of others, and (4) supplementary payments; and (5) automatic coverage is provided on additional objects. Coverage can be extended to cover consequential losses and loss from interruption of business.
Boiler and Machinery Policy - Insurance against loss due to accidents to boilers, pressure vessels or other machinery including the equipment itself as well as liability arising out of the accident.
Bond - An evidence of debt issued by corporations, municipalities and the federal government. Bonds represent the borrowing of money by a corporation or government. It is a legal obligation of the issuing company or government to repay principal in accordance with the terms and conditions of the bond.
Bond - A three-party contract guaranteeing that if one person, the principal, fails to perform as specified or proves to be dishonest, the person to whom the duty is owed, the obligee, will be financially protected by the issuer of the bond, the surety.
Bond Fund - A fund that holds corporate, municipal, or U.S. Treasury bonds, or a combination of those in the attempt to earn as much income as possible while maintaining a high degree of security.
Book of Business - A total of all insurance accounts written by a company or agent. It may be treated in different ways. For example: an insurer's book of automobile business, or an agent's overall book of business, or an agent's book of business with each insurer.
Cafeteria Plans - An employee benefit which provides a series of flexible health care benefits from which an employee may choose, including a cash only option.
Calendar Year - Used to describe all of the premium and loss activity during a given year, i.e. 1994. Many loss ratios shown for a given policyholder are based on calendar year results and may reflect claim activity on claims from prior years as well as the current year.
Calendar Year Experience - This measures the premiums and losses entered on accounting records during the 12-month calendar.
Call For Statistics - Annual publication of ISO that provides various details and guidelines concerning the reporting of data. Such information includes due dates, changes in eligibility requirements and technical requirements as to the reporting of data.
Cancellation - The termination of a policy before its normal expiration date. Cancellation may be flat, pro rata or short rate.
Cancellation (Flat) - Cancellation as of the inception date of the policy, with a return of all premiums received.
Cancellation (Pro Rata) - Cancellation whereby the premium returned to the insured is directly proportional to the unexpired portion of the policy period.
Cancellation (Short Rate) - Cancellation whereby the premium returned to the insured in the first year of a policy, as calculated from the applicable short rate provision, is less than the proportional or pro rata portion of the policy period that remains.
Capacity - The largest amount of insurance or reinsurance available from a company. In a broader sense, it can refer to the largest amount of insurance or reinsurance available in the marketplace.
Capital - Wealth in the form of money or property, which is usually available for investment.
Capital Appreciation - An increase in the market value of an investment.
Capital Asset - Any asset held and used for the production of goods and services, including fixed assets, such as land, plant, raw materials sources, and reserves; investments in owned and affiliated companies; and some long-term intangibles, such as patents.
Capital Ratio - The ratio for a financial guaranty insurer of aggregate net exposure to statutory capital.
Capital Stock - The shares of ownership in a corporation.
Capital Sum - The maximum lump sum payable in the event of accidental death or dismemberment.
Capital Transaction - The sale of a capital asset, such as stock, which results in the transaction being taxed as ordinary income and not as a dividend.
Capital Value - The worth of capital.
Capitation - A rate paid, usually monthly, to a health care provider. In return, the provider agrees to deliver the health services agreed upon to any covered person.
Captive Agent - One who sells insurance for only one company as opposed to an agent who represents several companies.
Captive Insurer - A legally recognized insurance company organized and owned by a corporation or firm whose purpose is to use the captive to write its own insurance at rates lower than those of other insurers. Usually it is a nonadmitted insurer that has the right, under special circumstances, to reinsure with an admitted insurer.
Care, Custody and Control - Most liability insurance policies exclude coverage for damage to property in the care, custody, or control of the insured. In some cases this type of coverage is not available; in other cases it can be purchased through certain forms of inland marine insurance, like installation floaters, and in some cases this exclusion can be made less restrictive by adding a Broad Form Property Damage Endorsement.
Cargo Insurance - A policy covering the cargo being transported by a carrier.
Carrier - Any organization that provides insurance. A carrier may be a company, corporation, association or facility.
Carrier (G) - Sometimes used to designate the insurer. The term "insurer" is preferred because of the possible confusion of "carrier" with transportation.
Carrier (H) - Usually a commercial insurer contracted by the Department of Health and Human Services to process Medicare Part B claims payments.
Carrier Replacement - This refers to a situation where one carrier replaces one or more carriers.
Carryover Provision - In major medical policies, allowing an insured who has submitted no claims during the year to apply any medical expenses incurred in the last three months of the year toward the new calendar year's deductible.
Case Management - The assessment of a person's long-term care needs and the appropriate recommendations for care, monitoring and follow-up as to the extent and quality of services to be provided.
Case Manager - A person, usually an experienced professional, who coordinates the services necessary under the case management approach.
Cash Flow Plans - Premium payment schemes which allow the insured to retain a large part of the premium and pay it out over a time period such as a year.
Cash Flow Statement - A listing of the sources and uses of the cash receipts and cash outlays of a person or business.
Cash Flow Underwriting - Willingness to lose money on the underwriting side, which will be made up on the investment side.
Cash Refund Annuity - A form of annuity contract which provides that if at the death of the annuitant installments paid out have not totaled the amount of the premium paid for the annuity, the difference will be paid to a designated beneficiary in a lump sum.
Casualty Actuarial Society - A professional society for actuaries in areas of insurance work other than life insurance. This society grants the designation of Associate and Fellow of the Casualty Actuarial Society (ACAS and FCAS).
Casualty Insurance - Insurance concerned primarily with the insured's legal liability for injuries to others or for damage to other persons' property; also encompasses such forms of insurance as plate glass, burglary, robbery and aviation.
D Ratio - The D (discount) ratio is the factor used in experience rating to determine the amount of expected loss for each classification that are expected primary losses.
Daily Report - An abbreviated statement of pertinent policy information with copies for the insurer, the agent, and others. It is usually the top page of a policy.
Damages - The amount required to pay for a loss.
Data Processing Coverage - A special form providing protection for loss due to the breakdown of data processing systems. It also includes coverage for the additional expense of putting the system back into operation.
Date of Issue - The date stated in a policy as the date on which the contract was issued by the insurer. This is not necessarily the effective date of the policy.
Date of Service - The date that the health service was provided.
DBG General Ledger - The DBG General Ledger system records all the accounting transactions so as to provide data for management and regulatory reporting. All DBG profit center premiums, losses and expenses flow through this system.
Death Benefit - The amount stated in a policy contract as payable upon the death of the person whose life is being insured (cesti que vie).
Debenture - A bond that is backed only by the general credit of the issuer.
Debit - (1) The amount of premium charged or debited to an agent to be collected. (2) The book of business represented by such premiums. (3) The territory where most of the insureds are located. (4) The total number of individual or home service insureds assigned to a given agent for collection of weekly or monthly premiums and for servicing, commonly referred to as "people in my debit."
Debit Agent - An agent who works on the debit system.
Debit System - The system of collecting insurance premiums weekly or monthly by an agent.
Debris Removal Clause - A provision that may be included in a Property policy contract to provide the insured with indemnification for expenditures incurred in the removal of debris produced by the occurrence of an insured peril. Ordinarily a property policy covers only the direct damage caused by an insured peril.
Debt - The amount owed to creditors.
Debt Securities - Securities that provide interest payments as compensation for the use of an investor's (i.e., lender's) funds. These payments usually last for a specific period. The principal (original loan amount) is usually paid at the end of this period. Some debt securities are backed by the credit of the issuer (i.e., Treasury bonds are backed by the credit of the U.S. government). However, other debt securities are backed by specific assets of the issuer. These securities are known as asset-backed bonds.
Debtor - One who owes a legal obligation or money to another.
Decedent - Same as Deceased.
Declaration - (Liability & Property) A term used in insurance other than Life or Health to denote that portion of the contract in which is stated such information 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.
Declaration - (Legal) A formal written statement in which an individual avows under oath certain facts as personally known to him or her specifying of the facts constituting the plaintiff's cause of action against the defendant.
Declarations Page - The 'dec page' or that part of the property or liability policy which includes the name and address of the insured, the property insured, its location and description, the policy period, the amount of coverage, applicable premium and supplemental information provided by the insured.
Declination - Rejection of an application for insurance by the insurer.
Decreasing Term - A form of life insurance that provides a death benefit which declines throughout the term of the contract, reaching zero at the end of the term.
Decreasing Term Insurance - A term life insurance policy where the death benefit decreases but the premium remains level for the policy term.
Deductible - An amount of a loss a policyholder agrees to pay, per claim or per accident, toward the total loss. Insurance is written on this basis at reduced rates.
Deductible Calendar Year - A deductible that specifies that one deductible needs to be satisfied for a calendar year regardless of the number of claims.
Deductible Carryover Credit - During the last three months of a calendar year, charges incurred for health services can be used to satisfy the deductible for the following calendar year. These credits may be applied whether or not the prior calendar year's deductible had been met.
Deductible Clause - A contract provision that sets forth the deductible.
Deductible Per Cause - A deductible that must be satisfied for each separate claim.
Defamation - Under insurance law an unfair trade practice involving false, maliciously critical or derogetory statement intended to injure a person engaged in the insurance business.
Defamation - (Legal) Any derogatory statement which is designed to injure a person's business or reputation. Defamation can be accomplished as libel (written) or slander (spoken).
Defendant - The person being sued in a court action.
Defense Base Act - The Defense Base Act extends the provisions of the U.S.L. & H.W. Act to employers and their employees on overseas military bases and on other overseas locations under public works contracts being performed by contractors with agencies of the United States Government.
Deferred Annuity - An annuity providing for income payments to begin at some future date.
Deferred Annuity - An annuity in which payments to the annuitant (or named beneficiary) are to begin either at a stated number of years in the future or when the annuitant reaches a certain age. During the accumulation period, the cash values of the annuity accumulate on a tax-deferred basis.
Deferred Compensation - A plan which may be qualified or non-qualified which allows a key person to defer receipt of current income in accordance with a written agreement with the employer. Deferral is usually until death, disability, or retirement.
Deferred Compensation Administrator - This refers to a company that provides services under a deferred compensation plan. Services may include administration of self-insured plans, compensation planning, salary surveys, retirement planning, etc.
Deferred Group Annuity - A group annuity contract providing for the purchase each year of a paid-up deferred annuity for each person covered in the group. The total amount of the annuity payments starts at a deferred date, usually retirement, and is the sum of the individual paid-up annuities.
Deferred Premium - The unpaid and yet undue premiums on life insurance, paid on other than an annual premium basis.
Deferred Premium Payment Plan - A method for payment of premium in installments.
Deferred Vesting - That form of vesting under which rights to vested benefits are acquired by a participant commencing upon a fulfillment of specified requirements, usually, reaching a certain age or number of years of service or membership.
Deficit - Any excess of debits over credits at the end of a given accounting period.
Deficit Carried Forward - The transfer of a debit balance from one accounting period to another.
Defined Benefit Pension Plan - A qualified retirement plan where the employer makes contributions on behalf of all eligible employees in order to provide a specific retirement benefit. The amount of the contribution is not specifically defined, but the amount of the retirement benefit is defined.
Defined Contribution Pension Plan - A type of pension plan under which contributions are fixed as flat amounts or flat percentages of an employee's salary. Benefits consist of whatever amounts the accumulated contributions will produce.
Defined-Benefit Plan - A pension plan under which the benefit the employee is to receive in the future is predetermined. (Example: $10 per month income at retirement for each year employed.) The amount of the required annual employer contributions depends on the level of benefits to be provided and the estimated number of years in the accumulation period.
Defined-Contribution Plan - A pension plan under which the amount of the employee's retirement benefit is determined by contributions, not a pre-determined formula. The amount of the employee's benefit equals the accumulated contributions plus earnings the fund will produce in terms of a retirement income or lump-sum payment.
Deflation - An economic period characterized by falling prices, high unemployment and a generally sluggish or slow economy.
Degree of Care - A duty owed to others which depends on circumstances. Persons who invite others on their premises, those who invite children on their premises and those who sell what might be considered inherently dangerous products are all required to take different degrees of care to prevent harm to others.
Degree of Risk - The amount of uncertainty that exists in a given situation. For instance, if you've chosen heads in the flip of a coin, the degree of risk present is 50%, since there is a 50% chance any flip of the coin will come up tails.
Delay Clause - A contract provision permitting the insurer to defer granting a loan on the sole security of the policy for any other purpose than that of paying premiums on the policy for a stated interval of time, usually six months.
Delay Clause - (Ocean Marine) A contract provision that excludes liability as a result of damage or loss of market arising out of delayed voyages.
Delayed Payment Clause - In life insurance, a clause deferring payment to the beneficiary for a specified period after the death of the insured with proceeds to be paid to contingent beneficiaries or the estate if the primary beneficiary does not survive the delay. It is used as one method of handling common-disaster situations, such as the death of the insured and the death of the primary beneficiary occurring in the same accident. The clause usually states that the beneficiary has to survive the death of the insured by a certain period of time in order to collect.
Delivered Business - Contracts issued by an insurer and delivered to an insured but not yet paid for.
Delivery - The actual placing of a life or health insurance policy in the hands of an insured.
Demand Loan - Any loan with an indefinite maturity.
Demolition Clause - A provision that excludes liability for costs incurred in demolishing undamaged property, often necessitated by building ordinances requiring that structures must be demolished after a certain degree of damage has been sustained.
Demolition Insurance - Insurance written to cover the cost of demolition excluded by a demolition clause. It may be endorsed to property insurance for an additional premium.
Early Return to Work - A loss reducing program whereby the employer agrees to modified work for an injured employee in order to return the employee back to work in a shorter period of time thus reducing costs.
Earned Exposure - The pro rata portion of the total exposure. It corresponds to the earned premium and to that part of the policy period that has already elapsed.
Earned Income - The money individuals earn as a result of working at some job or occupation for which they are paid a salary.
Earned Premium - The part of an insurance premium that pays for the protection the insurance company has already provided on a policy. Thus, insurance on which a premium has been paid one year in advance will, at the end of six months, be half earned by the insurance company.
Earnings - Something earned, especially wages. As a financial term, earnings also refers to the balance of revenue after deducting costs and expenses.
Earnings Income - Interest or dividends that are credited or paid to an investor.
Earnings Insurance - A form of gross earnings business interruption insurance, whose principal feature is the lack of a coinsurance clause. It is designed for small risks, and the maximum amount of loss the insured can collect in any 30-day period is established when the policy is written.
Earth Movement - A peril including landslide, mudflow, earth sinking, rising or shifting, and earthquake. Usually excluded on homeowners' and commercial property policies.
Earthquake Insurance - Insurance covering damage caused by an earthquake as defined in the contract.
Easement - An interest in land owned by another that entitles its holder to specific uses.
Economic Risk - A risk experienced by those who invest in securities identified as the uncertainty of the economy.
Economies of Scale - Reduction in unit cost (e.g. cost to issue a policy) as fixed costs (e.g. general operating expenses or GOE) are spread over increasingly more units. It enables the organization to process more volume at a declining unit cost per transaction.
Educational Assistance Plan - An employee benefit whereby certain educational expenses incurred by the employee is reimbursed on a tax-favorable basis by the employer.
Educational Fund - One of the uses of life insurance. It is designed to provide money for a child's education should the breadwinner of the family die.
Effective Date - The date on which the protection of an insurance policy goes into effect.
Efficiency - Measures related to the quantity of resources used in producing the output of a process (e.g. cost of a process such as policy issuance, total cycle time, costs of defects); links primarily to the organization's profitability. It is reflected in the number of units produced in a shorter time at the same or decreasing cost.
Efficient Portfolio - A portfolio that minimizes historical portfolio risk for a given potential return, or maximizes portfolio potential return for a given level of historical risk.
Elective Benefits - Lump sum payments which the insured may generally choose in lieu of periodic payments for certain injuries, such as fractures and dislocations.
Elective Deferral Plan - A type of qualified plan (401(k) or TSA) whereby participants voluntarily elect to defer current amounts of compensation and these amounts are placed in a retirement plan on a tax favorable basis.
Electrical (or Electrical Apparatus) Exemption Clause - A clause providing that damage to electrical appliances caused by artificially generated electrical currents is recoverable only if fire ensues and then only for the damage caused by the fire.
Electronic Data Processing Coverage - A specialized type of insurance designed to cover risks associated with computer equipment, data systems, information storage media, and expenses or income loss related to EDP losses.
Elevator Collision Coverage - Coverage for damage caused by collision of an elevator without regard to fault. This includes damage to personal property, the building, and the elevator itself. Liability coverage is usually provided automatically by business liability policies.
Eligibility Date - The date that a person is eligible for benefits.
Eligibility Period - (1) The period of time during which potential members of a group life or health program may enroll without providing evidence of insurability. (2) The period of time under a Major Medical policy during which reimbursable expenses may be accrued.
Eligibility Requirements - Requirements imposed for eligibility for coverage, usually in a group insurance or pension plan.
Eligible Dependent - A dependent of an insured person who is eligible for coverage according to the requirements set forth in the contract.
Eligible Employee - An employee who is eligible based on the requirements as indicated in the group contract.
Eligible Expenses - Expenses as defined in the health plan as being eligible for coverage. This could involve specified health services fees or "customary and reasonable charges."
Eligible Person - Similar to eligible employee except it could be a contract covering people who are not employees of a specified employer. An example might be members of an association, union, etc.
Elimination Period - A loosely used term, sometimes designating the probationary period, but most often designating the waiting period in a health insurance policy.
Embezzlement - Fraudulent use of money or property which has been entrusted to one's care.
Emergency - An injury or disease which happens suddenly and requires treatment within 24 hours.
Emergency Accident Benefit - A group medical benefit which reimburses the insured for expenses incurred for emergency treatment of accidents.
Emergency Fund - One of the uses of life insurance which provides money for the emergency expenses of a deceased's family prior to the final settlement of the estate.
Employee Benefit Program - Benefits offered an employee at work by the employer, covering such contingencies as medical expenses, disability, retirement, and death, usually paid for wholly or in part by the employer. These benefits are usually insured.
Employee Certificate of Insurance - The employee's evidence of participation in a group insurance plan, consisting of a brief summary of plan benefits. The employee is provided with a certificate of insurance rather than the actual insurance policy.
Employee Contribution - (Health) The employee's share of the premium costs.
Employee Contribution - (Pension) Deduction from employee's pay to apply toward the cost of a retirement plan.
Employee Dishonesty - Any dishonest act of an employee which may contribute to a loss for the employer. Fidelity bonds are usually used to protect against such losses.
Employee Leasing - The practice of paying another company to hire, train, insure, and administer benefits for staff used in business operations.
Employee Pension Benefit Plan or Pension Plan - Any program established and maintained by an employer or an employee organization providing retirement benefits to employees or deferred income until employment is terminated.
Employee Retirement and Income Security Act of 1974 - A federal statute governing U.S. pension plans.
Employee Retirement Income Security Act - This act prescribes federal standards for funding, participation, vesting, termination, disclosure, fiduciary responsibility, and tax treatment of private pension plans.
Employee Stock Ownership Plan - A qualified employee plan which provides eligible employees with part ownership in the corporation for which they work. Stock is issued and held in trust for the benefit of the employees.
Employee Welfare Benefit Plan - Any program established or maintained by an employer or an employee organization to provide its participants or their beneficiaries with medical, surgical, or hospital care, or benefits in the event of sickness, accident, disability, death or unemployment.
Employees' Trust - One way for a pension or profit-sharing plan to be financed and given effect.
Employer Contribution - The portion of the cost of a health insurance plan which is borne by the employer.
Employers Liability - Part 2 of the standard workers compensation policy which provides coverage for situations in which an employee or dependent could sue for injuries suffered under common law liability. For example, failure to maintain a safe workplace.
Employers Liability Coverage - A section of the Workers Compensation policy (Part Two of the policy) which provides coverage against the common law liability of an employer for injuries to employees, as distinguished from the liability imposed by a Workers Compensation law (Part One of the policy).
Employers Liability Coverage - This is coverage B of the standard workers compensation policy. It provides coverage against the common law liability of an employer for injuries to employees as distinguished from the liability imposed by a workers compensation law. Employers liability applies in situations where a worker does not come under these laws.
Employers Nonownership Liability Insurance - Protects the employer for liability arising from the use by employees of their own cars on company business.
Employment Benefit Plan - Any plan which is both an employee welfare plan and an employee pension plan.
Encounter - Each time a person meets with a health care provider to receive services, is a separate "encounter."
Encumbrance - A claim on property, such as a mortgage, a lien for work and materials, or a right of dower. The interest of the property owner is reduced by the amount of the encumbrance.
Endemic Disease - Any disease ordinary (endemic) to the place of an employee's employment outside of the United States, its territories or possessions, or Canada, and as such, is considered a covered occupational disease and a compensable injury in most states.
Endorsement - A document used to amend, change or modify the coverages in an otherwise complete policy.
Endorsement Extending Period of Indemnity - An endorsement attached to business interruption policies which extends coverage to the period during which a business has reopened for business but have not reached the level of business activity which existed prior to the business interruption loss.
Endorsement Premium - The change in premium that results from an endorsement. Such a change may be either a 'Return Premium' or an 'Additional Premium'.
Endorsement Split Dollar - A split dollar plan in which the employer owns and controls a life policy on the life of an employee. The employee's rights to certain policy benefits are protected by an employer endorsement.
Endowment - Life insurance payable to the policy-holder on the maturity date stated in the policy, or to a beneficiary, if the insured dies before the date.
Endowment Insurance - A form of life insurance where the face amount is payable to the insured at the end of the contract period or to a beneficiary if the insured dies before that. An example would be an insured purchasing an endowment payable at age 65. Upon reaching that age, the proceeds would be payable to the insured. If the insured dies prior to that age, the proceeds would be payable to the designated beneficiary as a life insurance benefit.
Engineer - An insurer's staff member who is charged with the responsibility of loss prevention and who assists in the securing of underwriting and rating information.
Enrollee - An eligible individual who is enrolled in a health plan - does not include an eligible dependent.
Enrolling Unit - The organization (such as an employer) that contracts for participation in a health insurance plan.
Enrollment - Used to describe the total number of enrollees in a health plan. It may also be used to refer to the process of enrolling people in a health plan.
Enrollment Period - The amount of time an employee has to sign up for a contributory health plan.
Entire Contract Clause - A provision in an insurance contract stating that the entire agreement between the insured and the insurer is contained in the contract, including the application if it is attached, declarations, insuring agreements, exclusions, conditions and endorsements.
Entity Agreement - A buy-sell agreement usually used with a partnership in which the partnership agrees to purchase the interest of a deceased or disabled partner.
Entry Age - The age when an employee satisfies all the age, service, and other eligibility requirements for participation in a pension plan.
Entry Date into Claims-Made - Initial effective date of a "claims-made" liability policy. An entry date is used to determine extent of maturity for rating purposes. If claims-made coverage is interrupted and reestablished, or if a retroactive date is changed on renewal, the entry date will change.
Environmental Impairment Liability - Insurance coverage used to pay claims arising out of negligent acts, errors or omissions of an insured, resulting in third party bodily injury or property damages for losses caused by sudden and accidental or gradual pollution/contamination.
Environmental Restoration - Restitution for the loss, damage or destruction of natural resources arising out of the accidental discharge or escape of any commodity transported by a motor carrier, including the cost of removal and measures to minimize damage to human health, the natural environment, fish, shellfish and wildlife. Federal regulations require common carriers of hazardous materials to maintain minimum liability coverages for BI, PD and environmental restoration.
Equipment Floater - A form which covers various types of equipment, e.g., construction equipment, against specified perils or occasionally on an all-risk basis subject to exclusions.
Equity - The money value of an insurance company that is over and above its liabilities. Liabilities include almost all of its reserves.
ERISA Liability - Liability imposed by law upon officers or other employees operating in a fiduciary capacity for the proper handling of pension funds and other employee benefits. It is excluded from most general liability policies.
ERM-14 - This form, titled "Confidential Request for Information", is filed by the insurance carrier to the appropriate rating organization when an ownership change occurs.
Errors and Omissions Clause - A clause usually found in an obligatory reinsurance treaty which provides that if an error is made or an omission takes place in describing a risk that falls within the automatic reinsurance coverage of the treaty, it shall not invalidate the liability of the reinsurer for the risk.
Errors and Omissions Insurance - A form of professional liability insurance that provides coverage for negligent acts or omissions by a professional.
Fac Oblig. - Fac Oblig is a form of reinsurance which is a cross between facultative and treaty reinsurance. The risk to be ceded is submitted to the reinsurer, which has limited rights to decline individual risks. In the case of AIU Fac Oblig reinsurance arrangements are generally dealt with as in the same manner as treaties.
FAC Payables - The FAC (Facultative) Payables system is a LAN-based data capture of payables data for entry into the corporate FAC Payables system.
Face - The first page of a life insurance policy.
Face Amount - That amount stated on the face of the policy that will be paid in case of death or at the maturity of the policy. It does not include additional amounts payable under accidental death or other special provisions, or acquired through the application of policy dividends.
Facility-of-Payment Clause - A contract provision found in industrial life policies which permits the insurer to pay a portion of the proceeds of the policy to any relative or person who has possession of the policy and who appears equitably entitled to such payment. This provision is designed to facilitate payment when some doubt may exist as to who the beneficiary is and to save legal expenses in the settling of an estate.
Factory Mutual - A mutual insurer specializing in large risks, with special emphasis on loss prevention.
Factory Mutuals - Member insurers of the Factory Mutual System, which is a group of mutual coinsurers formed to provide member insurers with insurance and engineering services.
Facultative - ("Fac") The reinsurance of part or all of (the insurance provided by) a single policy, with separate negotiation for each cession. The word "facultative" connotes that both the primary insurer and the reinsurer have the faculty or option of accepting or rejecting the individual submission (as distinguished from the obligation to cede and accept, to which the parties agree in treaty reinsurance).
Facultative (or Specific) Reinsurance - Reinsurance by offer and acceptance of individual risks, wherein the reinsurer retains the "faculty" to accept or reject each risk offered by the ceding company. Contrast with Treaty Reinsurance.
Facultative Certificate of Reinsurance - A document formalizing a facultative reinsurance policy.
Facultative Reinsurance - A procedure by which insurance companies reinsure risks on an individual basis, with the reinsurer having the option to accept or decline each risk.
Fair Access to Insurance Requirements Plan - A pooling plan reinsured by the United States Government that makes insurance available to those in inner-city or other high risk areas who cannot obtain insurance through normal channels. Coverages for fire and allied perils is available, with considerably high limits, after inspection of the premises.
Fair Credit Reporting Act - Public Law 91-508 requires that an applicant be advised if a consumer report may be requested and be told the scope of the possible investigation. Should the request for insurance be declined because of information contained in that report, the applicant must be given the name and address of the reporting agency.
Fair Rental Value Coverage - Insurance that pays the loss of rental value, minus expenses which do not continue, when property rented to others or held for rental is damaged by a peril insured against.
Fallen Building Clause - A provision in certain property insurance contracts which specifies that if a material part of an insured building collapses from causes other than fire or explosion, the fire coverage becomes void.
Family Automobile Policy - A form which was once widely used to write automobile insurance for individual car owners. It is a package policy which provides protection against legal liability for bodily injury and property damage to others, injury to the insured and other occupants of the vehicle, and damage to the vehicle itself. It has largely been replaced by the more modernized Personal Auto policy.
Family Dependent - A person entitled to coverage because he or she is: (1) The enrollee's spouse, or (2) A single dependent child of either the enrollee or the enrollee's spouse (including stepchildren or legally adopted children), and (3) A resident of the enrollee's home.
Family Expense Policy - A policy which insures the medical expenses of all members of a family.
Family Income Policy - A policy that pays an income up to some future date designated in the policy to the beneficiary after the death of the insured. The period of payment is measured from the date of the inception of the contract, and at the end of the income period the face amount of the policy is paid to the beneficiary. If the insured lives beyond the income period, only the face amount is payable in the event of the insured's death.
Family Maintenance Policy - A policy that pays an income to the beneficiary starting after the death of the insured and continuing for a stated period of time. At the end of the income period, the face amount of the policy is paid to the beneficiary.
Family Policy - This policy typically consists of whole life insurance for the head of the household with smaller amounts of term insurance on other family members.
Farm Coverage Part - One of the coverage parts available under the Commercial Package Policy program. Coverages may be included for farm property, agricultural equipment, livestock, and farm liability.
Farm Liability Coverage Form - A commercial liability form attached to a Farm Coverage Part to provide coverage for bodily injury, property damage, personal injury, advertising injury and medical payments for farm exposures.
Farm Personal Property - Scheduled or unscheduled classes of farm property which may be covered by the Farm Property Coverage form. It may include grain, feed, supplies, livestock, farm machines and farm vehicles. Contrast with Household Personal Property.
Farm Property Coverage Form - A farm coverage form which may be used to cover residential dwellings, other private structures, household personal property, farm personal property, and other farm structures.
Farmers Comprehensive Personal Liability - Similar to the Comprehensive Personal Liability policy but adapted to cover farm hazards, such as damage caused by grazing animals.
Farmowners-Ranchowners Policy - A package policy providing property coverage on farm dwelling buildings and contents, as well as barns, stables, and other farm outbuildings. Liability coverage is also included. It is similar to a homeowners policy adapted to cover farm properties.
Fast-track Technical Underwriting Unit - The organizational unit within the Customer Service Group that handles the technical underwriting of all business that is basic to medium in terms of underwriting complexity.
FC&S Bulletins - A service, published by the National Underwriter Company, explaining coverages, forms, underwriting, and rating procedures for the various property, casualty, and surety lines of insurance.
FCII - Fellow of the Chartered Insurance Institute, whose designation is gained by the completion of examinations and other requisites.
Federal Crime Insurance Program - A federally administered program under which pooling companies write crime insurance for those unable to secure it in the open market. Available for residential and commercial risks in various states.
Federal Crop Insurance Corporation - An agency within the U.S. Department of Agriculture which provides insurance on growing crops.
Federal Deposit Insurance Corporation - An agency of the federal government which insures bank deposits up to a stated maximum.
Federal Emergency Management Agency - A government agency that provides disaster relief during emergencies, such as floods, fire, earthquakes, etc.
Federal Employees Compensation Act - Under this Act, workers compensation benefits are provided to civilian federal government employees. The U.S. government administers and operates the system, as well as provides the benefits. Therefore, no private insurance is involved.
Federal Employer Identification Number - A tax identification number for businesses that has serves a tax-tracking function similar to the social security number for individuals.
Federal Employers Liability Act - Passed by Congress in 1908 before there were worker compensation statutes and benefits in this country, this Act applies to railroad workers only. It puts injured workers in a favorable position in terms of liability claims, allowing them to sue the employer for negligence. Because railroad workers and their unions were unwilling to trade their favorable positions for statutory benefits, they remain exempt from compensation laws in many states. Cases are decided on the issue of employer liability.
Federal Employers' Liability Act - Applies to employees of interstate railroads. Such employees are not subject to state workers compensation laws. This federal law imposes liability on the railroad if the injured railroad employee can show any negligence on the part of the railroad.
Federal Estate Tax - The federal tax which is imposed on the deceased's estate which includes the total assets comprising a person's estate at death.
Federal Home Loan Mortgage Corporation - A publicly chartered agency that buys qualifying residential mortgages from lenders, packages them into new securities backed by those pooled mortgages, provides certain guarantees, and then resells the securities on the open market. The corporation's stock is owned by savings institutions across the U.S. and is held in trust by the Federal Home Loan Bank System. The corporation, nicknamed Freddie Mac, has created a secondary market, which provides more funds for mortgage lending and allows investors to buy high-yielding securities backed by federal guarantees.
Federal Insurance Administration - A government office, part of HUD, which oversees the handling of FAIR plans, Federal Crime Insurance plans, and the Flood program.
Federal National Mortgage Association - A publicly-owned, government-sponsored corporation chartered in 1938 to purchase mortgages from lenders and resell them to investors. The agency, known by the nickname Fannie Mae, mostly packages mortgages backed by the Federal Housing Administration, but also sells some non-governmentally backed mortgages. Shares of FNMA itself, known as Fannie Maes, are traded on the New York Stock Exchange.
Federal Officials Bond - A bond which provides reimbursement to the federal government for loss occasioned by the dishonest acts of its employees or their lack of faithful performance.
Federal Qualification - Approval of any HMO made by the HCFA after conducting their evaluation of methods of doing business, documents, contracts, facilities, and systems.
Fee Maximum - The maximum amount available to a provider for specific health care services under a contract.
Fee Schedule - A list of maximum fees for providers who are on a fee-for-service basis.
Fee Simple - Complete ownership of property with the unconditional right to dispose of it. Compare with Joint Tenancy and Tenancy in Common.
Fee Simple Form of Ownership - The ownership of property where the owner is entitled to the entire property without conditions or limitations.
Fee-for-Service Equivalency - The difference between the amount a provider receives from a reimbursement system such as capitation (a flat charge per month, for instance) compared to fee-for-service reimbursement.
Fee-for-Service Reimbursement - A health care system where physicians and other providers receive payment based on their billed charge for each service provided.
Fellow of the Casualty Actuarial Society - This designation is gained by the completion of a series of examinations and other requirements.
Fellow of the Society of Actuaries - A designation which is gained by the completion of a series of examinations, as well as other experience requirements.
Fellow Servant Rule - A common law defense used by employers before the passage of compensation laws. It held that if an employee was injured due to the carelessness of a fellow employee, the right of action was against the fellow worker and not against the employer.
Fellow, Life Management Institute - A professional management designation earned by passing 10 national examinations on life and health insurance subjects including insurance, finance, marketing, law, information systems, accounting, management and employee benefits. Examinations and course materials are prepared and administered by the Life Office Management Association.
Fictitious Groups - Groups formed primarily for the purpose of buying insurance. Under the law such groups may not be underwritten.
Fidelity - A form of insurance that reimburses an employer under agreed upon terms and conditions for losses caused by dishonest or fraudulent acts of employees.
Fidelity Bond - A bond that will reimburse an employer, the insured, for loss due to the dishonest acts of a covered employee.
Fidelity Insurance - A liability insurance coverage for loss caused by dishonest or fraudulent acts committed by persons covered by the policy.
Fiduciary - A person holding the funds or property of another in a position of trust, and who is obligated to act in a prudent and ethical manner. An example would be an attorney, bank trustee, the executor of an estate, etc.
Fiduciary Bond - A bond which guarantees the faithful performance of a fiduciary.
Gain and Loss Exhibit - The portion of the convention blank which represents an analysis of gains, losses, and surplus during an accounting period.
Gambling - The creation of a situation where there is a chance of either loss or gain. This is the opposite of insurance, which either eliminates or reduces the risk of loss and presents no chance of gain.
Garage Coverage Form - A commercial automobile insurance coverage form used to insure automobile dealers, repair shops, service stations, and garage risks. Garage liability, garagekeepers coverage, and physical damage coverages may be included.
Garage Keepers Legal Liability Insurance - An insurance contract that protects a garage keeper against liability for damage to vehicles in the keeper's care, custody, or control caused by specific perils.
Garage Liability Insurance - Insurance to protect garage owners or automobile dealers for liabilities arising out of their business operations.
Garagekeepers Insurance - An insurance contract that protects a garagekeeper against liability for damage to vehicles in his care, custody, or control caused by specified perils.
Gatekeeper Model - Under this model of HMO and PPO organizations, the primary care physician (the gatekeeper) is the initial contact for the patient for medical care and for referrals. This is also called a closed access or closed panel.
Gender Rule - One method of determining which parent's medical coverage will be primary for dependent children: the father's coverage will automatically be considered primary and will pay first.
General Account - All assets of an insurer other than assets held in separate accounts.
General Account - An investment portfolio used by the insurer for investment of premium income. This portfolio generally consists of safe, conservative, guaranteed investments, such as real estate and mortgages.
General Adjustment Bureau, Inc. - An independent company which adjusts claims of all types for insurance companies. GAB also provides training programs for adjusters.
General Agency System - The marketing of life insurance through general agents.
General Agent - An individual appointed by a life or health insurer to administer its business in a given territory. General agents are responsible for building their own agency and service force and are compensated on a commission basis, with possibly some additional expense allowances.
General Agents and Managers Conference - An association of insurance general agents and managers affiliated with the National Association of Life Underwriters.
General Aggregate Limit - A Commercial General liability limit that applies to all damages paid for bodily injury, property damage, personal injury, advertising injury, and medical expenses, except damages included in the products-completed operations hazard.
General Average - A partial loss incurred to save the total venture from destruction. Any such losses are prorated among all parties to the venture, including the parties whose interests first suffered such loss. An example would be throwing cargo overboard in order to save a ship from a particular peril.
General Liability - Coverage for bodily injury or property damage losses for which the insured is legally liable as a result of negligence.
General Liability Insurance - Form of coverage that pertains to claims arising out of the insured's liability for injuries or damage caused by ownership of property, manufacturing operations, contracting operations, sale and distribution of products as well as professional services. General Liability is sometimes referred to as 'Liability Other Than Auto'.
General Liability Insurance - A form of insurance designed to protect owners and operators of businesses from a wide variety if liability exposures. These exposures could include liability arising out of accidents resulting from the premises or the operations of an insured, products sold by the insured, operations completed by the insured, and contractual liability.
General LTC Rider - A LTC rider which is attached to a life insurance policy but stands alone or is independent of the life policy. Any LTC benefits paid do not reduce any of the life insurance benefits.
General Operating Expense - The expense of an insurer other than commissions and taxes. Called "General and Insurance Expense" in the convention statement blank.
General Operating Expenses - The company's operating costs, fees for medical examinations and inspection reports, underwriting, commissions, advertising, agency expenses, premium taxes, salaries, rent etc. Such costs are important in determining premium rates.
General Partnership - A business enterprise owned and operated by two or more persons for the purpose of generating business income and profits.
General Power of Appointment - A donee is given the authority to pass on a property interest to whomever he or she pleases.
General Property Form - This form commonly in use for coverage on the property of commercial risks from whatever perils are specified in the contract.
Generally Accepted Accounting Principles - These principles have substantial authoritative support for use in the insurance business. They are intended to produce financial results consistent with those of other industries and to assure consistency in financial reporting. Contrast with Statutory Accounting Principles.
Generation Skipping Transfer - A transfer of property due to death or by gift, to a person who is two or more generations below the grantor.
Generic Drug - A drug which is exactly the same as a brand name drug and which is allowed to be produced after the brand name drug's patent has expired. It is also called a "generic equivalent."
Geographical Limitation - A contractual provision which is specifically names geographical areas outside of which the insurance is not effective.
Gift - A sale, exchange, or tranfer of property without adequate consideration.
Gift Tax - Both federal and state governments have gift tax laws which tax gifts made by one person to another.
Glass Coverage Form - A commercial property form used to insure plate glass, lettering, frames and ornamentation. It has replaced earlier commercial glass insurance forms.
Going & Coming Rule - This rule stipulates that while en route to and from work, an employee is not considered as being on the job.
Good Driver Discount - A system which entitles good drivers (as defined by driving safety record, number of miles driven annually, number of years driving experience, and other factors related to the risk of loss) to discounts on automobile insurance rates and premiums.
Good Student Discount - A discount granted to students with high scholastic ratings. There is a proven relationship between good grades and safe driving.
Goodwill - An intangible business asset. It refers to the value of a business which has been built up through the reputation of the business concern and its owners.
Governing Classification - The classification, which carries the highest amount of payroll exclusive of the Standard Exceptions--This describes the principal work activity of the employer's business.
Government National Mortgage Association - A government-owned corporation, nicknamed Ginnie Mae, which is an agency of the U.S. Department of Housing and Urban Development. The GNMA purchases mortgages from private lenders, such as banks and savings and loans, packages them into securities called Ginnie Maes, and sells the certificates to investors. The agency guarantees the timely payment of principal and interest to the Ginnie Mae holders.
Government Savings Bond - A bond issued by the United States Treasury at a discount equal to the present value of a future interest payment. The amount paid at maturity is the face amount which, in this case, is principal and interest.
Government Securities - Bonds and other debt instruments issued by federal agencies. Although government securities have high credit ratings, they are not backed by the full faith and credit of the federal government.
Grace Period - A prescribed period, usually 30 to 31 days from the premium due date, during which an insurance contract is in force and the premium may be paid.
Graded Commission - A compensation scale for agents which provides for varying commission rates depending upon the class, type, or volume of insurance written. Contrast with Flat Commission.
Graded Death Benefits - A provision in life insurance contracts for death benefits that, in the early years of the contract, are less than the face amount of the policy but that increase with the passage of time. Most commonly found in juvenile policies issued at or near age zero.
Graded Premium - A modified life insurance policy for which the initial premium is low, and then increases in steps over a period of time (usually five years), after which it becomes a level premium.
Grading Schedule for Cities and Towns - A schedule prepared by the National Board of Fire Underwriters for the purpose of determining which of ten grades to assign to a city for fire rating purposes, based on such factors of fire protection as water supply.
Graduated Life Table - A mortality table in which the experience has been smoothed out by formula.
Grantee - The buyer of real estate.
Grantor - The seller of real estate.
Grantor Retained Annuity Trust - A trust in which the grantor substitutes retention of a right to payment of a fixed income in exchange for a fixed period of time.
Grantor Retained Interest Trust - An irrevocable trust in which the grantor of the trust property receives an income for a fixed period of time. Usually, a personal residence is used as the trust property.
Grantor Retained Unitrust Trust - A trust in which a grantor substitutes retention of a right to a fixed percentage of the trust value in exchange for a fixed period of time.
Grievance Procedure - A procedure which allows a member of a health plan or a provider of benefits to express complaints and seek remedies.
Gross Earnings - An accounting term which is arrived at by subtracting the cost of goods sold from the total sales. Traditionally, the term was used primarily in business interruption insurance as the basis for determining how much insurance a policyholder should carry. The latest business income insurance forms have dropped this term.
Gross Earnings Form - A form once used widely in the writing of business interruption insurance. Coverage was written on either the Gross Earnings Form or the Earnings Form. The latest business income coverage forms no longer refer to gross earnings.
Gross Estate - Consists of all property owned directly by the decedent; property transferred during the decedent's lifetime, but with certain strings attached, annuities and life insurance benefits receivable by the beneficiary and jointly owned property over which the decedent had certain controls.
Gross Line - The total limit accepted by an insurer on an individual risk, including the amount to be reinsured.
Gross Negligence - Willful and wanton negligence or misconduct.
Gross Premium - Premium as calculated before deducting any reinsurance ceding commission. See net premium.
Gross Premium - The net premium plus operating expenses, commissions and other expenses.
Gross Premium - (Life) The premium for participating life insurance. If an insured elects to use dividends to pay premiums, this becomes the net premium when dividends are subtracted from it. Contrast with Net Premium.
Hail Insurance - Insurance against loss of crops caused by hail.
Hand In Hand - Common name for the first fire insurance company created in the 'New World' by Benjamin Franklin in 1752. The actual name is the 'Philadelphia Contributorship for the Insurance of Houses from Loss by Fire'.
Hangarkeepers Legal Liability Insurance - Insurance which the owner of an airplane hanger buys to protect against liability for damage or injury to others arising out of the ownership, maintenance, or use of the premises for an aircraft hanger.
Hazard - Condition which creates or increases the chances of a loss arising from a peril. Examples of hazards include: slippery floors, congested traffic, unguarded premises and uninspected boilers.
Hazard - 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. For example, accident, sickness, fire, flood, liability, burglary, and explosion are perils. Slippery floors, unsanitary conditions, shingled roofs, congested traffic, unguarded premises, and uninspected boilers are also hazards.
HCFA 1500 - A form used by providers of health services to bill their fees to health carriers. It was developed by the government agency known as Health Care Financing Administration.
Head Office - The term "head office" is primarily used in British insurance operations, whereas "home office" is used for American operations.
Health Benefits Package - The coverages offered by a health plan to an individual or group.
Health Care Financing Administration - Part of the Department of Health and Human Services, responsible for administration of the Medicare and Medicaid programs. The HCFA establishes standards for medical providers which must be complied with if the provider is to meet certification requirements.
Health History - A form used by underwriters to assist in evaluating groups or individuals to determine whether they are acceptable risks.
Health Insurance - Insurance against loss by sickness or bodily injury. The generic form for those forms of insurance that provide lump sum or periodic payments in the event of loss occasioned by bodily injury, sickness or disease, and medical expense. The term health insurance is now used to replace such terms as accident insurance, sickness insurance, medical expense insurance, accidental death insurance, and dismemberment insurance. The form is sometimes called accident and health, accident and sickness, accident, or disability income insurance.
Health Insurance Association of America - An association supported by life and health insurers to provide the research, public relations, education, and legislative base for the promotion of voluntary private health insurance.
Health Insurance Quality Award - An award granted annually by the International Association of Health Underwriters or the National Association of Life Underwriters for high persistency of health insurance policies written by agents.
Health Maintenance Organization - An HMO is a prepaid medical service plan which provides services to plan members. Medical providers contract with the HMO to provide medical services to plan members. Members must use contracted providers. The emphasis is on preventive medicine, and it is an alternative to employee benefit plans. Employers of more than 25 persons are required to offer the alternative of HMO to employees, but not if the cost exceeds that of present employee benefit plans.
Health Plan - This refers to any kind of plan that covers health care services such as HMOs, insured plans, preferred provider organizations, etc.
Health Service Agreement - The agreement between employer and the health plan which outlines a description of benefits, enrollment procedures, eligibility standards, etc.
Health Services - The benefits covered under a health contract.
Hearsay - Testimony based on what someone else has said or told a witness.
Hedge - An investment undertaken to offset the risk entailed by another investment.
High Pressure Tactics - An illegal method of marketing insurance policies (often associated with Medicare supplement policies) employing tactics having the tendency to induce the purchase or to recommend the purchase of coverage through force, fright, explicit or implied threat, or undue pressure.
Highly Protected Risk - Refers to property risks which meet the standards required for lower rates. Risks of this type are usually protected by sprinklers and have better-than-average construction and occupancy. The term is most often used in connection with the factory mutuals, factory insurance association, and the improved risk mutuals.
Hired Automobile - Autos the insured leases, hires, rents, or borrows, but not autos owned by employees or members of their households.
Historical Loss Risk - The likelihood of experiencing a loss, a return less than zero measured in a probability.
Historical Mean Return - The statistical average return provided by an asset, asset category, or portfolio mix over a specified time period. Also referred to as Average Annual Return.
Historical Variation Ranges - A statistical measure of the historical variation of asset class returns that shows the minimum and maximum returns at a given confidence level. This gives the investor a broad view of the historical characteristics of asset classes and provides a valid method for comparison of portfolio allocations.
Hold Harmless Agreement - A contractual arrangement whereby one party assumes the liability inherent in a situation, thereby relieving the other party of responsibility. Such agreements are typically found in contracts like leases, sidetrack agreements, and easements. For example, a typical lease may provide that the lessee must "hold harmless" the lessor for any liability from accidents arising out of the premises. The effect of such an agreement is that the lessee must provide a defense for the lessor, and if any judgment is rendered against the lessor, the lessee would have to pay.
Hold-Up - A form of robbery.
Holding Period - The length of time that an investor has owned a capital asset. The Tax Reform Act of 1984 shortened the capital gains holding period from a year and a day to six months and a day.
Holographic Will - A valid will which is completely handwritten and signed by the testator.
Home Health Agency - A certified facility approved by a health plan to provide services under contract.
Home Health Care - Care received at home as part-time skilled nursing care, speech therapy, physical or occupational therapy, part-time services of home health aides or help from homemakers or choreworkers.
Home Health Services - Health care services provided by a licensed home health agency in the patient's home which is a covered expense under Part A of Medicare.
Home Office - Generally the corporate headquarters of insurers and the location where the chief officers of the organization are housed.
Home Office Life Underwriters Association - An organization offering a course of study for home office life underwriters.
Home Service Insurance - A variation in the industrial life concept, home service life insurance policies are usually modest in size, ranging from $10,000 to $15,000 in face value, and are typically sold on a monthly debit plan (automatic bank draft) or payments by mail.
Homeowners Policy - A package policy for the homeowner that includes coverages ranging from fire and extended coverage, theft, and personal liability, to "all risk" coverages.
Homeowners Policy - A property and liability insurance contract that provides insurance against any of the property and liability perils to which a homeowner or renter is exposed.
Honorable Undertaking - This is stated in the reinsurance contract: "This agreement is considered by the parties hereto as an honorable undertaking, the purpose of which is not to be defeated by a strict or narrow interaction of the language thereof."
Hospice - An organization which is primarily designed to provide pain relief, symptom management and supportive services for the terminally ill and their families. Hospice care is covered under Part A of Medicare.
Hospital Affiliation - A contract whereby one or more hospitals agrees to provide benefits to members of a specific health plan.
Hospital Alliances - A group of hospitals that work together to share common services and thereby reduce health costs. By grouping together, they are better able to compete with other alliances or chains.
Hospital Benefits - Benefits payable for hospital room and board, plus miscellaneous charges resulting from hospitalization.
Hospital Confinement Rider - An optional disability income rider that results in the elimination period being waived when the insured is hospitalized as an inpatient.
Hospital Income Insurance - A form of insurance that provides a stated weekly or monthly payment while the insured is hospitalized, regardless of expenses incurred and regardless of whether or not other insurance is in force. The insured can use the weekly or monthly benefit as he chooses, for hospital or other expenses.
Hospital Indemnity - Coverage that pays based on daily, weekly, or monthly limits regardless of the amount of actual hospital expenses.
Hospital Insurance - Also identified as Part A of Medicare. HI provides inpatient hospital care, skilled nursing care home health and hospice care subject to a benefit period deductible and copayments for certain services.
Hospital Tax - A Social Security tax of 1.45% on an unlimited amount of income, paid by both the employee and employer to prepay for Part A of Medicare.
Hospitalization Expense Policy - A policy which covers daily hospital room and board charges and also covers miscellaneous hospital expenses (such as X-ray, etc.). It also often covers emergency treatment charges and many times will also include a surgical benefit.
Hospitalization Insurance - A form of insurance that provides reimbursement within contractual limits for hospital and specific related expenses arising from hospitalization caused by injury or sickness.
House Confinement - A provision in some health insurance contracts which requires an insured to be confined to the house in order to be eligible for benefits. This provision is most commonly found in policies providing loss of income benefits.
Household Personal Property - The term given to household goods, furniture and personal belongings of residents of a farm dwelling. The Farm Property Coverage Form uses the term "household" to distinguish it from the separate coverage for "farm" property. Contrast with Farm Personal Property.
Housekeeping - The general care, cleanliness and maintenance of an insured's property. It is an important underwriting consideration in many forms of insurance, such as workers compensation and property.
HR-10 - A qualified retirement plan for the self employed. Also known as a Keogh Plan.
Hull Policy - A contract that provides indemnification for damage sustained to or loss of an insured vessel or airplane.
Hull Syndicates - A group of companies which agree to share or prorate insurance on oceangoing vessels or aircraft. Coverage on the ship or plane itself is called hull insurance.
Human Life Value - A method of determining life insurance needs by considering a person's income, expenses, remaining years of earning capacity, and depreciation in the value of the dollar over time.
ICC - A business information provider, specializing in UK company data.
ICPI - Insurance Crime Prevention Institute
Identification Card - A card given to each person covered under the plan which identifies him or her as being eligible for benefits.
Identification of Benefits - A provision that the cost of putting a disabled insured in touch with and in the care of relatives will be reimbursed, usually up to a maximum amount.
If Clauses - Clauses which terminate coverage "if" certain conditions are created or discovered. An example is the concealment or misrepresentation provision which states that if this is discovered, the coverage is void. Contrast with "While" Clauses.
Illegal Occupation Provision - A health insurance policy provision that voids liability if the loss results from the insured's committing or attempting to commit a felony or from the insured's engaging in an illegal occupation.
Illness - A loss which is sustained due to sickness or disease usually due to an organic cause.
Immature Policies - Claims-made coverage which has not been in effect, on an uninterrupted basis, for at least five years. For rating purposes, a discount applies to manual rates for immature policies.
Immediate Vesting - A term used in pension or retirement plans. With immediate vesting an employee's right to benefits begin as soon as he enters the plan.
Impaired Insurer - An insurer which is in financial difficulty to the point where its ability to meet financial obligations or regulatory requirements is in question.
Impaired Property - Tangible property which cannot be used or has become less useful because it incorporates the insured's product or work which is defective or inadequate, or because the insured has failed to fulfill a contractual obligation.
Impaired Risk - A risk, or subject of insurance, with insurable qualifications below the standard of risks on which the premium for the coverage was based. For example, a life insurance prospect with heart disease would be an impaired risk.
Impairment of Capital - A condition in which the surplus account of a stock insurer has been exhausted so that it must invade the capital account (amounts contributed by stockholders) to meet liabilities. Some jurisdictions allow a percentage invasion of capital; some do not.
Impeach - Evidence which tends to detract from the credibility of the witness.
Implied Authority - Authority of an agent that the public may reasonably believe the agent to have. If the authority to collect and remit premiums is not expressly granted in the agency contract, but the agent does so on a regular basis and the insurer accepts, the agent has implied authority to do so.
Implied Seaworthiness - Seaworthiness of a vessel insured in an ocean marine contract is an implied warranty. The assumption is that the vessel, its equipment, and its crew are in good condition and prepared to make the voyage.
Implied Warranty - In certain cases the law says that one has given a warranty to another even though the warranty is not in writing. An example would be in sales: A seller implies that the product is fit for the purpose it purports to serve.
Import - Goods or services purchased from another country and brought into one's own country.
Improvements and Betterments - Additions or changes made by a lessee at his or her own cost to a building which he or she is occupying which enhance its value. These become part of the realty and require special insurance consideration.
Imputed - Occurs when actions of one party, usually the agent, are deemed to be actions of the other party, usually the principal.
In Kind - An expression relating to the insurer's right in many property contracts to replace damaged objects with new or equivalent (in kind) material, rather than to pay a cash benefit.
In-Area Services - Services which are provided within the "authorized" service area as designated in the plan.
In-Force - The aggregate amount of insurance policies that are paid up (or are being paid), which a life or health insurance company has on its books.
In-Force Business - The aggregate amount of insurance policies that are paid up (or are being paid), which a life or health insurance company has on its books.
In-Patient - A patient admitted to a hospital or other similar medical facility as a resident patient.
Incentive Stock Option Plans - A type of stock plan whereby executives are granted options to purchase company stock without incurring a tax liability at the time the option is granted or subsequently exercised.
Inception Date - The beginning date of a period of coverage, as defined for reporting by Commercial Statistical Plan (CSP). The inception date may refer to policies which are new, renewed, continuous, installment, installment (rerated), audit, endorsed, or cancelled. CSP provides detailed instructions for the reporting of this date.
Inchmaree Clause - A provision which provides reimbursement to an insured in the event of a loss which is due to the negligence of the master or crew of a vessel.
Incidents of Ownership - Various rights that may be exercised under the policy contract by the policyowner. Some of the incidents of ownership would be: (1) the right to cash in the policy, (2) to receive a loan on the cash value of the policy, and (3) to change the beneficiary.
Income - Earnings, generally from interest or dividends, that are credited or paid to an investor.
Income Bond - A type of bond on which interest is paid only when earned