Incurred Losses: The amount of paid claims and loss reserves within a particular period of time,
usually a policy year. Customarily computed as losses incurred during the period, plus outstanding losses at the end of the period, less outstanding losses at the beginning of the period.
Independent Adjuster: A claims adjuster who provides adjustment services to insurance companies but is not employed by them.
Insurability: The condition of the individual wishing to be insured, including their health, susceptibility to injury and life expectancy.
Insurance: A formal social device for reducing risk by transferring the risks of several
individual entities to an insurer. The insurer agrees, for a consideration, to pay for the loss in the amount specified in the contract.
Insurance Policy: The printed form which serves as the contract between an insurer and an insured.
Insured: The party who is being insured. In life insurance, it is the person because of his or her death the insurance company would pay out a death benefit to a designated beneficiary.
Insurer: The insurance company; Party that provides insurance coverage, typically through a
contract of insurance.
Lapse: Termination of a policy due to the policy owner's failure to pay the premium within the
grace period.
Leasehold Interest: Property insurance covering the loss suffered by a tenant due to termination of a lease because of damage to the leased premises by a covered loss.
Lessee: The person to whom a lease is granted.
Lessor: The person granting the lease.
Liability: The legal obligation to pay a monetary award for injury or damage caused by one's negligent or statutorily prohibited action.
Lien: An obligation that can be held by an individual who has an interest in a particular matter or property.
Limit of Liability: The most an insurance company agrees to pay in the case of loss.
Loss: The amount an insurance company pays for damages under the terms of a policy.
Loss Report: A form showing reported claims which provides information such as the date of occurrence, type of claim, amount paid and amount reserved for each loss.
Medical Expenses: Reasonable charges for medical, surgical, x-ray, dental, ambulance, hospital,
professional nursing, prosthetic devices, and funeral expenses. What is considered reasonable is
outlined in a policy.
Medical Payments, Auto: Coverage, which is optional, under an auto policy to pay for medical expenses for bodily injury caused by an auto accident, regardless of fault. Coverage for persons other than the named insured and his or her family members is typically restricted to circumstances when they are occupants of the insured auto.
Medical Payments, General Liability: A general liability coverage that reimburses others, regardless of fault, for medical or funeral expenses incurred as a result of bodily injury or death sustained by an accident.
Mexico Coverage: Coverage which is sometimes provided under automobile policies for the operation of an insured motor vehicle within Mexico, usually limited to a stated number of miles from the U.S. border.
Minimum Premium: The lowest amount of premium to be charged for providing a particular insurance coverage.
Misrepresentation: The act of knowingly presenting false information.
Mobile Equipment: Equipment such as earthmovers, tractors, diggers, farm machinery, forklifts, etc., that even when self-propelled, are not considered as automobiles for insurance purposes.
Named Perils Coverage: A property insurance term referring to exact causes of loss specifically listed as covered.
Nonadmitted Insurer: An insurance company that is not licensed to do business in a specific state. The insurers may write coverage through an excess and surplus lines broker that is licensed in these jurisdictions.
Nonowned Automobile: In commercial auto policies, coverage for autos that are used in connection with the named insured's business but are neither owned, leased, hired, rented or borrowed by the named insured. The term specifically applies to vehicles owned by employees and used for company business.
Ownership: All rights, benefits and privileges under life insurance policies are controlled by their
owners. Policy owners may or may not be the insured. Ownership may be assigned or transferred by written request of current owner.
Occurrence: A continual, gradual or repeated exposure to substantially the same general harmful
conditions. General liability policies insure liability for bodily injury or property damage that is
caused by an occurrence.
Package Policy: A policy providing several different coverages combined into one policy.
Refers to a policy providing both general liability insurance and property insurance.
Peril: Cause of loss such as fire, windstorm, collision, etc.
Personal Auto Policy (PAP): A policy insuring private-passenger autos owned by individuals.
Personal Injury: A General Liability coverage for insurable offenses that cause harm, other than
bodily injury, such as false arrest, detention or imprisonment, malicious prosecution, wrongful
eviction, slander, libel and invasion of privacy.
Personal Injury Protection (PIP): An automobile insurance coverage mandated by law in some states. The statutes typically require insurers to provide or offer to provide first-party benefits for medical expenses, loss of income, funeral expenses and similar expenses without regard to fault.
Personal Property: All tangible property not classified as real property such as contents.
Policy: The printed document given to the insured, outlining the terms and conditions of the Insurance coverage.
Policy Fee: A one-time charge per policy that does not change with the size of the premium.
Policy Holder: The person who owns a life insurance policy. This is usually the insured person,
but it may also be a relative of the insured, a partnership or a corporation.
Policy Period: The term or duration of a policy including the effective and expiration dates.
Preferred Risk: A positive characterisic of someone seeking to be insured. Usually means a better
likely hood for long life, and usually means a lower premium.
Premium: The agreed upon, payment made to keep an insurance policy in force, usually a monthly payment.
Primary Policy: The insurance policy that pays first when you have a loss that's covered by more
than one policy.
Pro Rata Cancellation: The cancellation of an insurance policy with the return premium being the
full proportion of premium for the unexpired term of the policy, without penalty for early cancellation.
Property Damage: In the general liability policy, a physical injury to property, resulting in the loss of use.
Property Insurance: First-party insurance for real and personal property against physical loss or damage.
Provisions: Details of an insurance policy which explain the benefits, conditions and other features of the insurance contract.
Reinstatement: Putting a lapsed policy back in force by producing satisfactory evidence of insurability and paying any past-due premiums required.
Renewal Policy: A policy issued to replace an expiring policy.
Replacement: A new policy written to take the place of one currently in force.
Representation: Statements made by applicants on their applications for insurance that they represent as being substantially true to the best of their knowledge and belief but that are not warranted as exact in every detail.
Return Premium: The amount of premium due the insured should the actual cost of a policy be less than the insured previously paid.
Rider: An attachment to a policy that modifies its conditions by expanding or restricting benefits
or excluding certain conditions from coverage.
Risk: The chance of injury, damage, or loss.
Robbery: Theft of property while force is used or threatened.
Short-Term Cancellation: Cancellation of an insurance policy prior to the expiration date in which a penalty in the form of a less than full pro-rata premium refund is allowed.
Special Causes of Loss Form: A cause of loss form providing coverage from all causes of loss unless specifically excluded or limited.
Specified Causes of Loss Coverage: Auto physical damage coverage only for losses caused by the
perils listed in the policy.
Term: Period for which the policy runs. In life insurance, this is to the end of the term period for
term insurance.
Third-Party Owner: A policy owner who is not the prospective insured. The policy owner and the
insured may be, and often are the same person. If for example, you apply for and are issued an
insurance policy on your life, then you are both the policy owner and the insured and may be
known as the policy owner-insured. If, however, your mother applies for and is issued a policy
on your life, then she is the policy owner and you are the insured.
Transit Coverage: Coverage on the insured's property while in transit from one location to another, over land.
Underinsured Motorists Coverage: Provides coverage for bodily injury, and in some states property damage, for losses incurred by an insured when an accident is caused by a motorist who does not have sufficient insurance limits.
Underlying Coverage: The insurance or coverage in place on the same risk that will respond to
loss before the excess policy is called on to pay any portion of the claim.
Underwriter: Company receiving premiums and accepting responsibility for fulfilling the policy contract. Also, company employee who decides whether the company should assume a particular risk; or the agent who sells the policy.
Uninsurable Risk: A person who is not acceptable for insurance due to excessive risk.
Unearned Premium: That portion of the policy premium that represents the unexpired policy term.
Uninsured Motorist Coverage: Provides coverage for bodily injury, and in some states property damage, for losses incurred by an insured when an accident is caused by a motorist who is not insured.