Term
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Definition
| Broadly determined by the underwriting guidelines published by an insurer for a type of policy. |
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Term
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Definition
| A Person, business, or organization that has purchased insurance. |
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Term
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Definition
| The process of evaluating all of the policies written by an insurance company for an individual. |
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Term
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Definition
| A certification program for state insurance departments. The purposes of the accreditation program are (1) to provide consistency of solvency regulations among states and (2) to improve the standards of solvency regulation and financial examinations in all states. |
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Term
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Definition
| The value of property determined by the cost to replace the property, adjusted by subtracting an amount that reflects depreciation. |
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Term
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Definition
| The increasing likelihood that customers will purchase insurance when the premium is low relative to the risk. Poor underwriting results might occur if too many of the applicants accepted for insurance are those most likely to incur serious loss. |
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Term
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Definition
| A producer who represents one of more insurance companies. |
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Term
| Agreed value (or agreed amount) |
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Definition
The value of property insured under an agreed value provision is the lesser of the following:
* The cost to restore the property to its condition before the loss.
* The amount scheduled.
The insured and the insurer agree on the value at the time the policy is written. |
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Term
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Definition
| This peril might occur in the spring in areas near orchards. If a late frost threatens the fruit buds or blossoms, oil burning smudge pots are burned at night around the fruit trees. A dark oily cloud covers the trees to prevent the frost from killing the buds. If this cloud is blown into a neighborhood of houses, damage can result. |
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Term
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Definition
| Automatic restraint systems that require no action on the part of the vehicle occupants. |
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Term
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Definition
| A statement by a party regarding the legal action which that party will attempt to prove. This assertion might be unsupported by fact. |
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Term
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Definition
| "All-risks" property policies, also called "special" or "open-preils" policies, cover any loss unless it is caused by an excluded peril described in the policy. In an "all-risks" policy, the burden of proof is on the insurer. All losses are covered unless the insurance company can prove that the loss was cause by an excluded peril. |
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Term
| All-terrain vehicle (ATV) |
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Definition
| A three- or four-wheeled vehicle equipped with balloon tires and designed for off-road use. ATV's can traverse a variety of ground surfaces, including swampy areas, sand, and snow. |
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Term
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Definition
| Formal financial reports presented to state insurance regulators. They must be prepared for each state in which the insurer is licensed. |
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Term
| Anti-lock braking system (ABS) |
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Definition
| In a vehicle with a standard braking system, a driver who brakes suddenly can lock the vehicles wheels and skid, causing loss of control and extending stopping distances. An ABS pumps the brakes automatically (many times a second) to prevent lockup and to enable a driver to maintain control. |
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Term
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Definition
| A vehicle that is at least twenty-five years old. Vehicles rated as antiques are provided a substantial premium discount, so insurers generally restrict use of an antique vehicle to parades and exhibitions. |
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Term
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Definition
| Legislation that opposes unfair business practices. |
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Term
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Definition
| A written request for insurance coverage containing statements made by the applicant. |
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Term
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Definition
| The criminal act of burning or attempting to burn property. |
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Term
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Definition
| Used to describe an insureds responsibility for causing an auto accident. It is not always accurate. An insured might only have contributed to an accident. |
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Term
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Definition
| A dangerous place, condition, or object that is particularly appealing to children. |
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Term
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Definition
| The opposite of retention. The percentage of policies not renewed at their anniversary date is the attrition rate. |
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Term
| Automobile insurance plans |
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Definition
| Mechanisms for ensuring that all drivers have access to insurance and for equitably distributing the risks that are not written voluntarily by insurers. |
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Term
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Definition
| A risk management technique that eliminates a loss exposure and reduces the chance of loss to zero. |
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Term
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Definition
| An insurer might use this method to set an advertising budget. This method limits the permissible expenditure on advertising to pre-set amounts. |
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Term
| Bind, bind coverage, binder |
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Definition
| An insurance agent is usually authorized by the insurance company to state that certain specified coverage is in force with a specific insurance company as of a particular date and time (or immediately). A binder is a statement that coverage is in foce. Its purpose is to provide temporary coverage until an actual insurance policy can be issued. A binder need not be in writing. |
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Term
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Definition
| Blanket coverage or blanket limits apply to classes of property. All items within a class are covered for the total limit of coverage for the class. |
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Term
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Definition
| An insurance producer who is similar to an agent except that, in the legal sense, he or she represents the party seeking insurance. |
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Term
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Definition
| Stopping coverage during the policy period is cancellation. A policyholder can cancel most policies at any time; state laws often prohibit insurers from canceling policies that have been in force for a certain period of time. |
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Term
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Definition
| The person responsible for the navigation, operation, and safety of a water-craft and crew. Another term for this role is master. |
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Term
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Definition
| The comparison of an insurers written premium to its surplus. An insurer must have adequate capital reserves in the form of surplus to be able to increase the number of policies the insurer writes. |
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Term
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Definition
| The Property Claims Services Division of the American Insurance Services Group defines catastrophe as an event that causes more than $25 million in insured losses (in constant 1982 dollars) and affects a significant number of policyholders. The threshold used to define a catastrophe occuring before January 1, 1997, was $5 million (in constant 1982 dollars). |
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Term
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Definition
| A special form of reinsurance that protects insurers against the adverse effects of catastrophes and limits the insurers total loss from a catastrophe to a predetermined amount. |
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Term
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Definition
| Contacts a security company that responds to the residence and contacts the police. |
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Term
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Definition
| A document that provides information about the liability and workers compensation insurance for a commercial venture. |
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Term
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Definition
| A boat is chartered if it is rented for use. The insured can act as the boats captain, or the person renting the boat from the insured can perform that role. |
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Term
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Definition
| A method of screening applications. Only those applications that require underwriting decisions are referred to an underwriter. Obviously acceptable applications are issued as policies, and obviously unacceptable applications are canceled. this is also called underwriting by exception, and it can be accomplished by a technician who sorts the policies based on a checklist. |
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Term
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Definition
| A demand by a person or business seeking to recover for a loss. A claim might be made against an individual or against an insurance company. |
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Term
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Definition
| The person directly responsible for investigating, evaluating and settling claims that might be covered by insurance. |
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Term
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Definition
| A folder or computer record that is created (opened) when a claim is made. |
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Term
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Definition
| Anyone who presents a claim that might be covered by insurance. For a liability insurance loss, the claimant is a person or business that has suffered a loss and seeks to collect for that loss from in insured. For a property insurance loss, the claimant is the insured who wants the insurance company to pay for repairing or replacing his or her damaged property. |
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Term
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Definition
| The inclination that people in a group have for submitting insurance claims. |
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Term
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Definition
| A vehicle that is at least ten years old and has a significantly higher average value than other autos of the same make and model year. |
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Term
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Definition
A provision found in many insurance policies that requires the insured to carry an insurance limit equal to at least a specified percentage of the value of the property insured. If the amount of insurance carried is equal to or greater than the required percentage, the insurer will pay covered losses in full (minus any deductible) up to the limit of insurance coverage. If the limit of insurance carried is less than the required percentage, the amount the insurer will pay is calculated by the following formula:
Loss payment =
[(Limit of insurance carried/Limit of ins required) x loss] - deductible |
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Term
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Definition
| Under the collateral source rule, a defenfant cannot introduce evidence showing that the injured party has other sources for compensation for injury. |
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Term
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Definition
| Coverage that applies to the impact of a vehicle with another vehicle or object or the upset (overturn) of the vehicle. |
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Term
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Definition
| A portion of insurance premiums paid to a producer for his or her sales and service activities. |
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Term
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Definition
| A mass-produced, unspecialised product. Wheat and cement are examples of commodities. |
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Term
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Definition
| An insurer might use this method to set an advertising budget. This method maintains a level of spending relative to that spent by certain competitors. |
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Term
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Definition
| Mandated by government regulatory groups. Individuals normally encounter compulsory insurance in the form of automobile insurance. |
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Term
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Definition
| Soil made from clay and limestone that has aged for thousands of years to become a solid base for construction. |
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Term
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Definition
| The tort liability of another person (or entity) assumed under contract. |
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Term
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Definition
| The vehicle design engineering that reduces or eliminates injury in an auto accident. |
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Term
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Definition
| A record of an individuals income, debt, and payment hgistory. Insurance companies use credit reports to identify an applicants or an insureds financial history. |
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Term
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Definition
| A person, business, or organization that has purchased insurance. |
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Term
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Definition
| A term used by underwriters to describe the hazards associated with homes that are unoccupied during the day. |
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Term
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Definition
| Loss or harm resulting from inury to a person, to property, or to someone's reputation. |
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Term
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Definition
| Money that the law requires one party to pay another because of loss or injury suffered by the other party. |
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Term
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Definition
| High-beam headlights operating at reduced intensity, or low-beam headlights operating at full or reduced power. These lights increase the contrast between vehicles and their background to make cars more visible to oncoming drivers. |
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Term
| Declarations, declarations page |
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Definition
| The page or pages of an insurnce policy containing information, such as the insureds name and address, that the policyholder declared (stated as facts) on the application for insurance. |
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Term
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Definition
| A Court ruling on a coverage point within a policy contract or a judgment on a point of law. The judgment is usually sought only when there is a genuine need to resolve such an issue and the claim is substantial enough to warrant the additional effort. |
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Term
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Definition
| Occurs when an insurer rejects and application. |
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Term
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Definition
| A portion of a covered loss that is not paid by insurance. The deductible is subtracted from the amount the insurer would otherwise be obligated to pay. |
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Term
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Definition
| When a party against whom a judgment is sought has failed to answer or defend, that party is in default, and a judgment by default may be entered. |
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Term
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Definition
| Expenses associated with defending a liability claim. Such expenses include wages the defendant loses to prepare for a trial, investigation expenses. witness fees, and premiums for bonds. |
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Term
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Definition
| In an insurance policy, provisions that define the words and phrases that have a special meaning when they are used elsewhere in that policy. Words defined in some policies aer printed in boldface or enclosed by quotation marks. |
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Term
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Definition
| The division of customer markets based on variables such as income, age, sex, education, stages in the family life cycle (child rearing, middle age, and retirement), and lifestyle. |
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Term
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Definition
| Loss in value of property that develops as items age, wear out, or become obsolete. In a sense, depreciation reflects value that has already been used up. |
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Term
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Definition
| A manual or computer system that calls a file to somebody's attention on a specifiied date (also called suspense system or index system). |
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Term
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Definition
| An insurance marketing system that handles sales by mail or telephone and has no local producers making face-to-face sales. |
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Term
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Definition
| A producer who sells insurance as an employee of one insurance company. The term direct writer is also used to refer to an insurance conpany that sells insurance directly to insurance buyers through employees. |
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Term
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Definition
| Communicates information between a seller and a buyer (or potential buyers) and distributes the product. |
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Term
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Definition
| A facility for providing repair estimates on damaged cars that are still driveable. |
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Term
| Driver training doscounts |
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Definition
| Applied to personal auto policies for youthful drivers who have completed an approved driver training course. |
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Term
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Definition
| The level of care, prudence, and activity that is reasonable, depending on the circumstances. Someone required to use due diligence must be able to demonstrate that all reasonable and recognized precautions were taken. |
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Term
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Definition
| A risk management technique that relies on backups or spares. |
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Term
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Definition
| Risk eligibility is determined by the rules adopted and filed for use in a state. An eligible risk falls within the broad category of risk that can be written on a policy. |
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Term
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Definition
| A document used to amend the coverage in an otherwise complete policy. |
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Term
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Definition
| Pieces of property of substantially the same economic value. |
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Term
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Definition
| An individual's principles of right and wrong. Moral conduct is the application of ethical principles. |
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Term
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Definition
| Insurance policy provisions that restrict the broad terms of the insuring agreement by stating some exceptions to coverage - certain activities, loss causes, property, persons, and places - for which the insurer does not provide coverage. |
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Term
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Definition
| A self-employed producer who has a contract to sell insurance exclusively for one insurance company (or several related companies). |
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Term
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Definition
A task completed by an underwriter during the review of an application or an existing policy. The task includes the following:
* Identifying loss exposures
* Identifying associated hazards
* Measuring the extent of the loss exposures and hazards |
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Term
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Definition
| Exposures, or loss exposures, are situations that could lead to an accidental loss. |
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Term
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Definition
| A warranty written in a policy. |
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Term
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Definition
| Fair Access to Insurance Requirements - residual market plans provide property insurance for those who cannot obtain coverage in the voluntary market. |
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Term
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Definition
| Persons or corporations having a duty to act primarily for another's benefit. The relationship between an insurer and a producer is a fiduciary relationship. |
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Term
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Definition
| A type of trailer hitch designed for pulling heavy trailers. It resembles a flat, metal wheel. the gooseneck hitch from the trailer sits over and connects to the fifth wheel. |
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Term
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Definition
| A filing law that requires the insurer to file rates with the state for a period of time BEFORE they are used. If the states do not reject the rates within a stated period, the rates can be used. |
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Term
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Definition
| The process of submitting information to a state insurance department for approval. The term is often used to describe the completed approval. |
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Term
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Definition
| An entity that obtains money from one source and redirects it to another. Insurance companies and banks are financial intermediaries. |
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Term
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Definition
| Include works of art and items of rarity or historic value. |
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Term
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Definition
| A party is a reference to an entity in a contract. The insured is the first party to an insurance contract. |
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Term
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Definition
| A gathering of ten to twelve customers or potential customers who meet with a marketer. The marketer solicits their responses to advertisements, products, or potential product changes. |
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Term
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Definition
| A preprinted document, often several pages long, containing standard wording that makes up the bulk of an insurance policy. |
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Term
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Definition
| A clear and willful act of obtaining money or value under false pretenses. Insurance claim fraud is a criminal activity in which the claimant deliberatly deceives the insurer about the circumstances of a loss. |
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Term
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Definition
| Indicates how often a loss occurs or is expected to occur. |
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Term
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Definition
| A division of customers by location. This is the most widely used approach to segmentation. Companies target metropolitan or rural markets or regions with different climate, culture, and social characteristics. |
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Term
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Definition
| Applied to personal auto poliies for youthful drivers who have good schoolastic records. Such drivers are expected to have lower loss involvement because they are more responsible in general and perhaps spend more time on school work and less time on the road than other youthful drivers. |
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Term
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Definition
| Refers to the overall aging of the population. The "baby boomers," who were born between 1946 and 1964, form a large percentage of the population. As this group ages, the average age of the population increases. |
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Term
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Definition
| A system to pay the claims of insolvent property and liability insurers. Generally, the money in a guarantee fund is provided by charges assessed against all insurers in the state. |
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Term
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Definition
| Any condition that has the propensity to increase either the frequency or the severity of a potential loss. |
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Term
| Highway Loss Data Institute (HLDI) |
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Definition
| The Highway Loss Data Institute (HLDI) is a nonprofit, public service organization. It is closely associated with and funded through the Insurance Institute for Highway Safety. HLDI gathers, compiles, and publishes data regarding insurance loss variations among different makes, models, and kinds of vehicles. |
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Term
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Definition
| The promise of one party to hold another harmless for any liability arising from an activity. |
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Term
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Definition
| Similar characteristics among insureds in the same ratign class. all insureds in rating classifications should have similar exposure characteristics. Homogeneity also describes the similarity among individuals in a market segment. |
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Term
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Definition
| A term underwriters use to include more than keeping a clean house. This term includes maintenance, removal of debris, and safe conditions. |
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Term
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Definition
| A storm with winds that exceed speeds of seventy-four miles per hour. |
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Term
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Definition
| As used in the personal auto policy, liability coverage exists for a person who has reasonable belief of being entitled to use an insured auto. Permission might be explicit (the named insured tells his brother that the brother can borrow the car), or permission might be implied (the insured keeps the car keys on the table by the door with the understanding that a neighbor can take the keys and borrow the car whenever he needs it). |
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Term
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Definition
| This type of warranty is understood rather than written. For example, for a watercraft to be covered by a yacht policy, a warranty of seaworthiness is implied (the insured watercraft must be in a seaworthy condition). |
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Term
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Definition
| To restore the party that has had a loss to the same financial position it held before the loss. |
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Term
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Definition
| Loss of earnings or extra expenses taking place over a period of days, weeks, or months following a direct loss. Indirect losses increase with the passage of time. |
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Term
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Definition
| Customer anticipations about a business, industry, or product. Customers reasonably assume that certain services are provided by a business or industry because the services are elemental. A customer might have inherent expectations that a policy will be mailed within a reasonable period of time and that a claims representative will contact a claimant within a few days. |
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Term
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Definition
| A system by which a risk is transferred by a person, business, or organization to an insurance company (insurer), which reimburses the insured for covered losses and provides for sharing the costs of losses among all insureds. |
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Term
| Insurance Institute for Highway Safety (IIHS) |
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Definition
| An independent, nonprofit, scientific, and educational organization. It is dedicated to reducing losses (deaths, injuries, and property damage) resulting from crashes. |
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Term
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Definition
| A periodic payment by the insured to the insurance company in exchange for insurance coverage. A periodic payment is one that must be made at certain time intervals. |
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Term
| Insurance Regulatory Information System (IRIS) |
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Definition
| An early warning system for the potential financial failure of an insurance company. |
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Term
| Insurance Services Office (ISO) |
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Definition
| The largest insurance service office in the country, ISO performs a variety of services, such as developing statistical classification systems and collecting statistical data on insured claims from a large number of insurance companies, analyzing this information, and using it to develope cost data. Insurance Companies that subscribe to ISO's services may use this loss-cost information in setting their own insurance rates. |
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Term
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Definition
| A person, business, or organization that is covered by an insurance policy. |
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Term
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Definition
| Also known as an insurance conmpany, an organization that sells insurance policies that protect insureds against financial hardship caused by financial loss. |
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Term
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Definition
| Losses that cannot be appraised tangibly, for example, items with sentimental value. |
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Term
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Definition
| The opposite of a tanglble product. when customers buy insurance products, they are buying promises that are intangible products. |
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Term
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Definition
| A legal action that is initiated by one family member against another. For example, a woman sitting in the passenger seat of an auto who sues the driver (her husband) for injuries that she sustained as the result of an accident has brought an intrafamily suit. |
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Term
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Definition
| A person who is on the insureds premises with permission (a guest or customer). |
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Term
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Definition
| Also called residual markets, or shared markets, involuntary markets are sources of insurance formed by the government bodies to provide insurance for those who could not obtain it otherwise. |
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Term
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Definition
| An electrical wiring system characterized by glass insulation knobs nailed to roof and ceiling joists in the attic with wire strung between the knobs. |
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Term
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Definition
| A measurement of speed of watercraft. A knot equals 1.15 miles per hour. |
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Term
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Definition
| A wall covering method that was used before dry wall Narrow boards (laths) were nailed to the wall supports with small spaces between the boards. Wet plaster was smoothed over the boards to create a wall surface. Enough plaster oozed between the spaces between the boards to hold the plaster to the wall. |
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Term
| Liability (legal concept) |
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Definition
| As a legal concept, liability means that a person, organization, or group of people is legally responsible, or liable, for the injury or damage suffered by another person, organization, or group of people. |
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Term
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Definition
| Covers accidental losses resulting from bodily injury or damage to someone else's property for which the insured is legally responsible (legally liable). If the loss is covered by the insurance policy, the payment is made directly to the party that suffered the loss. |
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Term
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Definition
| A person who is on the insured's premises by mutual consent (such as police, a meter reader, or surveyors). |
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Term
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Definition
| The legal right to reside in a home for the remainder of an individuals life. Such an individual is referred to as a life-tenant. |
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Term
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Definition
| The process of carrying on a lawsuit. |
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Term
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Definition
| Prone to engaging in lawsuits. A person who is litigious might seek situations to bring a lawsuit in the hope of a positive financial outcome. |
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Term
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Definition
| Additions made to insurance rates to allow for an insurer's administrative expenses. |
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Term
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Definition
| Creates a loud clamor that can be heard only at or near the premises. |
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Term
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Definition
| The happening or event for which insurance pays. |
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Term
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Definition
| A risk management technique that reduces the frequency or severity of a loss. |
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Term
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Definition
| The expected losses relating to each exposure unit. An insurer can add its own loadings and modificatins to establish its rates. |
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Term
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Definition
| A loss control technique that seeks to lower the probable frequency of losses. |
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Term
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Definition
| Indicates the percentage of premiums that are used to pay losses and loss espenses. To calculate a loss ratio, the dollars of loss and loss adjustment expenses are divided by the dollars of premium (usually measured for a year). Underwriters are frequently assigned loss ratio goals for the lines of business they underwrite. |
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Term
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Definition
| A loss control technique that seeks to lower the severity of losses that occur. |
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Term
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Definition
| Questionnaires distributed to a target or random audience. |
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Term
| Market conduct examination |
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Definition
| A review of an insurer's underwriting and rate-making practices conducted by the state insurance market conduct examiners. |
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Term
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Definition
| Grouping customers with similar or related characteristics. These customers might be expected to buy a product or service that satisfies their similar needs. |
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Term
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Definition
| Targets a specific customer group for product and service developement. Multiple lines of insurance products can then be targeted to that customer group. |
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Term
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Definition
| A term that is used interchangeably with "market plan" or "market level." It describes the groupings of insureds into preferred, standard, and nonstandard categories for marketing purposes. |
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Term
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Definition
| Seeking a solution that offers the optimum or greatest payoff is maximizing behavior. This behavior is exhibited by an individual who seeks the alternative with the most favorable outcome. |
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Term
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Definition
| A method of assisting an underwriter in the decision-making process by identifying hazards that would not be part of an ideal (or model) risk. |
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Term
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Definition
| A condition that exists when a person might intentionally cause a loss or exaggerate a loss that has occurred. |
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Term
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Definition
| A condition that exists when a person with insurance is not as careful as he or she would be if there were no insurance. |
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