Terms

Question 1

Accident Insurance

Answer 1

Covers expenses associated with a covered accident and can extend to ambulance and emergency room
expenses, intensive care, and hospital costs. Accident insurance also provides for loss of income, and a
death benefit if injuries prove fatal.

Question 2

Accumulated Depreciation

Answer 2

The total decrease in an item’s value over a period of time. Formula: (annual depreciation x number of
years used). Subtract this number from the item’s replacement cost to get its actual cash value (ACV)

Question 3

Acreage Reporting Date

Answer 3

In crop insurance, the deadline for providing the insurer with an acreage report, which is used to
determine the amount of coverage needed and the premium charged for a particular crop.

Question 4

Actual Cash Value (ACV)

Answer 4

A valuation method used by insurers to reflect an item’s current market value right before being damaged
or destroyed. Formula: (replacement cost - accumulated depreciation)

Question 5

Actual Production History

Answer 5

A history of a farmer’s crop yields over a multi-year period, which is used to determine the normal
production level of a farm.

Question 6

Adhesion

Answer 6

Characteristic of an insurance contract. Means that one party (the insurer) sets the terms, and the other
(the policyholder) can “take it or leave it.”

Question 7

Adjusted Gross Revenue

Crop Insurance

Answer 7

Narrowest (and least expensive) form of crop revenue insurance. Insures farm revenue as a whole
instead of individual crops. Guarantees a percentage of the insured farm’s average revenue.

Question 8

Adjuster

Answer 8

An agent who, for compensation, processes insurance claims. The adjuster investigates the damages,
evaluates the claim, and makes a fair and equitable settlement based on the insurance contract. Can
represent either the insured or the insurer.

Question 9

Adjuster – Emergency

Answer 9

Adjusters who are temporarily licensed by the insurance commissioner to handle claims during
catastrophes or emergencies that produce an overwhelming number of claims in a short period of time.

Question 10

Adjuster – Independent

Answer 10

Self-employed adjusters who contract with multiple insurers at the same time. Paid on a commission or
fee-plus-expenses basis for each claim. Also called: Fee Adjuster, Bureau Adjuster

Question 11

Adjuster – Public

Answer 11

An adjuster who is hired to represent the claimant and help determine a fair indemnification. Usually
specializes in appraisals and negotiation. Paid commission, usually a percentage of final settlement.

Question 12

Adjuster – Staff

Answer 12

Salaried employee of one insurance company who can work locally, regionally, or nationally. Also called:
Company Adjuster.

Question 13

Advance Payment

Settlement

Answer 13

A settlement option that lets the insurer offer some financial relief to the claimant before the claim has
been fully settled. The insurer makes advance payments to the claimant, which are then subtracted from
the final settlement amount. Often used when a claimant suffers bodily injury and is unable to work.

Question 14

Agency Authority

Answer 14

The agent’s authority to act on behalf of someone else (the principal), usually an insurer. This authority is
derived from the agent’s contract with the principal. It can be apparent, express, or implied.

Question 15

Agency Authority –

Apparent

Answer 15

Indirect authority that the agent can reasonably be assumed to have, based on appearances. If an
adjuster is equipped to represent an insurer (with the insurer’s permission), then an individual can assume
that the adjuster has the authority to act on the insurer’s behalf.

Question 16

Agency Authority –

Express

Answer 16

Authority that is expressly given to the agent in writing. Allows the agent to act on behalf of the principal.

Question 17

Agency Authority – Implied

Answer 17

Authority that an agent possesses by implication of her behavior, regardless of whether this authority is
granted in writing. For example, a person portraying herself as a representative for an insurance
company, even though she is not employed by that company.

Question 18

Agent (Insurance)

Answer 18

Someone who has received authority from an insurer to sell or service insurance policies.

Question 19

Agreed Value

Answer 19

A valued policy in which the insurer and the insured agree to a specific value for an item, appraised at the
inception of the policy. Often used to insure items whose value is difficult to quantify, such as antiques or
fine art. Also called a Guaranteed Value policy.

Question 20

Agreement

Answer 20

One of the four requirements of a legally binding contract. All parties involved must agree to the terms of
the contract. Can also refer to a binder, which is the preliminary substance of a contract.

Question 21

Agricultural Producer

Answer 21

A business that grows, harvests, and sells crops for profit.

Question 22

Aleatory

Answer 22

A characteristic of an insurance contract. Means “depending on an unknown future event.” An insurance
contract will only pay IF and WHEN covered damages occur. Neither party knows how much the contract
will end up paying when they enter into the contract.