Vocabulary Flashcards
Commissioner
Insurance commissioner of the department of insurance
NAIC
National Association of Insurance Commissioners
circumstance including possibility of loss or no loss but no possibility of gain
Pure Risk
Actual Cash Value
repayment value for indemnification due to loss or damage of property; in most cases it is replacement cost minus depreciation
Actuary
business professional who analyzes probabilities of risk and risk management including calculation of premiums, dividends and other applicable insurance industry standards.
an insurance company licensed to do business in a state(s), domiciled in an alternative state or country.
Admitted Company
Agent
an individual who sells, services, or negotiates insurance policies either on behalf of a company or independently.
Aggregate Cost Payments
method of reimbursement of a health plan with a corporate entity that directly provides care, where (1) the health plan is contractually required to pay the total operating costs of the corporate entity, less any income to the entity from other users of services, and (2) there are mutual unlimited guarantees of solvency between the entity and the health plan that put their respective capital and surplus at risk in guaranteeing each other.
an insurance company formed according to the laws of a foreign country. The company must conform to state regulatory standards to legally sell insurance products in that state.
Alien Company
All-Risk
also known as open peril, this type of policy covers a broad range of losses. The policy covers risks not explicitly excluded in the policy contract.
Annuitant
the beneficiary of an annuity payment, or person during whose life and annuity is payable.
a contract providing income for a specified period of time, or duration of life for a person or persons.
Annuity
an estimate of value.
Appraisal
Arbitration
a binding dispute resolution tactic whereby a conciliator with no interest in the outcome intercedes
Assumed Reinsurance
the assumption of risk from another insurance entity within a reinsurance agreement or treaty.
an insurer licensed or admitted to do business in a particular state.
Authorized Company
an individual who may become eligible to receive payment due to will, life insurance policy, retirement plan, annuity, trust, or other contract.
Beneficiary
Bonds
a form of debt security whereby the debt holder has a creditor stake in the company. Obligations issued by business units, governmental units and certain nonprofit units having a fixed schedule for one or more future payments of money; includes commercial paper, negotiable certificates of deposit, repurchase agreements and equipment trust certificates.
Builders’ Risk Policies
typically written on a reporting or completed value form, this coverage insures against loss to buildings in the course of construction. The coverage also includes machinery and equipment used in the course of construction and to materials incidental to construction.
Burglary and Theft
coverage for property taken or destroyed by breaking and entering the insured’s premises, burglary or theft, forgery or counterfeiting, fraud, kidnap and ransom, and off-premises exposure.
business insurance typically for property, liability and business interruption coverage.
Business owners Policy
Business Interruption
loss of income as a result of property damage to a business facility.
Capital Gains (Loss)
excess (deficiency) of the sales price of an asset over its book value. Calculated on the basis of original cost adjusted, as appropriate, for accrual of discount or amortization of premium and for depreciation.
Cash Equivalent
short-term, highly liquid investments that are both (a) readily convertible to known amounts of cash, and (b) so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Investments with original maturities of three months or less qualify under this definition.
Casualty Insurance
a form of liability insurance providing coverage for negligent acts and omissions such as workers compensation, errors and omissions, fidelity, crime, glass, boiler, and various malpractice coverages.
an insurance company that transfers risk by purchasing reinsurance.
Ceding Company
Claim
a request made by the insured for insurer remittance of payment due to loss incurred and covered under the policy agreement.
Claims Adjustment Expenses
costs expected to be incurred in connection with the adjustment and recording of accident and health, auto medical and workers’ compensation claims.
A clause contained in most property insurance policies to encourage policy holders to carry a reasonable amount of insurance. If the insured fails to maintain the amount specified in the clause (Usually at least 80%), the insured shares a higher proportion of the loss. In medical insurance a percentage of each claim that the insured will bear.
Coinsurance
Commercial Farm and Ranch
a commercial package policy for farming and ranching risks that includes both property and liability coverage. Coverage includes barns, stables, other farm structures and farm inland marine, such as mobile equipment and livestock.
Commercial Package Policy
provides a broad package of property and liability coverages for commercial ventures other than those provided insurance through a business owners policy.
Comprehensive Personal Liability
comprehensive liability coverage for exposures arising out of the residence premises and activities of individuals and family members. (Non-business liability exposure protection for individuals.)
Condos
homeowners insurance sold to condominium owners occupying the described property.
Crop
coverage protecting the insured against loss or damage to crops from a variety of perils, including but not limited to fire, lightening, loss of revenue, tornado, windstorm, hail, flood, rain, or damage by insects.
Deductible
Portion of the insured loss (in dollars) paid by the policy holder
Direct Loss
Damage to covered real or personal property caused by a covered peril.
an insurance company that is domiciled and licensed in the state in which it sells insurance.
Domestic Insurer
Dwelling Property/Personal Liability
a special form of package policy composed of dwelling fire and/or allied lines, and personal liability insurance.
Earned Premium
portion of insured’s prepaid premium allocated to the insurance company’s loss experience, expenses, and profit year- to -date.
property coverages for losses resulting from a sudden trembling or shaking of the earth, including that caused by volcanic eruption. Excluded are losses resulting from fire, explosion, flood or tidal wave following the covered event.
Earthquake
an amendment or rider to a policy adjusting the coverages and taking precedence over the general contract.
Endorsement
Exposure
risk of possible loss.
FAIR Plan - Fair Access to Insurance Requirements
state pools designed to provide insurance to property owners who are unable to obtain property insurance through conventional means.
Farmowners Insurance
farmowners insurance sold for personal, family or household purposes. This package policy is similar to a homeowners policy, in that it has been developed for farms and ranches and includes both property and liability coverage for personal and business losses. Coverage includes farm dwellings and their contents, barns, stables, other farm structures and farm inland marine, such as mobile equipment and livestock.
Federal Flood Insurance
coverage for qualifying residents and businesses in flood prone regions through the National Flood Insurance Act, a federally subsidized flood insurance program enacted in 1968.
FEMA - Federal Emergency Management Agency
an independent agency, tasked with responding to, planning for, mitigating and recovery efforts of natural disasters.
Fire Coverage
coverage protecting the insured against the loss to real or personal property from damage caused by the peril of fire or lightning, including business interruption, loss of rents, etc.
Flood
coverage protecting the insured against loss or damage to real or personal property from flood. (Note: If coverage for flood is offered as an additional peril on a property insurance policy, file it under the applicable property insurance filing code.)
Hazard
circumstance which tends to increase the probability or severity of a loss.
Health Insurance
a generic term applying to all types of insurance indemnifying or reimbursing for losses caused by bodily injury or illness including related medical expenses.
Homeowners Insurance
a package policy combining real and personal property coverage with personal liability coverage. Coverage applicable to the dwelling, appurtenant structures, unscheduled personal property and additional living expense are typical. Includes mobile homes at a fixed location.
Independent Adjuster
freelance contractor paid a fee for adjusting losses on behalf of companies.
Inland Marine Coverage
coverage for property that may be in transit, held by a bailee, at a fixed location, a movable good that is often at different locations (e.g., off road constructions equipment), or scheduled property (e.g., Homeowners Personal Property Floater) including items such as live animals, property with antique or collector’s value, etc. This line also includes instrumentalities of transportation and communication, such as bridges, tunnels, piers, wharves, docks, pipelines, power and phone lines, and radio and television towers.
Insurance
an economic device transferring risk from an individual to a company and reducing the uncertainty of risk via pooling.
Liability
a certain or probable future sacrifice of economic benefits arising from present obligations of a particular entity to transfer assets or to provide services to other entities in the future as a result of a past transactions(s) or event(s). three essential characteristics: a) It embodies a present duty or responsibility to one or more other entities that entails settlement by probable future transfer or use of assets at a specified or determinable date, on occurrence of a specified event, or on demand; b) The duty or responsibility obligates a particular entity, leaving it little or no discretion to avoid the future sacrifice; and c) The transaction or other event obligating the entity has already happened.
Loss
physical damage to property or bodily injury, Including loss of use or loss of income
Loss Ratio
the percentage of incurred losses to earned premiums.
Mobile Homes - Homeowners
homeowners insurance sold to owners occupying the described mobile home.
Moral Hazard
personality characteristics that increase probability of losses. For example not taking proper care to protect insured property because the insured knows the insurance company will replace it if it is damaged or stolen.
Morale Hazard
negligence or disregard on the part of the insured which could lead to probable loss.
Multi-Peril Insurance
personal and business property coverage combining several types of property insurance in one policy.
Named Peril Coverage
insurance for losses explicitly defined in the policy contract.
National Association of Insurance Commissioners (NAIC)
the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S.
Ocean Marine Coverage
coverage for ocean and inland water transportation exposures; goods or cargoes; ships or hulls; earnings; and liability.
Peril
the cause of property damage or personal injury, origin of desire for insurance. “Cause of Loss”
Personal Injury Liability
liability coverage for those who have been discriminated against, falsely arrested, illegally detained, libeled, maliciously prosecuted, slandered, suffered from identity theft, mental anguish or alienation of affections, or have had their right of privacy violated.
Personal Property
single interest or dual interest credit insurance (where collateral is not a motor vehicle, mobile home, or real estate) that covers perils to goods purchased or used as collateral and that concerns a creditor’s interest in the purchased goods or pledged collateral either in whole or in part; or covers perils to goods purchased in connection with an open-end credit transaction.
Property
coverage protecting the insured against loss or damage to real or personal property from a variety of perils, including but not limited to fire, lightening, business interruption, loss of rents, glass breakage, tornado, windstorm, hail, water damage, explosion, riot, civil commotion, rain, or damage from aircraft or vehicles.
Pure Risk
circumstance including possibility of loss or no loss but no possibility of gain.
Reinsurance
a transaction between a primary insurer and another licensed (re) insurer where the reinsurer agrees to cover all or part of the losses and/or loss adjustment expenses of the primary insurer. The assumption is in exchange for a premium. Indemnification is on a proportional or non-proportional basis.
Replacement Cost
the cost of replacing property without a reduction for depreciation due to normal wear and tear.
Risk
Uncertainty concerning the possibility of loss by a peril for which insurance is pursued.
Subrogation
situation where an insurer, on behalf of the insured, has a legal right to bring a liability suit against a third party who caused losses to the insured. Insurer maintains the right to seek reimbursement for losses incurred by insurer at the fault of a third party.
Surety Bond
a three-party agreement whereby a guarantor (insurer) assumes an obligation or responsibility to pay a second party (obligee) should the principal debtor (obligor) become in default.
Workers’ Compensation
insurance that covers an employer’s liability for injuries, disability or death to persons in their employment, without regard to fault, as prescribed by state or federal workers’ compensation laws and other statutes.
