Glossary of Insurance Terms
Accelerated Benefits Rider: A life insurance rider that allows for the early payment of some portion of the policy's face amount should the insured suffer from a terminal illness or injury.
Accidental Death Benefit Rider: A life insurance policy rider providing for payment of an additional cash benefit related to the face amount of the base policy when death occurs by accidental means.
Accidental Death Insurance: Insurance providing payment if the insured's death results from an accident.
Actual Cash Value: The fair market value of property; technically, replacement cost less depreciation.
Adverse Carrier: Term used to refer to the other party's insurance company.
Agent: An authorized representative of an insurance company who sells and services insurance contracts.
Agreed Price: The price or cost of repairs agreed to by the AD (auto damage) adjuster or independent appraiser and the body shop representative.
Amendment: A change to the basic policy contract. An amendment alters the policy; an endorsement adds to it.
Annually Renewable Term: A form of renewable term insurance that provides coverage for one year and allows the policy owner to renew his or her coverage each year, without evidence of insurability.
Anti-Theft Device: A device that deters auto theft. Autos equipped with these devices may entitle you to a discount on your insurance premiums.
Anti-lock Braking System (ABS): A computer-controlled high pressure system that assists the vehicle's normal braking system. ABS allows all wheels to slow at the same rate, thereby preventing loss of control.
Appraisal: Process that determines the value of property, or the extent of damage, usually performed by an impartial expert.
Arbitration: A process of settling a dispute through an impartial party. It is used as an alternative to litigation.
Assigned Risk (AIP): A driver or vehicle owner who cannot qualify for insurance in the regular market. He or she must get coverage through a state assigned risk plan which specifies that each company must accept a proportionate share of these drivers/owners.
Attained Age: Your current age. Your attained age is one of the factors life insurance companies use to determine your premiums. The older you are, the greater chance you'll die while you are covered - so the higher your premium.
At-Fault: The party that is legally liable for the damages in an accident.
Auto Damage (AD): Division of the claims department that handles auto claims.
Auto Damage Adjuster: The auto damage adjuster is responsible for writing the repair estimate for your vehicle. This adjuster will also answer questions about the repair process, rental vehicle or your total loss settlement.
Auto Insurance: Auto Insurance provides protection from losses resulting from owning and operating an auto. The insurance covers losses to the insured's property and losses for which the insured is liable as a result of owning or operating an auto.
Backdating: A procedure for making the effective date of a policy earlier than the application date. Backdating is often used to make the age of the consumer at issue lower than it actually was in order to get lower premium. State laws often limit to six months the time to which policies can be backdated.
Beneficiary: The person designated to receive the death benefit when the insured dies.
Binder: A temporary insurance policy that expires at the end of a specific time period or when the permanent policy is written. A binder is given to an applicant for insurance during the time the complete policy paperwork is being completed.
Bodily Injury: An injury sustained by a person.
Bodily Injury Liability Coverage: Pays damages for bodily injury or death resulting from an accident for which you are at fault and provides you with a legal defense. This coverage is subject to the terms, limits & conditions of the policy contract.
Cash Benefits: Money that?s paid to the insured upon settlement of a covered claim. Often found with Hospital Income Programs, "cash benefits" are paid directly to the insured rather than the doctor or the hospital directly.
Cash Value: Equity amount or "savings" accumulation in a whole life policy. Claim Notification to an insurance company that payment of an amount is due under the terms of the policy.
Certificate of Satisfaction: A form signed by the insured when he or she takes delivery of the car from the repairer. It certifies that he or she is satisfied with the vehicle operations, appearance, and visible quality of the repairs.
Claim: Any request or demand for payment under the terms of the insurance policy.
Claim Adjuster: A person responsible for investigating & settling a claim.
Claimant: Individual or entity presenting the claim.
Collision Coverage: Pays for damage to an insured vehicle when it hits or is hit by another car or object, or if the car overturns. This coverage is subject to the terms, limits & conditions of the policy contract.
Comparative Negligence: A doctrine of law that, in some states, may enable claimants to recover a portion of their damages even when they are partially at fault, or negligent. Each party's negligence is compared to the other's and a claimant's recovery can be reduced by the percentage of his or her own negligence.
Competitive Auto Repair Parts: Parts made by a company other than the manufacturer of the auto. All parts we authorize meet or exceed the quality of the manufacturer's parts, but cost less. THE INSURER guarantees these parts for as long as you own the car.
Competitive Estimate: A term used when an insurance company requests that you submit multiple repair estimates for consideration.
Comprehensive Physical Damage Coverage: Pays for damage to your car from theft, vandalism, flood, fire or other covered perils. This coverage is subject to the terms, limits & conditions of the policy contract.
Condition: The portion of the insurance contract which outlines the duties and responsibilities of both the insured and the insurance company.
Condo Insurance: A type of homeowners insurance that meets the special needs of condominium owners.
Conditional Receipt: Given to policy owners when they pay a premium at time of application. Such receipts bind the insurance company if the risk is approved as applied for, subject to any other conditions stated on the receipt.
Contestable Clause: A provision in an insurance policy setting forth the conditions under which or the period of time during which the insurer may contest or void the policy. After that time has lapsed, normally two years, the policy cannot be contested. Example: Suicide.
Contingent Beneficiary: Person or persons named to receive proceeds in case the original beneficiary is not alive; May also be referred to as secondary or tertiary beneficiary.
Contributory Negligence: A doctrine of law that, in some states, may prevent claimants from recovering any portion of their damages if they are even partially at fault, or negligent.
Coverage: Protection and benefits provided in an insurance contract - another word for insurance. Insurance companies use the term coverage to mean either the dollar amounts of insurance purchased ($200,000 of liability coverage), or the type of loss covered (coverage for theft).
Conversion Privilege: Allows the policy owner, before an original insurance policy expires, to elect to have a new policy issued that will continue the insurance coverage. Conversion may be effected at attained age (premiums based on the age attained at time of conversion) or at original age (premiums based on ageat time of original issue).
Convertible Term: A policy that may be changed to another form by contractual provision and without evidence of insurability. Most term policies are convertible into permanent insurance.
Cross-Purchase Plan: An agreement that provides that upon a business owner's death, surviving owners will purchase the deceased's interest, often with funds from life insurance.
Customized Vehicle: A vehicle that has been altered or has equipment or accessories not typically found in a personal vehicle.
Damage: Loss or harm to a person or property.
Damages: Money that one party becomes legally obligated to pay to another party.
Death Benefit: The amount of money paid to the beneficiary when the insured person dies.
Declarations: The part of your policy that includes your name and address; the property that is being insured, its location and description; the policy period; the amount of insurance coverage & the applicable premiums.
Decreasing Term Insurance: Term life insurance on which the face value slowly decreases in scheduled steps from the date the policy comes into force to the date the policy expires, while the premium remains level. The intervals between decreases are usually monthly or annually.
Deductible: The portion of a claim you pay out of pocket. Choosing a higher deductible will lower your insurance premiums.
Defensive Driver Discount: Certain drivers (usually over age 50) who have voluntarily taken a defensive driving course may qualify for this discount on their auto insurance premiums with some insurers.
Depreciation: The decrease in value of any property due to wear, tear, and/or time. Generally, depreciation is not an insurable loss.
Discount: A reduction in your premium if you or your car meet certain conditions that are likely to reduce the insurer's losses or expenses. For example, auto insurance discounts are given for cars with auto theft devices and for drivers and passengers who use seat belts.
Driver Training Discount: A discount for people who have taken an approved driver training course. This discount is not available in all states or for all individuals.
Double Indemnity: Payment of twice the basic benefit in the event of loss resulting from specified causes or under specified circumstances.
Endorsement: An addition to the basic policy contract. An endorsement adds to the policy contract; an amendment alters it.
Estimate: An assessment of the cost to repair your damaged property.
Exclusion: Restriction in your insurance policy that limits and may exclude coverage for certain perils, persons, property, or locations.
Expiration Date: This date, found on your declarations page, indicates when your policy coverage runs out. Your renewal policy will start on this date.
Evidence of Insurability: Any statement or proof of a person's physical condition, occupation, etc., affecting acceptance of the applicant for insurance.
Exclusions: Specified hazards listed in a policy for which benefits will not be paid.
Expiry: The termination of a term life insurance policy at the end of its period of coverage.
Face Amount: The amount of insurance provided by the terms of an insurance contract, usually found on the first page of the policy. In a life insurance policy, the death benefit.
Field Adjuster: An insurance adjuster who works primarily outside of an office and often meets personally with the public. Field adjusters can conduct face-to-face meetings, negotiations with claimants, scene investigations, and damage inspections.
Final Expenses: Expenses incurred at the time of a person's death. These include funeral costs, court expenses associated with probating his or her will, current bills or debt, and taxes. Depending on their circumstances, the survivors may also want to pay the outstanding balances of mortgage and loans.
Financed Car: A vehicle financed by a loan. The lender retains a lien on the auto until it has been paid off.
First Party: Term used to refer to an insured.
First Party Claims: A claim for damage, loss or injury made by an insured.
First To Die Insurance: Insurance policy whose death benefit is paid to the surviving insured upon the death of one of the insured's. There is no longer a benefit once the benefit is paid, however, the surviving insured usually has the option of purchasing a policy of the same amount without providing evidence of insurability.
Fixed Benefit: A death benefit, the dollar amount of which does not vary.
Forms: Two types of forms are important in insurance: 1. pre-printed contracts that comprise your insurance policy, 2. questionnaires or coverage selection forms that a policyholder is required to fill out.
Free Look: Provision required in most states whereby policy owners have up to 20 days to examine their new policies at no obligation.
Funeral Expenses: Expenses incurred for a funeral and burial. These can include casket, vault, grave plot, headstone and funeral director.
Good Student Discount: May be awarded to full-time students who maintain a grade average of "B" or better with some insurers.
Grace Period: Period of time after the due date of a premium during which the policy remains in force without penalty.
Graded Premium Policy: A type of whole life policy designed for people who want more life coverage than they can currently afford. They pay a lower premium rate that increases gradually over the first three to five years and then remains constant over the life of the policy.
Guaranteed Term: A form of renewable term insurance that remains in force as long as the premiums are paid on time. With guaranteed term insurance, the insurance company cannot terminate the policy during the term.
Guaranteed Insurability (Guaranteed Issue): Arrangement, usually provided by rider, whereby additional insurance may be purchased at various times without evidence of insurability.
Hazard: Anything that increases the chance of an accident occurring.
Homeowners Insurance: Protects homeowners from losses to their homes, personal property, and some types of damage or injury to others for which the homeowner is liable. Homeowners insurance is subject to the terms, limits and conditions of your policy contract.
Incontestable Clause: A clause in a policy providing that a policy has been in effect for a given length of time (two or three years), the insurer shall not be able to contest the statements contained in the application. In life policies, if an insured lied as to the condition of his health at the time the policy was taken out, that lie could not be used to contest payment under the policy if death occurred after the time limit stated in the incontestable clause.
Indemnification: The act of providing compensation for a loss with the intent to restore an individual or entity to the approximate financial position prior to the loss.
Indemnity: Compensation for a loss intended to restore an individual or entity to the approximate financial position prior to the loss.
Independent Adjuster: An individual who estimates losses on behalf of an insurance company, but is not an employee of that company.
In Force: Insurance on which the premiums are being paid or have been fully paid.
Insurable Interest: Exists when an individual would suffer an economic loss as the result of damage to property or bodily injury.
Insurance: Insurance is a system in which groups of people who have similar chances of suffering a loss transfer their risk of loss to an insurer who pools the risk of many people together. In exchange for payment of premium, the insurer promises to reimburse the person for their covered losses.
Insurance Fraud: The act of falsifying or exaggerating the facts of an accident to an insurance company to obtain payment that would not otherwise be made. Common types of insurance fraud are staged accidents, exaggerated injuries, and inflated medical bills.
Insurance ID Card: A card issued by your insurer containing basic information about your insurance policy. Some states require you to keep an ID card in your vehicle.
Insurance Policy: The printed form which serves as the contract between an insurer and an insured.
Insurance Score: Used in the underwriting process in some states. An individual's insurance score is frequently based, in part, on a person's credit history.
Insurability: All conditions pertaining to individuals that affect their health, susceptibility to injury and life expectancy; an individual's risk profile.
Insurable Interest: Requirement of insurance contracts that loss must be sustained by the applicant upon the death of another and it must be sufficient to warrant compensation.
Insured: A person or organization covered by an insurance policy.
Insurer: Party that provides insurance coverage, typically through a contract of insurance.
Inspection: Verification of a vehicle's physical condition.
Irrevocable Beneficiary: A beneficiary that cannot be changed without that beneficiary's consent.
Increasing Term Insurance: Term life insurance in which the death benefit increases periodically over the policy's term. Usually purchased as a cost of living rider to a whole life policy.
Lapse: Termination of a policy upon the policy owner's failure to pay the premium within the grace period.
Leased Vehicle: A vehicle rented under a long-term contract (lease). The leasing company retains ownership of the vehicle and must be shown on your insurance policy as an insured.
Level Term Insurance: Term coverage on which the face value and premiums remain unchanged from the date the policy comes into force to the date the policy expires.
Legal Liability: Liability imposed by law, as opposed to liability arising from an agreement or contract.
Liability: Any legally enforceable obligation or responsibility for the injury or damage suffered by another person.
Liability Adjuster: The liability adjuster handles the investigation of the accident. These adjusters' responsibilities can include collision payments, property damage payments, and bodily injury settlements. In some states, these adjusters may also handle the medical portion of your claim.
Liability Insurance: Insurance that provides protection from claims arising from injuries or damage to other people or property.
Liability Investigation: The process of gathering information to determine the cause of an accident.
Lien: A claim, charge, or encumbrance on property as a security for the payment of a debt.
Lien holder: A person or organization with a financial interest in property up to the amount of money borrowed or still owed on the property.
Life Expectancy: The average number of years remaining for a person of a given age to live as shown on the mortality or annuity table used as a reference.
Life Insurance: An agreement that guarantees the payment of a stated amount of monetary benefits upon the death of the insured.
Limit: The maximum amount of protection purchased by the insured for a specific coverage.
Limits of Liability: The amount specified in your policy up to which the insurance company will protect you.
Limited Pay Policy: A type of whole life insurance designed to let the policyholder pay higher premiums over a specific period such as 10 or 20 years and then not pay any premiums for the rest of his or her life.
Loss: Any measurable dollar cost of damage and/or injury suffered by a person.
Loss of Use: Compensation to a third-party claimant for financial consequences resulting from the inability to use property as the result of accident-related damage.
Malicious Mischief: Intentional damage of personal property with malice of forethought.
Material Damage: All property-related damage losses covered by the policy. This includes the following: property damage (PD), comprehensive damage (COMP), collision damage (COLL), Fire/Theft Combined Additional Coverage (FTCA), rental reimbursement (RR), or uninsured motorist property damage (UMPD).
Mechanical Breakdown Insurance: Covers repairs to all mechanical parts of the car, protecting you from expensive repair bills.
Medical: A document completed by a physician or another approved examiner and submitted to an insurer to supply medical evidence of insurability (or lack of insurability) or in relation to a claim.
Medical Adjuster: The medical adjuster is responsible for reviewing all medical bills, replacement/essential services, and lost wages submitted to the company for injuries sustained by you and/or the passengers in your vehicle (depending upon the state in which you live and the coverage on your policy).
Medical Expenses: Reasonable charges for medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, prosthetic devices, and funeral expenses. (The insurance company defines what is reasonable.)
Medical Payments Coverage: Pays medical expenses related to an automobile accident. This coverage is subject to the terms, limits and conditions of your policy contract.
Misrepresentation: Act of making, issuing, circulating or causing to be issued or circulated an estimate, an illustration, a circular or a statement of any kind that does not represent the correct policy terms, dividends or share of surplus or the name or title for any policy or class of policies that does not in fact reflect its true nature.
Motorcycle Insurance: Motorcycle Insurance provides protection from losses resulting from owning and operating motorcycles.
Motorcycle Safety Foundation (MSF): An international non-profit organization dedicated to motorcycle safety training, research and awareness. Some applicants who complete MSF courses qualify for discounts on Motorcycle Insurance.
Motor Vehicle Report (MVR): A report from the agency that issues your driver's license, listing accidents and violations that appear on your driving record. This report is used to verify information provided by insurance applicants and policyholders.
Mortality Charge: The charge for the element of pure insurance protection in a life insurance policy.
Mortality Cost: The first factor considered in life insurance premium rates. Insurers have an idea of the probability that any person will die at any particular age; this is the information shown on a mortality table.
Mortality Rate: The number of deaths in a group of people usually expressed as deaths per thousand.
Mortality Table: A table showing the incidence of death at specified ages.
Multi-Car Discount: Available to policyholders who insure more than one vehicle at the same location.
Named Insured: The person or entity listed on the policy declarations page.
National Insurance Crime Bureau (NICB): A not-for-profit organization that partners with insurers and law enforcement agencies to facilitate the identification, detection, and prosecution of insurance criminals. The NICB receives support from over 1,000 property/casualty insurance companies.
Negligence: The failure to exercise the care that is expected of a reasonable person in similar circumstances.
No-fault Insurance: May pay for your medical treatment, lost wages, or other accident-related expenses regardless of who caused the accident. This coverage is subject to the terms, limits & conditions of your policy contract and is not available in all states.
Non medical Insurance: A contract of life insurance underwritten on the basis of an insured's statement of his health with no medical examination required.
Occupational Hazard: A condition in an occupation that increases the peril of accident, sickness, or death. It usually will mean higher premiums.
Occurrence: An event, or repeated exposure to conditions, which unexpectedly causes injury or damage during the policy period.
Offer and Acceptance: The offer may be made by the applicant signing the application, paying the first premium and, if necessary, submitting to physical examination. Policy issuance, as applied for, constitutes acceptance by the company. Or the offer may be made by the company when no premium payment is submitted with the application. Premium payment on the offered policy then constitutes acceptance by the applicant.
Original Age: The age you were when you bought the policy.
Other Insured Rider: A term rider covering a family member other than the insured that is attached to the base policy covering the insured.
Overseas Insurance: Auto and Property Insurance for those living abroad is available from American International Underwriters through THE INSURER's subsidiary, International Insurance Underwriters.
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.
Payment Recovery: If your car is damaged because of another driver's negligence and your insurance to settle the claim for damage to your vehicle, we will seek to recover your deductible and our payments from the other party. This process of payment recovery is also called subrogation.
Para-Med (Paramedical) Examination: The medical examination of an applicant for Life Insurance.
Para-Med (Paramedical): A physician, nurse, or para-med appointed by the medical director of a life insurance company to examine applicants.
Passive Restraint System: A passenger safety system, such as an air-bag, that activates automatically in the event of an accident.
Peril: A danger or hazard that can cause a loss, for example, a car collision with an object, or a fire.
Permanent Life Insurance: A term loosely applied to life insurance policy forms other than Group and Term, usually Cash Value Life Insurance, such as Whole Life Insurance.
Personal Injury Protection: May pay for your medical treatment, lost wages, or other accident-related expenses regardless of who caused the accident. This coverage is subject to the terms, limits & conditions of your policy contract and is not available in all states.
Personal Property: Property that is not land or connected to land (real estate), such as furniture or jewelry.
Physical Damage: Damage to property.
Policy: A contract between you and the insurance company.
Policy Change: Any change made to your insurance policy during the period that the policy is in force.
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.
Pre-accident Condition: The state of the vehicle before the accident, including damage not related to the accident, mileage, options, and other factors.
Premium: The price of the insurance policy that the insured pays in exchange for insurance coverage.
Premium Flexibility: The policy holder's right to vary the amount of premium paid each month towards a universal life policy.
Preferred Risk: A risk whose physical condition, occupation, mode of living and other characteristics indicate a prospect for longevity superior to that of the average longevity of unimpaired lives of the same age.
Primary Beneficiary: In life insurance, the beneficiary designated by the insured as the first to receive policy benefits.
Primary Policy: The insurance policy that pays first when you have a loss that's covered by more than one policy.
Probate Costs: The legal fees and other costs incurred in the probate process, which is the legal processing of your will. Assets that you leave to other people through your will cannot be distributed until the will is probated.
Proof of Loss: A statement made regarding the extent of the claim; it may be requested in accordance with the conditions of the policy.
Property Damage Liability Coverage: Pays for damage to someone else's property resulting from an accident for which you are at fault and provides you with a legal defense.
Provisions: Statements contained in an insurance policy which explain the benefits, conditions and other features of the insurance contract.
Rate: Coverage's issued at a higher rate than standard because of some health condition, or impairment of the insured.
Renewal Date: The date that your insurance policy expires and the date that your renewed policy will begin.
Rental Reimbursement: Optional coverage that helps pay rental vehicle costs when your insured vehicle is disabled as the result of a covered accident or loss. Available to most policyholders for an additional premiums.
Renters Insurance: Insurance that provides protection from losses that arise out of the rental of a home. Protection covers losses to the insured's property, not to losses that occur as a result of owning a home.
Replacement Parts: Several types of parts may be used when your vehicle is repaired: new parts, both original equipment manufacturer and after-market and recycled parts. New or after-market parts will be used if we can't find like-kind and quality recycled parts. A 5-year-old car, for instance, would be repaired with parts at least as good as the parts that had been in the car. We guarantee the after-market parts used for these repairs for as long as you own the car.
Resident Adjuster: Adjuster who handles claims in remote areas of a region.
Re-entry Option: An option in a renewable term life policy under which the policy owner is guaranteed, at the end of the term, to be able to renew his or her coverage without evidence of insurability, at a premium rate specified in the policy.
Reinstatement: Putting a lapsed policy back in force by producing satisfactory evidence of insurability and paying any past-due premiums required.
Renewable: Term/Annual Renewable Term insurance that may be renewed for another term without evidence of insurability. Level term usually turns into renewable term with increasing premiums after the level premium period.
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.
Revocable Beneficiary: The beneficiary in a life insurance policy in which the owner reserves the right to revoke or change the beneficiary. Most policies are written with a revocable beneficiary.
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.
Risk Selection: The method a home office underwriter uses to choose applicants that the insurance company will accept. The underwriter must determine whether risks are standard, substandard or preferred and set the premium rates accordingly.
Rider: For motorcycle insurance, a rider is someone who will operate the insured motorcycle. In life and health insurance, the term 'rider' is often used to refer to an endorsement to an insurance policy.
Risk: The chance of suffering a loss.
SR-22, Certificate of Financial Responsibility (CFR): An SR-22 (CFR) is a certificate mandated by the state to verify that an individual is maintaining auto insurance liability coverage. If a person needs an SR-22 (CFR), they will usually be notified by their state's Motor Vehicle Department.
Salvage: Damaged property which is taken over by the insurance company after payment of a claim.
Secondary Beneficiary: An alternate beneficiary designated to receive payment, usually in the event the original beneficiary predeceases the insured.
Select Repair Shop: Body shops chosen by the insurer that are authorized to handle the repair of insured vehicles without the need for an inspection by a staff adjuster. Vehicle owners always have the right to choose the body shop of their choice.
Single Premium Policy: A whole life policy for people who want to buy a policy for a one-time lump sum, and then be covered for the rest of their lives without paying any additional premiums.
Standard Risk: A person who, according to a company's underwriting standards, is entitled to insurance protection without extra rating or special restrictions.
Substandard Risk: Person who is considered an under-average or impaired insurance risk because of physical condition, family or personal history of disease, occupation, residence in unhealthy climate or dangerous habits.
Term Insurance: Protection during limited number of years; expiring without value if the insured survives the stated period, which may be one or more years but usually is five to twenty years, because such periods usually cover the needs for temporary protection.
Term: Period for which the policy runs. In life insurance, this is to the end of the term period for term insurance.
Tertiary Beneficiary: In life insurance, a beneficiary designated as third in line to receive the proceeds or benefits if the primary and secondary beneficiaries do not survive the insured.
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.
Theft: The unlawful taking of another's property with the intent to permanently deprive the owner of its use or possession.
Third Party: Person or entity not party to an agreement but with an interest in the agreement.
Third Party Claim: Claims for injury or damage to property of a third party alleged to have been caused by the insured.
Tort: A private or civil wrong or injury, other than breach of contract, which violates a person's legally protected right(s), and for which the law may permit a remedy in the form of money damages.
Total Loss: Property that has sustained damage so extensive that repairing it is not reasonable. A vehicle is considered a total loss if it cannot be repaired safely, if repairing the vehicle is not economically practical, or if state regulations require us to consider it a total loss.
Towing and Labor Coverage: Provides insurance if your auto needs to be towed or requires roadside assistance.
Umbrella Insurance: Provides high limits of additional liability coverage above the limits of your homeowners and auto policy. In addition, it provides coverage that may be excluded by other liability policies.
Underwriting: The process an insurer goes through to determine whether or not it will provide coverage for an applicant.
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.
Uninsured Motorist Coverage: In some circumstances, may pay for your injuries or property damage caused by an uninsured motorist or, in some states, an unidentified driver. In some cases it also includes coverage for underinsured motorists and at-fault drivers with insufficient insurance to pay your claim.
Universal Life: An interest-sensitive life insurance policy that builds cash values. The premium payer has control over how the policy is structured. He has the flexibility to eliminate the premiums (essentially pay up the policy and pay no more premiums) or have the premiums continue for life. It is a matter of juggling three variables: the assumed interest rate, the cash value and the premium payment plan. The policy is interest-sensitive, and if interest rates change from the assumed interest, it will affect the other two variables. In the past, many Universal Life Policies were structured assuming a higher interest rate then was actually received, therefore, most of them have under performed. If you have a Universal Life Policy, you should have it evaluated to see if it needs to have the premiums adjusted to get it back on track. A fourth variable that has not been a factor but could be in the future, and the owner should be aware of, is the Mortality variable. Universal Life policies are usually structured assuming current mortality rates. The insurance companies reserve the right to change those rates.
Vandalism: Destruction or defacement of property.
Variable Life: Life insurance under which the benefits relate to the value of assets behind the contract at the time the benefit is paid. The assets fluctuate according to the investment experience of funds managed by the life insurance company. Premium payments may be fixed as to timing and amount (scheduled premium variable life) or subject to change by the policy holder (flexible premium variable life).
Vehicle Identification Number (VIN): A 17-digit number assigned to each vehicle manufactured in the United States after 1980. This number is used for identification purposes and is visible on the dashboard when viewed from the outside of the vehicle.
Waiver of Premium: Rider or provision included in most life insurance policies exempting the insured from paying premiums after he or she has been disabled for a specified period of time, usually six months.
Warranty: A written guarantee of the integrity of a product and of the manufacturer's responsibility for the repair or replacement of defective parts.
Whole Life Insurance: Life insurance that is kept in force for a person's whole life as long as the scheduled premiums are maintained. All Whole Life policies build up cash values. Most Whole Life policies are guaranteed as long as the scheduled premiums are maintained. The variable in a Whole life Policy is the dividend which could vary depending on how well the insurance is doing. If the company is doing well and the policies are not experiencing a higher mortality than projected, premiums are paid back to the policy holder in the form of dividends. Policyholders can use the cash from dividends in many ways. The three main uses are: it can be used to lower or vanish premiums, it can be used to purchase more insurance or it can be used to pay for term insurance.
