Glossary

As used in property insurance, prohibits the insured from abandoning damaged property to the insurance company for repair or disposal.

An adjustment (rider) to a life insurance policy 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.

An adjustment (rider) to a life insurance policy that provides for payment of an additional cash benefit when death occurs by accidental means. This amount depends on the value of the policy.

An Insurance policy that provides payment if the insured's death occurs as a result of an accident.

Covers loss of sums owed to the insured by its customers that are uncollectible due to damage by an insured peril to accounts receivable records.

Cost to repair or replace damaged property with materials of like kind and quality, less depreciation.

A person or organization for whom insured status is arranged by endorsement.

General liability coverage that insures against libel, slander, invasion of privacy, copyright infringement and misappropriation of advertising in connection with the insured's advertising of its goods or services.

An authorized representative of an insurance company.

The maximum amount an insurance company will pay during the policy period.

Property insurance covering loss arising from all causes of loss except those that are specifically excluded.

Term insurance that provides coverage for one year and allows the policy owner to renew his or her coverage each year.

A form with the information needed for an insurance company to underwrite and rate a specific policy.

The transfer of ownership of a Life Insurance policy from one person to another.

Your current age. Your attained age is a factor life insurance companies use to determine premiums.

A verification of the financial records, usually payroll or receipts, of an organization to determine exposures and premiums.

A land motor vehicle, trailer or semi-trailer designed for travel on public roads, not including "mobile equipment."

Making the effective date of a policy earlier than the date of application. Backdating is often used to make the age of the applicant lower than it actually was at the time of application so that he/she can get a lower premium. State laws often set limits to this.

Coverage on property left in the care of the insured for storage, repair or servicing.

Property coverage for named perils: Fire, Lightning, Explosion, Smoke, Windstorm, Hail, Riot, Civil Commotion, Aircraft, Vehicles, Vandalism, Sprinkler Leakage, Sinkhole Collapse and Volcanic Action.

The minimum limits of liability that can be carried by an insured.

The designated person set to receive the death benefit if the insured should die.

A rating system by A.M. Best Company giving the financial condition of insurance companies.

A temporary insurance policy that expires at the end of a specific time period or when a permanent policy is written. A binder is given to an applicant for insurance during the time it takes an insurance company to complete the policy paperwork.

The most an insurer will pay under Part Two of a Workers' Compensation Policy for claims arising out of any one accident, regardless of how many employee claims arise out of the accident.

The most an insurer will pay under Part Two of a Workers' Compensation Policy for damages due to bodily injury by disease to any one employee.

The most an insurer will pay under Part Two of a Workers' Compensation Policy for employee bodily injury by disease claims during the policy period regardless of the number of employees who make such claims.

The maximum amount an insurer will pay when the insured is legally liable for damages due to bodily injury, sickness, or disease, including resulting death.

Coverage for loss caused by mechanical or electrical equipment breakdown, including damage to the equipment.

A written agreement in which one party, the surety, guarantees the performance or honesty of a second party, the principal (obligor), to the third party (obligee) to whom the performance or debt is owed.

Property insurance coverage that allows the insured to remove labels from damaged goods or mark the items as "salvage," provided the goods are not damaged in the process.

Property coverage for the named perils: Fire, Lightning, Explosion, Smoke, Windstorm, Hail, Riot, Civil Commotion, Aircraft, Vehicles, Vandalism, Sprinkler Leakage, Sinkhole Collapse, Volcanic Action, Breakage of Building Glass, Falling Objects, Weight of Snow, Ice or Sleet, Water Damage (in the form of leakage from appliances) and Collapse from Specified Causes.

Covers against loss caused by enforcement of ordinances or laws regulating construction and repair of damaged buildings.

Theft of property by forcible entry, which is evidenced by visible signs, in a premises, by a person.

Auto Policy for businesses that includes auto liability and auto physical damage coverages.

Insurance covering loss of income by a business when operations are interrupted due to property loss that is a covered cause of loss.

See Business Income Coverage.

A policy that combines property and liability coverages for special types of small businesses.

The termination of an insurance policy usually before its expiration.

An exclusion of liability insurance which eliminates coverage for damage to property in the insured's care, custody or control.

The insurance company which provides coverage.

The money that is paid to the policyholder upon settlement of a covered claim.

The equity amount or "savings" accumulation in a whole life insurance policy.

Insurance that covers loss caused by injuries to persons and the legal liability imposed on the insured for injury or for damage to property of others.

A severe loss causing sizable financial loss.

The commercial property forms that define the covered causes of loss for which coverage is provided. Commonly, there are 3 Cause of Loss Forms: Basic, Broad and Special.

A document providing evidence that insurance has been purchased.

A request by a policyholder or a claimant for payment under a policy of insurance.

Expenses of settling or investigating a claim.

The person presenting a claim.

An amount of money set aside to meet claims reported but not paid.

A group of businesses who have common or similar exposures and are grouped together for rating purposes.

The arranging or establishing of business groups or categories for rating purposes.

An insurance provision for property coverages in which the policyholder must carry an amount of insurance that is at least equal to a set percentage of the value of the property in order to receive full payment of a loss.

Collapse of a building and collapse of personal property within a building due to specified causes (such as weight of snow, ice or rain). Does not include collapse due to design error or due to faulty workmanship or materials if the collapse occurs after construction is complete.

Provides for payment to a covered automobile resulting from the striking of another object by a moving vehicle.

A coverage which protects business organizations against liability claims for bodily injury and property damage. Those claims may be the result of events at your place of business, from your business operations, the products or services you make, or communications/advertisements your business broadcasts.

State-owned and operated facilities that write Workers' Compensation Insurance solely for that state.

A General Liability coverage for the work of the insured that has been completed away from the business premises.

Covers an automobile for loss or damage from all causes except for those specifically excluded.

Insurance that is required by law.

Failure to disclose facts which may void an insurance policy.

Given to policy owners when they pay a premium at the time of the application. These receipts bind the insurance company, provided your policy is approved, but are subject to any other conditions stated on the receipt.

Things agreed upon in an insurance policy that state the rights and the requirements of the insured and the insurer.

An indirect loss such as the reduction in value of property that is the result of a direct damage loss.

Term used when damage to property is more than the value of the property.

A provision in an insurance policy setting forth the conditions or time period under which the insurance company may contest or void the policy. After this time has lapsed, typically two years, the policy cannot be contested (e.g., Suicide clauses).

Person or persons designated to receive the value of an insurance policy in case the original beneficiary is not alive.

An agreement between two or more parties with characteristics of mutual assent, competent parties, a valid consideration and legal subject.

Another term for Insurance. It can be used to mean either the dollar amounts of insurance purchased ($500,000 of liability coverage), or the type of loss covered (coverage for theft).

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.

The signature of a licensed agent or representative on a policy that is required to validate the policy.

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.

A type of injury which occurs from the repetition of tasks over an extended length of time.

All risk property insurance for electronic data processing equipment (computers), computer programs and data including mechanical breakdown, electrical injury and changes in temperature and humidity.

The amount of money paid to the beneficiary when the insured person dies.

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.

The cost of removal of debris from covered property damaged by an insured peril.

The amount of loss which is paid or absorbed by the insured prior to determining the insurance company's liability.

The amount of premium required at the beginning of a policy prior to the actual premium being determined.

The reduction in value of property over a period of time, usually as a result of age, wear and tear, or economic obsolescence.

Causes of loss that produce direct and straightforward property damage (without interruption in time or deviation in space) from the cause of the event to the damaged property.

Payment of twice the basic benefit in the event of loss resulting from specified causes or under specified circumstances.

An endorsement that can be added to an automobile policy that gives protection while the insured designated in the endorsement is driving a car other than the one named in the policy.

A clause used in Umbrella policies providing that the Umbrella will "drop-down" over underlying policy aggregate limits when they have been reduced or exhausted.

The amount of premium that has been used for certain periods of time.

An exclusion found in most property insurance policies eliminating coverage for earth movement or earthquake, except ensuing fire.

The date on which an insurance binder or policy goes into effect.

An exclusion usually contained in property insurance policies eliminating coverage for damage to electrical appliances caused by artificially generated currents, except for ensuing fire or explosion.

Coverage for theft of money, securities or property by an employee.

A staffing method in which an employee leasing company provides all or most of its client's employees.

Insurance coverage purchased by employers that do not subscribe to the Texas Workers' Compensation law.

Part 2 of the Workers' Compensation policy which pays on behalf of the employer all sums that the employer becomes legally obligated to pay because of bodily injury by accident or disease sustained by any employee of the insured arising out of and in the course of his employment by the insured.

A form of liability insurance covering wrongful acts arising from employment practices such as wrongful termination, discrimination and sexual harassment.

A document attached to an insurance policy that changes the original policy provisions.

A property insurance coverage for equipment that is often moved from place to place.

A preliminary premium amount that could be adjusted based on a variance in exposures.

Any statement or proof of a person's physical condition, occupation, etc., affecting acceptance of the applicant for insurance.

Coverage that is provided by insurers not licensed in the states where the risk is located.

A policy that provides additional limits in excess of an underlying liability policy.

Specified hazards listed in a policy for which benefits will not be paid.

An exclusion for injury or damage that is expected or intended by the insured.

Coverage providing reimbursement of expenses for temporary repairs and costs incurred to speed up the permanent repair or replacement of covered property or equipment.

A small flat expense charged to Workers' Compensation policies.

A debit or credit factor developed by measuring the difference between the insured's actual past experience and the expected or actual experience of the class of business.

The ending date of an insurance policy.

The basis of rates that are applied to determine premium. Some exposures may be measured by payroll, receipts, sales, square footage, area, man-hours or per unit.

Coverage for reimbursement of expenses in excess of normal operating expenses that are incurred to continue operations after a direct damage loss.

The coverage for extending workers' compensation law to provide benefits for workers hired in one state but injured while working in another state.

The amount covered by the terms of an insurance contract, usually found on the first page of the policy.

The liability placed on trustees, employers, fiduciaries and professional administrators with respect to errors and omissions in the administration of employee benefit programs.

Expenses incurred at the time of a person's death. These include but are not limited to: funeral costs, court expenses, current bills or debt, mortgages, loans and taxes.

Property insurance for works of art.

Coverage in a property insurance policy for charges incurred by the insured from a fire department for their services in fighting a fire.

Liability coverage for the insured's legal liability for fire damage to premises rented by the insured.

A wall designed to prevent the spread of fire from one part of a building to another.

A computer security system that protects a company's private network from outside internet users.

A death benefit, the dollar amount of which does not vary.

The full cancellation of a policy as of the effective date of coverage which requires the return of paid premium in full.

Coverage for damage to property caused by flood.

A provision in almost all property insurance policies eliminating coverage for damage by flood and possibly other types of water damage, such as seepage and sewer backup.

An umbrella policy provision that follows the underlying policy for coverages and policy provisions.

Covers loss due to the dishonesty of writing, signing or altering of checks and bank drafts.

An event that is subject to chance without the implication of suddenness.

Trial period required in most states where policy owners have up to 20 days to examine their new policies with no obligation.

The number of times that a loss will occur within any given period of time.

Any form of insurance that provides payment in full of all losses caused by the perils insured against without applying a deductible or depreciation.

Expenses including casket, vault, grave plot, headstone and funeral director.

Insurance coverage for the legal liability of automobile dealers, garages, repair shops and service stations for bodily injury and property damage arising out of their business operations.

Provides coverage to owners of storage garages, parking lots and body and repair shops for their liability of damage to automobiles left in their custody for safekeeping or repair.

The maximum amount of insurance payable during the policy period for losses (other than those arising from the products - completed operations hazards as covered under the standard commercial general liability policy).

Insurance protecting businesses from most liability exposures other than automobile and professional liability.

A property insurance policy covering breakage of building glass regardless of the cause of loss, except for exclusions specifically listed in the policy.

In Workers' Compensation Insurance, the classification that best describes an employer’s primary workers' compensation exposure.

The period of time after a premium due date during which a policy remains in force without penalty.

A type of whole life policy that starts with lower premiums that gradually increase over a set period before remaining level for the life of the policy.

A serious disregard for the safety or rights of others involving willful or reckless misconduct.

The maximum total loaded weight of a single vehicle as specified by the manufacturer.

A form of renewable term insurance that remains in force as long as premiums are paid on time.

A vehicle leased, rented, hired, or borrowed for business use, excluding autos owned by employees or partners.

A contractual agreement in which one party agrees to assume liability for another party.

Liability coverage for businesses or individuals hosting events where alcohol is served but not sold as part of business operations.

Permanent additions or changes made by a tenant to rented property at the tenant’s expense.

A policy provision preventing the insurer from contesting coverage after the policy has been in force for a specified time.

The total of paid claims plus outstanding claim reserves during a specific period.

A claims adjuster hired by insurance companies on a contract basis and not employed directly by the insurer.

A person or business contracted to perform services but not classified as an employee.

A policy feature that automatically increases coverage limits over time to help keep pace with inflation.

The eligibility of an individual or business to qualify for insurance coverage.

A contract that transfers financial risk from an individual or business to an insurance company in exchange for premium payments.

The written contract outlining insurance coverage, terms, conditions, and limits.

Coverage carried in an amount equal to the property’s value or sufficient to satisfy coinsurance requirements.

The person or organization protected under an insurance policy.

The insurance company that provides coverage and pays covered claims.

A beneficiary who cannot be changed without his or her written consent.

Term life insurance in which the death benefit increases over time, often to offset inflation.

A business arrangement where two or more parties share resources, profits, and responsibilities for a specific project or business purpose.

Termination of an insurance policy due to the policy owner's failure to pay the premium within the grace period.

Property insurance covering a tenant’s financial loss due to termination of a lease when the leased premises are damaged by a covered loss.

The person or business to whom a lease is granted.

The person or business granting a lease.

The legal obligation to pay for injury, damage, or loss caused by negligence or other covered actions.

A provision within an insurance policy that broadens coverage automatically if the insurance company introduces a broader coverage form during the policy period.

A legal claim or right against property held by another party until a debt or obligation is satisfied.

The average number of years a person is expected to live based on age, health, and other actuarial factors.

Insurance coverage that pays a death benefit to designated beneficiaries upon the death of the insured person.

The maximum amount an insurance company will pay for a covered loss under a policy.

A type of whole life insurance that allows the policyholder to pay premiums over a set period, such as 10 or 20 years, while coverage continues for life.

A federal law that provides workers’ compensation benefits to maritime employees injured while loading, unloading, repairing, or building vessels, excluding crew members.

The amount paid by an insurance company for damages or covered claims under the terms of a policy.

The cost associated with investigating, handling, and settling a claim.

A flat charge added to smaller workers’ compensation policies to help offset administrative expenses and loss ratios.

Risk management practices used to reduce the likelihood or severity of losses.

A policy provision authorizing claim payments to a person or organization with a financial interest in covered property.

The percentage of incurred losses compared with earned premiums.

A report showing claims information such as date of loss, claim type, amount paid, and reserves.

An estimated amount set aside by an insurer for a reported claim that has not yet been paid.

A signed statement used when the insured wants to cancel a policy but has lost the original documents, releasing the insurance company from further liability.

A document completed by a physician or another approved examiner and submitted to an insurer to provide medical information. It is commonly used to determine insurability or in connection with a claim.

Reasonable charges for medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, prosthetic devices, and funeral expenses, as outlined by the insurance policy.

Optional auto insurance coverage that pays medical expenses for bodily injuries caused by an auto accident, regardless of fault.

General liability coverage that reimburses others, regardless of fault, for medical or funeral expenses resulting from bodily injury or death caused by an accident.

Coverage sometimes provided under an automobile policy for the operation of an insured vehicle within Mexico, typically limited to a specific distance from the U.S. border.

The lowest premium amount charged for providing a specific insurance coverage.

The act of knowingly providing false or misleading information on an insurance application or claim.

Equipment such as tractors, forklifts, earthmovers, diggers, and farm machinery that are generally not considered automobiles for insurance purposes.

States or jurisdictions where employers must obtain workers’ compensation insurance through a state-operated fund or qualify as self-insured.

The number of deaths within a specific group of people, typically expressed per thousand individuals.

A table used by insurers showing the probability of death at various age groups.

A property insurance provision protecting the mortgagee named in the policy by stating that covered losses are payable to both the insured and the mortgagee.

A property insurance term referring to specific causes of loss that are listed and covered in the policy.

A federally funded program established to make flood insurance available to property owners in participating communities.

An insurance company that is not licensed to do business in a specific state but may provide coverage through a properly licensed excess and surplus lines broker.

In commercial auto policies, coverage for vehicles used in connection with the insured’s business that are not owned, leased, hired, rented, or borrowed by the business, such as employee-owned vehicles used for company purposes.

A workers’ compensation term commonly used in Texas that refers to employers who choose not to participate in the workers’ compensation system and may be held legally liable for employee injuries.

A condition in the workplace that increases the risk of accident, illness, or death and may result in higher insurance premiums.

A continual, repeated, or gradual exposure to substantially the same harmful conditions. General liability policies cover bodily injury or property damage caused by an occurrence.

The age of the insured at the time an insurance policy is purchased.

A temporary addition to an insurance policy that extends coverage to another insured person, often a member of the immediate family.

All rights, benefits, and privileges under a life insurance policy are controlled by the policy owner. Ownership may be assigned or transferred by written request.

A policy providing several different coverages combined into one policy, such as general liability and property insurance.

A limit on the amount of payroll for certain classifications used in the development of premium.

A cause of loss such as fire, windstorm, collision, theft, or other covered events.

A policy insuring private passenger vehicles owned by individuals.

A general liability coverage for offenses that cause harm other than bodily injury, such as false arrest, detention, imprisonment, malicious prosecution, wrongful eviction, slander, libel, or invasion of privacy.

An automobile insurance coverage required in some states that provides first-party benefits for medical expenses, lost income, funeral expenses, and similar costs, regardless of fault.

All tangible property not classified as real property, such as furniture, equipment, and contents.

The written contract between the insured and the insurance company outlining the terms, conditions, coverages, and limits of insurance.

A one-time charge added to a policy that does not vary based on the premium amount.

The person or entity that owns an insurance policy. This may be the insured, a relative, a business partnership, or a corporation.

The length of time a policy remains in force, including the effective and expiration dates.

Any irritant or contaminant in solid, liquid, gaseous, or thermal form, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste.

A person considered a lower insurance risk due to favorable characteristics such as good health or a safe history, often resulting in lower premiums.

The location or property where insurance coverage applies.

A general liability exposure involving injury or damage arising from the insured’s premises or business operations while those operations are in progress.

The amount paid to keep an insurance policy in force, typically monthly, quarterly, or annually.

The policyholder’s right to vary the amount of premium paid, subject to the terms of the policy.

The beneficiary designated to receive policy benefits first upon the death of the insured.

The insurance policy that pays first when a loss is covered by more than one policy.

The cancellation of an insurance policy in which the unused premium is refunded based on the exact amount of time remaining on the policy.

Items manufactured, sold, handled, distributed, or disposed of by the named insured in the course of business, including containers, parts, equipment, warranties, and instructions.

Liability for bodily injury or property damage caused by a defect in a product manufactured, sold, or distributed by the insured.

General liability coverage for injury or damage arising from the insured’s products or completed work away from the insured’s premises.

Coverage designed to protect professionals, such as physicians or real estate brokers, against liability arising from errors or omissions in performing professional services.

Physical injury to property, including the resulting loss of use of that property.

First-party insurance protecting real and personal property against physical loss or damage.

The terms and conditions within an insurance policy that explain benefits, requirements, and policy features.

Real estate including land, buildings, and permanent structures attached to the property.

An option in a renewable term life policy allowing the policyowner to renew coverage at the end of the term without evidence of insurability at the premium specified in the policy.

Restoring a lapsed policy back into force by providing satisfactory evidence of insurability and paying any required past-due premiums.

A policy issued to replace an expiring policy and continue coverage for another term.

Insurance that reimburses a property owner for loss of rental income due to damage caused by a covered peril.

A new insurance policy issued to replace one that is currently in force.

Statements made by an applicant on an insurance application believed to be true to the best of their knowledge but not guaranteed as exact in every detail.

The amount of premium refunded to the insured when the actual premium due is less than what was previously paid.

An attachment to an insurance policy that changes coverage by adding, limiting, or excluding specific benefits or conditions.

The possibility or chance of injury, damage, or financial loss.

The theft of property involving force, violence, or threat of force.

An alternate beneficiary designated to receive policy proceeds if the primary beneficiary is unable to do so.

Cancellation of an insurance policy before expiration where the insured may receive less than a full pro rata premium refund.

A whole life policy purchased with one lump-sum payment that provides lifetime coverage without additional premiums.

A property insurance form that provides coverage for all direct physical loss unless specifically excluded or limited by the policy.

Auto physical damage coverage for losses caused only by the specific perils listed in the policy.

Coverage for property damage caused by the accidental discharge or leakage of water from sprinkler systems or fire protection equipment.

Insurance written by insurers not licensed in a state and placed through licensed surplus lines agents when coverage is unavailable through admitted carriers.

Property insurance covering loss of income or extra expenses resulting from the inability to use damaged property during a covered interruption.

Life insurance providing coverage for a specific period of time and paying a benefit only if the insured dies during that term.

The length of time an insurance policy remains in force.

A policyowner who owns a life insurance policy on another person and is not the insured individual.

Insurance coverage protecting insured property while it is being transported from one location to another.

A policy designed to provide additional protection against catastrophic losses covered under underlying liability policies such as the Business Auto Policy, Commercial General Liability Policy, watercraft and aircraft liability policies, and Employers Liability coverage. It provides excess limits when underlying limits are exhausted and may drop down when underlying aggregate limits are used up. It may also provide coverage for certain claims not covered by underlying policies, subject to a self-insured retention.

Provides coverage for bodily injury, and in some states property damage, when an insured is involved in an accident caused by a motorist whose insurance limits are insufficient to cover the loss.

The insurance policies in force on a risk that respond first to a loss before any excess or umbrella coverage applies.

An insurance company or company representative responsible for evaluating risks, determining acceptability, and issuing insurance policies. It may also refer to the insurer that assumes financial responsibility for coverage.

A person, property, or exposure that an insurance company will not accept due to excessive risk or unacceptable conditions.

An interest-sensitive life insurance policy that builds cash value and offers flexible premiums and death benefits. Policyholders may adjust premium payments, but changes in interest rates and mortality assumptions can affect policy performance.

The portion of a policy premium that represents the remaining period of coverage for which protection has not yet been provided.

Provides coverage for bodily injury, and in some states property damage, when an insured is injured in an accident caused by a motorist who does not carry insurance.

Coverage for loss suffered by an insured due to interruption of incoming utility services such as electricity, caused by damage from a covered peril to property away from the insured’s premises, typically the utility provider’s facilities.

A policy condition limiting coverage for buildings left vacant for a certain period.

Coverage for the cost to restore damaged or destroyed important documents and records.

A policy feature allowing premiums to be waived if the insured becomes disabled.

An agreement preventing an insurer from pursuing recovery from another party after paying a claim.

Permanent life insurance that provides lifelong coverage and builds cash value.

Insurance providing benefits to employees who are injured or become ill due to work-related causes.