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Glossary of Terms

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401(k) Plan – An employer-sponsored retirement savings plan for its employees. Contributions are made on a pre-tax basis to the plan by employees and are sometimes matched by the employer. The federal government limits the amount of pre-tax dollars that can be contributed annually.

529 Savings Plan – This is a savings vehicle designed to help save funds for a college education. This is a state-administered plan that allows the fund to increase without paying federal income tax. College costs can sometimes be paid for completely tax free. Some states offer better tax treatment than others.

Actual Cash Value – Replacement cost minus depreciation (See also replacement cost).
Actuary – Individual or firm employed by the insurer to evaluate and analyze statistics to help the insurance company set the rates or premiums. They also assist in developing guidelines for risk management and how to best minimize the risk to the insurance company.

Additional Living Expenses – Extra expenses a property policy may pay to the insured that are above and beyond the insured’s normal living expenses.  

Adjuster - The individual who is employed by the insurer to evaluate the loss and help settle the claim.

Admitted Insurance Company – This is an insurer where the state has approved its policies for sale to the public and they have been approved to do business in that state.

Annuity – A product that pays an income benefit periodically for a specified period of time or for life.

Appraisal – An evaluation of the properties value that is used to help settle the loss.

Assigned Risk Plan – A plan used for insured’s to purchase a policy when they can’t obtain coverage through the voluntary market. The applications are typically generic and sent in to an administrator who then “assigns” the risk to a particular company. All companies typically charge the same rate and use the same rules approved by the state where the risk is located.

Beneficiary – The person or entity that receives the proceeds of an insurance policy. With a life insurance policy, the beneficiary would receive the dollar amount of the death benefit upon the death of the insured.

Binder – A temporary document that shows that a particular risk is now covered or bound. The actual policy usually follows by mail.

Bond – A guarantee that obligates the issuer to pay a sum of money in the event of dishonesty, failure to perform and a variety of other acts. There are many types of bonds.

Burglary – Property that is stolen with evidence of forced entry.   

Catastrophe – Term used to statistically document a single incident or a series of closely related incidents that cause severe property losses in a short period of time that exceed a particular dollar amount.

Captive Agent – An agent who generally represents one company. This agent may also be an employee of the company or can be an independent contractor paid on a commission basis.

Catastrophe – An insurance term that refers to one or a series of closely related events. The event is declared a catastrophe when an insurer pays out $25 million or more and the event is then recorded as such for statistical purposes. That information helps determine future risk management policies for insurers.

Catastrophe Deductible – Sometimes referred to as a wind deductible, is a special deductible that applies when an event meets the definition of a catastrophe found within the policy. Definitions vary widely among insurers. The amount of the deductible is generally a specified dollar amount or a percentage of the dwelling coverage on a homeowner’s policy.

Coinsurance – On a property insurance policy, it is an amount of coverage a policyholder must carry equal to a specified percentage of the value of the property in order to receive the full payment for a covered loss.

Collision Coverage– Pays to fix your auto when the auto hits or is hit by another object (usually another auto) or the auto flips.

Comprehensive Coverage – Sometimes called “other than collision” pays for auto losses not covered under Collision Coverage. Some examples are: fire, theft, hailstorm, flood and vandalism.

Commercial Lines Agent – This is an agent who specializes in writing commercial insurance. Line is simply another word for type or kind of insurance.

Commission – The amount paid to an agent for selling a policy.

Complaint Ratio – A measurement tool used by state insurance departments to track the number of valid complaints against an insurance company. A company with a high complaint ratio may be subject to administrative penalties by the department of insurance.

Compulsory Auto Insurance State – A state that requires car drivers to carry the states minimum amount of automobile liability insurance. Most states are compulsory.

Coverage – Pooling the risks of many and transferring that risk to an insurance company in exchange for premiums paid by insurance policyholders.

Credit Score – A number associated with an individual’s ability to repay debt. A variety of factors are used to determine one’s credit score and those factors are a closely held trade secret. Many insurers use this data to help determine rates as well as develop risk management policies.

Declarations Page – The part of a policy that declares the name, address of the insured, risk insured, policy number, coverage period, coverages and other supplemental information. It is the part of the policy that makes it unique to the policyholder. This is sometimes referred to as the “dec page”.

Deductible – The amount of a claim paid by a policyholder. A typical deductible is $500.

Depreciation – A deduction based upon the fact that something is no longer new.

Direct Insurers – Insurance companies that sell directly to the public without using agents. Often these companies use licensed customer service representatives to service and sell policies.

Dividends – Money returned to policyholders that reflects an insurance company’s earnings and profitability. Some states cap the profits that an insurer can earn and anything above that must be returned to the policyholders.

Domestic Insurance Company – term that refers to the fact that an insurer is incorporated in a particular state. That state is the insurer’s domestic state.

Earned Premium – The portion of a policy premium that that an insurer has earned in exchange for providing coverage.

Earthquake Insurance – a policy that covers earthquakes. Most homeowners and commercial property policies do not cover earthquakes. The deductibles are generally high for this type of policy.

Elimination Period – A waiting period that applies before disability policies start to pay benefits. Usually is a specified number of days from when an injury or illness begins to when the benefits of the policy start to become payable. Some typical waiting periods are, 30, 45, 60, 90 and 180 days.

Endorsement – A change that is applied to a policy. An endorsement is usually in writing.

Escrow Account – Money that is collected by a lender and generally used to pay homeowners insurance policy premiums that come due in the future. Sometimes property taxes are collected in advance as well.

Fair Plan – FAIR stands for “Fair Access to Insurance Requirements”. This is a property insurance plan that is typically sold to an insured who owns a property that  the regular voluntary market does not want to insure because it is considered to be high risk. An example would be a property owned and rented to a tenant. Most voluntary insurers do not want to insure this risk. Roughly half of the states have such a plan. Laws vary from state to state but generally, there are only a few basic perils covered by this type of policy. For this reason, this type of policy is often considered only as a “last resort” to obtain coverage.

Fidelity Bond – A type of protection that covers losses suffered by policyholders as a result of some sort of fraud. Typically carried by businesses covering dishonest acts by its employees.

Fiduciary Bond – A type of protection that guarantees that certain financial responsibilities will be carried out or performed. Typically issued to executors or trustees of a will to ensure that the deceased’s last wishes are carried out as specified.

Financial Responsibility Law – Law that requires all car drivers to be able to show proof that they can pay damages equal to the states minimum requirements in the event that they are involved in an accident. This is usually accomplished by purchasing an auto insurance policy and showing the auto insurance identification card upon request.

Fire Insurance – A policy written that covers only a few perils. Many states have companies that issue three types of fire insurance policies. They are: Basic Form, Broad Form and Special Form. The Basic Form provides the least amount of covered perils while the Special Form provides the most.

First Party Coverage – Provides coverage to the “named insured” for injury or property damage. The definition of “named insured” can vary but will typically include the spouse and resident relatives.

Fixed Annuity – Is an annuity that guarantees to pay a specified rate of return or a specific dollar amount for a specified period of time.

Flat Cancelled Policy – Is a policy that is cancelled on the day that it was bound, as if the policy where never written in the first place. Generally any premiums paid are refunded in full.

Floater – An endorsement added to a property insurance policy that covers property that can often move from one location to another. This is also sometimes referred to as a “Rider”. Some examples are: jewelry, furs, art and musical instruments. The item is typically listed on the policy with a detailed description with a specified dollar amount of coverage supported by an appraisal.

Force Placed Insurance – Insurance that a lender places upon property that an insured has failed to insure as agreed upon when the loan was secured. This guarantees that the lender will be paid for the value of the property in the event of a loss. The cost of this coverage is paid by loan-holder and is generally significantly higher than that found in the standard market.

Fraud – Lying, concealing or misrepresenting facts to an insurer in order to save on premiums paid or in an effort to get a claim paid. If convicted, can result in jail time and/or fines.

Free Look Period – Once a policy is issued, is a period of time that an insured  has to review the actual policy and can cancel without penalty. This is a typical provision with life insurance policies.

Gap Insurance – In the event of a loss, this is a policy that will cover the difference between the actual cash value of a car and the actual balance due to the lender to pay off the loan. This is typically sold upon the purchase or lease of an automobile.

Generic Auto Parts – Also referred to as after-market parts are auto parts that are used to repair a car but these parts have not been manufactured by the original car maker. If certified as such, these parts are deemed to be as good as or better than the original equipment manufacturers (OEM) parts. Since these parts are generally cheaper, many auto insurers insist that they be used to fix your car in a covered claim.

Glass Insurance – This is a coverage that will pay for glass damage and is generally written with a commercial policy covering a building. Often, premiums are calculated by how many linear feet of glass must be insured.

Graduated Drivers License – This is a process designed for young drivers to gradually allow them to become more experienced drivers before they can drive alone without any restrictions. Often, the initial license will require that an experienced driver be in the car as a passenger. It may also restrict the number of passengers allowed in the car and the hours that can be driven. After a period of time passes, these restrictions are lifted until the young driver “graduates” to a fully licensed driver without restrictions.

Group Insurance – This is a policy type that insures a group of individuals and is common in life and health insurance. The underwriting is such that all members of the group can generally qualify for coverage. Healthy and young individuals may pay more than those who may not be as young or healthy as rates are often set somewhere in the middle. This is due to the fact that individuals are not underwritten but the group as a whole is.

Guaranteed Replacement Cost – A provision in a homeowners policy that will pay the entire cost to rebuild a home regardless of the limit of coverage found on the policy declarations page. This provision is no longer supported by many major insurers.

Guaranty Fund – All states have such a fund and all insurers are required to contribute to it. The fund is used to help pay claims if an insurer becomes insolvent and is unable to pay the claims or fulfill policy obligations. Once the insurer is declared insolvent, often state regulators will then oversee the day to day activities of the insurer and often administer the payment of any claims that become due. The provisions by which these claims become payable will vary from state to state but the fund will be used under these conditions.

Hacker Insurance – This coverage protects the insured from illegal activities initiated by a computer hacker. A hacker is one who without authorization, electronically enters a computer and causes damage to the computer or the data stored on it.

Homeowners Insurance Policy – This is a policy that covers the home, other structures, contents, loss of use, medical payments to others and liability that might arise out of the ownership of the home. The policy is generally written with replacement cost. The perils insured against are determined by the policy itself and a deductible may also apply. For a more detailed definition, see  Homeowners Basics found under the Insurance Basics section of this website.

Hurricane Deductible – A separate deductible that is triggered by a storm that meets the definition of a hurricane. The insurer defines the criteria that must be met before the storm is declared a hurricane. This deductible may be a dollar amount or a percentage of how much the home is insured for. This is the part of the claim that the insured is responsible to pay for.

Identity Theft Coverage – This coverage is generally available by endorsement to a property policy and will pay for expenses incurred as a result of the theft of an identity. Things like lost wages related to the theft, attorney fees, notary fees and many other miscellaneous fees are typically covered. However, it usually does not pay for the actual dollar amount of the theft.

Indemnify – Provide payment for losses incurred.

Independent Agent – An agent, who may represent several different insurers, is paid on a commission basis and is generally not an employee of a company that is represented.

Inflation Guard Provision – This clause will increase the amount of coverage on a property insurance policy in order to keep pace with inflation and increasing construction costs. If a home was purchased 20 years ago and insured for the same amount today as it was then, the home would likely be underinsured and could not be rebuilt. Most major insurers include this provision in policies being sold in today’s marketplace.

Inland Marine Coverage – This covers valuable items that need to be insured but while in transit to a destination that does not involve shipping overseas. Things that are shipped by truck or train are examples of when this coverage may be needed. This is typically found on a commercial policy but a Rider or Floater on a personal lines policy is similar to this coverage.

Insolvent – This is when an insurer can no longer pay all claims or fulfill policy obligations. The state regulators will step in may use the Guaranty Fund to help pay claims and do whatever is deemed necessary to protect the best interests of the public.

Insurable Risk – This is a risk that most insurers would consider to be eligible for a policy due to the fact that it meets its underwriting guidelines.

Insurance – A mechanism that transfers the risk of having a large financial loss individually to an insurer in exchange for a policy premium. The insurer pools the risks among many so that it can offer affordable policy premiums and have the financial resources available when claims become payable.

Insurance Score – This is a confidential scoring system that insurers use to help determine what an individual policy premium will be. Typically, if you have a good credit score, the insurer will assign you a good insurance score as well and you will likely have a lower policy premium.

IRA – This means Individual Retirement Account. This is a tax-deferred savings plan meaning you will not be taxed on the interest earned until sometime in the future. Contributions may be tax-deductible and are limited.

Joint and Survivor Annuity – This is an annuity that has two annuitants and payments will continue until both parties are deceased. This is usually written for spouses to insure income will continue for one or the other until both are deceased.

JUA – This stands for the Joint Underwriting Association. This is when insurers will join together and share in profits and losses for risks that may be difficult to insure in the standard insurance marketplace. These can be set up to insure homes, cars, medical malpractice and other difficult risks. This is also similar to an Assigned Risk Plan.

Key Person Insurance – This is a policy that is written on the life or health of a person who is employed by a company and is so valuable to that company, that it would suffer substantially should that person become disabled or die. The company is typically the beneficiary and usually makes the premium payments as well.

Law of Large Numbers – This is a presumption that allows insurers to be able to predict losses with a reasonable degree of accuracy. With a large number of risks insured, an insurer will be able to predict the probability of losses over time. This is the basis for the insurance business and it allows the insurer to determine the appropriate premium for the risk that it insures.

Liability Insurance – This policy type or provision of a policy protects the insured against any lawsuits for bodily injury or property damage that may arise where it is determined that the insured is legally obligated to pay.

Life Insurance – This is a policy that is written on the life of the insured where the proceeds become payable to the beneficiary upon the death of the insured.

Line of Insurance – Line is simply another word for type or kind of insurance.

Liquidity – The speed or method used that allows an asset to be converted to cash.

Liquor Liability – This is a provision that covers the insured in the event of a bodily injury or property damage claim arising out of the serving of alcohol by the policyholder.

Lloyd’s of London – This is a group that will insure sub-standard or hard-to-place insurance risks. It is said that “anything is insurable through Lloyd’s of London but for a price”. This means that this group will insure some very unusual risks. An example might be that they may insure the arm of a quarterback in the NFL against injury. If the quarterback injure his arm during the season, a benefit then becomes payable to the owner of the team. Lloyd’s of London is also involved in re-insurance as well. This is essentially insurance purchased by insurance companies so that they can share the risk. Often, Lloyd’s of London policies are policies that may not be approved or even supported by the laws of the states in which they are sold. However without this marketplace, certain risks would simply be uninsurable.

Long Term Care – This is a policy that will pay if the insured is no longer able to perform certain normal daily functions and requires assistance in order to live. Often, this policy will pay a benefit if the insured has to enter an assisted living facility. The provisions and language within these policies will vary greatly from one company to another.

Loss – This is another word for a claim.

Loss of Use – This provision of a property policy becomes payable in the event you are no longer able to live at your residence. It will reimburse or pay for any extra living expenses that you incur as a result of your covered loss. Things like hotel rent, dinning out expenses and laundry fees are a few examples. These are extra expenses that you would not normally incur had you not had the loss.

Loss Ratio – This is the ratio of dollars collected versus dollars paid out in claims. If an insurer pays out eighty cents for every dollar in premium that is collected; the insurer would have an eighty percent loss ratio.

Lump Sum Settlement – A one-time payment that settles a liability claim.

Malpractice Insurance – This policy will cover professionals against liability claims due to negligence and errors or omissions.

Managed Care – This is a group of medical providers and insurers who agree to abide by procedures, policies and fee schedules as a way of delivering healthcare at affordable prices to the public. An HMO health plan is a good example of a managed care.

Marine Insurance – This is coverage for valuables that are typically in transit over seas or water. This is similar to inland marine coverage but usually applies while the valuables are in transit and on water.

Medicaid – This is a federal or state assistance program designed to provide healthcare to those who can’t afford it.

Medicare – This is a federal program for people who are over age 65 that will pay a portion of certain covered medical expenses. There are many gaps in this coverage and policies called Medicare-Gap coverage are being sold in today’s marketplace.

Mortgage Insurance – Usually refers to a decreasing term life insurance policy that is based upon the balance of the mortgage. The insured is the policy holder and often the beneficiary is the lender or mortgage holder. In the event of the policyholders death, the mortgage balance is paid. Another way that this policy can be written is to have the policyholder name a beneficiary other than the lender so that the beneficiary will have control of the death benefit and do with it what they wish.

Multi-Lines Agent – This is an insurance agent that specializes in selling many different Lines of Insurance. Most agents listed in this directory specialize in many different policy types such as car, homeowners, renters, condominium and motorcycle insurance. Having multiple policies with the same company may qualify the policyholder for additional discounts. Of course this is just a short list of the many policy types being sold in the marketplace today by multi-line agents.

Multi-Peril Policy – This is a policy type that covers multiple or different perils. This policy typically also provides coverage for property and liability under one policy. An example of a multi-peril policy is a common homeowners policy that is sold in today’s market.

Mutual Insurance Company – This is an insurance company that is owned by its policyholders and typically shares its dividends or profits with the policyholders.

Named Peril Policy – This is a policy that specifically names the perils that the policy will cover.

National Flood Insurance – This is a federal government sponsored program through which flood insurance is sold.

Non-Admitted Insurance Company – Insurers that write unusual risks that the state has not approved for sale to the public but the state does allow these companies to sell such policies due to the fact that there would not otherwise be a market for these risks. Lloyds of London is a group of insurers often found in this category.

No-Fault – This is a system where each driver’s policy pays for his or her own liability or medical bills regardless of who is actually at fault. The idea here is to limit litigation and produce faster settlements.

Occurrence Policy – An insurance policy that pays for claims or losses that occurred during the policy term even if they are filed after the policy term. This type of coverage is generally associated with commercial insurance.

Ocean Marine Insurance – This coverage applies to boats, other watercraft and cargo during transport through waterways.

Open Peril Policy – A property insurance policy type that covers most perils but lists only a few common exclusions.

Ordinance Coverage – This endorsement onto a property policy will allow for the additional cost to rebuild so that the new construction complies with today’s building codes, laws and ordinances.

Pensions – An employer sponsored program designed to provide employees with retirement income. The employee must typically work at the company for a number of years and be a certain age before they become eligible to collect.

Peril – This is a type of loss or a cause of the loss. A few examples of perils include: fire, windstorm, hail, water damage and theft. This is just a small list of perils. Open Peril policies cover all perils with a few exclusions while Named Peril Policies cover only the perils that are named and exclude all others.

Personal Articles Floater – This coverage is often written as an endorsement to a property policy to insure valuables that may exceed the standard policy limits. Typically, jewelry, furs, collectibles and many other valuables are insured under this type of coverage. This is similar to Inland Marine Coverage.
Personal Injury Protection
– Is also known as PIP coverage and it typically covers the medical bills and other related expenses for the policyholder and any passengers as a result of a car accident.

Personal Lines Agent – A Line of Insurance is a type of insurance policy. Personal lines agents typically sell policies that individuals would buy such as car, homeowners, renters, condominium or motorcycle insurance. Of course this is just a small list of the policy types sold by a personal lines agent.

Policy – This is a written agreement between the policyholder and the insurance company detailing coverages.

Preferred Provider Network – This is a group of medical providers that have agreed in advance to a fee schedule set by the insurer. The insured may be required to seek medical attention through one of these providers or suffer a reduction in benefits. An HMO health plan is an example of this type of network.

Premiums – This is the actual dollar amount paid to the insurer in exchange for coverage.

Prime Interest Rate – This is the interest rate that applies to those with the best credit.

Product Liability Insurance – A product liability lawsuit could be brought against the manufacturer for producing a product that harmed or injured another party or damaged property. The manufacturer could then be liable for the injuries or property damage. A product manufacturer would purchase this type of insurance to cover that exposure.

Professional Liability Insurance – Covers a variety of professionals for mistakes, negligence and errors or omissions that result in an injury or property damage to their clients.

Property/Casualty Insurance – Is typically auto, property and commercial insurance. Agents selling these types of policies have received the authority to do so in the states in which they are licensed. Other authorities include: life, health, surplus lines and title insurance each requiring the authority by a given state before an agent can sell them.

Qualified Annuity – This is an annuity contract that is funded with pre-tax dollars and generally used as a retirement income vehicle. A 401-K plan is an example of this type of contract.

Rate – This is the amount of money paid in exchange for coverage provided by the insurance company.

Red-Lining – The practice of not insuring certain risks based solely upon the location of the risk. This is illegal in most if not all states.

Reinsurance – Simply put, this is insurance bought by insurance companies so that the risk can be spread out. Reinsurance companies don’t usually pay actual claims; rather they reimburse the insurer who purchased the coverage originally. Without reinsurance, many insurers would simply be out of business.

Renters Insurance – Tenants wanting to insure their personal property or contents can do so by purchasing a renters insurance policy. This policy typically includes coverage for personal property, loss of use and third party coverage for medical payments as well as liability claims.

Replacement Cost - Is paid at the cost to replace the property without a deduction for depreciation. (See also actual cash value)

Reserves – A fund set up by insurance companies representing an estimate of how much it will pay out in claims.

Rider – An endorsement that is added to a policy to provide additional or a different coverage. Typically adding jewelry to a property insurance policy; would refer to the item insured as a rider on the policy.

Risk Management – Simply put, this is the means by which an insurer manages risk. This includes avoiding risk, underwriting risk, evaluating risk, setting appropriate rates and a variety of other tools that enable the insurer to be a profitable enterprise.

Robbery – Property that is stolen by use of force or the threat of force.

Salvage Value – This is the value of property that is damaged after a covered loss. The insurer becomes the owner of the damaged property and then can sell the damaged property to a buyer for its salvage value. A good example of this would be after a car accident where the vehicle is a total loss or “totaled”, the insurer would pay the policyholder the book value of the car and then take possession of the vehicle and try to sell it to a salvage or junk yard to recoup some of the paid loss.

Securities and Exchange Commission – Also known as the SEC, is the group that oversees and governs stock insurance companies. The insurers are required to make periodical reports disclosing the financial status of the company.

Self-Insurance – A concept that has the insured assume the risk for his or her own self and not transfer it to the insurance company. Many large companies adopt this principle and must demonstrate that they have the financial assets to pay its own claims as well as manage those claims. A deductible on an insurance policy is another example of self-insurance. This is the portion that you, the insured are responsible to pay at claim time and the insurer will pay the amount over the deductible.

Sewer Back-Up Coverage – Is typically an endorsement to a property insurance policy that covers water that backs up into the structure from the sewer. The coverage generally pays for the ensuing water damage but does not pay for the repair of the source of the clog.

Single Premium Annuity – This contract is funded by a single or one-time payment when purchased.

Solvent – An insurer that has the ability to pay claims and adhere to policy provisions that it sell is said to be solvent. See insolvent as well, this is the opposite of solvent.

Stacking – A coverage option available in some states that will allow the liability limit of a single car to be multiplied by the total number of cars on the policy. For example, if the limit of liability for one car is 15,000 and two cars exist on the policy, the stacked limit would be 30,000(15,000 x 2).

Stock Insurance Company – This is an insurance company that is owned by its stockholders. Stockholders will share in the dividends and the increase as well as the decrease in the stock value.

Structured Settlements – These are settlements that are spread out over a period of time as opposed to a lump sum settlement option.

Subrogation – A process by which and insurer who has paid a claim, seeks reimbursement for what it has paid from the responsible party or policy.

Surety Bond – This bond guarantees the performance of an obligation. A contactor may be required to obtain a surety bond to cover a job; the bond will pay if the contractor is unable to perform the work that was promised.

Surplus Lines - These are unusual risks that do not meet normal insurance company guidelines and then must obtain coverage from non-admitted insurers. Each state will regulate these insurance companies differently. Lloyds of London is a group of insurers often found in this category.

Surrender Charge – A monetary penalty generally associated with life and annuity insurance products for the early withdrawal of funds from the contract.

Term Insurance – This is a type of life insurance that covers the insured for a specified period of time. Terms generally range from 1 to 30 years and are usually renewable after the term but at an increase in premiums. The insured may also be required to demonstrate insurability after the term has expired as well. In today’s insurance market, term insurance premiums are typically the cheapest way to obtain a policy with a large death benefit.

Territory – Insurers determine rates based upon the location or territory of the risk.

Terrorism Coverage – Covers acts associated with terrorism.

Third-Party – Refers to liability claims from a person other than the insured or the insurance company. The insured and the insurer are the first and second party and the person filing the lawsuit would be the third-party.

Title Insurance – A contract purchased upon the sale of real estate that insures the policyholder against any future claims against the ownership of the property.

Tort – Simply a wrong done to someone that becomes the basis for a lawsuit.

Tort Reform – Efforts by lawmakers to reduce the filing of lawsuits and legal judgments by changing the rules and laws so that everyone can benefit from lower cost insurance.

Total Loss – Also referred to as “totaled”; is a loss where the property or car is damaged to the extent that it would likely cost more to repair than the it’s actual value.

Travel Insurance – Coverage that pays for incidents related to delays, cancellation, lost luggage, bad weather and a variety of other things that are related to traveling. This type of coverage is typically sold by travel agents and airlines.

Umbrella Policy – This is an excess liability policy that will pay when an underlying policy’s limits are exceeded. These policies are typically sold with limits of liability of 1 million and up.

Underinsured – This coverage pays when the responsible party who caused the loss has an insufficient limit of liability to pay the claim. The policy holder who was the victim of the loss could then find coverage from the underinsured section of his or her own policy.

Unearned Premium – A portion of an insurance premium that has been paid to the insurance company in advance, but the coverage has not yet been provided or earned by the insurer.

Uninsured Motorist – Coverage that will pay in the event of a loss with an uninsured driver or for hit and run accidents.

Universal Life Policy – A permanent life insurance policy that offers flexibility with premiums, the years they are payable and the coverage amount. This contract also allows for the surrender, withdrawal or borrowing of the cash value of the policy. This permanent life insurance policy is designed to last for life if it is properly funded. These policies typically follow current interest rates and usually have a guaranteed interest rate feature as well. The universal life insurance policy is the most popular permanent life insurance contract being sold in today’s market.

Vandalism – Is a peril on property insurance policies that includes the destruction of another person’s property.

Variable Annuity - This contract utilizes stocks, bonds, mutual funds and a variety of other investment vehicles to grow its value. This contract is riskier than a fixed annuity but could produce greater gains.

Variable Life Insurance – A permanent life insurance contract that has a death benefit and a cash value component that grows through stocks, bonds, mutual funds and many other investment vehicles.

Voided Policy -  This is a provision where by a policy is deemed to have no liability due to a specific reason such as fraud, misrepresentation, deception and/or a variety of other causes.

Whole Life Insurance – This permanent life insurance policy has a fixed premium and is designed to last for a lifetime. The policy also has a cash value component and generally a fixed amount of insurance coverage. The amount of coverage can also increase through the years with some contracts. The cash value may be also be accessible. This is the oldest form of permanent life insurance that is sold in the market today although not nearly as popular as it used to be.


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