Adjuster: A person who settles insurance claims. An adjuster may be an insurance company employee or an independent operator.
Adjustment: The settlement of a claim; financial premium determination.
Agent’s authority: The authority placed in an agent by the insurance company; the extent to which the agent may act on behalf of the company. This authority is defined by a contract between the agent and the company.
All-risk: A term commonly used to describe broad forms of property or liability coverage. It is misleading because no property or liability policy truly provides an all-risk coverage — a policy will invariably contain some exclusions.
Appraisal: An estimate of value loss or damage.
Assigned risk: A risk that has been declined by one or more companies. Such a risk may be assigned to designated companies by a recognized authority. The operation is called an assigned risk plan.
Beneficiary: A person who will receive policy benefits.
Binder: An agreement usually written whereby one party agrees to insure another party pending receipt of a final action upon the application.
Business interruption: Insurance covering the loss of earnings resulting from the destruction of property; called use and occupancy insurance.
Cancellation: The termination of an insurance contract by either the insurance company or the insured.
Carrier: An insurance company.
Claim: A request by the insured for benefits under an insurance policy.
Coinsurance: Two or more entities providing insurance protection and sharing in losses.
Comprehensive: A loosely used term signifying broad or extensive insurance coverage.
Coverage: The insurance protection provided by the policy.
Declarations: That part of an insurance policy containing the information about the applicant listed on the insurance application.
Deductible: An amount the insured must pay before insurance benefits will be paid.
Discount: A reduction applied to an insurance premium.
Effective date: The date a policy is put in force; the inception date.
Endorsement: A written amendment affecting the declaration insuring agreements exclusions or conditions of an insurance policy; a rider.
Examiner: An individual who reviews evaluates and processes claims.
Exclusion: That which is expressly eliminated from the coverage under an insurance policy.
Expiration date: The date an insurance policy terminates.
Exposure: Person or property to whom injury or damage will cause an economic loss.
Group insurance: Insurance covering a group of employees.
Hazards: A condition that creates or increases the probability of a loss.
Incurred loss: A loss that while not yet paid, has been sustained and for which reserves have been established to pay in the future.
Indemnity: Insurance protection that will place the insured in the same financial position as before a loss was sustained.
Inspection: An examination by those having authority. An insurance company usually reserves the right to inspect any property it insures.
Insurance: Protection against loss. The insured sacrifices a small certain loss (the premium) for protection against a large uncertain loss (e.g. an accident fire or death). The insurance company assumes the risk by employing the law of large numbers and the principle of risk spreading.
Insured: The entity whose life or property is protected by the insurance. The one for whom insurance is written.
Lapse: To fail to continue an insurance policy; to cease to provide insurance protection.
Liability: Being bound by law and justice to do something that may be enforced by the courts.
Limits: The value or amount of a policy; the greatest amount that can be collected under the policy.
Loss: In insurance the amount the insurer is required to pay because of the insured’s loss.
Multi-peril insurance: An insurance policy that provides coverage against many perils. Sometimes called a package policy.
Occurrence: A continuance of a repeated exposure to conditions that result in injury.
Peril: Anything that may cause a loss.
Policy: A legal contract of insurance.
Policyholder: The owner of the policy; the one who purchases the policy and pays the premiums.
Policy period: The term for which insurance remains in force sometimes definite sometimes not.
Premium: The cost of an insurance policy; the charge the policyholder pays for the insurance protection.
Property: The thing owned; real property is real estate and things attached to it; anything else is personal property.
Property damage: Physical damage to property.
Provisions: The terms or conditions of an insurance policy.
Rate: Cost per unit of insurance.
Reinstate: To restore coverage after it has been canceled or suspended.
Reinsurance: Insurance placed by an underwriter in another company to reduce the amount of the risk his or her company has assumed.
Renew: To continue; to replace as with a new policy.
Rider: An endorsement.
Self-insurance: An arrangement whereby instead of purchasing an insurance policy a party maintains a reserve fund for self-protection against a loss.
Surety: A guarantee that a person normally called the principal will perform according to a statute or a contract. Surety offers protection to a third party normally called an obligee.
Underwriter: The insurance company; a party assuming risk; the person performing the underwriting function.
Void: Of no force; null.
Source: US Small Business Administration
