Info @ Gardner's
Why Do You Need a Broker?
An Insurance broker can save you time, money and worry. When arranging insurance, many people take shortcuts find out more...
>Apraiser - one who determines authenticity (as of works of art) or who guarantees validity
>Deductible - a clause in an insurance policy that relieves the insurer of responsibility to pay the initial loss up to a stated amount
> Insurable Asset - an interest in a person or thing that will support the issuance of an insurance policy; an interest in the survival of the insured or in the preservation of the thing that is insured
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Info @ Gardner's & FAQ
Why Do You Need a Broker?
An Insurance broker can save you time, money and worry. When arranging insurance, many people take shortcuts without seeking proper advice, understanding the fine print or considering whether they are getting value for money.
Often they are disappointed when their insurance doesn’t come to the rescue. Whether it’s home, car, life or business, brokers provide advice and assistance to make sure you are properly protected.
A good broker will be aware of the benefits, exclusions and cost's of competing policies on the market. They will also help arrange and place the cover and can often provide advice on how to make the most of your insurance budget.
Using a broker doesn’t necessarily cost more. Often it cost’s less because brokers have knowledge of the insurance market and the ability to negotiate competitive premiums on your behalf. Broker will also explain your policy and any special situations you need to watch out for.
Furthermore, a broker is obliged to advise you of fees charged for services provided to you.
Insurance Dictionary
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Absolute Liability: Liability for damages even though faults or negligence cannot be proven.
Accident: An event or occurrence which is unforeseen and unintended.
Accidental Bodily Injury: Injury to the body as the result of an accident.
Accounting: The process of recording, summarizing, and allocating all items of income and expense of the company and analyzing, verifying, and reporting the results.
Act of God: A flood, earthquake or other non preventable accident resulting from natural causes that occur without any human intervention.
Actual Cash Value: 1) The cost of replacing or restoring property at prices prevailing at the time and place of the loss, less depreciation, however caused; 2) replacement cost minus depreciation.
Actuary: A person professionally trained in the technical aspects of pensions, insurance and related fields. The actuary estimates how much money must be contributed to an insurance or pension fund in order to provide future.
Additional insured: A person, company or entity protected by an insurance policy in addition to the insured.
Adjuster: A person who investigates and settles losses for an insurance carrier.
Adjusting: The process of investigating and settling losses with or by an insurer.
Age Limits: Stipulated minimum and maximum ages below and above which the company will not accept applications or may not renew policies.
Agent: An insurance company representative licensed by the state, who solicits, negotiates or effects contracts of insurance, and provides service to the policyholder for the insurer.
Aggregate Deductible: Deductible in some property and health insurance contracts in which all covered losses during a year are added together and the insurer pays only when the aggregate deductible amount is exceeded.
Aggregate Indemnity: The maximum dollar amount that may be collected for any disability or period of disability under the policy.
All-Risks Policy: Coverage by an insurance contract that promises to cover all losses except those losses specifically excluded in the policy.
Amendment: A formal document changing the provisions of an insurance policy signed jointly by the insurance company officer and the policy holder or his authorized representative.
Amortization: Paying an interest-bearing liability by gradual reduction through a series of installments, as opposed to one lump-sum payment.
Arbitration: A form of alternative dispute resolution where an unbiased person or panel renders an opinion as to responsibility for or extent of a loss.
Arson: The willful and malicious burning of, or attempt to burn, any structure or other property, often with criminal or fraudulent intent.
Assets: All funds, property, goods, securities, rights of action, or resources of any kind owned by an insurance company. Statutory accounting, however, excludes non-admitted assets, such as deferred or overdue premiums, that would be considered assets under generally accepted accounting principles
Assignment: The legal transfer of one person's interest in an insurance policy to another person.
Automatic Reinsurance: An agreement that the insurer must cede and the reinsurer must accept all risks within certain explicitly defined limits. The reinsurer undertakes in advance to grant reinsurance to the extent specified in the agreement in every case where the ceding company accepts the application and retains its own limit.
Aviation Insurance: Aircraft insurance including coverage of aircraft or their contents, the owner's liability, and accident insurance on the passengers.
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Benefits: The amount payable by the insurance company to a claimant, assignee or beneficiary under each coverage.
Binder: A written or oral contract issued temporarily to place insurance in force when it is not possible to issue a new policy or endorse the existing policy immediately. A binder is subject to the premium and all the terms of the policy to be issued.
Binding Receipt: A receipt given for a premium payment accompanying the application for insurance. If the policy is approved, this binds the company to make the policy effective from the date of the receipt.
Boat Owners Package Policy: A special package policy for boat owners that combines physical damage insurance, medical expense insurance, liability insurance, and other coverage's in one contract.
Boiler and Machinery Insurance: Coverage for loss arising out of the operation of pressure, mechanical, and electrical equipment. It covers loss of the boiler and machinery itself, damage to other property, and business interruption losses.
Bond: A certificate issued by a government or corporation as evidence of a debt. The issuer of the bond promises to pay the bondholder a specified amount of interest for a specified period and to repay the loan on the expiration (maturity) date.
Broker: A marketing specialist who represents buyers of property and liability insurance and who deals with either agents or companies in arranging for the coverage required by the customer.
Burglary: Breaking and entering into another person's property with felonious intent.
Burglary and Theft Insurance: Coverage against property losses due to burglary, robbery, or larceny.
Business Insurance: A policy which primarily provides coverage of benefits to a business as contrasted to an individual. It is issued to indemnify a business for the loss of services of a key employee or a partner who becomes disabled.
Business Interruption Insurance: Protection for a business owner against losses resulting from a temporary shutdown because of fire or other insured peril. The insurance provides reimbursement for lost net profits and necessary continuing expenses.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Cancellation: The discontinuance of an insurance policy before its normal expiration date, either by the insured or the company.
Capacity: The amount of capital available to an insurance company or to the industry as a whole for underwriting general insurance coverage or coverage for specific perils.
Capital Gain: Profit realized on the sale of securities. An unrealized capital gain is an increase in the value of securities that have not been sold.
Captive Insurance Company: A company owned solely or in large part by one or more non-insurance entities for the primary purpose of providing insurance coverage to the owner or owners.
Captive Insurer: Insurance company established and owned by a parent firm in order to insure its loss exposures while reducing premium costs, providing easier access to a reinsurer, and perhaps easing tax burdens. See also Association captive; Pure captive.
Cargo Insurance: Type of ocean marine insurance that protects the shipper of the goods against financial loss if the goods are damaged or lost.
Casualty Insurance: Insurance concerned with the insider's legal liability for injuries to others or damage to other persons' property; also encompasses such forms of insurance as plate glass, burglary, robbery and workers' compensation.
Catastrophe: Event which causes a loss of extraordinary magnitude, such as a hurricane or tornado.
Cede: To transfer all or part of a risk written by an insurer (the ceding, or primary company) to a reinsurer.
Certificate of Insurance: A statement of coverage issued to an individual insured under a group insurance contract, outlining the insurance benefits and principal provisions applicable to the member.
Cession: Amount of the insurance ceded to a reinsurer by the original insuring company in a reinsurance operation.
Claim: A request for payment of a loss which may come under the terms of an insurance contract.
Claims Adjustor: Person who settles claims: an agent, company adjustor, independent adjustor, or public adjustor.
Claim-made policy: A liability insurance policy under which coverage applies to claims filed during the policy period.
Class Rating: Rate-making method in which similar insureds are placed in the same underwriting class and each is charged the same rate. Also called manual rating.
Coinsurance: 1) A provision under which an insured who carries less than the stipulated percentage of insurance to value, will receive a loss payment that is limited to the same ratio which the amount of insurance bears to the amount required; 2) a policy provision frequently found in medical insurance, by which the insured person and the insurer share the covered losses under a policy in a specified ratio, i.e., 80 percent by the insurer and 20 percent by the insured.
Combined Ratio: Basically, a measure of the relationship between dollars spent for claims and expenses and premium dollars taken in; more specifically, the sum of the ratio of losses incurred to premiums earned and the ratio of commissions and expenses incurred to premiums written. A ratio above 100 means that for every premium dollar taken in, more than a dollar went for losses, expenses, and commissions.
Commercial Lines: Insurance for businesses, organizations, institutions, governmental agencies, and other commercial establishments.
Commercial Package Policy : A commercial policy that can be designed to meet the specific insurance needs of business firms. Property and liability coverage forms are combined to form a single policy.
Commission: The part of an insurance premium paid by the insurer to an agent or broker for his services in procuring and servicing the insurance.
Company Adjustor: Claims adjustor who is a salaried employee representing only one company.
Completed Operations: Liability arising out of faulty work performed away from the premises after the work or operations are completed. Applicable to contractors, plumbers, electricians, repair shops, and similar firms.
Comprehensive Automobile Insurance: Protection against loss resulting from damage to the insured auto, other than loss by collision or upset.
Compulsory Third Party Liability Insurance: laws in all states required motorists to carry at least certain minimum auto coverages. This is called "compulsory" insurance.
Compulsory Insurance: Any form of insurance which is required by law.
Concealment: Deliberate failure of an applicant for insurance to reveal a material fact to the insurer.
Concurrent Causation: Legal doctrine that states when a property loss is due to two causes, one that is excluded and one that is covered, the policy provides coverage.
Conditional Receipt: A receipt given for premium payments accompanying an application for insurance. If the application is approved as applied for, the coverage is effective as of the date of the prepayment or the date on which the last of the underwriting requirements, such as a medical examination, has been fulfilled.
Conditions: Provisions inserted in an insurance contract that qualify or place limitations on the insurer's promise to perform.
Conservation: The attempt by the insurer to prevent the lapse of a policy.
Consideration: One of the elements for a binding contract. Consideration is acceptance by the insurance company of the payment of the premium and the statement made by the prospective policyholder in the application.
Consequential Loss: Financial loss occurring as the consequence of some other loss. Often called an indirect loss.
Contingent Liability: Liability arising out of work done by independent contractors for a firm. A firm may be liable for the work done by an independent contractor if the activity is illegal, the situation does not permit delegation of authority, or the work is inherently dangerous.
Contract: A binding agreement between two or more parties for the doing or not doing of certain things. A contract of insurance is embodied in a written document called the policy.
Contractual Liability: Legal liability of another party that the business firm agrees to assume by a written or oral contract.
Contributory Negligence: Negligence of the damaged person that helped to cause the accident. Some states bar recovery to the plaintiff if the plaintiff was contributory negligent to any extent. Others apply comparative negligence.
Convertible Bond: A bond that offers the holder the privilege of converting the bond into a specified number of shares of stock.
Cost Basis: An amount attributed to an asset for income tax purposes; used to determine gain or loss on sale or transfer; used to determine the value of a gift.
Coverage: The scope of protection provided under a contract of insurance; any of several risks covered by a policy.
Credit Insurance: A guarantee to manufacturers, wholesalers, and service organizations that they will be paid for goods shipped or services rendered. Applies to that part of working capital which is represented by accounts receivable.
Crop-hail Insurance: Protection against damage to growing crops as a result of hail or certain other named perils.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Declarations: Statements in an insurance contract that provide information about the property or life to be insured and used for underwriting and rating purposes and identification of the property or life to be insured.
Declination: The insurer's refusal to insure an individual after careful evaluation of the application for insurance and any other pertinent factors.
Deductible: An amount which a policyholder agrees to pay, per claim or per accident, toward the total amount of an insured loss.
Deposit Premium: The premium deposit paid by a prospective policy holder when an application is made for an insurance policy. It is usually equal, at least, to the first month's estimate premium and is applied toward the actual premium when billed.
Depreciation: A decrease in the value of property over a period of time due to wear and tear or obsolescence. Depreciation is used to determine the actual cash value of property at time of loss.
Difference in Conditions Insurance: "All-risks" policy that covers other perils not insured by basic property insurance contracts, supplemental to and excluding the coverage provided by underlying contracts.
Direct Loss: Financial loss that results directly from an insured peril.
Directors' and Officers' Liability: the exposure of corporate managers to claims from shareholders, government agencies, and employees, and others alleging mismanagement.
Disability: a physical or a mental impairment that substantially limits one or more major life activities of an individual. It may be partial or total.
Disability Benefit: Periodic payments, usually monthly, payable to participants under some retirement plans, if such participants are eligible for the benefits and become totally and permanently disabled prior to the normal retirement date.
Disability Income Insurance: A form of health insurance that provides periodic payments to replace income when an insured person is unable to work as a result of illness, injury, or disease.
Dismemberment: Loss of body members (limbs), or use thereof, or loss of sight due to injury.
Disposable Personal Income: The personal income less personal tax and nontax payments. It is the income available to people for spending and saving.
Disposable Personal Income: A return of part of the premium on participating insurance to reflect he difference between the premium charged and the combination of actual mortality, expense and investment experience. Such premiums are calculated to provide some margin over the anticipated cost of the insurance protection.
Dividend: (1) An amount returned to a policyholder by an insurance company out of its earnings. (2) In capital stock companies, a share of the profits distributed to stockholders.
Dividend: Portion of the premium which is returned to the insured because of favorable experience by the company.
Dividend: A policy holder's share in the insurer's divisible surplus fund apportioned for distribution, which may take the form of a refund of part of the premium on a participating policy. The term is also used for a stockholder's share of the portion of a corporation's earnings that is distributed in cash or additional stock.
Dwelling Property 1: Property insurance policy that insures the dwelling at actual cash value, other structures, personal property, fair rental value, and certain other coverages. Covers a limited number of perils.
Dwelling Property 2: Property insurance policy that insures the dwelling and other structures at replacement cost. It adds additional coverages and has a greater list of covered perils than the Dwelling Property 1 policy.
Dwelling Property 3: Property insurance policy that covers the dwelling and other structures against direct physical loss from any peril except for those perils otherwise excluded. However, personal property is covered on a named-perils basis.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Earned Income: Employment income derived from salary, wages, commissions, or fees.
Earned Premium: The part of the total property/casualty policy premium which applies to the portion of the policy period which has already expired.
Earned Premium: The portion of a premium which is the property of an insurance company, based on the expired portion of the policy period. E.g., a $300 premium for a one year policy beginning July 1 would amount to an earned premium of $150 the following January 1.
Earned Premium: That portion of a policy's premium payment for which the protection of the policy has already been given. For example, an insurance company is considered to have earned 75 percent of an annual premium after a period of nine months of an annual term has elapsed.
Economic Loss: The estimated total cost, both insured and uninsured, of mishaps (such as motor vehicle accidents, work accidents, and fires); includes such factors as property damage, funeral expenses, wage loss, insurance administration costs, and medical, hospital and legal costs.
Effective Date: The date on which the insurance under a policy begins.
Elimination Period: A period of time between the period of disability and the start of disability income insurance benefits, during which no benefits are payable. (See Waiting Period.)
Elimination Period: A specified number of days at the beginning of each period of disability during which no disability income benefits are paid. The elimination period may be as short as a few days or as long as one year or more.
Embezzlement: Fraudulent use or taking of another's property or money which has been entrusted to one's care.
Employee Dishonesty Coverage: Commercial crime insurance form drafted by the Insurance Services Office that covers the loss of money, securities, and other covered property because of any dishonest act of a covered employee or employees.
Endorsements: An additional piece of paper, not a part of the original contract, which cites certain terms and which, when attached to the original contract, becomes a legal part of that contract.
Endorsement: An amendment of the policy usually by means of a rubber stamp or rider.
Equities: Investments in the form of ownership of property, usually common stocks, as distinguished from fixed income bearing securities, such as bonds or mortgages.
Errors and Omissions Insurance: Liability insurance policy that provides protection against loss incurred by a client because of some negligent act, error, or omission by the insured.
Estate: The assets and liabilities of a person left at death.
Estoppels: Legal doctrine that prevents a person from denying the truth of a previous representation of fact, especially when such representation has been relied on by the one to whom the statement was made.
Excess and Surplus Insurance: (1) Insurance to cover losses above a certain amount, with losses below that amount usually covered by a regular policy. (2) Insurance to cover an unusual or one-time risk, e.g., damage to a musician's hands or the multiple perils of a convention, for which coverage is unavailable in the normal market. (See also "Umbrella liability" and "surplus lines.")
Exclusions: Specific conditions or circumstances listed in the policy for which the policy will not provide benefit payments.
Exclusive Agent: An agent who is employed by one and only one insurance company and who solicits business exclusively for that company.
Exclusive Remedy Doctrine: Doctrine in workers compensation insurance which states that workers compensation benefits should be the exclusive or sole source of recovery for workers who have a job related accident or disease; doctrine has been eroded by legal decisions.
Exclusion or Exception: Specified conditions or circumstances, listed in the policy, for which the policy will not provide benefits.
Expense Ratio: The ratio of a company's operating expenses to premiums.
Experience: A term used to describe the relationship, usually expressed as a percent or ratio, of premium to claims for a plan, coverage, or benefits for a stated time period.
Experience Rating: The process of determining the premium rate for a group risk, wholly or partially on the basis of that group's experience.
Exposure Unit: Unit of measurement used in insurance pricing.
Extortion: Surrender of property away from the premises as a result of a threat to do bodily harm to the named insured, relative, or invitee who is being held captive.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Facility: A pooling mechanism for insureds not able to obtain insurance in the voluntary market. Insurers write and issue policies but cede premium and losses on those policies to a central pool in which all insurers share.
Factory Mutual: mutual insurance Company insuring only properties that meet high underwriting standards. Emphasizes loss prevention.
Facultative Reinsurance: A type of reinsurance in which the reinsurer can accept or reject any risk presented by an insurance company seeking reinsurance.
Fiduciary: A person who holds something in trust for another.
Fire: A combustion accompanied by a flame or glow, which escapes its normal confines to cause damage.
Fire Insurance: Coverage for losses caused by fire and lightning, plus resultant damage caused by smoke and water.
Fire Legal Liability: Liability of a firm or person for fire damage caused by negligence of and damage to property of others. First party claim: a demand made by a policyholder reporting an insured event directly to his company.
Floaters: Insurance policies that cover property that can be moved from one location to another for both transportation perils and perils affecting property at a fixed location.
Flood Insurance: Coverage against loss resulting from the flood peril, widely available at low cost under a program developed by the private industry and the federal government.
Foreign Insurer: An insurer is a foreign company in any state other than the one in which it is incorporated.
Fortuitous Loss: Unforeseen and unexpected loss that occurs as a result of chance.
Franchise Deductible: Deductible commonly found in marine insurance contracts in which the insurer has no liability if the loss is under a certain amount, but once this amount is exceeded, the entire loss is paid in full.
Franchise Insurance: A form of insurance in which individual polices is issued to the employees of a common employer or the members of an association under an arrangement by which the employer or association agrees to collect the premiums and remit them to the insurer.
Franchise Insurance: Insurance under individual contracts issued to the employees of a common employer or the members of an association under an arrangement by which the employer or association agrees to collect the premiums and remit them to the insurer. The insurer usually agrees to waive its right to discontinue or modify any individual policy, unless it’s simultaneously discontinues or modifies all other policies in the same group.
Fronting Company: A domestic insurance company that provides claims or administrative services to a captive.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
General Average: In ocean marine insurance, a loss incurred for the common good that is shared by all parties to the venture.
General Damages: Damages awarded to an injured person for intangible loss which cannot be measured directly by dollars. Popularly known as "pain and suffering." General damages are distinguished from special damages which are awarded for actual economic loss, such as medical costs, loss of income, etc.
General Liability Insurance: Coverage that pertains, for the most part, to claims arising out of the insured's liability for injuries or damage caused by ownership of property, manufacturing operations, contracting operations, sale or distribution of products, and the operation of machinery, as well as professional services.
Glass Insurance: Protection for loss of or damage to glass and its appurtenances.
Grace Period: A specified period after a premium payment is due, in which the policyholder may make such payment, and during which the protection of the policy continues.
Graded Commission Scale: A commission scale providing for payment of a high first year commission and lower renewal commissions.
Gross estate: All of the assets and liabilities owned at death.
Gross Negligence: the intentional failure to perform a manifest duty in reckless disregard of the consequences as affecting the life or property of another.
Gross Premium: The premium paid by the policyholder.
Gross Rate: The sum of the pure premium and a loading element.
Group Contract: A contract of insurance made with an employer or other entity that covers a group of persons identified as individuals by reference to their relationship to the entity.
Group Insurance: Insurance written on a number of people under a single master policy, issued to their employer or to an association with which they are affiliated.
Guaranteed Renewable Contract: A contract that the insured person or entity has the right to continue in force by the timely payment of premiums for a substantial period of time, during which period the insurer has no right to make unilaterally any change in any provision of the contract, while the contract is in force, other than a change in the premium rate for classes of policyholders.
Guaranty Fund: A fund, derived from assessments against solvent insurance companies, to absorb losses of claimants against insolvent insurance companies.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Hard Market: That part of the insurance sales cycle in which competitive pricing is at a minimum as companies charge the premiums necessary to meet their underwriting losses in order to avoid insolvency and boost capacity; usually associated with a sharp decline in capacity (see "Soft market").
Hazard: Condition that creates or increases the chance of loss.
Hold Harmless Clause: Clause written into a contract by which one party agrees to release another party from all legal liability, such as a retailer who agrees to release the manufacturer from legal liability if the product injures someone.
Homeowners Policy: A package of insurance providing home owners with a broad range of property and liability coverage’s.
Hull Insurance: (1) Class of ocean marine insurance that covers physical damage to the ship or vessel insured. Typically written on an "all-risks" basis. (2) Physical damage insurance on aircraft- similar to collision insurance in an automobile policy.
Hurricane: A tropical storm marked by extremely low barometric pressure and circular winds with a velocity of 75 miles an hour or more.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Imputed Negligence: Case in which responsibility for damage can be transferred from the negligent party to another person, such as an employer.
Incurred Claims: Incurred claims equal the claims paid during the policy year plus the claim reserves as of the end of the policy year, minus the corresponding reserves as of the beginning of the policy year. The difference between the year end and beginning of the year claim reserves is called the increase in reserves and may be added directly to the paid claims to produce the incurred claims.
Incurred-but-not-reported (IBNR) reserves: liability account on an insurer's balance sheet reflecting claims that are expected based upon statistical projections but which have not yet been reported to the insurer.
Indemnification: Compensation to the victim of a loss, in whole or in part, by payment, repair, or replacement.
Indemnity: Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss.
Independent Adjustor: Claims adjustor who offers his or her services to insurance companies and is compensated by a fee.
Independent Agent: an independent business person who usually represents two or more insurance companies in a sales and service capacity and who is paid on a commission basis.
Indirect Loss: See Consequential Loss.
Individual Insurance: Policies which provide protection to the policyholder and/or his/her family. Sometimes called Personal Insurance as distinct from group and blanket insurance.
Inheritance tax: A tax on the right of an heir to receive property at the death of another.
Inland Marine Insurance: A broad form of insurance, generally covering articles in transit as well as bridges, tunnels and other means of transportation and communication. Besides goods in transit (generally excepting trans-ocean), it includes numerous "floater" policies, such as those covering personal effects, personal property, jewelry, furs, fine arts, and other items.
Inland Marine Insurance: A broad type of insurance, generally covering articles that may be transported from one place to another as well as bridges, tunnels and other instrumentality's of transportation. It includes goods in transit (generally excepting trans-ocean) as well as numerous "floater" polices such as personal effects, personal property, jewelry, furs, fine art and others.
Inspection Report: A report (usually written) of an investigation of an applicant, conducted by an independent agency that specializes in insurance investigations. The report covers such matters as occupation, financial status, health history, and moral problems.
Insolvent: Having insufficient financial resources (assets) to meet financial obligations (liabilities).
Insurability: Acceptability to the company of an applicant for insurance.
Insurable Risk: The conditions that make a risk insurable are (a) the peril insured against must produce a definite loss not under the control of the insured, (b) there must be a large number of homogeneous exposures subject to the same perils, (c) the loss must be calculable and the cost of insuring it must be economically feasible, (d) the peril must be unlikely to affect all insured’s simultaneously, and (e) the loss produced by a risk must be definite and have a potential to be financially serious.
Insurance: A system under which individuals, businesses, and other organizations or entities, in exchange for payment of a sum of money (a premium), are guaranteed compensation for losses resulting from certain perils under specified conditions.
Insurance: Protection by written contract against the financial hazards (in whole or in part) of the happenings of specified fortuitous events.
Insurance Company: An organization chartered to operate as an insurer.
Insurance Company: Any corporation primarily engaged in the business of furnishing insurance protection to the public.
Insurance Exchange: Term used to describe a facility that exists in a few states to provide a market for reinsurance and for the insurance of large and unusual domestic and foreign risks that are difficult to insure in the normal markets. Examples are the New York Insurance Exchange, the Insurance Exchange of the Americas, and the Illinois Insurance Exchange.
Insurance Examiner: The representative of a state insurance department assigned to participate in the official audit and examination of the affairs of an insurance company.
Insurance Ombudsman Services (IOS): Review complaints and disputes on insured’s behalf
Insured: A person or organization covered by an insurance policy, including the "named insured" and any other parties for whom protection is provided under the policy terms.
Insurer: The party to the insurance contract who promises to pay losses or benefits. Also, any corporation engaged primarily in the business of furnishing insurance to the public.
Insuring Agreement: That part of an insurance contract that states the promises of the insurer.
Insuring Clause: The clause which sets forth the type of loss being covered by the policy and the parties to the insurance contract.
Inter vivos Trust: A trust created while the creator of the trust is living. Also known as a living trust.
Interest: Money paid for the use of money.
Intestate: Without a will.
Investment Income: The income generated by a company's portfolio of investments (such as in bonds, stocks, or other financial ventures).
Investment Income: The portion of a company's income which is derived from its investments, including interest and dividends on stocks and bonds.
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Joint-and-Several Liability: A legal principle that permits the injured party in a tort action to recover the entire amount of compensation due for injuries from any tort feasor who is able to pay, regardless of the degree of that party's negligence.
Joint Tenants: A form of joint property ownership with right of survivorship, i.e., in which the survivors automatically own the share of a deceased co-owner.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Key-Person Insurance: Insurance designed to protect a business firm against the loss of income resulting from the death or disability of a key employee.
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Lapse: The termination or discontinuance of an insurance policy due to non-payment of a premium.
Lapsed Policy: A policy terminated for non-payment of premiums. The term is sometimes limited to a termination occurring before the policy has a cash or other surrender value.
Larceny-theft: The unlawful taking, carrying, leading or riding away of another person's property.
Law of Large Numbers: Concept that the greater the number of exposures, the more closely will actual results approach the probable results expected from an infinite number of exposures.
Legal Reserve: The minimum reserve which a company must keep to meet future claims and obligations as they are calculated under the state insurance code.
Liability: Any legally enforceable obligation.
Liability Insurance: Insurance covering the policyholder's legal liability resulting from injuries to other persons or damage to their property.
Liability Insurance: Provides protection for the insured against loss arising out of legal liability to third parties.
Liability Limits: The stipulated sum or sums beyond which an insurance company is not liable to protect the insured.
Lifetime Disability Benefit: A benefit to help replace income lost by an insured person as long as he/she is totally disabled, even for a lifetime.
Lifetime Disability Benefit: Disability income payable for the life of the insured as long as he is totally disabled.
Liquidation: Dissolving a company by selling its assets for cash.
Living Trust: A trust created while the creator of the trust is living. Also known as an inter vivos trust.
Loading: The amount that must be added to the pure premium for expenses, profit, and a margin for contingencies.
Long-Term Disability Income Insurance: Insurance issued to an employer (group) or individual to provide a reasonable replacement of a portion of an employee's earned income lost through serious and prolonged illness or injury during the normal work career. (See also Integration.)
Loss: The happening of the event for which insurance pays.
Loss Avoidance: A risk management technique whereby a situation or activity that may result in a loss for a firm is avoided or abandoned.
Loss control: any conscious action (or decision not to act) intended to reduce the frequency, severity, or unpredictability of accidental losses.
Loss Expense – Allocated: Handling expenses, such as legal or independent adjuster fees, paid by an insurance company in settling a claim which can be definitely charged to that particular claim.
Loss Expense - Unallocated: Salaries and other expenses incurred in connection with the operation of a claim department of an insurance carrier which cannot be charged to individual claims.
Loss Prevention: Any measure which reduces the probability or frequency of a particular loss but does not eliminate completely all possibility of that loss.
Loss Ratio: The percent which losses bear to premiums for a given period.
Loss Ratio: The ratio of claims to premiums. It may be calculated in several different ways, using paid premiums or earned premiums, and using paid claims with or without changes in claim reserves and with or without changes in active life reserves.
Loss Reserve: The amount set up as the estimated cost of a claim. (See IBNR Reserve)
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Malingering: The practice of feigning illness or inability to work in order to collect insurance benefits.
Malpractice: Improper care or treatment by a physician, hospital, or other provider of health care.
Malpractice Insurance: Coverage for a professional practitioner, such as a doctor or a lawyer, against liability claims resulting from alleged malpractice in the performance of professional services.
Manual Rate: The premium rate developed for group insurance coverage from the company's standard rate tables normally referred to as its rate manual or underwriting manual.
Marine Insurance: A form of insurance primarily concerned with means of transportation and communication, and with goods in transit (see "Inland Marine Insurance" and "Ocean Marine Insurance").
Market Price (or Market Value): The price at which a security can be bought or sold at any particular time.
Master Policy: A policy that is issued to an employer or trustee, establishing a group insurance plan for designated members of an eligible group.
Master Policy (or Master Contract): The policy issued to a group policyholder setting forth the provisions of the group insurance plan. The individuals insure under the policy are then issued certificates of insurance.
Material Damage: Insurance against damage to a vehicle itself. It includes automobile comprehensive, collision, fire and theft.
Material damage and physical damage are terms that often are used inter- changeably.
Medical Examination: The examination given by a qualified physician to determine to the insurability of an applicant. A medical examination may also be used to determine whether an insured claiming disability is actually disabled.
Medical malpractice: Improper care or treatment by a physician, hospital, or other provider of health care.
Medical Payments Insurance: A coverage, available in various liability insurance policies, in which their insurer agrees to reimburse the insured and others, without regard for the insured's liability, for medical or funeral expenses incurred as the result of bodily injury or death by accident under specified conditions.
Minimum Group: The least number of employees permitted under a state law to affect a group for insurance purposes; the purpose is to maintain some sort of proper division between individual policy insurance and the group forms.
Misrepresentation: A false, incorrect, improper, or incomplete statement of a material fact, made in the application for a policy.
Moral Hazard: Hazard arising from any nonphysical, personal characteristic of a risk that increases the possibility of loss or may intensify the severity of loss for instance, bad habits, low integrity, poor financial standing.
Morbidity: The incidence and severity of sicknesses and accidents in a well-defined class or classes or persons.
Morbidity Tables: Actuarial statistics showing the frequency and duration of disability.
Mortality Table: A table showing how many members of a group, starting at a certain age, will be alive at each succeeding age. It is used to calculate the probability of dying in, or surviving through, any period, and for the valuation of an annuity. To be appropriate for a specific group, it should be based on the experience of individuals having common characteristics, such as sex or occupation.
Mortality Table: A statistical table showing the death rate at each age usually expressed as so many per thousand.
Multi-Peril Policy: A package policy which provides protection against a number of separate perils. Multi-peril policies are not necessarily multiple line policies, since the combined perils may be all within one insurance line.
Mutual Insurance Company: An insurance company in which the ownership and control is vested in the policyholders and a portion of surplus earnings may return to policyholders in the form of dividends. No capital stock exists.
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Named Perils: Coverage in a property policy that provides protection against loss from only the perils specifically listed in the policy rather than protection from physical loss. Examples of named perils are fire, windstorm, theft, smoke, etc.
Negligence: Failure to use the care that a reasonable and prudent person would have used under the same or similar circumstances.
Net Premium: The portion of the premium rate which is designed to cover benefits of the policy, but not expenses, contingencies, or profit. The term is also used to describe the portion of the premium remitted to the home office by an agent after deduction of the agent's commission.
Net written premiums: premium income retained by insurance companies, directly or through reinsurance, after payments made for reinsurance.
Noncancellable: A contract that the insured has the right to continue in force by the timely payments of premiums set forth in the contract (1) until at least age 50 or (2) in the case of a policy issued after age 44 for at least five years from its date of issue, during which period the insurer has no right to make unilaterally any change in any provision of the contract while the contract is in force.
Noncancellable Guaranteed Renewable Policy: An individual policy which the insured person has the right to continue to force until a specified age, such as to age 65, by the timely payment of premiums. During this period, the insurer has no right to unilaterally make any changes in any provision of the policy while it is in force.
Noncontributory: A term applied to employee benefit plans under which the employer bears the full cost of the benefits for the employees. One hundred percent of the eligible employees must be insured.
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Occupational Hazards: Occupations which expose the insured to greater than normal physical danger by the very nature of the work in which the insured is engaged, and the varying periods of absence from the occupation, due to the disability, that can be expected.
Occurrence: An accident, including continuous or repeated exposure to substantially the same general, harmful conditions, that results in bodily injury or property damage during the period of an insurance policy.
Occurrence policy: A liability insurance policy that covers claims arising out of occurrences that take place during the policy period, regardless of when the claim is filed.
Ocean Marine Insurance: Insurance for sea-going vessels, including liabilities connected with them, and their cargoes.
Operating Ratio: The sum of expenses and losses expressed as a percent of earned premium.
Overriding Commission (Overwrite): A commission paid to general agents or agency managers in addition to the commission paid the soliciting agent or broker.
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Package Policy: A combination of two or more individual polices or coverages into a single policy. for example, is a package combining property, liability and theft coverages.
Partial Disability: The result of an illness or injury which prevents an insured from performing one or more of the functions of his/her regular job.
Partial Disability: A benefit sometimes found in disability income policies providing for the payment of reduced monthly income in the event the insured cannot work full time and/or is prevented from performing one or more important daily duties pertaining to his occupation.
Peril: The cause of a possible loss, such as fire, windstorm, theft, explosion, or riot.
Persistency: A term used to refer to the length of time insurance remains continuously in force.
Personal Lines: Those types of insurance, such as auto or home insurance, for individuals or families rather than for businesses or organizations.
Personal representative: A person appointed through the will of a deceased or by a court to settle the estate of one who dies.
Physical Damage: Damage to or loss of the auto resulting from collision, fire, theft or other perils.
Policy: The printed legal document stating the terms of the insurance contract that is issued to the policyholder by the company.
Policy: A contract of insurance.
Policy: The legal document issued by the company to the policyholder, which outlines the conditions and terms of the insurance; also called the policy contract or the contract.
Policy Reserves: The measure of the funds that a life insurance company holds specifically for fulfillment of its policy obligations. Reserves are required by law to be so calculated that, together with future premium payments and anticipated interest earnings, they will enable the company to pay all future claims.
Policy Term: That period for which an insurance policy provides coverage.
Policyholder: 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.
Policyholder: A person who pays a premium to an insurance company in exchange for the insurance protection provided by a policy of insurance.
Pool: An organization of insurers or reinsurers through which particular types of risk are underwritten and premiums, losses and expenses are shared in agreed upon amounts.
Premium: The sum paid by a policyholder to keep an insurance policy in force.
Premium finance: allows the insured to pay part of the premium when coverage takes effect and pay the rest during the policy period.
Premium Loan: A policy loan made for the purpose of paying premiums.
Premium Tax: A tax, imposed by each state, on the premium income of insurers doing business in the state.
Primary Beneficiary: See Beneficiary.
Primary Insurance: Insurance that pays compensation for a loss ahead of any other insurance coverages the policyholder may have.
Probate: The court supervised process of validating or establishing a distribution for assets of a deceased including the payment of outstanding obligations.
Probate estate: That portion of the assets and liabilities whose distribution is supervised by the courts in the probate process.
Probationary Period: A period from the policy date to a specified time, usually 15 to 30 days, during which no sickness coverage is effective. It is designed to eliminate a sickness actually contracted before the policy went into effect.
Product Liability: legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage resulting from the use of its product.
Product Liability Insurance: Protection against financial loss arising out of the legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage resulting from the use of a covered product.
Proof of Loss: Documentation presented to the insurance company by the insured in support of a claim so that the insurer can determine its liability under the policy.
Proof of Loss: Documentary evidence required by an insurer to prove a valid claim exists. It usually consists of a claim form completed by the insured and the insured's attending physician. For medical expense insurance itemized bills must also be included.
Property Damage Coverage: An agreement by an insurance carrier to protect an insured against legal liability for damage by an insured automobile to the property of another.
Property Insurance: Insurance providing financial protection against the loss of, or damage to, real and personal property caused by such perils as fire, theft, windstorm, hail, explosion, riot, aircraft, motor vehicles, vandalism, malicious mischief, riot and civil commotion, and smoke.
Property Insurance: Provides financial protection against loss or damage to the insured's property caused by such perils as fire, windstorm, hail, etc.
Provision: A part (clause, sentence, paragraph, etc.) of an insurance contract that describes or explains a feature, benefit, condition, requirement, etc. of the insurance protection afforded by the contract.
Proximate Cause: The dominating cause of loss or damage; an unbroken chain of events between the occurrence and damage.
Punitive Damages: a court awarded amount that exceeds the economic losses and general damages of a defendant and is intended solely to punish the plaintiff.
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Qualification Period: The period during which the insured must be totally disabled before becoming eligible for residual disability benefits.
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Rate: The pricing factor upon which the insurance buyer's premium is based.
Rated Policy: Sometimes called an "extra risk" policy, an insurance policy issued at a higher-than-standard premium rate to cover the extra risk where, for example, an insured has impaired health or a hazardous occupation.
Ratemaking: The statistical process by which insurers determine risks and pricing for the basic classes of insurance.
Rating Territory: A geographical grouping in which like hazards tend to equalize and permit the establishment of an equitable rate for the territory.
Regulation: Supervision of business practices by a governmental entity.
Rehabilitation: (1) Restoration of a totally disabled person to a meaningful occupation, (2) a provision in some long- term disability policies that provides for continuation of benefits or other financial assistance while a totally disabled insured is retraining or attempting to resume productive employment.
Reimbursement: The payment of the expenses actually incurred as a result of an accident or sickness, but not to exceed any amount specified in the policy.
Reinstatement: The resumption of coverage under a policy which has lapsed.
Reinsurance: Assumption by one insurance company of all or part of a risk undertaken by another insurance company.
Reinsurance: The acceptance by one or more insurers, called reinsurer, of a portion of the risk underwritten by another insurer who has contracted for the entire coverage.
Reinsurance: The purchase of insurance by an insurance company from another insurance company (reinsurer) to provide it protection against large losses on cases it has already insured.
Reinsurance Facility: An alternative mechanism to service those insured’s that cannot obtain insurance in the voluntary market. Premiums and losses for the business that is ceded to the facility are pooled and all insurers share according to their proportion of the voluntary market.
Renewal: Continuance of coverage under a policy beyond its original term by the insurer's acceptance of the premium for a new policy term.
Replacement: The substitution of health insurance coverage from one policy contract to another.
Replacement Cost: The cost to repair or replace property at construction costs prevailing at time of loss; the cost to repair or rebuild property without considering depreciation. (See Actual Cash Value)
Representation: Statements made by an applicant in the application, which he represents as being substantially true to the best of his knowledge and belief, but which are not warranted as exact in every detail.
Rescission: Termination of an insurance contract by the insurer on the grounds of material misstatement on the application for insurance. The action of rescission must take place within the contestable period or Time Limit on Certain Defenses but takes effect as of the date of issue of the policy, thus voiding the contract from its inception.
Reserve: ( 1) an amount representing liabilities kept by an insurer to provide for future commitments under policies outstanding. (2) An amount allocated for a special purpose. Note that a reserve is usually a liability and not an extra fund.
Retention: ( 1) the net amount of risk retained by an insurance company for its own account or that of specified others, and not reinsured. (2) The amount of the risk kept for oneself, as opposed to the amount it insures (or reinsures) with another.
Retrocession: The process by which a reinsurer obtains reinsurance from another company.
Retrospective Date: The first date for which claims will be paid under a claims-made policy of liability insurance.
Retrospective Rating: Rating procedure which allows adjustment of an insured's final rate on the basis of the insured's own loss experience.
Revocable Trust: A trust that can be terminated or revoked by its creator.
Risk: The chance of loss. Also used to refer to the insured or to property covered by a policy. (2) Any chance of loss. (3) A term used to refer to a person or the peril insured.
Risk Classification: The process by which a company decides how its premium rates for life insurance should differ according to the risk characteristics of individuals insured (e.g., age, occupation, sex, state of health) and then applies the resulting rules to individual applications. (See: Underwriting)
Risk control: any conscious action (or decision not to act) intended to reduce the frequency, severity, or unpredictability of accidental losses.
Risk Retention Group: An alternative form of insurance in which members of a similar profession or business band together to self insure their risks.
Robbery: The taking of property from a person by force or threat of violence.
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Salvage: Recovery made by an insurance company by the sale of property which has been taken over from the insured as a part of loss settlement.
Self-Insurance: (1) A program for providing group insurance with benefits financed entirely through the internal means of the policyholder, in place of purchasing coverage from commercial carriers. (2) A form of risk financing through which a firm assumes all or a part of its own losses.
Settlement Options: The several ways, other than immediate payment in cash, which a policyholder or beneficiary may choose to have policy benefits paid.
Short-Term Disability Income Insurance: The provision to pay benefits to a covered disabled person as long as he/she remains disabled up to a specified period not exceeding two years.
Small Business Insurance: insurance cover for small to medium sized enterprise (SMEs)
Soft Market: That part of the insurance sales cycle in which competition is at a maximum as insurance companies use their excess capacity to sell more policies at lower prices (see Hard market).
Special Damages: Compensation awarded for actual economic losses, such as medical expenses and lost wages. (See general damages)
Special Risk Insurance: Coverage for risks or hazards of a special or unusual nature.
Standard Markets: insurance companies for which the vast majority of people qualify
Standard Provision: Those contract provisions generally required by state statutes until superseded by the uniform policy provision. (2)A set of policy provisions prescribed by former laws setting forth certain rights and obligations of both the insured and the company under an individual policy of health insurance. These were originally introduced in 1912 and have now been replaced by the Uniform Provisions.
Stock Exchange: An organization that provides a facility for buyers and sellers of listed securities to come together to make grades in those securities.
Stockholder (or shareholder): A person who owns shares of stock in a corporation.
Strict Liability: Liability for damages even though faults or negligence cannot be proven.
Subrogation: Process by which one insurance company seeks reimbursement from another company or person for a claim it has already paid.
Substandard (Impaired Risk): A risk that cannot meet the normal health requirements of a standard health insurance policy. Protection is provided in consideration of a waiver, a special policy form, or a higher premium charge. Substandard risks may include those persons who engage in certain sports and persons who are rated because of poor habits or morals.
Substandard Insurance: Insurance issued with an extra premium or special restriction to those persons who do not qualify for insurance at standard rates.
Substandard Risk: An individual, who, because of health history or physical limitations, does not measure up to the qualification of a standard risk.
Surety Bond: An agreement providing for monetary compensation in the event of a failure to perform specified acts within a stated period. The surety company, for example, becomes responsible for fulfillment of a contract if the contractor defaults.
Surplus: ( 1) the net worth of a company, i.e. the amount by which assets exceed liabilities. Adequate net worth is necessary for the protection of policyholders against unforeseen losses. (2)The amount by which the value of an insurer's assets exceeds its liabilities.
Surplus Lines: (1) A risk or a part of a risk for which there is no normal insurance market available. (2) Insurance written by non-admitted insurance companies.
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Tax Basis: The cost from which your profits or losses are calculated for income tax purposes.
Taxable estate: The value upon which estate taxes are calculated by the federal government.
Tenants in common: A form of joint property ownership in which the owners may have unequal shares and which does not involve a right of survivorship.
Testamentary trust: A trust created through the will of its creator.
Third Party: The claimant under a liability policy. So called because the person making the claim is not one of the two parties, insured and insurer, to the insurance contract.
Third party claim: a demand made by a person against a policyholder of another company and any payment that will be made by that company.
Time Limit: The period of time during which a notice of claim or proof of loss must be filed.
Tornado: A whirling wind over land, accompanied by a funnel-shaped cloud. It is usually very violent and destructive in a narrow path, often for many miles.
Tort: A civil wrong, other than a breach of contract, for which a court of law will afford legal relief, i.e. harming another by an act of negligence in driving an auto.
Total Disability: An illness or injury which prevents an insured person from continuously performing every duty pertaining to his/her occupation or engaging in any other type of work. (This wording varies among insurance companies.)
Travel Accident Policy: A limited contract covering only accidents while an insured person is travelling, usually on a commercial carrier.
Treaty: An agreement between a reinsurer and a ceding insurer setting forth details of the reinsurance arrangement.
Trust: A legal instrument allowing one party to control property for the benefit of another.
Turnover Rate: The rate at which employees terminate covered service other than by death or retirement. Expected future turnover can be taken into account in translating contributions into benefits.
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Umbrella Liability: Insures losses in excess of amounts covered by other liability insurance policies; also protects the insured in many situations not covered by the usual liability polices.
Underwriter: (1) a company that receives the premiums and accepts responsibility for the fulfilment of the policy contract; (2) the company employee who decides whether or not the company should assume a particular risk; (3) the agent who sells the policy.
Underwriting: The process of selecting risks for insurance and determining in what amounts and on what terms the insurance company will accept the risk.
Underwriting Profit or Loss: The amount of money which an insurance company gains or loses as a result of its insurance operations. It excludes investment transactions and federal income taxes.
Unearned Premium: The portion of a premium that a company has collected but has yet to earn because the policy still has unexpired time to run.
Uniform Premium: A rating structure in which one premium applies to all insureds, regardless of age, sex, or occupation.
Uninsurable Risk: One not acceptable for insurance due to excessive risk.
Uninsured/Underinsured Motorist Coverage: A form of insurance that pays the policy holder and passengers in his/her car for bodily injury caused by the owner or operator of an uninsured or inadequately insured automobile.
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Waiting Period: The length of time an employee must wait from his/her date of employment or application for coverage, to the date his/her insurance is effective.
Waiver: An agreement attached to a policy which exempts from coverage certain disabilities or injuries that otherwise would be covered by the policy.
Waiver of Premium: A provision in some policies to relieve the insured of premium payments falling due during a period of continuous total disability that has lasted for a specified length of time, such as three or six months.
Will: The legal statement of a person's wishes concerning the disposal of his or her property after death.
Workers Compensation: A system established under state law that provides payments, without regard to fault, to employees injured in the course and scope of their employment.
Workers' Compensation Insurance: Insurance against liability imposed on certain employers to pay benefits and furnish care to employees injured, and to pay benefits to dependents of employees killed in the course of or arising out of their employment.Written Premiums: The entire amount of premiums due in a year for all polices issued by an insurance company.
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Disclaimer
Whilst we have made every effort to ensure that information contained in this glossary is free from error, Gardner Insurance Brokers does not warrant the accuracy, adequacy or completeness of its information. The information is provided for general information only and is not specific to any Individual Company contract and/or wording. Specific questions and terminology determination need to be sent to your insurance representative. Gardner Insurance Brokers Insurance is not responsible for the results of any action taken or not taken on the basis of any information in this glossary, nor for any error or omission in that information.