ACTUARY: A person whose principal function is to make the technical calculations required for the pricing of insurance policies.

ADDITIONAL EXTENDED COVERAGE: A second endorsement on the fire policy (fire and lightning with extended coverage) which insures the dwelling and/or contents against water damage from plumbing, etc.; boiler explosion; glass breakage; and damage by ice and snow, freezing, fall of trees, collapse, vandalism, vehicles owned by insured or tenants and landslide.

ADDITIONAL INSURED: One who is protected by an insurance policy other than the named insured. Examples: In automobile insurance, one who drives the insured’s car with his consent ordinarily is protected. In property insurance, this might be a co-owner, mortgagee, or lien holder. 

ADJUSTER: A person who investigates and settles losses for an insurance carrier or the insured.

ADVANCE PREMIUM: Most companies give the insured the right of making premium payments in advance. 

AGE CHANGE: An age change occurs on the date, halfway between birth dates, on which the life insurance age changes. Immediately after, the premium for new life insurance will be computed to the age on the next following birth date. The life insurance age is the age at nearest birthday.

AGE LIMITS: The ages below and above which the company will not accept applicants. 

AGENCY: An organization which solicits insurance for one or more carriers and may perform other functions such as issuing policies and adjusting losses. 

AGENT:

1. An individual who solicits insurance for one or more carriers and may perform other functions, such as issuing policies.
2. Agents of a direct writer are sales employees of one company only.

AGE OF CAR (age group): A term used to classify cars according to age for rating purposes. 

ANNUAL POLICY: Insurance policy written for a term of one year.

ANNUITANT: The person during whose life an annuity is payable, usually the person to receive the annuity. 

APPLICATION: A request to a company for a policy. The application is a conditional offer to buy. If the medical examination and the inspection are in order, the company usually will accept the offer. It may be the policy named in the application or, if the applicant is substandard, it may be on a higher premium or other policy form.

APPRAISAL: Determination of the value of property or the extent of damage by impartial experts. Many property insurance policies provide for "appraisals" where the company and the insured cannot agree on the amount or the extent of a loss. 

APPROVED: In fire insurance, usually means that the construction, equipment, preventive and protective devices meet established requirements for insurance. In many cases, "approved" construction results in reduced insurance premiums.

AREA: A territorial subdivision, usually called "rating territory," within a given state used for rating purposes. 

ARSON: The willful and malicious burning of property, sometimes with the intent of defrauding an insurance company.

ASSETS: All of the property owned by a carrier.  

ASSIGNEE: One to whom the legal ownership of a policy or a limited interest therein is transferred.

ASSIGNMENT: The partial or complete transfer by a person of his right or interest in a policy to another person. The ability of a person to so assign the policy may be limited by law or individual circumstances. An assignment must be written, signed by the owner-policyholder whose interest is being transferred, properly attested, and the original or a certified copy must be filed with the insuring company. A valid assignment so filed is binding on the company. 

ASSURANCE-INSURANCE: These terms are today generally accepted as synonymous, although not originally so. The term "assurance" is used more commonly in Canada and Great Britain than in the United States.

B

BENEFICIARY (LIFE): The person named in the policy, to whom the insurance money is paid at the death of the insured. 

BODILY INJURY COVERAGE: This coverage, often called "public liability insurance," protects an insured against legal liability for injury to the person of another arising from an accident.

BROAD FORM: A policy affording more liberal benefits, or in fire insurance, an endorsement that grants broader or additional coverages to a basic policy; usually added to a standard fire and extended coverage policy. For example, on a dwelling policy, it usually adds the following: vandalism, glass breakage, falling trees, weight of ice, snow or sleet, collapse. If added to a commercial fire policy, it might include vandalism, falling objects, weight of ice, snow or sleet, and collapse. 

BROKER: A representative of the insured in placing insurance with companies. He is paid a commission by the company or its agent. Often a broker also is a licensed "agent" for one or more companies.

BURGLARY: Breaking and entering into the premises of another for the purpose of stealing with visible signs of forced entry. 

BUSINESS INSURANCE (LIFE): Insurance concerned primarily with the protection of an insured’s business or vocation. Business insurance protects a business against the loss of its valuable lives or key men; stabilizes the business through the establishment of better credit relations; and provides a practical plan for the retirement of business interest in the event of the death of one of the owners. 

C

CANCELLABLE POLICY: A policy which may be cancelled by the company at any time by giving advance notice to the insured and refunding any unearned premium. 

CANCELLATION: The discontinuance of an insurance policy before its normal expiration date.

CAPITAL SUM: A term in accident insurance to describe the amount payable for death or for loss of hands, feet or sight. Also called principal sum. 

CARRIER: The insurance company or the one who agrees to pay the losses. The carrier may be organized as a company, either stock, mutual, or reciprocal, or as an association of underwriters such as Lloyds.

CASH SURRENDER VALUE: The amount available in cash upon surrender of a life insurance policy before it matures as a death claim or otherwise. 

CHARTERED LIFE UNDERWRITER (C.L.U.): A designation conferred in recognition of the attainment of certain standards of education and proficiency in the art and science of life insurance underwriting. 

CHARTERED PROPERTY AND CASUALTY UNDERWRITER (C.P.C.U.): A designation conferred in recognition of the attainment of certain standards of education and proficiency in the art and science of fire and casualty insurance underwriting.

CLAIMANT: One who makes a claim.

CLAIM FREQUENCY: The number of claims of a given coverage reported to an insurance company divided by the number of policies in force for car years in force having the given coverage. It is usually expressed as the number of claim coverages reported per one hundred of such coverages in force. Example: For bodily injury (BI), the frequency of 2.50 means that bodily injury accidents were reported at the rate of 2 ½ per year for each one hundred BI policies in force. 

CLAIM SEVERITY: The average cost per claim considering all claims under a certain coverage for a specified period.

CLAIMS-MADE COVERAGE: Claims-made insurance is a type of liability protection that covers current legal obligations result for acts of the insured. It provides coverage to the insured for claims reported during the term of the policy. 

CO-INSURANCE: A provision under which an insured, in consideration of a reduced premium rate, promises to maintain a certain percentage of insurance to the value of the property. The co-insurance clause attached to the policies specifies the percentage, and has no bearing on loss payment if the insured keeps his promise. If he carries less than the stipulated percentage of insurance to value, loss payment is limited to the same ratio which his insurance bears to the amount required. For example, if the co-insurance clause says he must carry 80% to value but he only carries 60% to value, the company will only pay 60/80 of any loss, up to the policy limit.

COMMERCIAL FIRE: This coverage insures all property not occupied as a residence, excluding farming and manufacturing, against loss by fire. 

COMMISSIONER OF INSURANCE (INSURANCE COMMISSIONER): Title of the head of the state insurance department who is responsible for the enforcement of insurance laws.

COMMON DISASTER CLAUSE: In life insurance, this clause is designed to alleviate the hardship that can result if the insured and primary beneficiary die at the same time or within a short period of time of each other. Usually the clause provides that if the primary beneficiary dies either before proof of the insured’s death is submitted to the company, or within a stated period (usually 14 or 30 days after the insured’s death), the proceeds will be paid to the contingent beneficiary. 

COMPULSORY INSURANCE: The purpose of compulsory insurance laws is to require all residents to buy liability insurance before auto license plates are issued. The law requires proof of financial responsibility (insurance) when license plates are issued.

CONCEALMENT: The withholding of material facts from an insurer, either in applying for a policy or making a claim.

CONTENTS: A term used to refer to the personal property contained in a building. It may be household furniture, personal effects, or other types of personal property, movable in nature and not firmly affixed to the real property. 

CONTINGENT BENEFICIARY: A beneficiary whose right to receive depends upon the occurrence of a certain contingency – for example, the right to receive certain benefits only in the event that another named beneficiary dies prior to the time of payment.

CONTRACT: The "Law of Contracts" specifies four requirements for the formation of a single contract: (1) parties of legal capacity; (2) expression of mutual assent of the parties to a promise or set of promises; (3) a valid consideration; and (4) the absence of any statute or other rule declaring such agreement void. A life insurance policy qualifies as a contract under the above definition. 

CONTRACT OF SALE CLAUSE: The clause attached to a fire policy when a dwelling has been purchased on a "contract" basis. Title to the property in a "contract sale" remains in the name of the seller; the buyer gets use and possession of the property.

CONTRIBUTORY NEGLIGENCE: Carelessness of the injured person that helped to cause the accident in which he was injured. 

COVERAGES: Automobile –

Bodily Injury Liability: An agreement by a company to protect an insured against loss from legal liability for injury to another person arising from an automobile accident. This is usually referred to as "third party coverage."

Collision or Upset (usually called collision – first party coverage: A form of insurance protecting the insured against loss resulting from any damage to his car caused by collision with any object, or upset, whether it was the insured’s fault or not (other than his willful act). This does not cover other people’s property.

Comprehensive: An agreement to protect an insured against loss resulting from damage to his automobile, exclusive of loss by collision or upset. Broad coverage is provided and includes protection from such hazards as fire, theft, glass damage, wind hail and malicious mischief (first party coverage).

Medical Payments: An insurance coverage under which an insurance company agrees to pay medical, hospital, and the expense of funeral services resulting from an automobile accident, regardless of the liability of the insured (first party coverage).

Property Damage Liability: An agreement by an insurance company to protect an insured against loss from legal liability for damage by his automobile to the property of another. The term includes damage to other automobiles, buildings, utility poles and other types of real and personal property (third party coverage).

Uninsured Motorist Coverage: Protects the insured against financial loss resulting from bodily injury carelessly inflicted by an uninsured motorist, including a hit and run driver, who is legally liable. Bodily Injury Benefit. 

COVERAGES: Fire --

Additional Living Expense: The purpose of this coverage is to pay for increased expense of living while the insured’s residence is being rebuilt or repaired after damage from an insured peril. Examples are the extra cost of housing the insured’s family in a hotel, dining in restaurants, etc.

All Physical Loss Form: This coverage protects against loss from "all risks of physical loss" for dwellings subject to certain exclusions contained in the form.

Broad Form: Can be written on dwelling and contents. Fire forms include Extended Coverage perils, plus such additional perils as falling objects, weight of ice, snow or sleet, collapse of buildings, accidental discharge, leakage or overflow of water or steam from plumbing, heating, or air conditioning systems, sudden and accidental tearing asunder, burning, bulging of appliances for heating water, freezing of plumbing, heating or air conditioning systems, and domestic appliances, glass breakage, and breakage of building glass.

Builder’s Risk Insurance: Insurance against loss resulting from damage to buildings and to materials incidental to construction, including machinery and equipment, while the buildings are under construction.

Extended Coverage: An extension of the fire policy to cover the additional perils of windstorm, hail, explosion, or riot, attending a strike, civil commotion, aircraft, vehicle and smoke.

Homeowners Policy: A policy in which Fire and extended or Broad coverage for dwelling and contents, residents’ theft insurance, additional living expense, and personal liability insurance are combined.

Rents or Rental Value: Insurance against loss of the rental value of a property; protects against loss of rents resulting from an insured peril.

Replacement Cost: Insurance under which the amount payable is the current replacement cost of the property new, rather than the depreciated value. Applies only to the building items and covers loss from all insured perils. 

CONVERTIBLE TERM: Some term life insurance policies provide that they may be converted to permanent forms of insurance without medical examination, if the conversions are made within a limited period as specified in the contracts. Usually the conversion may be made as of the original date of issue, provided the insured pays the difference in reserves, or as of the attained age of the insured at the time of conversion.

CREDIT LIFE INSURANCE: Life insurance issued by a life insurance company on the lives of borrowers, payable to the creditors, to cover payment of loans (usually small loans repayable in installments) in case of death. It is usually handled through a lending office and is written on either a group or an individual basis. 

D

DAMAGES; In a technical sense, damages refer to the money or compensation recoverable in a lawsuit by a party who has been injured in person or property or rights by the negligence of another.

DEATH CLAIM; When a policy holder dies, the person entitled to the proceeds must complete certain forms giving due proof of the death and establishing the claimant’s right to such proceeds. When filed with the company, the company is said to have received a death claim. 

DECREASING TERM LIFE INSURANCE:

Term insurance, the face value of which decreases each year over a slated period. Family income and usually mortgage cancellation are decreasing term insurance.

DEDUCTIBLE COLLISION COVERAGE: A form of collision coverage which specifies that an insurance carrier will pay the damage less a specified amount. For example: For $50 deductible collision coverage, the insurance carrier would deduct $50 from the total damage and be liable for only the amount in excess of $50.

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. (See ACTUAL CASH VALUE.) 

DIRECT LOSS; A loss where an insured peril is the proximate cause. If a windstorm blows the roof off a home, the windstorm is the insured peril causing the direct loss or damage.

DIRECT MAIL: A form of advertising using letters or other printed material designed to secure prospects for insurance. Some direct mail is used to solicit insurance. 

DIRECT WRITER: The industry term for a company which uses it own sales employees to write its policies. Sometimes refers to companies which contract with exclusive agents.

DIVIDENDS: A return to the policyholder of excess premium over losses and expenses at the end of the policy period. Dividends are authorized by the board of directors, and are payable to all participating policyholders of a specified class.

DOMESTIC CARRIER: An insurance company organized in a given state is referred to in that state as a domestic carrier.

DOUBLE INDEMNITY: An accidental death benefit providing for an additional payment equal to the face amount of the policy in case of accidental death caused solely through external and violent means, and occurring within a limited period, usually 90 days, after bodily injury. Certain causes are specifically excluded.

E

EARNER PREMIUM: The part of the total policy premium earned by the insurance company which applies to the expired portion of the policy period. 

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. Additions to life insurance contracts are accomplished through the use of riders, which are similar to endorsements.

EQUITY: The extent of someone’s interest or ownership of property. If you purchase a $15,000 home with a $5,000 payment, your equity in the property is the down payment, of $5.000. 

ESCROW FUNDS: Funds set aside with an impartial third party, for a specific purpose. Mortgage companies quite often include insurance premiums as a part of the monthly mortgage payment. Each month the mortgage company collects 1/12 of the fire insurance premium for the house. The total funds collected for fire premium are placed in an "escrow account" and cannot be used for any other purpose.

EXPENSE RATIO: The ratio of a company’s operating expenses to premiums. 

EXPIRATION DATE: The specified date and time at which the policy terminates.

EXPOSURE; This term in the insurance field may have several meanings: (1) possibility of loss; (2) a loss potential as measured by type of construction, area or values; (3) a possibility of a loss being communicated to an insurance risk from its surroundings. 

EXTENDED TERM INSURANCE: The non-forfeiture option which provides that the case surrender value of a life policy may be used as a net single premium at the attained age of the insured to purchase term insurance for the face amount of the policy, less indebtedness and for as long a period as possible, but not longer that the term of the original policy. If the cash value of an endowment policy is more than sufficient to purchase extended term insurance for the remainder of the endowment period, the excess cash value is used to buy pure endowment payable at the maturity of the policy.

F

FACE AMOUNT: The amount of the principal sum, or basic sum, insured – usually stated on the face or first page of the contract. The actual amount payable by the company may be increased by dividends, decreased by loans, or increased by supplemental term riders (e.g., Family Income). 

FAMILY AUTO INSURANCE: The automobile policy (most common in the industry) which provides protection for all members of the family.

FAMILY PLAN INSURANCE: Insurance where the head of the household has one master policy on his life (usually whole life) and term coverage for wife and children in lesser amounts. New-born children are also included, usually at no additional premium. The policies have automatic programming devices that are in the original contract: i.e., the children’s coverage terminates at the father’s age 65, etc. There is usually a savings over the same coverage provided by separate policies, since one master policy reduces administrative costs. 

FINANCIAL RESPONSIBILITY LAWS: North Carolina’s laws require that motor vehicle owners maintain financial responsibility through a liability insurance policy, a financial security bond, or by qualification as a self-insurer. Any liability policy certified as proof of financial responsibility must provide coverage of not less than $15,000 for bodily injury to or death of one person in any one accident and $30,000 for bodily injury to or death of two or more persons in any one accident, and $5,000 property damage coverage for injury to or destruction of property of others in any one accident.

The Vehicle Responsibility Act of 1957 requires that the owner of each motor vehicle registered in this state shall maintain financial responsibility continuously throughout the period of registration. The penalty for failure to do so is loss of the vehicle registration plates for 60 days.

The Motor Vehicle Safety and Financial Responsibility Act of 1953 requires that the Department of Motor Vehicles suspend the license of each operator and each owner of the motor vehicle if the person responsible for an accident does not provide satisfactory evidence of financial responsibility as required by law. The suspension is effective unless the owner or operator deposits security in the amount determined by the Commissioner of Motor Vehicles. 

FIRE: Court decisions have held generally that there are three elements which constitute a fire within the meaning of an insurance policy:

1. Rapid oxidation (combustion).
2. Visible flame or glow.
3. Hostile or unfriendly. (A "hostile" fire is one which escapes the area in which it was intended to burn. A "friendly" fire is one which does not exceed its intended purpose.)

FISCAL YEAR: A certain 12-month period selected by an organization for its financial accounting period. In insurance companies, this always coincides with the calendar year. 

FRANCHISE INSURANCE: Individual life or health insurance policies issued to a small group of people having a common affiliation or interest. Same as wholesale insurance.

FRATERNAL INSURANCE: Life insurance protection provided by fraternal benefit societies, having no capital stock, and not organized for profit, and maintaining a lodge system. Practically all fraternals operate on a level rate and legal reserve basis in accordance with special fraternal insurance regulation, and under supervision of the state insurance authorities. 

FULL COVERAGE: Insurance which covers all losses, with no deductions, up to the amount of the insurance. (See DEDUCTIBLE COLLISION COVERAGE.)

FURNITURE AND FIXTURES: A term used in commercial fire insurance. This coverage includes: desks, chairs, bookcases, filing cabinets, typewriters, calculating machines, temporary partitions, etc. 

G

GENERAL LIABILITY: A broad term meaning liability insurance, other than automobile written to cover personal, professional and commercial risks. As respects commercial liability, it includes the following hazards and coverages: premises and operations, elevators, independent contractors, contractual products, and completed operations.

GRACE PERIOD: Life and health insurance contracts provide that premiums may be paid at any time within a month or 31 days following the premium due date, the policy remaining in full force in the meantime. In life insurance, if death occurs during the grace period, the earned premium is deducted from the proceeds payable. No interest is charged on overdue premiums if paid during the grace period.

GUARANTEED RENEWABLE: A health policy which the company guarantees to renew for life or until the insured reaches a specified age, usually 65. The company may adjust rates only on a class of risks, not on any individual.

H

HEALTH INSURANCE: Formerly sickness insurance – but now has superseded the term accident and sickness insurance.

I

IMPAIRED RISKS: In health insurance, individuals who can reasonably be expected to have an above-average number of claims due to medical history or physical impairment. Most impaired risks can be insured by use of a waiver or waiting period.

IMPROVEMENTS AND BETTERMENTS INSURANCE: Insurance coverage that protects a tenant against loss of improvements made by him to real property in which he is a tenant as a result of fire, etc. Some property policies use the term improvements and additions in describing the coverage.

INCONTESTABILILTY: Life policies provide that, except for non-payment of premiums of certain other circumstances, the policy shall be incontestable after the policy has been in force for two years during the lifetime of the insured. During the contestable period, misrepresentation of facts material to the risk will permit the company to avoid liability under the policy and refund the premium. Total and permanent disability and accidental death provisions usually are excepted from the operation of the policy incontestable provision, although they may have their own incontestable provisions.

INDEMNITY: In general, reimbursement for loss, but also a benefit provided by a policy. In health insurance it sometimes is used to designate a specified amount paid regardless of actual loss or expense incurred.

INSPECTION REPORT: Filed by an investigator employed by the insurance company or credit agency, giving general information on the health, habits, finances and reputation of the applicant.

INSURED: A person covered by an insurance policy. In life insurance, the person upon whose life an insurance policy is issued.

J

JOINT TENANCY: Ownership of property by two or more in such a way that when one of the joint owners dies, his share goes to the surviving joint owners rather than the heirs. 

JUVENILE INSURANCE: Life insurance policies written on the lives of children within specified age limits.

K

KEY MAN INSURANCE: Insurance used for a business purpose, usually to reimburse a corporation for the loss it sustains when an important member of the firm dies.

L

LARCENY: The unlawful taking and carrying away of the personal property of another without his consent and with intent to deprive him of ownership or use. 

LEGAL LIABILITY: An obligation which can be enforced by law.

LEGAL RESERVE: In life insurance that sun which, accumulated at an assumed rate of interest and taken together with future specifications, is defined by the state insurance code.

LIABILITIES: An insurance company’s liabilities consist of its immediate or contingent policy obligations and unpaid claims.

LICENSE – AGENT OR BROKER: Certification, issued by the department of insurance, that an individual is qualified to solicit insurance applications for the period covered. 

LICENSE – COMPANY: Certification, issued by the department of insurance, stating that an insurance company is qualified to do business in the state.

LIFE INSURANCE: A contract whereby, for a stipulated premium, the insuring company agrees to pay the insured, or his beneficiary, a fixed sum or its equivalent in income, upon the happening of death or some other specified event. 

LOSS EXPENSE, ALLOCATED: Handling expenses, such as legal fees, paid by an insurance company in settling a claim which can be definitely charged to that particular claim. This excludes payments to the claimant.

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 RATIO: The percent which losses bear to premiums for a given period.

LOSS RESERVE: The amount set up as the estimated cost of an accident at the time the first notice is received.

M

MATURITY VALUE: The proceeds are payable on maturity of a policy. An ordinary life policy matures on the death of the insured and an endowment policy on a specified date or on the prior death of the insured. The maturity value is normally the "face amount" of the policy.

MORTGAGE INSURANCE: One of the basic uses of life insurance. Family heads buy mortgage insurance for the specific purpose of paying off any mortgage balance outstanding at their death. 

MULTIPLE LINE: A general term referring to fire and casualty insurance in general. A multiple line company writes auto, fire, health, commercial, boatowners, homeowners individual fire, theft insurance.

N

NATIONAL ASSOCIATION OF LIFE UNDERWRITERS (N.A.L.U.): An organization of life insurance men and women formed for the sole purpose of benefiting the agent in the field. Membership in the association gives the agent an opportunity to meet others in the same work, exchange ideas and experience, and listen to successful leaders in the business.

NET COST: This term ordinarily refers to the actual cost of life insurance in a mutual or participating company after deducting the policy dividends from the premiums deposited. Since there are no dividends on non-participating policies, the net cost of such policies is equal to the total premiums paid. In determining the true net cost of a policy over a period of years, allowance also should be made for the cash surrender value at the end of the given period. 

O

OCCUPATIONAL HAZARD: The danger of suffering a sickness or injury due to the hazards of an occupation.

OCCURRENCE: Any incident or happening. Usually used by insurance carriers in connection with accidents involving the policyholders. The word "occurrence" is used because of the precise legal meaning of the word "accident," which an "occurrence" may or may not be.

OCCURRENCE COVERAGE: Occurrence coverage is insurance for incidents of liability alleged to have occurred during the term of the policy, no matter when the claim is reported.

OMNIBUS CLAUSE: An automobile policy provision which covers persons driving the named insured’s auto with the named insured’s permission.

OPTIONAL SETTLEMENTS: Most policies offer several optional modes of settlements of the proceeds in lieu of a single payment at the death of the insured or at the maturity of a policy, or within certain limits, upon the surrender of a policy. The usual options are (a) interest only; (b) limited installments certain; ( c ) equal installments until proceeds are exhausted; (d) life income with period certain.

ORDINARY LIFE: Synonymous with "whole life" and "straight life." The three terms are applied to the type of policy which continues during the whole of the insured’s life and provides for the payment of amount insured at this death (or at age 96 on the basis of American Experience Table of Mortality; or at age 100 on the C.S.O. Table, if he is still living at that age).

OWNER: The person who can legally exercise all rights and privileges in the life policy. This will usually be the insured, but may be any other party to whom proper transfer of these rights and privileges has been made.

P

PAID-UP ADDITIONS: Additional life insurance purchased by policy dividends on a net single premium basis at the insured’s attained insurance age at the time the dividend is allotted. 

PARTIAL DISABILITY: An injury which prevents the insured from performing one or more, but not all, important duties of his job.

PERIL: The cause of 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 PROPERTY: This type of property is usually movable and easily transportable. On the other hand, real property generally is considered to be immovable such as land and things affixed to it. A rule of thumb definition for personal property is "everything other than real property." 

PHYSICAL HAZARD: This refers to the material, structural or operational features of the risk itself, apart from the persons owning or managing it. Electrical wiring, building construction, type of heating system, are examples of physical hazards.

POLICIES-IN-FORCE: Policies written and recorded on the books of the carrier which are unexpired as of a given date.

POLICY: The name generally used to mean the written contract of insurance.

POLICY FEE: An amount charged by some companies in addition to the first regular premium. Also called "joiner’s fee." 

POLICYHOLDER: One who owns an insurance policy. A mortgagee often is issued a copy of an insurance policy, or a certificate of insurance, at the request of the insured, but he is not a policyholder.

POLICY LOAN (LIFE): A loan made by an insurance company to a policyholder on the security of the cash value of his policy.

PRE-EXISTING CONDITION: A physical condition which existed prior to the issuance of a health policy.

PRELIMINARY CLAIM NOTICE: Notice to the company that the insured wants to make a claim. 

PREMIUMS-IN-FORCE: Premium dollars which have been written and are unexpired on the books of the insurance carrier.

PREMIUM UNEARNED: The portion of an insurance premium which applies to the unexpired portion of the policy period. 

PRICE-GROUP SYMBOL: Designates the original list price grouping of the private passenger car covered in the current period.

PROCEEDS: The net amount of money payable by the company at the death of an insured or at the maturity of a policy.

PROPERTY DAMAGE COVERAGE: An agreement by an insurance carrier to protect an insured against legal liability for damage by his automobile to the property of another.

PROXIMATE CAUSE: The dominating cause of loss or damage; an unbroken chain of events between the occurrence of an insured peril and damage to property. As an illustration, water damage occurring from fire fighting activities is covered under the fire policy because fire was the proximate cause of the loss. 

R

RATE: A charge per unit in determining insurance premiums.

REINSURANCE: The insurance by one insurer of liability or another insurance carrier under its insurance or reinsurance policies.

RETIREMENT INCOME OR INCOME ENDOWMENT (LIFE): Such a policy provides retirement income from a stated date and insurance protection in the meantime. On death, before the first income payment, the death benefit is normally the stated initial sum assured or the cash surrender value of the policy at date of death, whichever is greater.

RIDER: Endorsement. Special provision added to an original policy contract.

RISK: Chance of loss with respect to person, liability, or the property of the insured. Also used to mean "the insured."

S

SALES EXPENSE: Compensation of agents, advertising expense, and other costs related to selling insurance policies.

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. 

SCHEDULE: A list describing the property or items insured under the policy.

SPECIAL CLASS: Policies on which an extra premium rate is charged because an extra risk is presented.

STANDARD PROVISIONS: Policy provisions required by law or supervisory regulation – such as provisions relating to grace period and incontestability. 

STANDARD RISK: A person who, according to a life company’s underwriting standards, is entitled to insurance protection without extra rating or special restrictions.

STOCK COMPANY: A company organized and owned by stockholders, as distinguished from the mutual form of company which is owned by its policyholders. 

SUBSTANDARD RISK: A person who is considered an under-average or impaired insurance risk because of his physical condition, family or personal history of disease, occupation, residence in unhealthy climate, or dangerous habits.

SURPLUS: A stock company’s surplus is the amount by which its admitted assets exceed its liabilities and capital stock. In both stock and mutual companies, the term surplus to policyholders means the excess of admitted assets over liabilities. 

T

TERMINATION: The recording of a cancellation of an insurance policy. In some instances, cancellations may not be recorded for many weeks, due to the pressure of other work. Many policies cancelled for non-payment are reinstated without either cancellation or being recorded. (See also CANCELLATION.)

TERM INSURANCE: Life or health insurance protection during a limited number of years but expiring without value if the insured survives the stated period.

THEFT: This is a common word for "act of stealing." There is no precise meaning in law. 

TWISTING: The practice of inducing by misrepresentation, or inaccurate or incomplete comparison, a policyholder in one company to lapse, forfeit or surrender his insurance for the purpose of taking out a policy in another company.

U

1. An insurer.
2. an officer, medical adviser or technician who reviews applications for insurance, selects risks for acceptance, and determines the amount and the terms of such acceptance.
3. an agent or other field representative who unavoidably "selects risks" when selecting his prospects for solicitation.

UNDERWRITING PROFIT AND LOSS: The profit or loss experienced after deducting from earned premiums the incurred losses and expenses of doing business, but before provision for federal income tax. It excludes investment transactions. 

UNREPORTED CLAIMS: Accidents which have occurred but which have not been reported or recorded.

V

VALUATION: The process of determining a company’s liabilities under its policy obligations is known as policy valuation. The process of determining the value of a company’s investments is known as asset valuation. Minimum valuation standards are usually prescribed by state law. 

W

WHOLE LIFE INSURANCE: A plan of insurance for the whole of life. It includes straight life on which premiums are payable until death.