Actual cash value: Insurance under which the policyholder receives an amount equal to the replacement value of damaged property minus depreciation.

Actuary: An insurance professional who specializes in statistical information.

Adjuster: A person employed by a property/casualty insurer to evaluate losses and settle policyholder claims.

Admitted company: An insurance company licensed and authorized to do business in a particular state.

Agent: Two types of agents sell Insurance. Independent agents are self-employed business people who typically represent two or more insurance companies and are paid on a commission basis.

An agency company is a company that markets products via independent agents.

Exclusive agents represent only one insurance company. They may be salaried employees or work on a commission basis.

Appraisal: A survey to determine a property's insurable value, or the amount of loss.

Arson: The deliberate setting of a fire.

Assets: The property owned by an insurance company, including stocks, bonds and real estate.

Assigned risk plans: All 50 states and the District of Columbia have facilities in which drivers can obtain auto insurance, if they are unable to buy in the regular or "voluntary" market.

Auto insurance: Protection for the owner of a car.

Auto insurance premium discounts: Many insurance companies also give premium discounts to drivers who:

• Have a good driving record
• Have taken driver education courses
• Are between the ages of 50 and 74
• Car pool
• Insure several cars on one policy
• Buy homeowners or renters insurance from the same company
• Install anti-theft devices in their cars
• Drive cars with safety features like automatic seat belts and air bags

Auto policy: It can (but doesn't have to) include coverage for up to six different risks, each of which is priced separately. They are: Bodily injury liability, Medical, Property damage, Collision, Comprehensive and Uninsured motorists.

Auto premium: Insurers base their auto premiums (which must be approved by the Department of Insurance), the price charged for coverage, on historical loss experience for similar risks.

B

Balance sheet: The balance sheet lists the insurance company's assets.

Broker: An intermediary between a customer and an insurance company who represents the insurance buyer.

C

Casualty insurance: See Property/Casualty insurance

Catastrophe: To insurers, a catastrophe is a singe incident, or series of related incidents, causing insured property losses totaling more than $25 million.

Claims, filing: Taking the right steps after an insured loss can speed up the process of settling a claim. To find out more about what to do, ask IINC for a brochure on Settling Claims after a Disaster.

Collision insurance: An optional auto insurance coverage which pays for damage to the policyholder's car caused by collision.

Commission: The fee paid to the insurance salesperson, as a percentage of the policy premium.

Contingent liability: The liability of individuals, corporations or partnerships, for accidents caused by persons (other than employees) for whose acts or omissions the individuals, corporations or partnerships are legally responsible.

Coverage: Another word for insurance, i.e, how much coverage a person has is the amount of insurance he or she carries.

D

Declaration: The part of a property or liability insurance policy that states the name and address of the policyholder, the property insured, its location and description, the policy period, the amount of insurance, applicable premiums, and supplemental information provided by the insured.

Deductible: The amount of loss paid by the policyholder. It is a specified amount the insured must pay, or a specified amount of time that must elapse before the insurance policy starts paying benefits.

Direct premiums: Property/casualty premiums collected by the insurer from policyholder's, before reinsurance is ceded to, or accepted from, another company.

Direct writers: Insurance companies that sell directly to the public via their own employees or by exclusive agents.

E

Earned premium: The portion of premium that applies to the expired part of the policy period.

Earthquake coverage: See Catastrophe/earthquakes

Economic loss: The total financial loss resulting from a death or disability of a wage earner, or from destruction of property.

Endorsements: A written form attached to an insurance policy that alters the policy's coverage, terms or conditions.

Expense ratio: The percentage of each premium dollar the insurer spends on expenses Ð overhead, marketing, and commissions.

F

Fair Plans: These plans are insurance pools that sell property insurance to people who can't buy it in the volunteer marketplace because of their high exposure to risks over which they may have no control.

Fraud: See Insurance fraud

G

Glass insurance: Coverage for glass breakage caused by all risks, subject to exclusions of war and fire.

Guaranteed replacement cost insurance: Insurance that pays the full costs of replacing damaged property, without a deduction for depreciation, and without a dollar limit.

H

I

Insolvency: Deciding whether an insurer is insolvent, i.e., unable to pay it debts, is far from simple, partly because the insurance company solvency standards vary from state to state, and partly because the adequacy of reserves to pay future claims is a matter of opinion.

Insurable risk: Risks for which it is relatively easy to get insurance.

Insurance: A system to make financial loss more affordable by transferring it from individuals to large groups.

Insurance fraud: 1) Intentional lying or concealment by policyholders to obtain payment of an insurance claim that would otherwise not be paid. 2) Lying or misrepresentation by insurance company managers, employees, agents and brokers for their personal enrichment.

Insurance-to-value: Insurance written in an amount approximating the value of the insured property.

Insured: The policyholder is the insured.

K

L

Liability insurance: Insurance for money the policyholder is legally obligated to pay because of bodily injury or property damage caused to another personal and covered in the policy.

Loss: A reduction in the quantity or value of a property.

M

Medical payments insurance: A coverage, available in various liability insurance policies, in which the insurer agrees to reimburse the insured and others, with regard for the insured's liability, for medical an funeral expenses incurred as the result of bodily injury or death by accident under specified conditions.

N

No-fault: No fault is a system in which each driver's auto insurance coverage pays for his or her own injuries, no matter who caused the accident.

O

P

Peril: A specific risk covered by an insurance policy, such as fire, windstorm, or theft.

Personal lines: Insurance products that are designed for and bought by individuals.

Policy:A contract for insurance between the insurance company and the policyholder.

Premium: The price of an insurance policy.

R

Rate: The cost of a unit of insurance.

Rider: See Endorsement

S

Self insurance: Assuming risk for oneself without the benefit of an insurance company taking it for you.

Structured settlements: An agreement to pay a certain amount of money in periodic payments instead of a single lump sum payment.

Subrogation: When an insurance company, after paying a loss, seeks to recover the money from the other party who is legally liable.

T

Tort: A wrongful act, resulting in injury or damage, on which a civil action can be based.

U

V

W

X

Y

Z