Glossary – WorldClass Insurance Services

Insurance Glossary

Actual Cash Value (ACV): The value of property after depreciation is deducted from the replacement cost.
Actuary: A professional who analyzes financial risks using mathematics, statistics, and financial theory.
Adjuster: An individual who investigates and settles insurance claims.
Admitted Carrier: An insurance company licensed to do business in a specific state.
Aggregate Limit: The maximum amount an insurer will pay for all covered losses during a set time period.
Annuitant: The person who receives the payments from an annuity.
Annuity: A financial product that provides regular payments for a specified period or for life.
Appraisal: An estimate of the value of insured property.
Assigned Risk: Insurance coverage assigned to a high-risk individual or entity that insurers would not normally insure.
Binder: A temporary insurance contract providing proof of coverage until a permanent policy is issued.
Broker: An insurance professional who represents the insured, not the insurer, in finding coverage.
Cancellation: The termination of an insurance policy before its expiration date.
Captive Agent: An agent who sells insurance for only one company.
Claimant: The person making an insurance claim.
Coinsurance: A provision under which the insured and insurer share covered losses in a specified ratio.
Collision Coverage: Insurance that covers damage to your car from a collision, regardless of who is at fault.
Comprehensive Coverage
Contingent Beneficiary: The person who receives benefits if the primary beneficiary is deceased.
Coverage Limit: The maximum amount an insurer will pay for a covered loss.
Declaration Page: The part of an insurance policy that summarizes coverage, limits, deductibles, and premiums.
Depreciation: The reduction in value of an asset over time due to wear and tear or obsolescence.
Disability Insurance: Insurance that provides income if a policyholder is unable to work due to disability.
Earned Premium: The portion of a premium that applies to the expired portion of a policy period.
Effective Date: The date when insurance coverage begins.
Endorsement: A written amendment to an insurance policy that modifies its terms.
Errors and Omissions Insurance (E&O): Coverage protecting professionals against claims of negligence or inadequate work.
Excess Insurance: Insurance that provides coverage above the limits of an underlying policy.
Exclusion: Specific conditions or circumstances not covered by an insurance policy.
First-Party Claim: A claim filed by the policyholder against their own insurance policy.
Flood Insurance: Coverage for damage caused by flooding, often not included in standard homeowner policies.
Grace Period: The time after the due date during which a premium can be paid without lapse of coverage.
Group Insurance: Insurance coverage offered to a group, typically employees of a company or members of an organization.
Hazard: A condition that increases the likelihood or severity of a loss.
Health Insurance: Coverage that pays for medical, surgical, and sometimes dental expenses.
Homeowners Insurance: A policy covering losses and damages to an individual’s house and assets in the home.
Indemnity: Compensation for a loss, intended to restore the insured to their financial position before the loss.
Independent Adjuster: An adjuster hired by the insurance company who is not an employee of the company.
Inland Marine Insurance: Coverage for goods in transit and other movable property.
Insurable Interest: A stake in the value of the insured item or person such that loss would cause financial harm.
Insurance Rider: An addition to a basic insurance policy that provides extra coverage.
Insured: The person or entity covered by an insurance policy.
Insurer: The company providing insurance coverage.
Lapse: The termination of a policy due to nonpayment of premiums.
Liability: Legal responsibility for damages or injury to another party.
Loss: Reduction in value due to damage, injury, or destruction.
Loss Ratio: The ratio of losses paid to premiums earned by an insurer.
Medical Payments Coverage (MedPay): Covers medical expenses for injuries sustained in an auto accident, regardless of fault.
Moral Hazard: The risk that the insured might behave differently because they have insurance coverage.
Named Insured: The person or entity specifically named in the policy declarations as being insured.
Named Perils Policy: A policy that covers only the perils specifically listed in the policy.
No-Fault Insurance: Coverage where your own insurer pays for your losses regardless of who caused the accident.
Occurrence: An event that results in an insured loss.
Peril: The cause of a loss, such as fire, theft, or flood.
Personal Property: Movable property that is not fixed to one location, such as furniture or electronics.
Policy: The written contract of insurance.
Policyholder: The person who owns the insurance policy.
Premium: The amount paid for an insurance policy.
Primary Insurance: The insurance that pays first when multiple policies cover the same loss.
Probationary Period: The waiting period before coverage becomes effective.
Proof of Loss: A formal statement made by the insured to the insurer regarding a claim.
Proximate Cause: The primary cause of a loss in a chain of events.
Quote: An estimate of the premium for an insurance policy.
Reinsurance: Insurance purchased by an insurance company from another insurer to reduce risk.
Replacement Cost: The cost to replace damaged or lost property without deduction for depreciation.
Retention: The amount of risk retained by the insured or the insurer before insurance coverage kicks in.
Rider: An amendment to an insurance policy that changes the policy’s terms or coverage.
Risk: The chance of a loss occurring.
Salvage: Property saved from a loss and sold to reduce the insurer’s loss.
Settlement: The agreement and payment of a claim.
Subrogation: The insurer’s right to recover payment from a third party responsible for a loss.
Surcharge: An additional charge added to a premium because of increased risk factors.
Term Insurance: Life insurance coverage for a specified period.
Third-Party Claim: A claim made against another party’s insurance policy.
Title Insurance: Insurance that protects against loss from defects in a title to real property.
Total Loss: A loss so severe that repair would cost more than the value of the property.
Umbrella Policy: Liability insurance that provides additional coverage beyond the limits of your other policies.
Underinsurance: Insurance that does not adequately cover the value of the insured property or risk.
Underwriter: The person who evaluates and determines the risk of insuring a party.
Underwriting: The process of evaluating the risk of insuring an individual or asset and deciding the terms of coverage.
Uninsured Motorist Coverage: Covers injuries and damages caused by a driver who has no insurance.
Waiting Period: The time between the beginning of an event (such as a disability) and when insurance benefits begin.
Whole Life Insurance: Life insurance that provides coverage for the insured’s entire life and includes a savings component.
Workers’ Compensation: Insurance providing wage replacement and medical benefits to employees injured on the job.