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Insurance Terms ‐ Glossary

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 (link to below)


Abandonment: As used in property insurance, prohibits the insured from abandoning damaged property to the insurance company for repair or disposal.

Accelerated Benefits Rider: An adjustment (rider) to a life insurance policy that allows for the early payment of some portion of the policy's face amount should the insured suffer from a terminal illness or injury.

Accidental Death Benefit Rider: An adjustment (rider) to a life insurance policy that provides for payment of an additional cash benefit when death occurs by accidental means. This amount depends on the value of the policy.

Accidental Death Insurance: An Insurance policy that provides payment if the insured's death occurs as a results from an accident.

Accident Forgiveness: In most states, if you've been an accident-free policyholder for five years you may qualify for this program. Accident forgiveness means that won't add a surcharge to your premium after your next at-fault accident.

Accounts Receivable Coverage: Covers loss of sums owed to the insured by its customers that are uncollectible due to damage by an insured peril to accounts receivable records.

Actual Cash Value (ACV): Cost to repair or replace damaged property with materials of like kind and quality, less depreciation.

Actuary: An insurance professional skilled in the analysis, evaluation, and management of statistical information. Evaluates insurance firms’ reserves, determines rates and rating methods, and determines other business and financial risks.

Additional Insured: A person or organization for whom insured status is arranged by endorsement.

Additional Living Expenses: Extra charges covered by homeowner’s policies over and above the policyholder's customary living expenses. They kick in when the insured requires temporary shelter due to damage by a covered peril that makes the home temporarily uninhabitable.

Adjuster: An individual employed by a property/casualty insurer to evaluate losses and settle policyholder claims. These adjusters differ from public adjusters, who negotiate with insurers on behalf of policyholders, and receive a portion of a claims settlement. Independent adjusters are independent contractors who adjust claims for different insurance companies.

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

Adverse Carrier: Term used to refer to the other party's insurance company.

Advertising Injury: General liability coverage that insures against libel, slander, invasion of privacy, copyright infringement and misappropriation of advertising in connection with the insured's advertising of its goods or services.

Agent: An authorized representative of an insurance company.

Aggregate: The maximum amount an insurance company will pay during the policy.

All Risk Coverage: Property insurance covering loss arising from all causes of loss except those that are specifically excluded.

Amendment: A change to the basic policy contract. An amendment alters the policy; an endorsement adds to it.

Annually Renewable Term: Term insurance that provides coverage for one year and allows the policy owner to renew his or her coverage each year.

Annuity: A contract that pays out for a stated period for life; this plan is designed to liquidate funds.

Application: A form with the information needed for an insurance company to underwrite and rate a specific policy.

Appraisal: Process that determines the value of property, or the extent of damage, usually performed by an impartial expert.

Arbitration: A process of settling a dispute through an impartial party. It is used as an alternative to litigation.

Assigned Risk Plans: Facilities through which drivers can obtain auto insurance if they are unable to buy it in the regular or voluntary market. These are the most well-known type of residual auto insurance market, which exist in every state. In an assigned risk plan, all insurers selling auto insurance in the state are assigned these drivers to insure, based on the amount of insurance they sell in the regular market.

Assignment: The transfer of ownership of a Life Insurance policy from one person to another.

Assured: Means the same as an insured, policyholder, or someone who has an insurance policy.

At-Fault: The party that is legally liable for the damages in an accident.

At-home Recovery: Short term, at-home assistance with activities of daily living while recovering from an illness, injury, or surgery.

Attained Age: Your current age. Your attained age is a factors life insurance companies use to determine premiums.

Audit: A verification of the financial records, usually payroll or receipts, of an organization to determine exposures and premiums.

Automobile: A land motor vehicle, trailer or semi-trailer designed for travel on public roads, not including 'mobile equipment'.


Bailee Coverage: Coverage on property left in the care of the insured for storage, repair or servicing. 

Basic Cause of Loss Form: Property coverage for named perils: Fire, Lightening, Explosion, Smoke, Windstorm, Hail, Riot, Civil Commotion, Aircraft, Vehicles, Vandalism, Sprinkler Leakage, Sinkhole Collapse and Volcanic Action.   

Basic Limits: The minimum limits of liability that can be carried by an insured.

Beneficiary: The designated person set to receive the death benefit if the insured should die.

Benefit Period: The length of time during which a benefit is paid by the insurance carrier to the insured.

Binder: A temporary insurance policy that expires at the end of a specific time period or when a permanent policy is written. A binder is given to an applicant for insurance during the time it takes the insurance company to complete the policy paperwork.

Blanket Insurance: Coverage for more than one type of property at one location or one type of property at more than one location.

Bodily Injury by Accident Limit: The most an insurer will pay under Part Two of a Workers' Compensation Policy for claims arising out of any one accident, regardless of how many employee claims arise out of the accident.

Bodily Injury by Disease, Each Employee : The most an insurer will pay under Part Two of a Workers' Compensation Policy for damages due to bodily injury by disease to any one employee.

Bodily Injury by Disease-Policy Limit : The most an insurer will pay under Part Two of a Workers' Compensation Policy employee bodily injury by disease claims during the policy period regardless of the number of employees who make such claims.

Bodily Injury Liability: Protects you if you are determined to be responsible for an accident in which someone is injured or a fatality occurs. This liability coverage takes care of medical expenses, lost wages, pain and suffering.

Boiler & Machinery Insurance: Coverage for loss caused by mechanical or electrical equipment breakdown, including damage to the equipment.

Bond: A written agreement in which one party, the surety, guarantees the performance or honesty of a second party, the principal (obligor), to the third party (obligee) to whom the performance or debt is owed.

Brands and Labels Endorsement: Property insurance coverage that allows the insured to remove labels from damaged goods or mark the items as 'salvage,' provided the goods are not damaged in the process.

Broad Causes of Loss Form: Property coverage for the named perils: Fire, Lightening, Explosion, Smoke, Windstorm, Hail, Riot, Civil Commotion, Aircraft, Vehicles, Vandalism, Sprinkler Leakage, Sinkhole Collapse, Volcanic Action, Breakage of Building Glass, Falling Objects, Weight of Snow, Ice or Sleet, Water Damage (in the form of leakage from appliances) and Collapse from Specified Causes.

Building Ordinance Coverage: Covers against loss caused by enforcement or ordinances or laws regulating construction and repair of damaged buildings.

Burglary: Theft of property by forcible entry, which is evidenced by visible signs, in a premises, by a person.

Burglary and Theft Insurance: Insurance for the loss of property due to burglary, robbery or larceny. It is provided in a standard homeowner’s policy and in a business multiple peril policy.

Business Auto Policy: Auto Policy for businesses that includes auto liability and auto physical damage coverages.

Business Auto Insurance: Coverage for vehicles used for business. Liability limits and other coverage needs are different from personal auto insurance policies.

Business Income Coverage: Insurance covering loss of income by a business when operations are interrupted due to property loss that is a covered cause of loss.

Business Interruption Coverage: See Business Income Coverage.

Business Owners Policy (BOP): A policy that combines property and liability coverages for special types of small businesses.


Cancellation: The termination of an insurance policy usually before its expiration.

Care, Custody or Control: An exclusion of liability insurance which eliminates coverage for damage to property in the insured's care, custody or control.

Carrier: The insurance company which provides coverage.

Cash Benefits: The Money that is paid to the policy holder upon settlement of a covered claim.

Cash Value: The equity amount or "savings" accumulation in a whole life insurance policy.

Casualty Insurance: Insurance that covers loss caused by injuries to persons and the legal liability imposed on the insured for injury or for damage to property of others.

Catastrophe: A severe loss causing sizable financial loss.

Causes of Loss Forms: The commercial property forms that define the covered causes of loss for which coverage is provided. Commonly, there are 3 Cause of Loss Forms: Basic, Broad and Special.

Certificate of Insurance: A document providing evidence that insurance has been purchased.

Certificate of Satisfaction: A form signed by the insured when he or she takes delivery of the car from the repairer. It certifies that he or she is satisfied with the vehicle operations, appearance, and visible quality of the repairs.

Claim: A request by a policyholder or a claimant for payment under a policy of insurance.

Claim Expense: Expenses of settling or investigating a claim.

Claimant: The person presenting a claim.

Claims-made Policy: A form of insurance that pays claims presented to the insurer during the term of the policy or within a specific term after its expiration. It limits liability insurers’ exposure to unknown future liabilities.

Claims Reserve: An amount of money set aside to meet claims reported but not paid.

Class: A group of businesses who have common or similar exposures and are grouped together for rating purposes.

Classification: The arranging or establishing of business groups or categories for rating purposes.

CLUE® Report: Comprehensive Loss Underwriting Exchange (CLUE) report; provides claim history information.

Cobra: Short for Consolidated Omnibus Budget Reconciliation Act. A federal law under which group health plans sponsored by employers with 20 or more employees must offer continuation of coverage to employees who leave their jobs and their dependents. The employee must pay the entire premium. Coverage can be extended up to 18 months. Surviving dependents can receive longer coverage.

Co-Insurance Provision: An insurance provision for property coverages in which the policyholder must carry an amount of insurance that is at least equal to a set percentage of the value of the property in order to receive full payment of a loss.

Collapse: Collapse of a building and collapse of personal property within a building due to specified causes (such as weight of snow, ice or rain). Does not include collapse due to design error or due to faulty workmanship or materials if the collapse occurs after construction is complete.

Collision Coverage: Pays for damage to your vehicle that is caused from a collision or vehicle rollover.

Commercial General Liability Policy (CGL): A coverage which protects business organizations against liability claims for bodily injury and property damage. Those claims may be the result of events at your place of business, from your business operations, the products or services you make or do, communications or advertisements your business broadcasts.  

Commercial Multiple Peril Policy: Package policy that includes property, boiler and machinery, crime, and general liability coverages.

Comparative Negligence: A doctrine of law that, in some states, may enable claimants to recover a portion of their damages even when they are partially at fault, or negligent. Each party's negligence is compared to the others and a claimant's recovery can be reduced by the percentage of his or her own negligence.

Competitive State Funds: State-owned and operated facilities that write Workers' Compensation Insurance solely for that state.

Completed Operations: A General Liability coverage for the work of the insured that has been completed away from the business premises.

Comprehensive Auto Coverage: Covers an automobile for loss or damage for all causes except for those specifically excluded.

Comprehensive Coverage: Pays for damage to your vehicle caused by something other than a collision, such as theft or vandalism, fire, flood and hail.

Compulsory Insurance: Insurance that is required by law.

Concealment: Failure to disclose facts which may void an insurance policy.

Conditional Receipt: Given to policy owners when they pay a premium at the time of the application. These receipts bind the insurance company, provided your policy is approved, but are subject to any other conditions stated on the receipt. Conditions: Things agreed upon in an insurance policy that state the rights and the requirements of the insured and the insurer.

Consequential Loss: An indirect loss such as the reduction in value of property that is the result of a direct damage loss.

Constructive Total Loss: Term used when damage to property is more than the value of the property.

*Contestable Clause: A provision in an insurance policy setting forth the conditions or time period under which the insurance company may contest or void the policy. After this time has lapsed, typically two years, the policy cannot be contested. Example: Suicide.

Contingent Beneficiary: Person or persons designated to receive the value of an insurance policy in case the original beneficiary is not alive.

Contingent Liability: Liability of individuals, corporations, or partnerships for accidents caused by people other than employees for whose acts or omissions the corporations or partnerships are responsible.

Contributory Negligence: A doctrine of law that, in some states, may prevent claimants from recovering any portion of their damages if they are even partially at fault, or negligent.

Contract: An agreement between two or more parties with characteristics of mutual assent, competent parties, a valid consideration and legal subject.

*Coverage: Coverage is just another term for Insurance. It can be used to mean either the dollar amounts of insurance purchased ($500,000 of liability coverage), or the type of loss covered (coverage for theft).

Convertible Term: A policy that may be changed to another form by contractual provision and without evidence of insurability. Most term policies are convertible into permanent insurance.

Countersignature: The signature of a licensed agent or representative on a policy that is required to validate the policy.

Cross-Purchase Plan: An agreement that provides that upon a business owner's death, surviving owners will purchase the deceased's interest, often with funds from life insurance.

Cumulative Injury: A type of injury which occurs from the repetition of tasks over an extended length of time.


Data Processing or EDP Coverage: All risk property insurance for electronic data processing equipment (computers), computer programs and data including mechanical breakdown, electrical injury and changes in temperature and humidity.

Death Benefit: The amount of money paid to the beneficiary when the insured person dies.

Declarations: A section of an insurance contract that sets forth information that includes the insured, what is covered in the contract, and the property covered, as well as rates and premiums, limits, deductibles, coinsurance percentages, and so forth.

Decreasing Term Insurance: Term life insurance on which the face value slowly decreases in scheduled steps from the date the policy comes into force to the date the policy expires, while the premium remains level. The intervals between decreases are usually monthly or annually.

Debris Removal: The cost of removal of debris from covered property damaged by an insured peril.

Deductible: The amount of loss which is paid or absorbed by the insured prior to determining the insurance company's liability.

Defined Benefit Plan: A retirement plan under which pension benefits are fixed in advance by a formula based generally on years of service to the company multiplied by a specific percentage of wages, usually average earnings over that period or highest average earnings over the final years with the company.

Defined Contribution Plan: An employee benefit plan under which the employer sets up benefit accounts and contributions are made to it by the employer and by the employee. The employer usually matches the employee's contribution up to a stated limit.

Deposit Premium: The amount of premium required at the beginning of a policy prior to the actual premium being determined.

Depreciation: The reduction in value of property over a period of time. Usually as a result of age, wear and tear, or economic obsolescence.

Direct Damage: Causes of loss that produce direct and straightforward property damage (without interruption in time or deviation in space) from the cause of the event to the damaged property.

Disability Income Insurance: A health insurance policy that provides payments to replace income when an insured is unable to work as a result of an accident or sickness.

Dismemberment: Loss of a limb or part of a limb (also includes loss of sight).

Dividend: The portion of the premium that is returned to the policyholder of a participating (par) insurance policy when losses or expenses are less than anticipated and/or investment returns are greater.

Double Indemnity: Payment of twice the basic benefit in the event of loss resulting from specified causes or under specified circumstances.

Driver Other Car Endorsement: An endorsement that can be added to an automobile policy that gives protection while the insured designated in the endorsement is driving a car other than the one named in the policy.

Drop Down Provision: A clause used in Umbrella policies providing that the Umbrella will 'drop-down' over underlying policy aggregate limits when they have been reduced or exhausted.


Earned Premium: The amount of premium that has been used for certain periods of time.

Earth Movement or Earthquake Exclusion: An exclusion found in most property insurance policies eliminating coverage for earth movement or earthquake, except ensuing fire.

Earthquake Insurance: Covers a building and its contents, but includes a large percentage deductible on each. A special policy or endorsement exists because earthquakes are not covered by standard homeowners or most business policies.

Effective Date: The date on which an insurance binder or policy goes into effect.

Electrical Damage or Injury Exclusion: An exclusion usually contained in property insurance policies eliminating coverage for damage to electrical appliances caused by artificially generated currents, except for ensuing fire or explosion.

Eligible Expenses: Costs that are deemed medically necessary by Medicare.

Elimination Period (Waiting Period): The period between the beginning of a disability and the date benefits begin.

Emergency Care: Medical care needed immediately because of an injury or an illness of sudden and unexpected onset.

Employee Dishonesty Coverage: Coverage for theft of money, securities or property by an employee.

Employee Leasing: A staffing method which an employee leasing company provides all or most of its client's employees.

Employers Liability Coverage: Pays on behalf of the employer all sums that the employer becomes legally obligated to pay because of bodily injury by accident or disease sustained by any employee of the insured arising out of and in the course of his employment by the insured.

Employment Practices Liability Insurance: A form of liability insurance covering wrongful acts arising from employment practices such as wrongful termination, discrimination and sexual harassment.

Endorsement: A document attached to an insurance policy that changes the original policy provisions.

Environmental Impairment Liability Coverage: A form of insurance designed to cover losses and liabilities arising from damage to property caused by pollution.

Equipment Floater: A property insurance coverage for equipment that is often moved from place to place.

Errors and Omissions Coverage / E&O: A professional liability policy covering the policyholder for negligent acts and omissions that may harm his or her clients.

Estimated Premium: A preliminary premium amount that could be adjusted based on a variance in exposures.

Evidence of Insurability: Any statement or proof of a person's physical condition, occupation, etc., affecting acceptance of the applicant for insurance.

Excess and Surplus Lines Insurance: Coverage that is provided by insurers not licensed in the states where the risk is located.

Excess Liability Policy: A policy that provides additional limits in excess of an underlying liability policy.

Exclusions: Specified hazards listed in a policy for which benefits will not be paid.

Expected or Intended: An exclusion for injury or damage that is expected or intended.

Expediting Expense Coverage: Coverage providing reimbursement of expenses for temporary repairs and costs incurred to speed up the permanent repair or replacement of covered property or equipment.

Expense Constant: A small flat expense charged to Workers' Compensation policies.

Experience Modifier: A debit or credit factor developed by measuring the difference between the insured's actual past experience and the expected or actual experience of the class of business.

Expiration: The ending date of an insurance policy.

Exposure Base: The basis of rates that are applied to determine premium. Some exposures may be measured by payroll, receipts, sales, square footage, area, man-hours or per unit.

Extended Coverage: An endorsement added to an insurance policy, or clause within a policy, that provides additional coverage for risks other than those in a basic policy.

Extra Expense Coverage: Coverage for reimbursement of expenses in excess of normal operating expenses that are incurred to continue operations after a direct damage loss.

Extra Territorial Coverage: The coverage for extending workers' compensation law to provide benefits for workers hired in one state but injured while working in another state.


Face Amount: The amount covered by the terms of an insurance contract, usually found on the first page of the policy.

Fiduciary Liability: The liability placed on trustees, employers, fiduciaries and professional administrators with respect to errors and omissions in the administration of employee benefit programs.

Final Expenses: Expenses incurred at the time of a person's death. These include but are not limited to: funeral costs, court expenses, current bills or debt, mortgages, loans and taxes.

Fine Arts Coverage: Property insurance for works of art.

Fire Department Service Charge Coverage: Coverage in a property insurance policy for charges incurred by the insured from a fire department for their services in fighting a fire.

Fire Legal Liability Coverage: Liability coverage for the insured's legal liability for fire damage to premises rented by the insured.

Fire Wall: A wall designed to prevent the spread of fire from one part of a building to another.

Firewall: A computer that protects a company's private network from outside internet users.

First Party: Term used to refer to an insured.

First Party Claims: A claim for damage, loss or injury made by an insured.

Fixed Benefit: A death benefit, the dollar amount of which does not vary.

Flat Cancellation: The full cancellation of a policy as of the effective date of coverage which requires the return of paid premium in full.

Floater: Attached to a homeowner’s policy, a floater insures movable property, covering losses wherever they may occur. Among the items often insured with a floater are expensive jewelry, musical instruments, and furs. It provides broader coverage than a regular homeowner’s policy for these items.

Flood Coverage: Coverage for damage to property caused by flood.

Flood Exclusion: A provision in most all property insurance policies eliminating coverage for damage by flood and possibly other types of water damage, such as seepage and sewer backup.

Follow Form: An umbrella policy provision that follows the underlying policy for coverages and policy provisions.

Forgery or Alteration Coverage: Covers loss due to the dishonesty of writing, signing or altering of checks and bank drafts.

Fortuitous Event: An event that is subject to change without the implication of suddenness.

Fraud: Intentional lying or concealment by policyholders to obtain payment of an insurance claim that would otherwise not be paid, or lying or misrepresentation by the insurance company managers, employees, agents, and brokers for financial gain.

Free Look: Trial period required in most states where policy owners have up to 20 days to examine their new policies with no obligation.

Frequency: The number of times that a loss will occur within any given period of time.

Full Coverage: Any form of insurance that provides payment in full of all losses caused by the perils insured against without applying a deductible or depreciation.

Funeral Expenses: Expenses including casket, vault, grave plot, headstone and funeral director.


Gap Insurance: An automobile insurance option, available in some states, that covers the difference between a car’s actual cash value when it is stolen or wrecked and the amount the consumer owes the leasing or finance company.

Garage Liability Insurance: Insurance coverage for the legal liability of automobile dealers, garages, repair shops and service stations for bodily injury and property damage arising out of their business operations.

Garagekeepers Coverage: Provides coverage to owners of storage garages, parking lots and body and repair shops for their liability of damage to automobiles left in their custody for safekeeping or repair.

General Aggregate Limit: The maximum amount of insurance payable during the policy period for losses (other than those arising from the products - completed operations hazards as covered under the standard commercial general liability policy).

General Liability Insurance: Insurance protecting businesses from most liability exposures other than automobile and professional liability.

Glass Insurance: A property insurance policy covering breakage of building glass regardless of cause.

Governing Classification: In Workers' Compensation Insurance, the classification that best describes the workers' compensation exposure of an employer's business.

Grace Period: Period of time after the due date of a premium during which the policy remains in force without penalty.

Graded Premium Policy: A type of whole life policy designed for people who want more life coverage than they can currently afford. They pay a lower premium rate that increases gradually over the first three to five years and then remains constant over the life of the policy.

Gross Negligence: Willful and wanton misconduct.

Gross Vehicle Weight (GVW): The weight specified by a manufacturer for the maximum total loaded weight of a single vehicle.

Group Insurance: A single policy covering a group of individuals, usually employees of the same company or members of the same association and their dependents. Coverage occurs under a master policy issued to the employer or association.

Guaranteed Insurability: An option that allows the insured to buy additional amounts of insurance at future time intervals without evidence of insurability.

Guaranteed Term: A form of renewable term insurance that remains in force as long as the premiums are paid on time. With guaranteed term insurance, the insurance company cannot terminate the policy during the term.


Hazard: Anything that increases the chance of an accident occurring.

Health Insurance: An insurance contract that pays a benefit for losses that occur because of sickness or bodily injury.

Health Maintenance Organization (HMO): An organization that provides health care; each member pays a subscription fee for which they receive medical care if needed.

Hired Automobile: An automobile whose exclusive use has been temporarily given to another for a monetary sum or other consideration. The business auto definition of 'hired autos,' however, includes autos borrowed except those borrowed from employees or partners.

Hired and Non-Owned Auto Liability: Coverage option for commercial vehicle insurance that accommodates employees who may occasionally use their personal vehicles on company business. This special liability coverage comes into play, for example, when an employee uses his own car to pick up supplies for his employer, and gets into an accident. Many other examples apply.

Hold Harmless Agreement: A contractual agreement that requires one contracting party to assume certain legal liabilities of the other party.

Homeowners Insurance Policy: The typical homeowner’s insurance policy covers the house, the garage and other structures on the property, as well as personal possessions inside the house such as furniture, appliances and clothing, against a wide variety of perils including windstorms, fire and theft. The extent of the perils covered depends on the type of policy. An all-risk policy offers the broadest coverage. This covers all perils except those specifically excluded in the policy.

Homeowners insurance also covers additional living expenses. Known as Loss of Use, this provision in the policy reimburses the policyholder for the extra cost of living elsewhere while the house is being restored after a disaster. The liability portion of the policy covers the homeowner for accidental injuries caused to third parties and/or their property, such as a guest slipping and falling down improperly maintained stairs. Coverage for flood and earthquake damage is excluded and must be purchased separately.

Hospital Expense Policy: A policy that covers daily hospital room and board charges and also covers miscellaneous expenses such as laboratory work, x-rays, and so forth; generally, this policy limits the total number of days covered and/or the total amounts of benefits it will pay out, such as $3,000 total in expenses.

Host Liquor Liability: Liability coverage for hosts of business or social functions arising out of the serving or distribution of alcoholic beverages by a party not engaged in this activity as a business enterprise.


Identity Theft Insurance: Coverage for expenses incurred as the result of an identity theft. Can include costs for notarizing fraud affidavits and certified mail, lost income from time taken off from work to meet with law-enforcement personnel or credit agencies, fees for reapplying for loans and attorney's fees to defend against lawsuits and remove criminal or civil judgments.

Impaired Risk: Insurance industry term for an individual considered below average or an impaired insurance risk due to his or her dangerous habits, health condition, family history of disease, hazardous occupation or hobby, and/or residence in unhealthy surroundings. Also called Substandard Risk.

Improvements and Betterments: Additions or changes made by a lessee at his own expense to property that may not legally be removed. Usually covered under the tenants property coverage.

Incontestable Clause: A clause in a policy providing that a policy has been in effect for a given length of time (two or three years), the insurer shall not be able to contest the statements contained in the application. In life policies, if an insured lied as to the condition of his health at the time the policy was taken out, that lie could not be used to contest payment under the policy if death occurred after the time limit stated in the incontestable clause.

Incurred Losses: The amount of paid claims and loss reserves within a particular period of time, usually a policy year. Customarily computed as losses incurred during the period, plus outstanding losses at the end of the period, less outstanding losses at the beginning of the period.

Indemnity: Principle of restoring the insured to his preloss financial condition (no better and no less).

Independent Adjuster: A claims adjuster who provides adjustment services to insurance companies but is not employed by them.

Independent Agent: An individual or firm who represents one or more insurance companies and operates as an independent business (such as Stiteler Insurance Agency).

Independent Contractor: An individual or company who has agreed, in writing, with another party to perform a job or function on behalf of that party.

Inflation Guard Provision: A provision that increases the limit of insurance by a specified percentage over a specified period of time to offset inflation costs.

Insurable Interest: A requirement that states that an individual or organization will suffer a financial loss; in life and health insurance, it must exist at the time of application.

Insurable Risk: Risks for which it is relatively easy to get insurance and that meet certain criteria. These include being definable, accidental in nature, and part of a group of similar risks large enough to make losses predictable. The insurance company also must be able to come up with a reasonable price for the insurance.

Insurability: The condition of the individual wishing to be insured, including their health, susceptibility to injury and life expectancy.

Insurance: A formal social device for reducing risk by transferring the risks of several individual entities to an insurer. The insurer agrees, for a consideration, to pay for the loss in the amount specified in the contract.

Insurance Policy: The printed form which serves as the contract between an insurer and an insured.

Insurance to Value: Insurance written in an amount equal to the value of the property or which meets coinsurance requirements.

Insured: The party who is being insured. In life insurance, it is the person because of his or her death the insurance company would pay out a death benefit to a designated beneficiary.

Insurer: The insurance company; Party that provides insurance coverage, typically through a contract of insurance.

Irrevocable Beneficiary: A beneficiary that cannot be changed without that beneficiary's consent.

Increasing Term Insurance: Term life insurance in which the death benefit increases periodically over the policy's term. Usually purchased as a cost of living rider to a whole life policy.


Joint Life Policy: A policy that pays the face amount when the first of two or more die.

Joint Venture: A business relationship when two or more persons join their labor or property for a business undertaking and share profits.

Juvenile Insurance: Insurance policy written on a child (usually under age 15 or any age established by the state).


Key Person Insurance: Insurance on the life or health of a key individual whose services are essential to the continuing success of a business and whose death or disability could cause the firm a substantial financial loss.

Kidnap/ransom Insurance: Coverage up to specific limits for the cost of ransom or extortion payments and related expenses. Often bought by international corporations to cover employees. Most policies have large deductibles and may exclude certain geographic areas. Some policies require that the policyholder not reveal the coverage’s existence.


Lapse: Termination of a policy due to the policy owner's failure to pay the premium within the grace period.

Leasehold Interest: Property insurance covering the loss suffered by a tenant due to termination of a lease because of damage to the leased premises by a covered loss.

Legal Liability: Liability imposed by law, as opposed to liability arising from an agreement or contract.

Lessee: The person to whom a lease is granted.

Lessor: The person granting the lease.

Liability: The legal obligation to pay a monetary award for injury or damage caused by one's negligent or statutorily prohibited action.

Liability Coverage: Protects your assets in case you cause injury to others or damage to the property of others with your vehicle. These monies pay towards expenses involved, or toward the costs involved in a lawsuit. There are two types of liability coverage – bodily injury, and property damage.

Liberalization Clause: A provision within an insurance policy that broadens the coverage if the insurance company offers a broader coverage form within the first 45 days of coverage.

Lien: An obligation that can be held by an individual who has an interest in a particular matter or property.

Life Expectancy: The average number of years a person is expected to live based on a national average per age group, and other factors.

Life Insurance: Insurance coverage that pays out a set amount of money to specified beneficiaries upon the death of the individual who is insured.

Limit of Liability: The most an insurance company agrees to pay in the case of loss.

Limited Pay Policy: A type of whole life insurance designed to let the policyholder pay higher premiums over a specific time period such as 10 or 20 years so that they won't have to pay any premiums for the rest of his or her life.

Long Term Care (LTC) Insurance: This insurance pays for Custodial Care (think Care Giver) rather than Skilled Care (think Doctor or Nurse) and is designed to cover at least some of your expenses if you have a chronic but not life-threatening illness, a long-term disability, or you are unable to live independently because you can't perform a number of the activities of daily living. Those activities of daily living typically include bathing, dressing, feeding yourself, taking medication, using the bathroom, and being able to move from a sitting to a standing position. Most contracts also cover cognitive impairments, such as Alzheimer's disease. Under the terms of most long-term care contracts, you can be cared for at home or in a nursing home.

Longshore and Harbor Workers' Compensation Act: A federal law that provides workers' compensation benefits to employees of a vessel injured in maritime employment - usually in loading, unloading, repairing or building a vessel - but not applicable to crew members.

Loss: The amount an insurance company pays for damages under the terms of a policy.

Loss Adjustment Expense: The cost assessed to a particular claim for investigating and adjusting that claim.

Loss Constant: A flat charge added to the premium of small workers' compensation policies to offset higher loss ratios.

Loss Control: A technique that is put in place to reduce the possibility that a loss will occur or reduce the severity of those that do occur.

Loss of Use Coverage: Pays for living accommodations in a comparable home in the event of a loss that requires you to vacate your home during repairs or replacement.

Loss Payable Clause: An insurance clause that authorizes loss payments to a person or entity having an insurable interest in the covered property.

Loss Ratio: Percentage of losses incurred against earned premiums.

Loss Report: A form showing reported claims which provides information such as the date of occurrence, type of claim, amount paid and amount reserved for each loss.

Loss Reserve: An estimated amount set aside for a particular claim that has not yet been paid.

Lost Policy Release: A signed statement by the named when the insured wishes to cancel the policy, but has lost or mislaid the policy, which releases the insurance company from all liability or losses.


Major Medical Insurance: A health insurance policy that provides high lifetime limits (catastrophic coverage) and generally has a high deductible; losses are paid on a participating basis (coinsurance: 80% by the insurer, 20% by insured).

Malicious Mischief: Intentional damage of personal property with malice of forethought.

Master Policy: The policy issued to the employer (or other entity) under a group life or health insurance plan.

Material Damage: All property-related damage losses covered by the policy. This includes the following: property damage (PD), comprehensive damage (COMP), collision damage (COLL), Fire/Theft Combined Additional Coverage (FTCA), rental reimbursement (RR), or uninsured motorist property damage (UMPD).

Maturity Date: The date when a life insurance policy pays the face amount, either because of death or endowment.

Mechanical Breakdown Insurance: Covers repairs to all mechanical parts of the car, protecting you from expensive repair bills

Medicaid: A medical assistance program for the needy that is administered by the state and subsidized by the federal government.

Medical: A document completed by a physician or another approved examiner and submitted to an insurer (insurance company) in order to provide medical information. This is usually done to determine insurability (or lack of insurability) or is sometimes done in relation to a claim.

Medical Expenses: Reasonable charges for medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, prosthetic devices, and funeral expenses. What is considered reasonable is outlined in a policy.

Medical Expense Insurance: A health policy that provides benefits for medical and hospital expenses (also called hospital-surgical expense).

Medical Information Bureau (MIB): A bureau formed by insurance companies for the purpose of exchanging information about the physical condition of prior applicants.

Medical Payments, Auto: Coverage, which is optional, under an auto policy to pay for medical expenses for bodily injury caused by an auto accident, regardless of fault. Coverage for persons other than the named insured and his or her family members is typically restricted to circumstances when they are occupants of the insured auto.

Medical Payments, General Liability: A general liability coverage that reimburses others, regardless of fault, for medical or funeral expenses incurred as a result of bodily injury or death sustained by an accident.

Medical Payments Coverage: Covers the cost of doctors, hospitals and funeral expenses for you and/or your passengers which result from an accident, regardless of who is at fault. It also covers you when you drive another person’s vehicle (with permission) or if you or your family is struck by another vehicle as pedestrians.

Medicare: Health benefits provided under a federal program as part of the Social Security program.

Mexico Coverage: Coverage which is sometimes provided under automobile policies for the operation of an insured motor vehicle within Mexico, usually limited to a stated number of miles from the U.S. border.

Minimum Premium: The lowest amount of premium to be charged for providing a particular insurance coverage.

Misrepresentation: The act of knowingly presenting false information.

Mobile Equipment: Equipment such as earthmovers, tractors, diggers, farm machinery, forklifts, etc., that even when self-propelled, are not considered as automobiles for insurance purposes.

Monopolistic State Funds: States or Jurisdictions where an employer must obtain workers' compensation insurance from a state fund or qualify as a self-insurer, as is allowed in five of the states: North Dakota, Ohio, Washington, West Virginia, Wyoming, Puerto Rico and the U.S. Virgin Islands.

Mortality Rate: The number of deaths in a group of people usually expressed as deaths per thousand.

Mortality Table: A table showing the incidence of death at specified age groups.

Mortgage Clause: Property insurance provisions granting protection for the mortgagee named in the policy. It establishes that loss to mortgaged property is payable to the insured and to the mortgagee named in the policy.

Mortgage Guarantee Insurance: Coverage for the mortgagee (usually a financial institution) in the event that a mortgage holder defaults on a loan. Also called private mortgage insurance (PMI).

Mortgage Insurance: A form of decreasing term insurance that covers the life of a person taking out a mortgage. Death benefits provide for payment of the outstanding balance of the loan. Coverage is in decreasing term insurance, so the amount of coverage decreases as the debt decreases. A variant, mortgage unemployment insurance pays the mortgage of a policyholder who becomes involuntarily unemployed.

Motor Vehicle Report (MVR): A report from the agency that issues your driver's license, listing accidents and violations that appear on your driving record. This report is used to verify information provided by insurance applicants and policyholders.

Multi-Car Discount: Available to policyholders who insure more than one vehicle at the same location.

Multiple Peril Policy: A package policy, such as a homeowners or business insurance policy, that provides coverage against several different perils. It also refers to the combination of property and liability coverage in one policy. In the early days of insurance, coverages for property damage and liability were purchased separately.

Mutual Insurance Company: A company owned by its policyholders that returns part of its profits to the policyholders as dividends. The insurer uses the rest as a surplus cushion in case of large and unexpected losses.


Named Insured: An individual, partnership, or corporation specifically named as the insured in the declaration section of an insurance contract.

Named Perils: A property insurance term referring to exact causes of loss specifically listed as covered such as; Fire or Lightning, Windstorms or Hail, Explosion, Riot or Civil Commotion, Aircraft, Vehicle Damage, Smoke, Vandalism and Malicious Mischief, Theft, Falling Objects, Weight of Ice, Snow or Sleet, Accidental Discharge or Overflow of Water, Sudden & Accidental Tearing Apart, Freezing, Sudden & Accidental Damage, Artificially Generated Current, Volcanic Eruption.

National Flood Insurance Program: A federally funded program established to make flood insurance available to properties located in participating communities National Flood Insurance Program: A federally funded program established to make flood insurance available to properties located in participating communities.

Negligence: The failure to exercise the care that is expected of a reasonable person in similar circumstances.

No-fault: Auto insurance coverage that pays for each driver’s own injuries, regardless of who caused the accident. No-fault varies from state to state. It also refers to an auto liability insurance system that restricts lawsuits to serious cases. Such policies are designed to promote faster reimbursement and to reduce litigation. This coverage is not available in all states, check with us to find out more.

Non-admitted Insurer: An insurance company that is not licensed to do business in a specific state. The insurers may write coverage through an excess and surplus lines broker that is licensed in these jurisdictions.

Non-owned Automobile: In commercial auto policies, coverage for autos that are used in connection with the named insured's business but are neither owned, leased, hired, rented or borrowed by the named insured. The term specifically applies to vehicles owned by employees and used for company business.

Non-Renewal: When an insurer decides not to renew a policy at the end of its policy period.

Noncancelable (Noncan): A health insurance plan that is guaranteed to be renewed to a stated age; the premiums are also guaranteed to that stated age.

Nonforfeiture Values: The values in a life policy that the policyowner does not forfeit even if he ceases to pay the premiums; the cash value in the policy will be used in one of three ways: 1)cash value returned to the policyowner, 2)cash value buys extended term insurance, or 3)cash value buys a reduced paid-up life insurance policy.

Notice of Loss: A written notice required by insurance companies immediately after an accident or other loss. Part of the standard provisions defining a policyholder's responsibilities after a loss.

Nursing Home Insurance: A form of long-term care policy that covers a policyholder’s stay in a nursing facility.


Occupational Hazard: A condition in the work place that increases the chances of an accident, sickness, or death. It usually will mean higher premiums.

Occurrence: A continual, gradual or repeated exposure to substantially the same general harmful conditions. General liability policies insure liability for bodily injury or property damage that is caused by an occurrence.

Occurrence Policy: Insurance that pays claims arising out of incidents that occur during the policy term, even if they are filed many years later.

Ordinary Life Insurance: A life insurance policy that remains in force for the policyholder’s lifetime.

Original Age: The age you were when you bought an insurance policy.

Other Insured Rider: The temporary addition to an insurance policy, usually a member of the direct family.

Ownership: All rights, benefits and privileges under life insurance policies are controlled by their owners. Policy owners may or may not be the insured. Ownership may be assigned or transferred by written request of current owner.


Package Policy: A policy providing several different coverages combined into one policy. Refers to a policy providing both general liability insurance and property insurance.

Paid-Up Policy: A life insurance policy on which all premiums have been paid but that has not yet matured.

Payroll Limitation: A limit on the amount of payroll for certain classifications used for the development of premium.

Peril: Cause of loss such as fire, windstorm, collision, etc.

Personal Articles Floater: A policy or an addition to a policy used to cover personal valuables, like jewelry or furs.

Personal Auto Policy (PAP): A policy insuring private-passenger autos owned by individuals.

Personal Injury: A General Liability coverage for insurable offenses that cause harm, other than bodily injury, such as false arrest, detention or imprisonment, malicious prosecution, wrongful eviction, slander, libel and invasion of privacy.

Personal Injury Protection: Pays for medical care, lost wages and replacement services for the injured party. It pays regardless of who is at fault in an accident. The availability of Personal Injury Protection varies by state.

Personal Property: All tangible property not classified as real property such as contents.

Policy: The printed document given to the insured, outlining the terms and conditions of the Insurance coverage.

Policy Fee: A one-time charge per policy that does not change with the size of the premium.

Policy Holder: 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.

Policy Period: The term or duration of a policy including the effective and expiration dates.

Pollutant: An irritant or contaminant, whether in solid, liquid, or gaseous form, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.

Pre-existing Condition: A condition of health or physical condition that existed before the date the policy was issued.

Preferred Risk: A positive characteristic of someone seeking to be insured. Usually means a better likely hood for long life, and usually means a lower premium.

Premises: The location where coverage applies.

Premises-Operations: A category of hazard ordinarily insured by a general liability policy which is composed of those exposures to loss that fall outside the defined 'products-completed operations hazard,' including liability for injury or damage arising out of the insured's premises or out of the insured's business operations while such operations are in progress.

Premium: The price of an insurance policy, typically charged annually or semiannually.

Premium Flexibility: The policy holder's right to vary the amount of premium paid each month.

Prepaid Hospital Service Plan: A plan in which members pay a flat fee to an organization (Health Maintenance Organization) in exchange for comprehensive health care services.

Primary Beneficiary: In life insurance, the beneficiary designated by the insured as the first to receive policy benefits.

Primary Policy: The insurance policy that pays first when you have a loss that's covered by more than one policy.

Pro Rata Cancellation: The cancellation of an insurance policy with the return premium being the full proportion of premium for the unexpired term of the policy, without penalty for early cancellation.

Probationary Period: The period between the effective date of a health insurance policy and the date coverage begins.

Product Liability: The liability for bodily injury or property damage a merchant or manufacturer may incur as a consequence of some defect in the product sold or manufactured.

Products-Completed Operations: General Liability coverage for liability arising out of the insured's products or business operations conducted away from the insured's premises once those operations have been completed.

Professional Liability: Coverage designed to protect professionals such as physicians and real estate brokers, against liability incurred as a result of errors and omissions in performing professional services.

Proof of Loss: Documents showing the insurance company that a loss occurred.

Property/Casualty Insurance: Covers damage to or loss of policyholders’ property and legal liability for damages caused to other people or their property. Property/casualty insurance, which includes auto, homeowners and commercial insurance, is one segment of the insurance industry. The other sector is life/health. Outside the United States, property/casualty insurance is referred to as nonlife or general insurance.

Property Damage Liability: Covers the damage your vehicle causes to someone else’s property, including their vehicle, a storefront, fence or other structures. If you are found at fault for causing the damage, you are responsible financially.

Property Insurance: First-party insurance for real and personal property against physical loss or damage.

Provisions: Details of an insurance policy which explain the benefits, conditions and other features of the insurance contract.

Proximate Cause: An act or omission initiating an unbroken sequence of events resulting in injury to a person or damage to property.


Quote: A statement of the premium that will be charged for insurance coverage’s based on specific information provided by the person requesting the quote including drivers, vehicles, and driving record.


Real Property: Real estate including buildings and vegetation.

Re-entry Option: An option in a renewable term life policy under which the policy owner is guaranteed, at the end of the term, to be able to renew his or her coverage without evidence of insurability, at a premium rate specified in the policy.

Redlining: Literally means to draw a red line on a map around areas to receive special treatment. Refusal to issue insurance based solely on where applicants live is illegal in all states. Denial of insurance must be risk-based.

Reinstatement: Putting a lapsed policy back in force by producing satisfactory evidence of insurability and paying any past-due premiums required.

Renewal Policy: A policy issued to replace an expiring policy.

Rents or Rental Value Insurance: Insurance that reimburses a building owner for loss of rental income due to damage by an insured peril.

Renters Insurance: A form of insurance that covers a policyholder’s belongings against perils such as fire, theft, windstorm, hail, explosion, vandalism, riots, and others. It also provides personal liability coverage for damage the policyholder or dependents cause to third parties. It also provides additional living expenses, known as loss-of-use coverage, if a policyholder must move while his or her dwelling is repaired. It also can include coverage for property improvements. Possessions can be covered for their replacement cost or the actual cash value that includes depreciation.

Replacement Policy: A new policy written to take the place of one currently in force.

Replacement Cost Coverage: Coverage that pays the dollar amount needed to replace your damaged personal property or dwelling without deduction for depreciation up to the coverage limits displayed on the declaration page of the policy.

Representation: Statements made by applicants on their applications for insurance that they represent as being substantially true to the best of their knowledge and belief but that are not warranted as exact in every detail.

Return Premium: The amount of premium due the insured should the actual cost of a policy be less than the insured previously paid.

Rider: An attachment to a policy that modifies its conditions by expanding or restricting benefits or excluding certain conditions from coverage.

Risk: The chance of injury, damage, or loss.

Robbery: Theft of property while force is used or threatened.


Salvage: Damaged property which is taken over by the insurance company after payment of a claim.

Secondary Beneficiary: An alternate beneficiary designated to receive payment, usually in the event the original beneficiary predeceases the insured.

Self-insurance: The concept of assuming a financial risk oneself, instead of paying an insurance company to take it on. Every policyholder is a self-insurer in terms of paying a deductible and co-payments. Large firms often self-insure frequent, small losses such as damage to their fleet of vehicles or minor workplace injuries. However, to protect injured employees state laws set out requirements for the assumption of workers compensation programs. Self-insurance also refers to employers who assume all or part of the responsibility for paying the health insurance claims of their employees. Firms that self insure for health claims are exempt from state insurance laws mandating the illnesses that group health insurers must cover.

Scheduled Property: This endorsement allows you to list and insure specific items which require more insurance than can be provided under the basic policy.

Short-Term Cancellation: Cancellation of an insurance policy prior to the expiration date in which a penalty in the form of a less than full pro-rata premium refund is allowed.

Single Premium Policy: A whole life policy for people who want to buy a policy for a one-time lump sum, and then be covered for the rest of their lives without paying any additional premiums.

Specified Causes of Loss Coverage: Auto physical damage coverage only for losses caused by the perils listed in the policy.

Sprinkler Leakage Coverage: Coverage for property damage caused by the accidental discharge or leakage of water from automatic sprinkler systems or other fire prevention devices.

Stock Insurance Company: An insurance company owned by its stockholders who share in profits through earnings distributions and increases in stock value.

Subrogation: If your car is damaged because of another driver's negligence and you ask AEI Insurance Brokerage to settle the claim for damage to your car, we will seek payment recovery (including your deductible) from the other party. This process of payment recovery is called subrogation

Substandard Risk: Insurance industry term for an individual considered below average or an impaired insurance risk due to his or her dangerous habits, health condition, family history of disease, hazardous occupation or hobby, and/or residence in unhealthy surroundings. Also called Impaired Risk.

Surplus Lines Insurance: Insurance written by insurers not licensed in the states where the risks are located and placed with such insurers under the surplus line laws of the various states.


Time Element Insurance: A term referring to property coverage for loss of earnings or income resulting from the inability to put damaged property to its normal use.

Title Insurance: Insurance that indemnifies the owner of real estate in the event that his or her clear ownership of property is challenged by the discovery of faults in the title.

Term Insurance: Life Insurance protection during limited number of years; expiring without value if the insured survives the stated period, which may be one or more years but usually is five to twenty years, because such periods usually cover the needs for temporary protection.

Term: Period for which the policy runs. In life insurance, this is to the end of the term period for term insurance.

Third Party Claim: Claims for injury or damage to property of a third party alleged to have been caused by the insured.

Third-Party Owner: A policy owner who is not the prospective insured. The policy owner and the insured may be, and often are the same person. If for example, you apply for and are issued an insurance policy on your life, then you are both the policy owner and the insured and may be known as the policy owner-insured. If, however, your mother applies for and is issued a policy on your life, then she is the policy owner and you are the insured.

Total Loss: The condition of an automobile or other property when damage is so extensive that repair costs would exceed the value of the vehicle or property.

Transit Coverage: Coverage on the insured's property while in transit from one location to another, over land.


Umbrella Liability Policy: A policy designed to provide additional protection against catastrophic losses covered under liability policies, such as the business auto policy, commercial general liability policy, watercraft and aircraft liability policies and employers liability coverage. It provides excess limits when the limits of the underlying liability policies are used up by the payment of claims and it drops down and picks up where the underlying policy leaves off when the aggregate limit of the underlying policy in question is exhausted by the payment of claims. It also provides protection against some claims not covered by the underlying policies, subject to a self-insured retention.

Unearned Premium: The portion of an advance premium that has not yet been used for written coverage; in the case of an annual premium, at the end of the first month, 11 months of premium would still be unearned.

Underinsurance: The result of the policyholder’s failure to buy sufficient insurance. An underinsured policyholder may only receive part of the cost of replacing or repairing damaged items covered in the policy.

Underinsured Motorists Coverage: Provides coverage for bodily injury, and in some states property damage, for losses incurred by an insured when an accident is caused by a motorist who does not have sufficient insurance limits.

Underinsured Motorist Coverage: Pays for damages that exceed the amount of coverage carried by a driver with insufficient coverage to cover your damages.

Underlying Coverage: The insurance or coverage in place on the same risk that will respond to loss before the excess policy is called on to pay any portion of the claim.

Underwriter: Company receiving premiums and accepting responsibility for fulfilling the policy contract. Also, company employee who decides whether the company should assume a particular risk; or the agent who sells the policy.

Uninsurable Risk: A person who is not acceptable for insurance due to excessive risk.

Universal Life: An interest-sensitive life insurance policy that builds cash values. The premium payer has control over how the policy is structured. He has the flexibility to eliminate the premiums (essentially pay up the policy and pay no more premiums) or have the premiums continue for life.

Unearned Premium: That portion of the policy premium that represents the unexpired policy term

Uninsured Motorist Coverage: Pays the cost of damages and injuries resulting from being hit by an uninsured or hit-and-run driver. Both you and your passengers are covered for medical expenses, lost wages and other injury-related losses.

Utility Service Interruption Coverage: Coverage for the loss to an insured due to lack of incoming electricity which was caused by damage from a covered cause of loss, such as a fire or windstorm, to property away from the insured's premises - usually the utility generating station. Also referred to as 'off-premises power coverage'.


Vacancy Provision: Property insurance provision found in commercial property policies that restrict coverage in connection with buildings that have been vacant for a specified number of days, usually 60 days.

Valuable Papers and Records Coverage : Coverage that pays the cost to reconstruct damaged or destroyed valuable papers and records and usually includes almost all forms of printed documents or records except money or securities; data processing programs, data and media are usually excluded.

Vandalism: The malicious and often random destruction or spoilage of another person’s property.

Variable Annuity: An annuity contract in which the benefit paid out varies, usually in relation to the security market.

Vehicle Identification Number (VIN): A 17-digit number assigned to each vehicle manufactured in the United States after 1980. This number is used for identification purposes and is visible on the dashboard when viewed from the outside of the vehicle.


Waiver of Premium: Rider or provision included in most life insurance policies exempting the insured from paying premiums after he or she has been disabled for a specified period of time, usually six months.

Waiver of Subrogation: Also known as 'transfer of rights of recovery,' the relinquishment by an insurer of the right to collect from another party for damages paid on behalf of the insured.

Warranty: Statement of fact or a promise made by the insured that is part of the insurance contract and that must be true if the insurer is to be liable under the contract.

Water-damage Insurance Coverage: Protection provided in most homeowners insurance policies against sudden and accidental water damage, from burst pipes for example. Does not cover damage from problems resulting from a lack of proper maintenance such as dripping air conditioners. Water damage from floods is covered under separate flood insurance policies issued by the federal government.

Whole Life Insurance: Life insurance that is kept in force for a person's whole life as long as the scheduled premiums are maintained. All Whole Life policies build up cash values. Most Whole Life policies are guaranteed as long as the scheduled premiums are maintained. The variable in a Whole life Policy is the dividend which could vary depending on how well the insurance is doing. If the company is doing well and the policies are not experiencing a higher mortality than projected, premiums are paid back to the policy holder in the form of dividends. Policyholders can use the cash from dividends in many ways; it can be used to lower premiums, purchase more insurance or it can be used to pay for term insurance.

Workers' Compensation: Protection which provides benefits to employees for injury or contracted disease arising out of and in the course of employment. Most states have laws which require such protection for workers and prescribe the length and amount of such benefits provided.

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