| A |
|
| Accident |
An event or occurrence which is unforeseen and unintended. |
| Actual Cash Value |
Property insurance valuation method. The replacement cost of property damaged or destroyed at the time of loss, with less depreciation. |
| ACV |
Actual Cash Value |
| ADA |
Americans With Disabilities Act |
| Additional Insured |
A person or organization that meets the definition of an insured within an insurance policy. The party is not named specifically but is insured due to a group or class. Employees, officers and directors, for example. |
| Additional Named Insured |
A person or organization, other than the first named insured, specifically named as an insured in the declarations of the policy. |
| Adjustor |
A person who investigates and settles losses for an insurance company. May be an employee of the insurer or an employee of an independent adjusting firm. |
| Advertising Injury |
Injury rising out of an offense committed in the course of advertising activities. For example: libel, slander, defamation, violation of right of privacy, piracy, unfair competition, or infringement of copyright, title, or slogan. |
| Agent |
A legal representative of an insurance company. Role in the insurance transaction is to sell and service insurance. May be an employee. See also "Independent Agent," "Direct Writer," and "Captive Agent." |
| Agent of Record |
See "Broker of Record" |
| Agents' Errors & Omissions |
See "Insurance Agents' Errors & Omissions" |
| Aggregate Limit |
A limitation in many liability policies stipulating the maximum amount available for the total of all claims paid in a period of time. Aggregates are usually annual. |
| Agreed Amount Endorsement |
An endorsement to property insurance policies that removes the penalty for coinsurance issues by agreeing that the amount of insurance meets any coinsurance requirements. |
| All Risk |
Antiquated term to describe the perils in a property insurance policy. It has been replaced by the term "Special Risk." Using "All" got insurers and agents into trouble. See "Special Risk." |
| Application |
A form completed by the insured and / or the agent providing information used in the underwriting and pricing process. The application becomes a part of the insurance policy for many lines of insurance. |
| ARAP |
Rating system for assigned risk insurance programs managed by some states. |
| ARM |
Professional designation Associate In Risk Management. A course of study including the management of risks using techniques other than insurance. |
| ARP |
Assigned Risk Plan |
| Assessable Policy |
An insurance policy that allows insurers to return to policy holders (as a group) for additional funds to cover losses of the group greater than anticipated. Usually only utilized in mutual insurance companies and captive / self insurance plans. |
| Assigned Risk Plan |
AKA The Pool. This is a risk sharing mechanism set up by states to provide insurance for employers where no standard insurance company is interested. The problem may be with the risk (poor loss experience) or with the state's workers' compensation system (the state insurance has set up a system where insurers feel that they cannot make money). |
| Audit Worksheet |
The document prepared by the auditor that outlines the payrolls of your company. In many cases the worksheet will show the remuneration of each employee and the classification assigned to that individual. The information on the worksheet is what is used to calculate the final premium. |
| Audited Premium |
The final premium based upon the audited, actual payrolls. |
| Auditor |
See "Premium Auditor" |
| Average Weekly Wage |
A wage figure used to determine the payout in lost wages to an employee injured in a workers' compensation loss. |
| B |
|
| B&M |
Boiler and Machinery |
| Bailee |
An individual or entity that holds property of another. Examples are dry cleaners, jewelers, appliance repair firms, and computer repair firms. |
| Bailee Insurance |
Insurance on the property of others held by a bailee. |
| BI |
Bodily Injury |
| BII |
Business Income Insurance or Business Interruption Insurance |
| Binder |
An oral or written statement that insurance coverage has been placed in effect. Usually issued by an insurance agent or the insurance company pending the actual policy being issued. |
| Blanket Insurance |
A single limit of property insurance that insures multiple classes of property (buildings and contents) over multiple locations. Specific insurance provides specific coverage to a specific property. Blanket coverage lumps all property into one amount of insurance. |
| Bodily Injury |
Injury or death. Some liability policies include emotional distress in the definition. |
| Boiler & Machinery Policy |
Provides coverage for damage to equipment and machinery by mechanical breakdown, power surges, etc. |
| BOP |
Business Owner's Policy |
| BOR |
Broker of Record |
| Broker |
An insurance professional who represents the insured in the insurance transaction. Sometimes used incorrectly as a synonym for agent. |
| Broker Of Record Letter |
A form letter used to indicate to an insurance company a policyholder's preference as to which insurance agent will have exclusive rights to the insured. Excludes all other agents / brokers from accessing the insurance company in question for that policyholder. |
| Builder's Risk Insurance |
Property insurance designed to protect buildings under construction or renovation. The policy recognizes the unique issues and hazards of construction. The rating of the policy recognizes the increasing values at risk. |
| Burglary |
Breaking and entering into another person's building with felonious intent. |
| Business Income Insurance |
See "Loss of Business Income" |
| Business Insurance |
A subset of insurance that applies to the risks and hazards of business ventures, as opposed to personal insurance. |
| Business Interruption Insurance |
Part of property insurance that pays for the lost profits and continuing expenses that result from physical damage to insured property caused by an insured peril.
See "Loss of Business Income," and "Extra Expense" |
| Business Owners Policy |
A package of insurance coverage providing both property and general liability insurance usually designed for smaller retail and office type businesses. |
| C |
|
| Cafeteria Plan |
See "Flexible Benefit Plan" |
| Cancellation |
Discontinuance of an insurance policy prior to policy expiration. May be at the request of the insured or by the insured's action (non-payment of premium). In extreme cases the insurance company cancels a policy for an increase in hazard. Cancellations are largely governed by state law. |
| Captive Agent |
An insurance agent who represents a single insurer or a single group of insurers. Captive agents may have to give their represented insurers first right of refusal or may be bared from accessing other insurers altogether. |
| Captive Insurance Company |
An insurance company owned by one or more non-insurance companies formed to provide insurance coverage for the owners. |
| Carrier |
The insurance company |
| Casualty Insurance |
Classification of insurance dealing with losses caused by issues of liability through bodily injury, personal injury, wrongful acts, or property damage. Includes:
--Auto Insurance
--General Liability
--Workers' Compensation
--Professional Liability
--Directors' and Officers' Liability
--Fiduciary Liability
Many casualty insurers also write surety business. |
| Cede |
To transfer all or part of a risk written by an insurer to a reinsurer. |
| Certificate of Insurance |
Proof of the existence at a moment in time of an insurance policy. Usually prepared by an insurance agent listing the coverage included in a program of insurance. Prepared for the information of a business associate of the insured - a subcontractor would have his agent issue a certificate to the general contractor. |
| Certified Insurance Counselor |
Professional designation in property and liability insurance administered by the Society of Certified Insurance Counselors. |
| CGL |
Commercial General Liability |
| CGL Policy |
See "Commercial General Liability Policy" |
| Chartered Property and Casualty Underwriter |
Professional designation administered by the American Institute for Property and Liability Underwriters. The course of study includes extensive examinations covering the breadth of property and casualty insurance issues. |
| CIC |
See "Certified Insurance Counselor" |
| Claims Made |
Refers to the trigger of liability coverage. An occurrence policy responds to events that happen (occur) during the policy period. Claims-made policies respond to lawsuits filed (the making of a claim) during the policy period. |
| Classification |
Work Comp - See "Employment Classification" |
| Closed Claim |
A claim that has been resolved. No further payments or treatments are expected. |
| CNP |
Closed No Payment. Used on loss runs and claim reports to indicate that no payment was made on a claim and the file has been closed. |
| COBRA |
Health Insurance - Stands for: Consolidated Omnibus Budget Reconciliation Act.
Federal law that provides certain former employees, retirees, spouses and dependent children the right to temporary continuation of health coverage at group rates.
Coverage is limited to 18 months. |
| Coinsurance |
A penalty clause in property insurance policies that requires a certain percentage of the property's value to be insured.
Example, a building with a replacement cost of $1,000,000 and an 80% coinsurance clause must be insured for at least $800,000 (80% of the $1,000,000 value) or a penalty is assessed at the time of a loss.
Coinsurance in health insurance means the percentage of a loss paid by the insurance company.
Liability insurance policies may have a coinsurance clause that denotes the percentage of the loss paid by the insurance company. |
| Collision Insurance |
Auto Insurance - coverage for damage caused to the insured vehicle by an automobile accident or upset of the vehicle. Damage caused by collision with an animal or bird is covered by automobile comprehensive insurance. |
| Commercial Auto Policy |
Provides protection for liability arising out of the use of motor vehicles. Also provides physical damage coverage to specified vehicles (also know as comprehensive and collision coverage). |
| Commercial Crime Insurance |
Coverage forms used to insure against burglary, robbery, counterfeit currency for organizations other than banks and financial institutions. |
| Commercial Crime Policy |
Crime insurance used by general businesses. Banks use the Financial Institution Bond. |
| Commercial General Liability Policy |
Provides coverage for bodily injury and property damage either from operations or products. |
| Commercial Lines Insurance |
A broad category of insurance indicating insurance for businesses, professionals, and commercial establishments. |
| Commercial Property Policy |
Coverage for buildings and contents. |
| Conditions |
Qualifications on the terms made by an insurance company - insured must pay premium, insured must notify insurance company of claims, etc. |
| Coverage |
The scope of protection of an insurance policy. Used as a synonym for insurance. |
| Coverage Symbols |
See "Garage Policy Coverage Symbols" |
| CPCU |
Chartered Property and Casualty Underwriter |
| Credit Insurance |
Coverage against default by creditors. Insureds can protect all of their accounts receivable or specific creditors. Some credit insurance companies also provide credit watch and account receivable advisory services. |
| CSR |
See "Customer Service Representative" |
| Customer Service Representative |
An employee of an insurance agency or company who provides administrative and customer support functions. |
| D |
|
| D&O |
Directors' and Officers' insurance |
| Dealer Bonds |
Financial guarantees required by a state licensing authority usually for the protection of consumers. |
| Dealer's Errors and Omissions Coverage |
A broad errors and omissions insurance coverage offered by some specialty insurance companies. May include Truth In Lending Liability, Title E&O, Odometer Liability, and Insurance Agent's E&O. |
| Dealer's Open Lot |
Provides coverage on a dealer's inventory of vehicles. Can be written on a monthly reporting form or on a non-reporting basis. See "Monthly Reporting" |
| Death Benefit |
Payment made to a policy beneficiary upon death. |
| Debris Removal Clause |
Extends property insurance to include payment for the removal of the debris of an insured loss. Includes demolition, transportation, and disposal of the rubble. |
| Dec |
Declarations page - see "Declarations" |
| Declarations |
The part of an insurance policy that specifically describes the limits, premiums, rates, names and other information relative to a specific insured. |
| Deductible |
The part of a claim paid for by the insured. A $5,000 property deductible means that the insured pays the first $5,000 of any fire damage or other insured loss. |
| Definitions |
The part of an insurance policy that defines many of the words used in the policy. Most policies highlight terms that are defined or place the term in quotation marks to indicate that the word is defined in the policy. |
| DIC |
Difference In Conditions policy |
| Difference In Conditions Policy |
A property insurance policy that provides additional perils such as earthquake and flood coverage. |
| Diminished Value |
The reduction of the market value of a vehicle after it has been involved in an accident and repaired. |
| Direct Primary Garage Keepers Coverage |
Garage keepers insurance that responds regardless of a dealer's negligence or the insurance held by the vehicle owner. |
| Direct Writer |
An insurance company that does not work through independent insurance agents. Agents for direct writers are usually employees of the insurance company or in exclusive relationships with the insurance carrier. Liberty Mutual, State Farm, and Allstate are direct writers. |
| Directors & Officers Insurance Policy |
Provides coverage for allegations of third parties for mismanagement, failure to act properly, and other "wrongful acts" against directors' and officers'. Coverage can also be included for the bank, known as entity coverage. |
| Discovery Period |
See "Extended Reporting Period" |
| Dishonesty Insurance |
See "Commercial Crime Policy" |
| Dividend |
A return of premium given after a policy has expired based on loss experience of the insured or of a group of insureds. Low losses results in higher dividends. Under most state laws insurers cannot guarantee dividends. |
| DOC |
Drive Other Car coverage |
| Domestic |
See "Residence Employee" |
| Domestic Insurer |
An insurer domiciled in a state in which the insured's insurance is written. |
| Drive Other Car Coverage |
An endorsement to the commercial auto policy that extends coverage for individuals not covered by a personal auto policy that are provided personal use of a company vehicle. |
| E |
|
| E&O |
Errors and Omissions Insurance |
| Earned Premium |
Premium used in an insurance policy. In workers' compensation premium is earned as the employer incurs payroll expense. |
| EDP |
Electronic Data Processing |
| EE |
Extra Expense |
| EL |
Employers' Liability |
| Employee Retirement Income Security Act |
US federal law passed in 1974 that provides regulation over employee welfare plans - retirement funds, group insurance, pensions, etc. |
| Employers' Liability |
The second part of workers' compensation insurance policies. Provides protection from liabilities that arise out of the employment relationship but are not covered by workers' compensation. For example: a spouse of an employee who becomes ill because of chemical residues brought home on employee's clothing. |
| Employment Classification |
The job code / description used to categorize employees and exposures. |
| Employment Practices Liability Insurance |
Liability insurance for acts of harassment, wrongful discharge, wrongful hiring, and discrimination. Also called EPL. |
| Endorsement |
Additional policy coverage, conditions, or exclusions added to the insurance contract by the insurance company. Sometimes called a rider. |
| Entity Coverage |
An extension of directors' and officers' insurance providing coverage for legal actions against the insured entity. |
| EPLI |
Employment Practices Liability Insurance |
| ERISA |
See "Employment Retirement Income Security Act" |
| ERISA Bond |
Provides the required protection for the assets of a retirement fund under the federal law known as ERISA. |
| Errors and Omissions Insurance |
See "Professional Liability Insurance" |
| Estimated Premium |
Premiums determined at the beginning of a policy period based upon estimated payrolls. The insured pays for the policy based upon the estimated premium then the audit determines the final premium. |
| Excess and Surplus Lines |
See "Surplus Lines" |
| Excess Garage Keepers Coverage |
Garage keepers insurance that only pays amounts above any insurance collectable by the vehicle owner. |
| Excess Liability Policy |
See "Umbrella Liability" |
| Excess Loss Premium Factor |
A part of retrospective rating programs. A factor to compensate the insurer for limiting the effects of losses over a certain amount, $50,000 for example. |
| Excess Losses |
Workers' Compensation - Part of the experience modification calculation. The amount of a loss that exceeds $5,000. See also "Primary Losses." |
| Exclusion |
A part of an insurance contract that removes coverage for a specific set of circumstances. Flood is excluded from coverage on most property insurance policies. |
| Exclusive Agent |
See "Captive Agent" |
| Experience Modification Factor |
Workers' Compensation - A premium adjustment factor based upon the losses of a risk compared to losses of similar organizations. A ratio of expected losses to actual losses. Calculated by rating bureaus such as NCCI. |
| Experience Period |
Workers' Compensation - Policy and claim periods used in the experience modification. Usually the oldest three of the past four years.
2006 mod is based on the data from years 2004, 2003, and 2002. |
| Exposure |
A vulnerability to loss. |
| Exposure Basis |
A unit of measuring exposure. In workers' compensation the exposure basis is remuneration. In the case of some rates for domestic help, the unit may be per employee.
A liability policy may use payroll, sales, or area as the basis of premium. |
| Extended Discovery Period |
See "Extended Reporting Period" |
| Extended Reporting Period |
A provision included in claims-made liability insurance policies where after the expiration or cancellation of a policy the insured can extend the time to discover a claim that occurred prior to the end of the policy.
Also called a Tail or Discovery Period. |
| Extended Theft |
See "False Pretence Coverage" |
| Extortion
|
Extracting money or forcing actions based on a threat of harm. A part of most kidnap and ransom insurance policies. |
| Extra Expense Insurance |
A part of time element insurance that pays the increased costs that are necessary to get an insured back into business quickly after insured property is damaged by an insured peril. |
| F |
|
| False Pretence Coverage |
Protection for "Trick and Device" schemes for inventory and stock. Coverage can be provided for "incoming" (parting with a vehicle) and "outgoing" losses (the acquisition of a vehicle or property without a valid title due to false pretense). |
| False Pretence Exclusion |
An exclusion that affects coverage for losses caused by the voluntary parting of possession of property. Excludes coverage for "Trick and Device" schemes. |
| Federal Employees Compensation Act |
Workers' compensation act for federal civilian government employees. Overseen by the US government. Does not involve private insurers or state funds. |
| Federal Employers Liability Act (FELA) |
Applies to railway workers who are exempt from workers' compensation statues. Cases decided on the basis of employers' liability. |
| Fellow Servant Rule |
Archaic term used as a common law defense for employers prior to workers' compensation laws. Held that employer was not liable for injuries to an employee if the injury was caused by a fellow employee. |
| Fidelity Bond |
See "Commercial Crime Policy" |
| Fiduciary |
A person entrusted with property or the care of an asset. |
| Fiduciary Coverage |
See "Fiduciary Responsibility Liability Insurance" |
| Fiduciary Duty |
The duties expected of a fiduciary. |
| Fiduciary Responsibility Liability Insurance |
Protects the fiduciaries, directors, and officers of employee welfare plans (group insurance, pension plans, 401k plans) against actual or alleged wrongful acts. Covers liabilities imposed by the federal law ERISA. |
| Fire Insurance |
Broad term used to describe building and personal property insurance protection. |
| Fire Legal Liability |
A part of the commercial general liability insurance policy that protects damage to the part of the building occupied by the insured that is damaged due to the insured's negligence. Usually called upon to protect a tenant for damage to the portion of the building they rent. |
| First Named Insured |
The first person or organization listed on an insurance policy as an insured. First named insureds receive all policy notices and bills. |
| Flat Cancellation |
Cancellation of a policy that has been issued back to the effective date of the policy. No coverage is provided. |
| Flexible Benefit Plan |
An employee benefit plan that allows employees to select among the various group life, medical expense, disability, dental, and other plans that best meet their specific needs. |
| Flood Insurance |
Insurance against the peril of a general and temporary increase in the level of a stream, lake, river, or ocean. |
| Floor Plan Insurance |
Insurance coverage on the inventory of a new or used automobile dealer. Provides protection for the dealer and the dealer's lender. |
| Forced Placed Insurance |
Property insurance designed to cover properties where the bank's customer (the mortgagee) has failed to buy their own property insurance. Usually written on a monthly reporting basis. |
| Foreign Insurer |
An insurer domiciled in a state other than the one in which the insured's insurance is written. |
| Form |
The contract of insurance that outlines terms and conditions of protection. |
| FRIP |
Fiduciary Responsibility Insurance Policy |
| G |
|
| Garage Keeper's Coverage |
Insurance protection for dealers and repair operations. Covers damage to customer's vehicles - vehicles in the dealer's care, custody, or control. Can be written on a direct primary basis (insurance responds regardless of a dealer's negligence or insurance held by the vehicle owner) or on an excess basis (insurance only pays amounts above any insurance collectable by the vehicle owner). |
| Garage Liability |
A part of the garage insurance policy that provides coverage for bodily injury and property damage resulting from operations involving the ownership, maintenance or use of automobiles and the operation of an automobile sales and/or service operation. |
| Garage Policy |
A combination of auto insurance policy and general liability insurance. Designed for new and used car dealers as well as auto repair operations. |
| Garage Policy Coverage Symbols |
The garage coverage form has several classifications of covered vehicles, coded by numbers, as follows:
21. Any auto: the broadest classification.
22. Owned autos only: vehicles owned by the insured, including any acquired during the policy period.
23. Owned private passenger autos only: vehicles defined as private passenger (for example, a sedan or station wagon). Coverage is not provided on vans or pickup trucks even if they are used only to transport people.
24. Owned autos other than private passenger autos only: vehicles not designed as private passenger vehicles (for example, pickup trucks, vans, truck-tractors), including newly acquired vehicles.
25. Owned autos subject to no-fault: coverage only for no-fault or personal injury protection on vehicles located in no-fault states.
26. Owned autos subject to compulsory uninsured motorist law: vehicles located in a state where uninsured motorist coverage is compulsory. The required coverage is provided under the policy form.
27. Specifically described autos: vehicles listed in the policy or supplementary schedule. Coverage is limited to 30 days for newly acquired vehicles.
28. Hired autos only: vehicles that are leased, rented or borrowed.
29. Nonowned autos used in the garage business: vehicles belonging to employees and partners or their household members, which are covered while being used for the insured's business purposes.
30. Autos left for service, repair, storage or safekeeping: customers' vehicles while in the insured's care.
31. Dealer's autos and autos held for sale by nondealers or trailer dealers: this category is only used to provide physical damage coverage, requiring other classifications with it. |
| General Liability |
See "Commercial General Liability" |
| GL |
General Liability |
| Governing Classification |
The employment class with the highest remuneration on a policy except for standard exception classifications. |
| Group Self Insurance |
Many employers banding together to insure their operations based on a pooling of exposures and risks. They become an insurer. Groups can be homogeneous (a dealer workers' compensation group) or heterogeneous (a plumber, a lumber yard, and an auto dealer band together). |
| Guaranteed Cost |
A workers' compensation program that is not subject to adjustments in premiums based on losses. Guarantee cost programs do include audits and premiums are adjusted based on changes to remuneration. |
| H |
|
| Hammer Clause |
A provision in a professional liability policy or directors' and officers' insurance that limits the insurer's liability should the insured refuse to accept a settlement offer from the plaintiff. |
| Hard Market |
A description of the insurance marketplace used to indicate a period of increasing rates and constricting coverage / availability. A seller's market. The opposite of a soft market. |
| Hazard |
A situation that presents a chance of loss or an increase in the severity of a potential loss. |
| I |
|
| Incurred Losses |
Usually refer to a listing of losses from an insurance company. The total of amounts paid and amounts reserved for a claim. |
| Indemnification |
An agreement where one party agrees to provide protection for certain legal actions brought against the primary party by another. |
| Indemnity |
As To Property Insurance - Legal principle that holds an insured should not collect more that what he or she lost in a claim. |
| Indemnity |
As To Work Compensation - Lost time payments. As opposed to medical bills |
| Indemnity Contract |
As To Liability - A provision that the insurance company reimburses an insured after settlement of a claim. |
| Independent Adjuster |
A contractor of the insurance company who manages insurance claims for the insurance company. |
| Independent Agent |
An autonomous business that sells and services insurance policies as a representative of a variety of insurance companies. |
| Inland Marine Insurance |
A class of insurance covering articles in transit as well as the modes of transportation. Includes cargo, equipment, bridges, tunnels, art, jewelry, property owned by others and other items. |
| Insurance |
A contractual agreement where an insurance company assumes the risks outlined in an insurance policy in return for payment of a premium. |
| Insurance Adjuster |
The person who manages the claim process for the insurance company. May be an employee of the insurer or a contractor hired by the insurer. |
| Insurance Agents' Errors & Omissions |
Malpractice insurance for wrongful acts when acting as an insurance agent. |
| Insurance Carrier |
See "Insurance Company" |
| Insurance Commissioner |
The top insurance regulatory official in a state. May be called a Superintendent. |
| Insurance Company |
A commercial enterprise formed to sell and service insurance policies. |
| Interstate Rating |
An experience modification that includes payroll and loss information from more than one state. Several states do not participate in interstate rating plans |
| IRA-Keogh Errors & Omissions Policy |
Covers errors in the administration of IRA and Keogh plans. |
| J |
|
| K |
|
| K&R |
Kidnapping and Ransom Insurance |
| Kidnap Ransom and Extortion Policy |
Pays moneys demanded either for kidnapping or the threat of kidnapping. Also pays for extortion with a threat to property. |
| L |
|
| Liability |
A legally enforceable obligation usually due to a breach of some duty or negligence. |
| Liability Insurance |
Insurance that responds to a breech or negligence of the insured to another party. |
| Liquor Liability Insurance |
Coverage designed to respond to liabilities arising out of the sale, manufacture or serving of alcoholic beverages.
Most commercial general liability policies exclude liquor liability claims only for those in the business of selling, manufacturing, or serving alcohol. |
| Longshoremen's and Harbor Workers' Act |
See "United States Longshoremen & Harbor Workers' Act" |
| Loss |
An accident or event that causes damage, injury, or illness. |
| Loss Adjustment Expenses |
Monies spent to investigate and settle losses. |
| Loss Control |
Practices and procedures used to minimize the severity of a loss. Also used to describe loss prevention activities. |
| Loss Of Business Income |
A part of time element insurance that pays for the lost profits and continuing expenses after damage to insured property caused by an insured peril. |
| Loss Prevention |
Practices and procedures used to keep accidents from happening. Prevents frequency of loss. Also used to describe loss control activities. |
| Loss Ratio |
Incurred losses (and loss adjustment expenses) divided by net premiums earned. Measures profitability. A measure of losses compared to premiums. |
| Loss Reserves |
Estimated amounts for future payments of medical and wage payments for a specific claim. |
| Loss Run |
A record of losses for a policy period. |
| Lost Wages |
Amounts paid for wages lost by an employee due to a workers' compensation claim. |
| LTD |
Long Term Disability |
| M |
|
| Manual Premium |
Calculated by multiplying payrolls by rate before application of any modification factors, schedule credits, or debits. |
| Manuscript Policy |
A unique policy customized to the needs and exposures of a specific insured and a specific insurance company. |
| Medical Payments |
General Liability - coverage for medical bills incurred by a third party at an insured location. Coverage is not dependent on the negligence of the insured.
Automobile - Coverage for injuries to occupants of the insured vehicle caused by an auto accident. |
| Medical-Only Claims |
Workers' compensation claims where there is no lost time/wages. |
| Misrepresentation |
A false, incorrect, improper, or incomplete statement of a material fact, made in the application for an insurance policy. Constitutes fraud in many states. |
| Mod |
See "Experience Modification" |
| Modified Premium |
The workers' compensation premium after the application of the experience modification but before other credits/debits are applied. |
| Monopolistic |
A state workers' compensation system where no private insurers are allowed to compete for business. |
| Monthly Reporting Form |
See "Reporting Form" |
| MOP |
Manufacturers' Output Policy |
| MP |
Medical Payments |
| Mutual Insurance Companies |
An insurance company owned by policyholders as opposed to stockholders. |
| N |
|
| Named Insured |
Individuals and organizations listed on the declarations as insured. |
| National Association of Insurance Commissioners (NAIC) |
Association of state insurance regulators who administer state insurance rules and laws. NCCI promotes uniformity in regulation throughout the country. |
| NCCI |
The National Council on Compensation Insurance is the organization responsible in most states for administering classifications, experience modification factors, and collecting data used in ratemaking. NCCI is not connected with any state government. It is a rate and rulemaking organization funded by insurance companies that use their services. They report information to states and are certainly regulated by state insurance departments. It is not, however a government run organization. They do act like it sometimes, though. |
| Net Premium |
Premiums after all fees, charges and credits. |
| NOC |
As To Work Comp - See "Not Otherwise Classified" |
| No-Fault Automobile Insurance |
An approach to liability issues resulting from auto accidents used by certain states. Injuries resulting from auto accidents are paid by the insurance covering the vehicle occupied by the injured person rather than who was negligent. |
| Noncancellable |
A policy feature that provides a guarantee of continuation of insurance at the insured's option. Insurers may adjust premiums, however. |
| Not Otherwise Classified |
As To Work Comp - A term used in the SCOPES classification manual and other rule books to indicate employment classifications that are not included in other class descriptions. |
| O |
|
| Occupational Disease |
An illness or disease arising out of work hazard or condition. |
| Occupational Hazard |
A condition in a job or work environment that increases the peril of accident, sickness, or death. |
| Occurrence |
Defined by most liability policies as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." |
| Ocean Marine Insurance |
Insures boats, vessels, and cargo transported over water. |
| OD |
Occupational Disease |
| Ordinance or Law Insurance |
A part of property insurance that pays the increased cost of construction due to new zoning or building codes. Can also pay for demolition of the undamaged portion of a building that must be torn down due to violation of codes or ordinances. All coverage is triggered by a covered cause of loss plus the required action of laws or codes. |
| Other States |
Work Compensation - The section of the policy that describes how coverage will apply outside of the states listed in the classification page of your policy. |
| P |
|
| Package Policy |
Combining two or more insurance coverage sections into a single policy. Property and liability coverages for example. Homeowners and business owner's policies are package policies. |
| Partial Disability |
Work Comp - Impairment of a part of the body. May be permanent or temporary. |
| Payroll Audit |
Work Comp - An examination of employer records to determine final remuneration in individual employment classifications for the purpose of determining policy premium. Performed by an auditor. |
| PD |
Property Damage |
| Peril |
A cause of loss - fire, lightning, hail, robbery are examples of perils. |
| Permanent Partial Disability |
Partial impairment of a part of the body that is not reversible and will not heal. Amputation of a finger for example. May not impair work capacity for certain occupations. May remove an employee from the current occupation. |
| Permanent Total Disability |
Total loss of work capacity that is not reversible or will not heal. |
| Personal Injury |
Usually a part of the commercial general liability policy. Provides coverage for libel, slander, false arrest, defamation of character. Actual definition varies by policy. |
| Personal Injury Liability Insurance |
Part of the commercial general liability insurance policy that provides protection for libel, slander, defamation, or violation of right of privacy; and wrongful entry, eviction, or other invasion of right of private occupancy. |
| Personal Injury Protection (PIP) |
Auto Insurance - See "No Fault" |
| Personal Lines |
Insurance coverage in property and casualty insurance for families and households. Personal auto coverage and homeowners' insurance for example. |
| PI |
Personal Injury |
| Policy |
The insurance contract. It spells out the terms, conditions, and exclusions of the insurance provided by the insurance company. |
| Policy Term |
The period of time that the insurance policy is in force. |
| Policyholder |
The person or organization that owns the insurance policy. |
| Pollution |
A cause of loss that is excluded by most property and liability insurance polices. Usually requires a special pollution liability insurance policy. |
| Pool |
See "Assigned Risk Plan" |
| Premium |
The price of insurance for a specified risk for a specified period of time. |
| Premium Auditor |
Work Comp - An individual who performs the audit of remuneration at the end of a policy period. May be an employee of the insurance company or a contractor hired by the insurance company. |
| Premium Discount |
Work Comp - A premium credit based on the size of the premium paid. |
| Premium Finance |
Finance arrangement for the insured to make payment of the insurance premium. |
| Primary Insurance |
The insurance policy that is responsible to pay the first part of a loss. Excess policies pay after primary policies pay. |
| Primary Losses |
Work Comp - Part of the experience modification calculation. The first $5,000 of any loss. See also "Excess Losses." |
| Product Liability Insurance |
Protection against legal actions against an insured for bodily injury and property damage caused by a product sold, manufactured, processed, or provided by the insured. |
| Professional Liability Insurance |
Insurance against negligent damage caused by a wrongful act of the insured. Usually excludes bodily injury and property damage.
Also called Malpractice Insurance or Errors and Omissions Insurance |
| Proof of Loss |
Presentation by the insured of documentation of the extent of a claim. Usually used in property insurance policies as a condition. Insurers must respond (pay) within a certain time to the presentation by the insured of a proof of loss. |
| Property Damage |
Physical damage to tangible property. |
| Property Insurance |
Insurance protection for loss of tangible property owned by or in the care of the insured. Includes buildings, personal property, stock, inventory, and time element insurance. |
| Property Policy |
See "Commercial Property Policy" |
| Protection and Indemnity Insurance |
Specialized insurance for boats and commercial vessels. Responds to the unique exposures of maritime law and federal laws such as the Jones Act. |
| Public Adjuster |
A person or firm that is a representative of the insured in a claim for insurance benefits. |
| Q |
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| R |
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| Rating Bureau |
Work Comp - An organization that compiles statistical and rate making information to determine premiums. See "NCCI." Non-NCCI states have their own rating bureaus. See the appendix of this document for a listing of NCCI states and the regulatory agencies for workers' compensation in each state. |
| RC |
Replacement Cost |
| Rehabilitation Benefits |
Benefits payable to return an injured worker to work after a work related injury or illness. |
| Reinsurance |
Insurance purchased by insurance companies to provide a risk transfer mechanism. Also used by self insurers and self insured groups. |
| Remuneration |
Payroll and other compensation paid to employees. Used to calculate premiums. |
| Renewal |
The reestablishment of an insurance policy after the expiration of a prior term of coverage. |
| Replacement Cost |
Property valuation method that uses the cost of replacement of an item or the cost of new construction without any deduction for depreciation. |
| Reporting Form |
A policy requirement that the dealer provide a monthly inventory of vehicles to be insured. Substantial penalties can be included for underreporting or missed reports. |
| Reservation of Rights |
A response to a claim whereby the insurance company defends a case without any commitment as to the coverage provided by a policy. |
| Reserve |
Amount expected to be paid on a claim that is not resolved or closed. |
| Residence Employee |
Work Comp - A person who performs full- or part-time household services. |
| Residual Market |
See "Assigned Risk Plan" |
| Retention |
Amount of a claim paid for by the insured. The term is usually used in liability insurance. Similar to a deductible. |
| Retention |
A risk held by the insured. Sometimes used as a synonym for deductible. |
| Retention Plan |
A loss sensitive insurance plan that adjusts the premium up or down based on losses and associated costs. |
| Retrospective Rating |
A loss sensitive workers' compensation insurance program where adjustments are made to premiums after policy expiration. Adjustments can go up or down subject to premium minimums and maximums. |
| Rider |
See "Endorsement" |
| Risk |
1) Exposure to loss
2) An insured
3) A portion of an insured operation |
| Risk Management |
The process of addressing in a systematic way the hazards and exposures of an organization. Risks can be avoided, reduced, transferred, and retained.
Insurance transfers the risk (or a part of it) to an insurance company. |
| Risk Retention Group |
Alternative risk financing tool where similar businesses band together to share risks. Usually utilizes reinsurance and individual retentions along with regimented loss control and claims management process. Meets the requirements of the Risk Retention Act of 1986. |
| S |
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| Schedule Credit/Debit |
Premium adjustment factors applied at the discretion of insurance company underwriters based upon individual characteristics of the risk. Issues such as managed care, quality of management, loss control efforts, and insurance company appetite are included. |
| Scopes Manual |
Work Comp - A publication of NCCI that outlines the definitions of the 600 plus employment classifications. |
| Second Injury Fund |
Work Comp - A mechanism set up by states to minimize the impact of re-injuries. The theory is that employers will be reluctant to hire previously injured work |
