AAI® accredited advisor in
ACLI American Council of
ACV See actual cash value.
AD&D accidental death and
ADPL See accidental direct
AIDS Acquired Immunodeficiency
AIPSO Automobile Insurance
Plans Service Office.
AMTC Agency Management Training
ARM See associate in risk
to an insurer the insured property after the event insured against has occurred.
Not permitted under most property insurance contracts.
Assignment by the policy owner of all control and rights to a third party.
accident An unforeseen
and unintentional act identifiable in time and place.
accident and health insurance
Insurance under which benefits are payable in case of disease, accidental
injury, or accidental death. Also called health insurance, personal health
insurance, sickness and accident insurance.
accidental bodily injury
A bodily injury which is not intentionally self?inflicted.
accidental death benefit
A form of insurance that provides payment if death of the insured results
from an accident, subject to the conditions of the specific policy. Accidental
death insurance is often combined with dismemberment insurance in a form called
Accidental Death & Dismemberment (AD&D).
accidental direct physical loss
(ADPL) Property insurance that covers an insured against essentially all perils
except those specifically excluded.
An account to which funds are added and from which risk charges are deducted.
The balance earns interest.
The cost to a company of securing business, including commissions, inspection
act of God An occurrence
which results from natural causes without any human intervention and could
not have been prevented by reasonable care or foresight (e.g., flood, lightning,
actual cash value
(ACV) The amount that the property in question could have been sold for by
the insured on the date of the loss. Computed on the basis of replacement
value less its depreciation by obsolescence or general wear.
actuary A person trained
in mathematics whose job is to apply the theory of probability to the business
of insurance to develop insurance rates. This is done largely from past experience,
though future probable trends are also taken into account.
additional insured/additional interest
Some person, other than the original named insured, who is entitled to protection
under a policy either by virtue of the wording of the basic policy or because
the policy has been modified to protect such interest.
additional living expense clause
A type of coverage that may be included in a policy that provides funds to
pay for increased living costs that result from damage covered by the policy.
The contractual right of a company to modify a policy owner's premium payments
under certain specified conditions.
adjuster An individual
representing the insurance company who works on agreements regarding the amount
of a loss and liability issues.
One of the basic uses for life insurance. Also called "readjustment income."
An added "step-down" income beyond what is required to cover the family's
minimum needs, which helps the family adjust to the shock of a lower income
following the insured's death.
An insurance company authorized and licensed to transact business in a given
or deposit premium The premium for many policies
depends on payroll or some other factor which can only be determined accurately
at the end of the policy period. In such cases, an estimated premium is charged
in advance and an adjustment is made at the close of the policy term.
"against the company." The tendency of less favorable insurance risks to seek
or continue insurance to a greater extent than others. Also, the tendency
of policy owners to take advantage of favorable options in insurance contracts.
Adverse selection may result in high loss ratios.
age limits Set ages
contained in a specific policy for the insuring of new applicants or for the
renewal of that policy.
agency 1) A situation
wherein one party (an agent) has the power to act for another (the principal)
in dealing with third parties. 2) An insurance sales office.
agent An individual appointed
by an insurance company to solicit, negotiate, effect or countersign insurance
contracts, and to provide policyholder services on its behalf.
alien company An
insurance company incorporated or organized under the laws of a foreign nation,
province, or territory.
see accidental direct physical loss.
allied lines insurance
Coverage for such miscellaneous perils as floods, earthquakes, and sprinkler
leakage, all of which have no immediate relationship to fire insurance but
are normally associated with it. Some of these perils are written by endorsement
to the fire contract; others are written in separate policies.
The total value which is exposed to loss at any one location or from any one
annuitant The person
whose life is measured to determine the timing and amount of annuity payments.
annuity A contract that
provides for a stipulated sum payable at certain regular intervals during
the lifetime of one or more persons, or payable for a specified period.
application A form
designed to show whether the person seeking insurance meets the company's
underwriting requirements and to establish proper price or rating. Requested
coverage may be accepted, modified, or declined.
This clause provides that if there is other insurance covering the loss, the
policy to which the clause is attached will not pay more than its pro rata
share of the loss.
Used when the insured and insurer agree that the loss is covered, but the
amount of the loss is in dispute. In general, each party selects its own appraiser.
If the appraisers cannot agree, they select an umpire. An agreement by any
two is binding on all parties.
Buildings located on the same premises as the main building insured under
a property policy (e.g., a tool shed).
In a property insurance contract, a clause that provides that if the policyholder
and the company cannot agree on the settlement amount on a claim, they both
select a neutral arbitrator. Any differences between the arbitrators are submitted
to an umpire. The amount agreed to by any two of the three will be the amount
arson The willful and malicious
burning of any property.
A risk which is not ordinarily acceptable to insurers and, thus, is "assigned"
to an insurer by an assigned risk pool or plan. Each participating company
agrees to accept its share of these risks.
assignee The person,
firm or corporation to whom a right or rights under a policy are transferred
by means of an assignment.
assignment The transfer
of a policy or certain policy rights from one party to another.
Associate in Risk Management
(ARM) A designation granted by the American Institute for Property and Casualty
Underwriters to qualified persons who successfully pass a series of examinations.
association group insurance
Group insurance issued to an association rather than to an employer or union.
Refers to the amount of money that will be spent to get a policy into the
hands of the policyholder. These costs include such items as commissions,
underwriting expenses, salaries for company employees, state insurance filing
fees and product development costs.
Assumed interest is an estimate of how much a company will earn on the money
it receives from policyholders.
See contractual liability.
An estimate of when a policyholder is likely to die and is based primarily
on age, but it can be influenced by health. Mortality tables covering large
cross sections of people in varying degrees of health, different occupations
and multiple lifestyles have been developed to help insurance companies determine
the average number of people of any given age who will die within a certain
The age an insured has reached on a given date.
A person or entity given the power of performing stated acts for another person.
This is done by a written contract, called a "power of attorney." Often used
to define the powers of the person or entity which operates a reciprocal or
Any object, place or condition that is attractive to children and may prove
harmful to them. People may be held liable for injuries to children caused
by an attractive nuisance, even if the children were trespassing when they
audit A survey or examination
of the insured's books (payroll records) or other records to determine the
premium due the carrier for coverage provided.
The amount of insurance which an insurer will accept from a broker; also the
limit of authority for a claims adjuster in settling losses on his/her own
Subject to contract terms, coverage of additional property or other risk by
an existing contract without specific request by the insured.
automatic premium loan
An option which may be available on certain policies to automatically pay
premiums in default at the end of the grace period by charging the amount
against the policy as a policy loan.
automatic reinstatement clause
In a property insurance contract, a clause providing for the automatic restoration
of the full face value of the policy after the payment of a loss.
A rate used in fire insurance to determine the premium for a policy or policies
covering more than one location or more than one type of property. It is obtained
by multiplying the rate for each location by the value at that location, totaling
the premium for all locations, and dividing the sum of the results by the