Glossary R 

rateThe premium charge for specific coverage for the regular policy period. Also, the cost of a unit of insurance for a specified period of time.

rated A term used to describe insurance issued to a person, who is a substandard risk, at a premium rate which is higher than that charged for a standard risk.

rating bureaus Organizations which ascertain, determine and sometimes fix and regulate insurance rates.

rebating Giving a premium reduction or another financial advantage not stated in the policy as an inducement to purchase the policy. The offer of sharing commissions with the applicant is an inducement that is not part of the insurance policy and, therefore, is considered rebating. Rebates include not only cash but also personal services and items of value. Rebating is considered a violation of the Unfair Trade Practices Acts in most states.

reciprocal insurance exchange An unincorporated insurance company whose members exchange contracts of insurance with each other. Each member, called a subscriber, contributes to pay for the losses of other subscribers. Subscribers pay only their share of losses and expenses.

redlining Unfair discrimination against a risk based on its location, not on the risk’s characteristics.

reduced paid-up insurance One of the nonforfeiture options contained in certain policies; it provides that the insured may elect to have the cash surrender value of the policy used to purchase a paid-up policy for a reduced amount of insurance.

reinstatement A process for making a coverage applicable again after it has been canceled or suspended, but before the original normal expiration date of the policy in question.

reinsurance An agreement by which one insurance company transfers to another carrier part or all of its risk of loss under its policies by means of a separate contract or treaty with another insurance company. The company providing reinsurance protection is the “reinsuring company” or “reinsurer.” The one receiving reinsurance protection is the “ceding company.”
Under the common form of reinsurance known as excess reinsurance, the reinsurer covers losses exceeding a certain limit specified in advance, and then only for the excess of the amount of the loss over the fixed limit. There are also quota share (pro rata) and stop loss (excess) types as well as facultative, which is specific for a given risk and may be of any type. The liability retained by the ceding company is known as its “retention.”

release An instrument signed by an insured or a third party claimant relieving the insurance carrier of any further liability (or any liability at all) with respect to a specific claim.

renewable term Term insurance that may be renewed for another term without evidence of insurability.

rental value insurance Insurance which reimburses an owner of a building for loss of income as a landlord or, if he/she occupies the building, for loss of such comparable value.

replacement A new policy written to take the place of one currently in force or recently terminated.

replacement cost The cost of replacing property without deduction for depreciation.

reporting form policy A policy covering property with varying values (inventory), etc., which contains a provision that requires reported values at stated intervals.

representations Statements made by the proposed insured in the process of securing coverage. Coverage may be voided if the representation is false and material to the determination of risk. The standard of truth in representation is substantial, that is, “to the best of knowledge and belief,” but not exact to detail.

reserve An amount set aside by the insurer to meet future obligations. The amount of reserve varies with different types of claims, as well as with differences in severity of claims.

retained limit See self-insured retention.

retention That part of the insurance on a risk retained or not reinsured, the balance of which is reinsured.

retirement income One of the basic uses for life insurance. Life income, beginning at a selected retirement age, derived by applying contractual settlement options to policy or annuity case values. The definition may apply to individual or to joint lives.

retroactive date A date that may be entered by the insurer on the Declarations Page of a “claims made” policy. This provision establishes that no claims for injury of damage that occurred before the retroactive date will be covered by that policy.

revocable beneficiary This designation means the policy owner can change the beneficiary without the beneficiary’s consent.

rider A document that amends or changes the policy. In life insurance, a rider usually adds coverage to the basic policy.

risk The hazard, or chance of loss, on any particular item of insurance. The term “risk” usually is used in a general way to designate the entire subject matter of insurance covered under a policy or upon which an application for insurance has been received. Risk is also sometimes used to designate a policyholder.

robbery The felonious and forcible taking of property by violence inflicted upon the victim of the robbery, or by putting such person in fear of violence. This includes money, checks, and goods taken from such person during a holdup.

Roth IRA An individual retirement plan that features nondeductible contributions and tax-free withdrawals pursuant to qualified distributions.