Glossary S 

SEGLI See Service Employees Group Life Insurance.

SEP See simplified employee pension plan.

SIR See self-insured retention.

salary savings insurance Regular forms of life insurance sold to a group of employees with premiums collected on a monthly basis from the employer who deducts the premiums from the wages of the insured employees.

salvage Property transferred to an insurer to reduce its loss. The insurer secures an ownership interest from paying a claim for total loss or damage based on the true value of the property in its undamaged state or before the loss occurred.

schedule The list of individual items covered under one policy (sometimes showing descriptions and values), as the various buildings or the list of items insured under a floater.

self-insurance Periodically setting aside sums of money which in time will cover losses as they occur. Only very large concerns with widely scattered property can safely afford to self-insure.

self-insured retention (also known as retained limit) In an umbrella policy, this is a deductible that applies to liability losses not covered by other underlying policies.

Service Employees Group Life Insurance (SEGLI) Insurance issued to members of the armed forces while they are in the service. After separation, it is convertible to individual policies from certain private insurers.

settlement options Nearly all life insurance policies issued provide for several optional modes of settlement in lieu of payments in a lump sum. The usual options are:
(1) interest,
(2) installments for a period certain,
(3) life income with specified number of years’ payment certain,
(4) fixed income as long as proceeds and interest will last.

short rate cancellation A cancellation by the insured that refunds the unearned premium minus administrative expenses.

short term policy A policy written for less time than is normal for that type of policy.

simplified employee pension plan (SEP) A written arrangement (a plan) that allows an employer to make contributions to an employee’s retirement. Contributions can be made to an employee’s individual retirement account or annuity (IRA).

soft market Used to describe a condition in which insurance is relatively inexpensive and easy to obtain.

specific rates Rates provided by ISO state officers for particular risks. They are based on a physical survey and on the application of rating schedules.

split limits In auto insurance, where rather than one liability amount applying on a per accident (occurrence) basis, separate amounts apply to bodily injury and property damage liability. For example, a liability limit of 100/300/100 means bodily injury limits of $100,000 per person, $300,000 per accident and a property damage limit of $100,000 per accident.

sprinkler leakage insurance A fire policy covers damage caused by discharge of water from a sprinkler system when the operation of the system is due to fire, but not otherwise. Damage caused by a fault in the system may be covered by a sprinkler leakage policy.

stacking Application of the limits of more than one policy to a claim or loss. Some courts have required stacking of limits when multiple policies cover an accident (occurrence).

standard risk A person who, according to a company’s underwriting standards, is entitled to insurance protection without extra rating or special restrictions.

stated value policy A policy of property insurance which states the maximum amount the company will pay in case of loss.

statute of limitations The time limit set by law in which a person must bring legal action on a claim.

stock insurer A corporation owned by stockholders who participate in the profits and losses of the insurer.

subrogation When the insurer pays the insured for a loss, the insurer takes over the insured’s right to collect damages from the other party responsible for the loss. Subrogation upholds the principle of indemnity by preventing the insured from collecting twice for a given accident.

substandard risk A risk that does not measure up to the company’s underwriting requirements.

suicide provision Most life policies provide that if the insured commits suicide within a specified period, usually two years, after the date of issue, the company’s liability will be limited to a return of premiums paid.

surety In bonds, this means the company which provides the bond is guaranteeing the behavior of the principal.

surety bond A bond guaranteeing the faithful performance of a contract, or the faithful performance of a duty or trust.

surplus The dollar amount remaining after company operation expenses. Surplus typically grows from underwriting gain and investment income. Surplus is diminished if payout on claims (insured losses) exceeds premiums collected.
A favorable surplus ratio, excess assets over liabilities, guarantees available funds for solvency and the ability to pay claims. It allows an insurer to grow and offer more products, as well as helps maintain a favorable rating within the insurance industry.

surrender Occurs when a policy owner requests termination of his/her policy with cash value. The insurer pays the policy owner any cash value that the policy has built up.