Glossary
Insurance glossary
409 definitions · page 7 of 7.
- SUPERFUND
- A federal law enacted in 1980 to initiate cleanup of the nation’s abandoned hazardous waste dump sites and to respond to accidents that release hazardous substances into the environment. The law is officially called the Comprehensive Environmental Response…
- SURETY BOND
- A contract guaranteeing the performance of a specific obligation. Simply put, it is a three-party agreement under which one party, the surety company, answers to a second party, the owner, creditor or “obligee,” for a third party’s debts, default or…
- SURPLUS
- The remainder after an insurer’s liabilities are subtracted from its assets. The financial cushion that protects policyholders in case of unexpectedly high claims. (See Capital; Risk-based capital)
- SURPLUS LINES
- Property/casualty insurance coverage that isn’t available from insurers licensed in the state, called admitted companies, and must be purchased from a non-admitted carrier. Examples include risks of an unusual nature that require greater flexibility in…
- SURRENDER CHARGE
- A charge for withdrawals from an annuity contract before a designated surrender charge period, usually from five to seven years.
- SWAPS
- The simultaneous buying, selling or exchange of one security for another among investors to change maturities in a bond portfolio, for example, or because investment goals have changed.
- TERM CERTAIN ANNUITY
- An form of annuity that pays out over a fixed period rather than when the annuitant dies.
- TERM INSURANCE
- A form of life insurance that covers the insured person for a certain period of time, the “term” that is specified in the policy. It pays a benefit to a designated beneficiary only when the insured dies within that specified period which can be one, five, 10…
- TERRITORIAL RATING
- A method of classifying risks by geographic location to set a fair price for coverage. The location of the insured may have a considerable impact on the cost of losses. The chance of an accident or theft is much higher in an urban area than in a rural one…
- TERRORISM COVERAGE
- Included as a part of the package in standard commercial insurance policies before September 11, 2001 virtually free of charge. Since September 11, terrorism coverage prices have increased substantially to reflect the current risk.
- THIRD-PARTY ADMINISTRATOR
- Outside group that performs clerical functions for an insurance company.
- THIRD-PARTY COVERAGE
- Liability coverage purchased by the policyholder as a protection against possible lawsuits filed by a third party. The insured and the insurer are the first and second parties to the insurance contract. (See First-party coverage)
- TIME DEPOSIT
- Funds that are held in a savings account for a predetermined period of time at a set interest rate. Banks can refuse to allow withdrawals from these accounts until the period has expired or assess a penalty for early withdrawals.
- 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.
- TORT
- A legal term denoting a wrongful act resulting in injury or damage on which a civil court action, or legal proceeding, may be based.
- TORT LAW
- The body of law governing negligence, intentional interference, and other wrongful acts for which civil action can be brought, except for breach of contract, which is covered by contract law.
- TORT REFORM
- Refers to legislation designed to reduce liability costs through limits on various kinds of damages and through modification of liability rules.
- 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.
- TRANSPARENCY
- A term used to explain the way information on financial matters, such as financial reports and actions of companies or markets, are communicated so that they are easily understood and frank.
- TRAVEL INSURANCE
- Insurance to cover problems associated with traveling, generally including trip cancellation due to illness, lost luggage and other incidents.
- TREASURY SECURITIES
- Interest-bearing obligations of the U.S. government issued by the Treasury as a means of borrowing money to meet government expenditures not covered by tax revenues. Marketable Treasury securities fall into three categories — bills, notes and bonds…
- TREATY REINSURANCE
- A standing agreement between insurers and reinsurers. Under a treaty each party automatically accepts specific percentages of the insurer’s business.
- UMBRELLA POLICY
- Coverage for losses above the limit of an underlying policy or policies such as homeowners and auto insurance. While it applies to losses over the dollar amount in the underlying policies, terms of coverage are sometimes broader than those of underlying…
- UNBUNDLED CONTRACTS
- A form of annuity contract that gives purchasers the freedom to choose among certain optional features in their contract.
- 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.
- UNDERWRITING
- Examining, accepting, or rejecting insurance risks and classifying the ones that are accepted, in order to charge appropriate premiums for them.
- UNDERWRITING INCOME
- The insurer’s profit on the insurance sale after all expenses and losses have been paid. When premiums aren’t sufficient to cover claims and expenses, the result is an underwriting loss. Underwriting losses are typically offset by investment income.
- UNEARNED PREMIUM
- The portion of a premium already received by the insurer under which protection has not yet been provided. The entire premium is not earned until the policy period expires, even though premiums are typically paid in advance.
- UNINSURABLE RISK
- Risks for which it is difficult for someone to get insurance. (See Insurable risk)
- UNINSURED MOTORISTS COVERAGE
- Portion of an auto insurance policy that protects a policyholder from uninsured and hit-and-run drivers.
- UNIVERSAL LIFE INSURANCE
- A flexible premium policy that combines protection against premature death with a type of savings vehicle, known as a cash value account, that typically earns a money market rate of interest. Death benefits can be changed during the life of the policy within…
- VALUED POLICY
- A policy under which the insurer pays a specified amount of money to or on behalf of the insured upon the occurrence of a defined loss. The money amount is not related to the extent of the loss. Life insurance policies are an example.
- VANDALISM
- The malicious and often random destruction or spoilage of another person’s property.
- VARIABLE ANNUITY
- An annuity whose contract value or income payments vary according to the performance of the stocks, bonds and other investments selected by the contract owner.
- VARIABLE LIFE INSURANCE
- A policy that combines protection against premature death with a savings account that can be invested in stocks, bonds, and money market mutual funds at the policyholder’s discretion.
- VIATICAL SETTLEMENT COMPANIES
- Insurance firms that buy life insurance policies at a steep discount from policyholders who are often terminally ill and need the payment for medications or treatments. The companies provide early payouts to the policyholder, assume the premium payments, and…
- VOID
- A policy contract that for some reason specified in the policy becomes free of all legal effect. One example under which a policy could be voided is when information a policyholder provided is proven untrue.
- VOLATILITY
- A measure of the degree of fluctuation in a stock’s price. Volatility is exemplified by large, frequent price swings up and down.
- VOLCANO COVERAGE
- Most homeowners policies cover damage from a volcanic eruption.
- VOLUME
- Number of shares a stock trades either per day or per week.
- WAIVER
- The surrender of a right or privilege. In life insurance, a provision that sets certain conditions, such as disablement, which allow coverage to remain in force without payment of premiums.
- WAR RISK
- Special coverage on cargo in overseas ships against the risk of being confiscated by a government in wartime. It is excluded from standard ocean marine insurance and can be purchased separately. It often excludes cargo awaiting shipment on a wharf or on…
- 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…
- WEATHER DERIVATIVE
- An insurance or securities product used as a hedge by energy-related businesses and others whose sales tend to fluctuate depending on the weather.
- WEATHER INSURANCE
- A type of business interruption insurance that compensates for financial losses caused by adverse weather conditions, such as constant rain on the day scheduled for a major outdoor concert.
- WHOLE LIFE INSURANCE
- The oldest kind of cash value life insurance that combines protection against premature death with a savings account. Premiums are fixed and guaranteed and remain level throughout the policy’s lifetime.
- WORKERS COMPENSATION
- Insurance that pays for medical care and physical rehabilitation of injured workers and helps to replace lost wages while they are unable to work. State laws, which vary significantly, govern the amount of benefits paid and other compensation provisions.
- WRAP-UP INSURANCE
- Broad policy coordinated to cover liability exposures for a large group of businesses that have something in common. Might be used to insure all businesses working on a large construction project, such as an apartment complex.
- WRITE
- To insure, underwrite, or accept an application for insurance.