Insurance Terms Glossary – DEF

Death Benefit: The policy proceeds to be paid upon the death of the insured.

Deductible: Dollars or percentage of expense that will not be reimbursed by the insurer.

Decreasing Term Insurance: Term insurance whose amount of coverage starts out at the full amount, then gradually decreases until the expiration date of the policy.

Deferred Annuity: An Annuity on which payments to the annuitant are delayed until a specified future date.

Direct Writer: An insurance company that sells its policies through licensed producers who represent the insurer exclusively, rather than through independent local producers, who represent several insurance companies.

Disability Income Insurance: A form of Health insurance that provides periodic payments to replace income, actually or presumptively lost, when the insured is unable to work as a result of sickness or injury.

Dividend: The return of part of the premium paid for a Participating policy.

Dividend Options: Ways an insured may receive policy dividends.

Domestic Insurance Company: An insurance company formed under the laws of the state in which the insurance is written.

Double Indemnity: Payment of twice the basic benefit in the event of loss resulting from specified cause or under specific circumstances.

Earned Premium: That portion of the premium for which policy protection has already been given during the now-expired portion of the policy term.

Effective Date: The date on which an insurance policy or bond goes into effect and from which protection is furnished.

Eligibility Period: The period following the Probationary Period during which the employee is eligible to obtain non-medical coverage under the Group Life plan.

Endorsement (Rider): A form attached to an insurance contract changing part of the contract.

Endowment Policy: A permanent life policy for which premiums are paid for a limited number of years. If the insured is alive at the end of this premium-paying period, she receives the face amount of the policy. If the insured dies before maturity of the policy, the beneficiary receives the proceeds. Maturity occurs prior to age 100.

Exclusions: Causes, conditions, or property listed in the policy that are not covered and for which no benefits are payable.

Face Amount (coverage): The amount indicated on the face of the policy that will be paid at death or when the policy matures.

Fiduciary: A person who occupies a position of special trust and confidence (for example, in handling or supervising the affairs or funds of another).

Foreign Company: An insurer organized under laws of a state other than the one in which the insurance is written.

Fraud (misrepresentation): An intentional misrepresentation made by a person with intent to gain advantage, and relied upon by a second party that suffers a loss.

Debris Removal: A coverage provided in many Property contracts that reimburses the insured for expenses involved in removing debris produced by a loss from a Peril insured against.

Declarations Page (Dec Sheet): A portion of the insurance contract that contains information such as the name and address of the insured, the property insured, its location and description, the policy period, the amount of insurance coverage, applicable premiums, and supplemental representations by the insured.

Deductible: Usually, a dollar amount the insured must pay on each loss to which the deductible applies. The insurance company pays the remainder of each covered loss up to the policy limits.

Depreciation: Decrease in the value of property over a period of time due to use, wear and tear, and obsolescence.

Direct Loss: Loss that is a direct result of a Peril, such as fire.

Direct Writer: An insurance company that sells its policies through licensed agents who represent the insurer exclusively, rather than through independent local agents, who represent several insurance companies.

Dividend: The return of part of the premium paid for a participating policy.

Domestic Insurance Company: An insurance company formed under the laws of the state in which the insurance is written.

Earned Premium: That portion of the premium for which policy protection has already been given during the now-expired portion of the policy term.

Effective Date: The date on which an insurance policy or bond goes into effect and from which protection is furnished.

Employers Liability Coverage: Coverage provided under a Workers’ Compensation policy to cover the employer’s liability arising out of employees’ work related injuries.

Endorsement: A document, agreed to by both parties, that is attached to the policy and modifies or changes the original policy in some way.

Errors And Omissions (E&O): A Professional Liability coverage that protects the insured against liability for committing an error or omission in performance of professional duties.

Exclusions: Causes, conditions, or property listed in the policy that are not covered and for which no benefits are payable.

Expediting Expenses: A Boiler and Machinery coverage that covers the cost of temporary repairs and the cost of speeding up permanent repairs. (Examples: overtime, express transportation charges.)

Experience: The loss record of an insured, a class of coverage, or an insurance company.

Extended Coverage Endorsement (ECE): A specific endorsement, attached to a standard Fire policy, usually providing coverage for windstorm, hail, explosion, riot, civil commotion, aircraft, vehicular damage, volcanic eruption and smoke damage.

Extra Expense Insurance: A Time-Element coverage for additional expenses incurred by the insured business to continue operations following a Direct Loss by a Peril insured against.

Fidelity Bond: A class of bonds that guarantees an employee’s honest discharge of duty.

Fiduciary: A person who occupies a position of special trust and confidence. For example, one handling or supervising the affairs or funds of another.

Financial Responsibility Laws: State laws that require owners or operators of autos to provide evidence that they have the funds to pay for automobile losses for which they might become liable. Insurance is the usual method for providing this evidence to the state.

Fire: Combustion, sufficient to produce a spark, flame, or glow, that is hostile (not in a place where it is intended to be). A friendly fire is one in your fireplace.

Fire Insurance: I) Contract that indemnifies an insured for loss caused by the destruction of the insured property resulting from fire. 2) The field of insurance that provides policies on the insured property for a variety of Perils, including Fire.

Floater Policy: Protection that follows moveable property, covering it wherever it may be, rather than applying only at a fixed location, such as a Personal Articles Floater (PAF).

Flood Insurance: Insurance designed to reimburse property owners for loss due to flood or to flood related erosion. Administered through the Federal Insurance Administration, but marketed through independent agents. ‘

Fraud: A false statement intended to deceive the insurer and induce it to part with something of value or to surrender a legal right. (This may void a policy)