Glossary of Insurance Terms
H - O Terms
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Back A - G P - WHOMEOWNER'S POLICY
A package type of insurance for the homeowner that provides coverage for the dwelling, personal property, and personal liability.
INCONTESTABILITY
Life policies provide that, except for non-payment of premiums and certain other circumstances, the policy shall be incontestable after the policy has been in force for two years during the lifetime of the insured.
INDEMNITY
In general, means reimbursement for loss, but also is used to mean a benefit provided by a policy.
INDUSTRIAL LIFE INSURANCE
A class of life insurance that is usually issued with a protection amount of less than $1,000 and premiums usually payable weekly or at most, monthly. No longer sold by most companies.
INLAND MARINE INSURANCE
A broad type of insurance, generally covering articles that may be transported from one place to another as well as bridges, tunnels and other instrumentalities of transportation. It includes goods in transit (generally excepting trans-ocean) as well as numerous "floater" policies such as personal effects, personal property, jewelry, furs, fine art and others.
INVESTMENT INCOME
The income generated by a company's portfolio of investments (such as in bonds, stocks, or other financial ventures).
JOINT UNDERWRITING ASSOCIATION (JUA)
A device used to provide insurance to those who cannot obtain insurance in the voluntary market. Certain companies (called carriers) issue policies at one rate level and handle claims, but the ultimate costs are borne by all companies writing insurance in that state.
LAPSE
The termination or discontinuance of a policy due to non-payment of a premium.
LIABILITY INSURANCE
Provides protection for the insured against loss arising out of legal liability to third parties.
LOSS EXPENSE-ALLOCATED
Handing expenses, such as legal or independent adjuster fees, paid by an insurance company in settling a claim which can be definitely charged to that particular claim.
LOSS EXPENSE-UNALLOCATED
Salaries and other expenses incurred in connection with the operation of a claim department of an insurance carrier which cannot be charged to individual claims.
LOSS RATIO
The percent which losses beat to premiums for a given period.
LOSS RESERVE
The amount set up as the estimated cost of a claim. (See IBNR Reserve)
MATERIAL DAMAGE
Insurance against damage to a vehicle itself. It includes automobile comprehensive, collisions, fire and theft. Material damage and physical damage are terms that often are used inter-changeably.
MULTI-PERIL POLICY
A package policy which provides protection against a number of separate perils. Multi-peril policies are not necessarily multiple line policies, since the combined perils may be all within one insurance line.
MUTUAL INSURANCE COMPANIES
Insurance companies, without capital stock, owned by the policyholders.
NAMED PERILS
Coverage in a property policy that provides protection against loss from only the perils specifically listed in the policy rather than protection from all physical loss. Examples of named perils are fire, windstorm, theft, smoke, etc.
NEGLIGENCE
The failure to use the care that a reasonable and prudent person would have used under the same or similar circumstances.
NO-FAULT
A type of auto insurance mechanism whereby the right to sue another party for damages caused by negligence is limited and, in exchanged first party benefits are offered.
OCEAN MARINE INSURANCE
Coverage on all types of vessels, including liabilities connected with them, and on their cargoes.
OPERATING RATIO
The sum of expenses and losses expressed as a percent of earned premium.
ORDINARY LIFE: SYNONYMOUS WITH WHOLE LIFE AND STRAIGHT LIFE
The three terms are applied to the type of policy which continues during the whole of the insured's life and provides for the payment of amount insured at his or her death.