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Abandonment - Giving up the proprietary rights in insured property to the underwriter in exchange for payment of a constructive total loss.
Accident - An unplanned and unexpected event which occurs suddenly and at a definite place.
Accidental Death Benefit - In a life insurance policy, benefit in addition to the death benefit paid to the beneficiary, should death occur due to an accident. There can be certain exclusions as well as time and age limits.
Act of God - An event or occurrence due to natural causes which occurs independently of human intervention and either could not be foreseen, or if foreseen, could not be reasonably guarded against. (e.g. storm, flood, earthquake, cyclone).
Active Participant - Person whose absence from a planned event would trigger a benefit if the event needs to be canceled or postponed.
Activities of Daily Living - Bathing, preparing and eating meals, moving from room to room, getting into and out of beds or chairs, dressing, using a toilet.
Actual Cash Value - Cost of replacing damaged or destroyed property with comparable new property, minus depreciation and obsolescence. For example, a 10-year-old sofa will not be replaced at current full value because of a decade of depreciation.
Actual Total - Loss An actual total loss occurs when:
1. the insured property is completely destroyed or
2. the assured is irretrievably deprived of the insured property or
3. cargo changes in character so that it is no longer the thing that was insured or
4. a ship posting “missing” at Lloyd’s in which case both the ship and its cargo are deemed to be an actual total loss.
Actuary - A specialist in the mathematics of insurance who calculates rates, reserves, dividends and other statistics.
Additional Excess - This excess may be imposed in special circumstances, for example in motor insurance on high performance cars or motorbikes. It is payable in addition to any other excesses.
Adjustable Rate - An interest rate that changes, based on changes in a published market-rate index.
Adjuster - A representative of the insurer who seeks to determine the extent of the insurer's liability for loss when a claim is submitted.
Admitted Assets - Assets permitted by law to be included in an insurance company's annual statement. These assets are an important factor when regulators measure insurance company solvency. They include mortgages, stocks, bonds and real estate.
Adventure - The exposure of property to risk
Agent - Direct or career agent represents only one company and sells only its policies. This agent is paid on a commission basis in much the same manner as the independent agent.
Aggregate Limit - Usually refers to liability insurance and indicates the amount of coverage that the insured has under the contract for a specific period of time, usually the contract period, no matter how many separate accidents might occur.
Agreed Value - Agreed value is the value of the subject matter of the insurance set at the time of taking cover and agreed to by the insured and the insurer.
All Risks - All fortuitous causes of loss. It does not embrace inevitable loss, such as wear and tear.
Amount covered - The amount covered is shown on the insurance schedule as the sum insured and it is the most the insurer will pay, less any excess, for a claim that is covered by the policy.
Annual Administrative Fee - Charge for expenses associated with administering a group employee benefit plan.
Annual Crediting Cap - The maximum rate that the equity-indexed annuity can be credited in a year. If a contract has an upper limit, or cap, of 7 percent and the index linked to the annuity gained 7.2 percent, only 7 percent would be credited to the annuity.
Annuitization - Process by which you convert part or all of the money in a qualified retirement plan or nonqualified annuity contract into a stream of regular income payments, either for your lifetime or the lifetimes of you and your joint annuitant. Once you choose to annuitize, the payment schedule and the amount is generally fixed and can't be altered.
Annuitization Options - Choices in the way to annuitize. For example, life with a 10-year period certain means payouts will last a lifetime, but should the annuitant die during the first 10 years, the payments will continue to beneficiaries through the 10th year. Selection of such an option reduces the amount of the periodic payment.
Annuity - An agreement by an insurer to make periodic payments that continue during the survival of the annuitant(s) or for a specified period.
Approved or h/c - An “approved vessel is on one which the Underwriter deem adequate to carry the insured cargo, at the agreed rate of premium. Where the vessel is not approved the risk is still covered but subject to a reasonable additional premium.
Arson Any unlawful setting fire to property.
Approved for Reinsurance - Indicates the company is approved (or authorized) to write reinsurance on risks in this state. A license to write reinsurance might not be required in these states.
Approved or Not Disapproved for Surplus Lines - Indicates the company is approved (or not disapproved) to write excess or surplus lines in this state.
Assets - Assets refer to "all the available properties of every kind or possession of an insurance company that might be used to pay its debts." There are three classifications of
1. assets: invested assets, all other assets, and total admitted assets.
2. Invested assets refer to things such as bonds, stocks, cash and income-producing real estate.
3. All other assets refer to nonincome producing possessions such as the building the company occupies, office furniture, and debts owed, usually in the form of deferred and unpaid premiums.
4. Total admitted assets refer to everything a company owns. All other plus invested assets equals total admitted assets. By law, some states don't permit insurance companies to claim certain goods and possessions, such as deferred and unpaid premiums, in the all other assets category, declaring them "nonadmissable."
Assignment - The passing of beneficial rights from one party another.
Attained Age - Insured's age at a particular time. For example, many term life insurance policies allow an insured to convert to permanent insurance without a physical examination at the insured's then attained age. Upon conversion, the premium usually rises substantially to reflect the insured's age and diminished life expectancy.
Attestation Clause That part of a policy in which the Underwriter binds himself to the policy condition.
Automobile Liability Insurance - Coverage if an insured is legally liable for bodily injury or property damage caused by an automobile.
Average - A partial loss. This can be particular average or general average.
Average Clause - A clause in a policy, whereby partial losses are subject to special conditions.
Avoidance - The right of an Underwriter, in the event of a breach of good faith or delay in commencement of an insured voyage, to step aside from the insurance contract and to treat it as though the never accepted the risk.
