Insurance protection against loss due to rain, hail, snow
or sleet, which causes cancellation or reduced earnings of
an outdoor event.
A charge per unit in determining insurance premiums.
The process by which states monitor insurance companies’ rate
changes, done either through prior approval or open competition
models. (See Open Competition States; Prior
Six major credit agencies determine insurers’ financial
strength and viability to meet claims obligations. They are
A.M. Best Co.; Duff & Phelps Inc.; Fitch, Inc.; Mayday’s
Investors Services; Standard & Poor’s Corp.; and
Weiss Ratings, Inc. Factors considered include company earnings,
capital adequacy, operating leverage, liquidity, investment
performance, reinsurance programs, and management ability,
integrity and experience. A high financial rating is not
same as a high consumer satisfaction rating.
An organization that gathers statistics, makes rates and/or
creates policy forms and provides other services for the property
and casualty insurers affiliated with the bureau.
In various property and casualty lines, a geographical grouping
within which insureds are likely to share an exposure to similar
risks. Grouping of insureds within a territory helps establish
equitable rates for the territory.
Real Estate Investments:
Investments generally owned by life insurers that include
commercial mortgage loans and real property.
Amounts owed to a business for goods or services provided.
An illegal act to refuse to lend money or issue insurance
based only on geographic area.
The restoration of a lapsed life or health insurance policy
to its original premium-paying status—usually after
evidence of good health has been submitted and past-due premiums
have been paid.
An arrangement by which one insurer transfers all or a portion
of its risk under a policy or group of policies to another
insurer (reinsurer). Thus reinsurance is insurance purchased
by an insurance company from another insurer, to reduce risk
for the original insurer.
An alternative mechanism to service those insureds who cannot
obtain insurance in the voluntary market. Premiums and losses
for the business that is ceded to the facility are pooled
and all insurers share according to their proportion of the
A package type of insurance that includes coverage similar
to a homeowners policy to cover the personal property of a
renter or tenant in a building.
Rents or Rental Value Coverages:
Insurance against loss of the rental value of a property;
protects against loss of rents resulting from an insured peril.
Replacement Cost Property Coverage:
Insurance under which the amount payable is the current replacement
cost of the property new, rather than the depreciated value.
Applies to the building structures (in most cases) and can
apply to contents in some policies.
(1) An amount representing actual or potential liabilities
kept by an insurer to cover obligations to policyholders and
third-party claimants. (2) An amount allocated for a special
purpose. Note that a reserve is usually a liability and not
an extra fund. On occasion, a reserve may be an asset, such
as a reserve for taxes not yet due.
A general term describing the total of all consumers who have
had difficulty purchasing insurance through normal channels.
Automobile Insurance Plans, FAIR Plans, Reinsurance Facilities
and Joint Underwriting Associations all service this market.
The net amount of risk retained by an insurance company for
its own account or that of specified others, and not reinsured.
The reinsurance bought by reinsurers to protect their financial
Rating procedure that allows adjustment of an insured’s
final rate on the basis of the insured’s own loss experience.
Additional provision added to a policy by issuance of an amending
Chance of loss with respect to person, liability or the property
of the insured. Also is used to mean “the insured.”
The need for insurance companies to be capitalized according
to the inherent riskiness of the type of insurance they sell.
Higher-risk types of insurance, liability as opposed to property
business, generally necessitate higher levels of capital
The management of the various risks that might affect a business
firm. Its purpose is to identify potential loss situations
and control or reduce them through insurance, elimination
of risk, or improved or additional safety practices.
Risk Retention Groups:
Insurance companies that band together as self-insurers and
form an organization that is chartered and licensed as an
insurer in at least one state to handle liability insurance.
The loss of property due to theft when a person is threatened
with physical harm or injury.