> TIPS & INFO > GLOSSARY
A & H, A &S
— Accident & Health or Accident & Sickness. Once commonly
used as generic designations for the entire field, now called Health
Absolute Liability — A type
of liability that arises from extremely dangerous operations. An
example would be in the use of explosives: A contractor would almost
certainly be liable for damages caused by vibrations of the earth
following an explosive detonation. With absolute liability it is
usually not necessary for a claimant to establish that the operation
Value — The sum of money required to pay for damages
or lost property, computed on the basis of replacement value less
its depreciation by obsolescence or general wear.
— Statistical calculations used to determine insurance rates
and premiums, based on projections of utilization and costs for
a defined risk.
Additional Insured or Additional Interest
— A person or an organization, other than the named insured
or covered person, who is protected under the named insured's auto
policy. If an auto is leased, the leasing company may want to be
listed as an Additional Insured as well as a lien holder or loss
payee. This protects the leasing company if it's named in a lawsuit
for an accident caused by a policyholder.
— An individual usually representing the insurance company
and acting for the company in working on agreements as to the amount
of a loss and the liability of the company in same.
Admitted Company — An insurance
company authorized and licensed to do business in a given state.
Adverse Selection — This occurs
when a plan's health insurance population, usually due to age or
health status, has a significantly higher utilization of health
care services than an average population. The result is costs exceeding
premiums or fees collected. Also occurs when a programs eligibility
criteria or rating structure causes it to be populated with insureds
with higher losses than expected.
Injury (AI) — Injury arising out of libel or slander,
violation of the right to privacy, misappropriation of advertising
ideas, or infringement of copyright, title or slogan committed in
the course of advertising goods, products, or services.
Aggregate Products Liability Limit
— This limit represents the amount of money which an insurer
will pay during the term of a policy for all Products Liability
claims which it covers.
Age Limits — The ages below
or above which the insurance company will not issue a given policy
or renew a policy in force.
Agent — Any person appointed
by an insurer to solicit applications for insurance on its behalf.
With authorization, an agent may effectuate insurance contracts.
An agent may collect premiums on insurance so applied for or effectuated.
(from the RCW 48.17.010)
Annuity — (1) An amount of
money payable yearly, or by extension, at other regular intervals.
(2) An agreement by an insurer to make periodic payments that continue
during the survival of the annuitant (the beneficiary of the policy)
or for a specified period.
Application (APP) — A form
on which the prospective insured states facts requested by the insurance
company and on the basis of which (together with any information
from medical examiners, attending physicians, hospitals, investigations,
and the agent) the insurance company decides whether or not to accept
the risk, modify the coverage offered, or decline the risk. An application
without premium money is a request for an offer. With premium money,
it is an offer itself, unless the insurance company declines to
issue as applied for.
Apportionment — The division
of loss among insurance companies when two or more cover the same
Appurtenant Structures — Buildings
on the same premises as the main building insured under a Property
Insurance policy. Most Dwelling Property Insurance policies cover
appurtenant structures under most circumstances.
Assigned Risk — A risk which
underwriters do not care to insure, but because of state law or
otherwise, the insured must be protected and the insurance is therefore
handled through the state, or a bureau and assigned to companies.
Basic Extended Reporting Period — An
automatic "tail" for reporting claims after expiration
of a "claims-made" liability policy. It is provided without
charge and consists of two parts: a mini-tail covers claims made
within 60 days after the end of the policy; a midi-tail covers claims
made within five years after the end of the policy period arising
out of occurrences reported not later than 60 days after the end
of the policy.
Basic Health (BH) — This plan
was created in 1987 to provide low-cost, limited benefits in high
unemployment areas of the state. Under the 1993 Health Services
Act, the BH was expanded to statewide and its benefits were improved.
Beneficiary — A person eligible
to receive benefits under an insurance policy.
Benefit Package — Also known
as a Benefit Schedule. The list of covered services offered by an
HCSC, HMO or insurance plan.
Binder (Or Binding Receipt) —
In lines other than life and (usually) health, a binder is an acknowledgment
(usually from the agent) that the insurance applied for is in force
whether or not premium settlement has yet been made or the policy
Bodily Injury Liability (BI) —
A legal liability that may arise as a result of the injury or death
of another person.
Boiler and Machinery Insurance —
Insurance against the sudden and accidental breakdown of boilers,
machinery, and electrical equipment. Coverage is provided on (1)
damage to the equipment, (2) expediting expenses, (3) property damage
to the property of others, and (4) supplementary payments; and (5)
automatic coverage is provided on additional objects.
Broker — (1) An individual
who for compensation solicits, negotiates or procures insurance
or the renewal or continuance thereof on behalf of insureds or prospective
insureds. (2) One who solicits, negotiates, or procures the making
of contracts of insurance on behalf of the insured, other than himself
or another broker, and who may render services incidental to these
functions, except as an employee of an insured. (To this definition,
the Commission on Insurance Terminology adds this comment: "By
law, may be made agent of the insurer (insurance company) for certain
purposes such as delivery of policy or collection of premium.")
Business Interruption —
Business interruption insurance pays for your lost income following
a covered insurance loss. It is designed to pay for your ongoing
expenses, including payroll.
Business Owner’s Policy —
It provides Broad Property and Liability coverage in a single contract
and is designed for small and medium-sized mercantile, office, or
Cancelable — A contract of
insurance that may be terminated by the insurance company or insured
at any time. Most insurance is cancelable. The exceptions are certain
life insurance policies and health insurance, which in Washington
state is now guaranteed renewable, provided subscribers pay their
Cancellation — Termination
of contract of insurance in force by voluntary act of the insurance
company or insured, effected in accordance with provisions in the
contract or by mutual agreement.
Capitation — A per-member
monthly payment made in advance to a managed care insurer covering
contracted services. The insurance provider agrees to provide specified
services to eligible members of a plan for this fixed, predetermined
payment for a specified length of time (usually a year), regardless
of how many times the member uses the services. No additional payment
is made to the provider for services that exceed the agreed-upon
amount-per-member. In such a product, the rate may be the same for
all members or adjusted for age and gender, based on actuarial projections
of medical utilization.
Care, Custody and Control —
Most Liability Insurance policies exclude coverage for damage to
property in the care, custody, or control of the insured. In some
cases this type of coverage is not available; in other cases it
can be purchased through certain forms of Inland Marine Insurance.
Carrier — An insurance company
which "carries" the insurance. (The term "insurance
company" or "insurer" are preferred because of the
possible confusion of "carrier" with transportation terminology.)
Carve-out — Services separately
designed and contracted to an exclusive, independent provider by
a managed care plan.
Case Management — Coordination
of patient care to ensure appropriate care and reductions in costs
of providing services. Physician case managers coordinate such elements
as referrals to consultants, specialists, hospitals, ancillary providers
and services. This is intended to eliminate misutilization of facilities
and resources, fragmented services and to provide continuity of
services and intensity of services appropriate to the patient's
needs over time.
Casualty Insurance — That
type of insurance that is primarily concerned with the legal liability
for losses caused by injury to persons or damage to the property
Claims-Made Coverage — A policy
providing liability coverage only if a written claim is made during
the policy period or any applicable extended reporting period. For
example, a claim made in the current year could be charged against
the current policy even if the injury or loss occurred many years
in the past. If the policy has a retroactive date, an occurrence
prior to that date is not covered. Contrast with Occurrence Coverage.
Coinsurance — In health insurance,
it is a provision that the insured and the carrier share losses
in agreed proportion. Also known as "percentage participation."
In managed health care, it refers to the portion of the cost of
care for which the individual is responsible, usually determined
by a fixed percentage. This often applies after a specified deductible
is met. In property and casualty insurance, the insured shares proportionally
in losses when the amount of insurance is less than a specified
percentage of the property insured.
Coinsurance Clause — A clause
under which the insured shares in losses to the extent that he is
underinsured at the time of loss. The insurer grants a reduced rate
to the insured providing he carries insurance 80, 90, or 100% to
value. If, at the time of loss, he carries less than required, he
must share in his loss. For example, if an insured has a building
worth $100,000 and carries an 80% coinsurance clause, it means that
he agrees to carry at least $80,000 of insurance. If the insurance
carried equaled $60,000, then any loss under the policy would be
paid for on the basis of the comparison of $60,000 (amount carried)
divided by $80,000 (amount agreed upon in advance) times the amount
of the loss. Thus, the insured above would only receive 75% of a
loss or $7,500 for a $10,000 loss.
Collision Coverage — Physical
damage protection for the insured's own automobile(s) for damage
resulting from collision with another object. This is a part of
most automobile insurance policies.
Combined Single Limit — A
single limit of protection for both Bodily Injury and/or Property
Damage, contrasted with split limits, where specific limits apply
to Bodily Injury and Property Damage separately.
Commercial General Liability (CGL)
— General liability coverage which may be written as a monoline
policy or part of a commercial package. The latest forms provide
very broad coverage, and two variations are available - "Occurrence"
or "Claims-Made" coverage.
Community Rating — A method
of establishing the level of premiums for health insurance in which
the premium is based on the average of actual or anticipated services
used by all subscribers in a specific geographic area (or the entire
state). Under pure community rating, premiums also would not vary
for different groups or with such variables as a group's claims
experience, age, sex, occupation or health status. (Modified community
rating may allow slight variances for some of these factors.) The
intent of community rating is to spread costs evenly across an entire
population, rather than set premiums according to individual or
small group experiences.
Completed Operations Insurance —
A form of insurance issued particularly to various types of contractors.
It covers a contractor's liability for accidents arising out of
jobs or operations that he has completed.
Composite Rate — A uniform
premium applicable to all those eligible in a subscriber group,
regardless of the number of claimed dependents. This is common among
plans purchased by large employer groups.
Comprehensive General Liability —
A policy covering a variety of general liability exposures, including
Premises and Operations, Completed Operations, Products Liability,
and Owners and Contractors Protective. Contractual Liability and
Broad Form coverages could be added.
Comprehensive Personal Liability
— This coverage protects individuals and families from liability
for nearly all types of accidents caused by them in their personal
lives as opposed to business lives. It is most commonly a part of
the protection provided by a Homeowners policy.
Comprehensive Health Insurance —
Sometimes called "Comprehensive Major Medical." A form
of health insurance that combines the coverage of Major Medical
and Basic Medical Expense contracts into one broad contract that
provides coverage for almost all types of medical expense with few
internal limits, usually subject to a small deductible for some
or all expenses and to a percentage participation clause (sometimes
called "co-insurance") applicable to all or some of the
Comprehensive Personal Liability Policy (CPL)
— A personal liability contract. It provides liability insurance
coverage for the individual and family needs arising out of numerous
personal activities and situations, such as the ownership of residential
property, ownership of pets, sports activities and many other everyday
Contingent Liability — A liability
imposed because of accidents caused by persons other than employees
for whose acts an individual, partnership or corporation may be
responsible. For example, an insured who hires an independent contractor
can in some cases be held liable for his negligence.
Contract Bond — A guarantee
of the faithful performance of a contract and the payment of all
labor and material bills incident thereto. In those situations where
two bonds are required, one to cover performance and the other to
cover payment of labor and material, the former is known as a PERFORMANCE
bond and the latter as a PAYMENT bond.
Contractual (or Assumed) Liability Insurance
— This insurance protects the insured in the event a loss
occurs for which he has assumed liability, express or implied, under
a written contract. For example, under most construction agreements
with a municipality, the contractor agrees to "hold the municipality
harmless" for any accidents arising out of the job. Contractual
Liability Insurance would thus protect the contractor from any loss
for which the municipality would be liable in connection with the
Co-Payment — A co-payment
is a patient's share of a health-care bill. It usually is a small
amount - $5 or $10 per office visit. Health-care reform advocates
say its primary function is to remind consumers that health care
is not free - and to discourage them from seeking unnecessary care.
Cost Sharing — The general
set of financing arrangements whereby the consumer must pay out-of-pocket
to receive care, either at the time of initiating care or during
the provision of services, or both. This also can occur when an
insured pays a portion of the monthly premium for his health insurance.
Coverage Trigger — A mechanism
that determines whether a policy covers a particular claim for loss.
For example, the difference between the coverage triggers of liability
"occurrence" forms and "claims made" forms is
that loss must occur during the policy period in the first case
and the claim must be made during the policy period in the second
Directors and Officers Liability Insurance
(D&O) — Insurance that protects directors and
officers from liability claims arising out of alleged errors in
judgment, breaches of duty, and wrongful acts related to their organizational
Declaration Page (Dec Sheet) —
The portion of an insurance policy containing the information regarding
the risk. It identifies the parties to the contract and the subject
Decreasing Term Policy — Generally,
a rider which is attached to cash value policies or other term policies.
The protection decreases each year or month in accordance with a
schedule. Also sold as MORTGAGE Protection policy.
Deductible — The part of the
insured's expenses or loss that must be paid before insurance coverage
Deferred Annuity — An annuity
whose benefits begin at some designated future date (as contrasted
to an annuity where benefits begin at once, called an IMMEDIATE
Diagnosis-Related Groups (DRG) —
This refers to predetermined reimbursements. DRGs were originally
designed to facilitate utilization review, and are also used to
analyze patient case mix in hospitals and to determine reimbursement
Direct Access — Under a 1995
Washington law, health-insurance carriers must cover direct access
to women's health-care service providers when that care is appropriate.
Insurance companies also cannot create unfair obstacles to this
access, including a requirement for women to visit "gatekeeper"
or primary-care providers first.
Direct Writer — An insurance
company which sells its policies through salaried employees (licensed
agents) who represent it exclusively, rather than through independent
local agents, who represent more than one company.
Disability Income Insurance —
A form of health insurance that provides periodic payments to replace
income lost when the insured is unable to work as a result of sickness
Drug Formulary — A list of
selected pharmaceuticals and their appropriate dosages that will
be covered by a health plan. In a "closed formulary,"
physicians are required to prescribe from that list of drugs.
Early and Periodic Screening, Diagnosis and
Treatment (EPSDT) — Covers screening and diagnostic
services to determining physical or mental defects in patients under
age 21, as well as health care and other measures to correct or
ameliorate any defects and chronic conditions discovered.
Earned Premium — That portion
of a premium for which the policy protection has already been given
during the now-expired portion of the policy term.
Effective Date/Inception Date —
The date that coverage begins on an insurance policy.
Elimination Period — A loosely-used
term sometimes designating the "waiting period" and sometimes
the "probationary period."
ERISA (Employee Retirement Income Security
Act) Liability — Liability imposed by law upon officers
or other employees operating in a fiduciary capacity for the proper
handling of pension funds and other employee benefits. It is excluded
from most General Liability policies.
Endorsement — A form attached
to the policy bearing the language necessary to change the terms
of the policy to fit special circumstances.
Endowment Insurance — A form
of life insurance payable to the insured if living at the end of
the endowment period or to a beneficiary if the insured dies before
the endowment date. (Inasmuch as a whole life policy pays the face
amount at the ultimate age of the mortality table used in calculating
the rate for it, age 100 on the CSO Table, it is sometimes said
that whole life is "endowment at 100." However, while
perhaps a descriptive explanation of a WHOLE LIFE policy, it is
actuarially incorrect to refer to a whole life policy as a form
of Endowment insurance.)
ERISA — The Employee Retirement
Income Security Act of 1974. This law, which dealt primarily with
pensions and retirement plans, includes a section exempting self-funded
employer and union health plans from state regulation. Washington's
health-care reform law - the Health Services Act of 1993 - required
a congressional waiver of this law so that the state could mandate
employer-provided health coverage. The waiver did not pass, and
the state law was subsequently changed.
Errors and Omissions Insurance (E&O) –
Professional Liability Insurance — A form of insurance
that indemnifies the insured for any loss sustained because of an
error or oversight on his part. For instance, an insurance agency
purchases this type of coverage to protect itself against losses
from such things as failing to issue a policy.
Exclusions — Clauses in a
health insurance contract that deny coverage for certain conditions,
treatments, supplies or risks, such as acts of war. In property
and casualty contracts, certain events or circumstances also may
be excluded from coverage.
Exclusive Provider Organization (EPO)
— A managed care organization similar to PPOs in that physicians
do not receive capitated payments, but members may only choose medical
care from network providers. A patient seeking care outside the
EPO network would not be reimbursed for the cost of that treatment.
See also Group Model HMO.
Expiration Date — The date
your coverage ends. There is usually a time of day associated with
this date, for example, an expiration date of 5/1/2002 at 12:01am.
This means your coverage ends one minute after midnight on the date
Experience — The loss record
of an insured, a class of coverage, or of an insurance company.
Experience Rating — A method
used by insurers to determine the premium to be charged based on
the actual utilization of individual large groups. Federal qualification
guidelines for HMOs do not permit this rating method, but it is
common in other health insurance plans.
Exposure — (1) State of being
subject to the possibility of loss. (2) Extent of risk as measured
by payroll, gate receipts, area, or otherwise. (3) Possibility of
loss to a risk being caused by its surroundings.
Extended Reporting Period (ERP)
— A period allowing for making claims after expiration of
a "claims-made" liability policy. Also known as a "tail."
Extra Expense Insurance — Extra expense insurance
pays the additional expenses your business would not have incurred
had a loss not occurred. Examples of these expenses are the printing
of new menus, advertising to announce the reopening of your business,
and moving to a temporary location while your location is being
Fee-for-Service — The traditional
payment method in U.S. health care, when patients pay doctors, hospitals
and other providers for the services rendered at the time of that
service, and then seek reimbursement for those costs from their
private insurers or the government, if eligible for such a program
(e.g. Medicare). The patient is charged according to a fee schedule
set for each service and or procedure provided.
Fiduciary — A person who occupies
a position of special trust and confidence (for example, in handling
or supervising the affairs or funds of another).
Fiscal Intermediary — An organization
that contracts with health care providers to process health insurance
claims. It may also provide consulting services or serve as a communication
center for providers. A Health Care Services Contractor (HCSC).
Flood — A general and temporary
condition of partial or complete inundation of normally dry land
areas from (1) overflow of inland or tidal waters, (2) the unusual
accumulation and runoff of surface waters from any source, or (3)
abnormal, flood-related erosion and undermining of shorelines. Flood
also means inundation from mud flows caused by accumulations of
water on or under the ground, as long as the mud flow and not a
landslide is the proximate cause of loss.
Flood Insurance — A form of
insurance designed to reimburse property owners from loss due to
the defined peril of flood. Usually sold in connection with a government
Flood Insurance plan.
Form — An insurance policy
itself or riders and endorsements attached to it.
Frame — A type of construction.
A frame building is primarily made with wood frames and joists.
Fraternal — An insurance company
organized under a special section of the state insurance code, characterized
by a lodge or social system, and issuing insurance only to members.
Gap Insurance — If you are
making lease or loan payments and you experience a total loss, there
may be a difference (gap) between the market value of your vehicle
and what you still owe on it. This optional coverage pays the difference.
Garage Keepers Legal Liability Insurance
— An insurance contract that protects a garage keeper against
liability for damage to vehicles in his care, custody, or control
caused by specific perils.
Garage Liability Insurance —
Insurance to protect garage owners or automobile dealers for liabilities
arising out of their business operations.
Gatekeeper — A primary care
physician responsible for overseeing and coordinating all aspects
of a patient's medical care in managed care plans to reduce health
care utilization and costs. Managed care patients cannot receive
referrals to specialty care or hospital admission (except for emergency
room service when the patient believes an emergency exists) without
pre-authorization from a gatekeeper.
General Agent — An insurance
company representative in a given territory, entrusted with the
task of supervising the company's business within that territory.
He may appoint local agents whom he services. A true general agent
is an independent contractor compensated on a commission basis.
In practice, in the life and health fields, he may receive certain
expense subsidies from the company for office operation and training
of new agents.
General Liability Insurance —
A form of insurance designed to protect owners and operators of
businesses from a wide variety if liability exposures. These exposures
could include liability arising out of accidents resulting from
the premises or the operations of an insured, products sold by the
insured, operations completed by the insured, and contractual liability.
Grace Period — A period of
time (commonly 30-31 days) after premium-due date during which a
policy remains in force without penalty even though the premium
due has not been paid.
Group Insurance — Insurance
policy or health services contract covering a group of employees
(and often their dependents) under a single contract issued to an
employer or other group by an HCSC, HMO or other insurer.
Group Model HMO — There are
two types: closed panel and the contract model. Closed panel HMO
deliver medical services in the HMO's health center or clinics by
providers who belong to a legally separate medical group paid a
negotiated monthly capitation fee. Its providers are salaried and
generally prohibited from carrying on any fee-for-service practice.
In the second type, the HMO contracts with an existing independent
group of physicians to deliver medical care at their facilities
to HMO members for a prepaid fee. Such a medical group may also
offer health services on a fee-for-service basis. The medical group
generally contracts with more than one HMO.
Guaranteed Insurability Rider —
A rider that may be attached to a health or life insurance policy,
which permits the insured, to purchase additional insurance at one
or more specified "option dates," without providing new
evidence of insurability at that time.
Guaranteed Renewable — A contract
that the insured has the right to continue in force by the timely
payment of premiums for a substantial period of time, as set forth
in the contract, during which period the insurance company has no
right unilaterally to make any change in a provision of the contract
while the contract is in force, other than a change in the premium
rate for classes of insured. (In commenting on this definition,
the Committee on Health Insurance Terminology of the American Risk
and Insurance Association adds: "The term guaranteed continuable
is synonymous with guaranteed renewable. Guaranteed renewable should
be distinguished from non-cancelable.") An NAIC - National
Association of Insurance Commissioners - definition specifies that
the policy must be renewable to at least age 50 or, if issued after
age 44, for at least five years.
Health Care Service Contractor (HCSC)
— A legal entity in Washington state that may be sponsored
by certain health professionals or which uses contracts with health
professionals for the provision of prepaid health care services.
Examples of HCSCs include Blue Cross/Blue Shield plans.
Health Care Financing Administration (HCFA)
— The U.S. Department of Health and Human Services (DHHS)
agency renamed to the Centers for Medicare and Medicaid Services
(CMS) that administers federal health financing and related regulatory
programs, principally Medicare, Medicaid, and Peer Review Organization
programs. The contracting agency for HMOs that provide Medicare
managed care plans.
Health Insurance — Insurance
against loss by sickness or bodily injury.
Health Maintenance Organization (HMO)
— A legal entity in Washington state that provides health
care in a geographic area, and which accepts responsibility to provide
directly or by contract an agreed-upon set of health services to
a defined, voluntarily-enrolled group of individuals. HMOs are reimbursed
through a pre-determined, fixed, periodic prepayment made by or
on behalf of each subscriber without regard to the amount of actual
services provided. (In other states, HMOs are regarded as synonymous
with "managed care." However, in Washington state other
kinds of health carriers also may employ managed care.)
Health Plan — A generic term
referring to a specific benefit package offered by an insurer.
High Risk Pool — A non-profit
entity called the Washington State Health Insurance Pool, created
by state law in 1987, to provide access to health insurance to all
residents of Washington who are denied adequate health insurance
for any reason. (RCW 48.41) The premium is limited 150 percent of
the average group premium charged in the marketplace or 125 percent
of the average group premium if the health plan is managed care.
An assessment on health insurers operating in the state, based on
the number of individuals each carrier covers, provides any subsidy
Hold Harmless Agreement —
A contractual arrangement whereby one party assumes the liability
inherent in a situation, thereby relieving the other party of responsibility.
Such agreements are typically found in contracts like leases, sidetrack
agreements, and easements. For example, a typical lease may provide
that the lessee must "hold harmless" the lessor for any
liability from accidents arising out of the premises. The effect
of such an agreement is that the lessee must provide a defense for
the lessor, and if any judgment is rendered against the lessor,
the lessee would have to pay.
"Hold Harmless" Clause
— found in managed care contracts in which the HMO and its
physicians hold each other not liable for malpractice or corporate
malfeasance if either is found liable. This clause is also common
for insurance carriers. State law requires this type of clause to
prohibit health care providers from billing patients if their managed
care company becomes insolvent.
Homeowner Policy — A "package"
or multi-line policy providing the protection needed by most homeowners.
The policy provides property insurance, including theft, with very
broad coverage on both the building and the contents. Liability
insurance is also provided.
ID Card — An identification
card issued by your insurance company that provides evidence of
liability insurance. Such evidence is required in most states.
Impaired Property — Tangible
property which cannot be used or has become less useful because
it incorporates the insured's product or work which is defective
or inadequate, or because the insured has failed to fulfill a contractual
Incurred but not reported (IBNR)
— The liability for the claim cost related to services performed
within the contractual period but not yet reported to the insurance
carrier, HMO or HCSC.
Indemnify — To restore the
victim of a loss, in whole or in part, by payment, repair, or replacement.
(To this definition, the Commission on Terminology adds the following
comment: "To the extent that the obligation of the insurer
is to do other than make good losses, the insurance contract is
not one of indemnity. The term indemnity or indemnify should not
be used to apply to an obligation other than to make good loss.")
Independent Practice Association/Organization
(IPA/IPO) — An HMO contracting with a physician organization
which in turn contracts with individual physicians to provide health
services to its members. IPA physicians practice in their own offices
and also see fee-for-service patients. The IPA is reimbursed on
a capitated basis. The IPA may reimburse its physicians on a capitated
or modified fee-for-service basis when physicians charge agreed-upon
rates to the HMO patients and then bill the IPA.
Indirect Loss (or Damage) —
Loss resulting from a peril but not caused directly and immediately
by that peril. For example: Loss of property due to fire is a direct
loss, while the loss of rental income as the result of the fire
would be an indirect loss.
Individual Market — The portion
of the health insurance industry consisting of individuals and their
dependents who purchase coverage directly from a carrier - approximately
five percent of the entire market. Those in the individual market
usually buy their own coverage because they are not eligible for
employee-sponsored or government coverage, such as Medicare, Medicaid
or the Children's Health Insurance Program (CHIP).
Inflation Guard Coverage —
Coverage which provides for automatic periodic increases in the
amount of insurance on buildings to keep an appropriate "limit
to value" considering the effect of inflation on building replacement
costs. An endorsement is usually used to add this coverage to a
Installment Refund Annuity —
Promises to continue the periodic payments after the death of the
annuitant, until the combined benefits paid to the annuitant and
his beneficiary have equaled the purchase price of the annuity.
Insurable Interest — Any interest
in a subject of insurance or any legal relation to it of such a
nature that a certain happening might cause monetary loss to the
Insurance — (1) A contract whereby one undertakes to indemnify
another or pay a specified amount upon determinable contingencies.
(2) A device for the transfer of the risks of individual entities
to an insurance company, which agrees, for a consideration, to assume
to a specified extent, losses suffered by the insured.
Insured — The party to an
insurance agreement to whom, or on behalf of whom, the insurance
company agrees to indemnify for losses, provide benefits, or render
service. (To this definition the Commission on Terminology adds
the comment: "Like Insurer, the term Insured is functional
and unmistakable. Therefore, it is preferred to such terms as Policyholder.")
In pre-paid hospital service plans, the insured is called the subscriber.
Joint Life Policy — Pays the
insurance when the first of two or more covered persons die.
Joisted Masonry Construction —
A building which has exterior walls constructed of masonry materials,
such as adobe, brick, concrete, gypsum block, hollow concrete block,
stone, tile, or other similar materials, and a roof and floor constructed
of combustible materials. A floor which rests directly on the ground
is an exception and may be disregarded.
Key Man — (Key Employee) Insurance
Policy - An insurance policy on the life of a key employee whose
death would cause the employer financial loss, owned by and payable
to the employer. In health insurance, the term KEY EMPLOYEE A &
H policy is also used to designate salary continuation insurance
payable to a key employee or to a medical benefits plan, payable
to that employee, the employer paying all or part of the premium.
Landlords Protective Liability —
Coverage provided to the owner of property who leases the entire
premises to another. This cost is very reasonable because the full
control of the premises rests with the lease.
Lapse — Termination of a policy
because of failure to pay the premium. In life insurance, the term
is sometimes confined to non-payment before the policy has developed
any non-forfeiture value, being called termination if premium failure
is after non-forfeiture values develop or surrender if cash value
Lender/Lessor — Your lender
is the institution to which you make car payments. Your lessor is
the institution to which you make your lease payments.
Liability Insurance — Insurance
that pays and renders service on behalf of an insured for loss arising
out of his responsibility, due to negligence, to others imposed
by law or assumed by contract.
Liability Insurance — That
insurance which pays and renders service on behalf of an insured
for loss arising out of her responsibility to others imposed by
law or assumed by contract.
Liability Limits — The sum
or sums beyond which a liability insurance company does not protect
the insured on a particular policy, similar to limit of liability.
Liberalization Clause — A
clause in Property Insurance contracts which provides that if policy
or endorsement forms are broadened by legislation or ruling from
rating authorities and no additional premium is required, then all
existing similar policies will be construed to include the broadened
Life Insurance — Insurance
on human lives including endowment benefits, additional benefits
in event of death or dismemberment by accident or accidental means,
additional benefits for disability, and annuities.
Lifetime Policy — (1) A policy
guaranteed renewable or non-cancelable to age 65 (or sometimes later).
(2) A policy paying disability benefits for life.
Limit of Liability — The maximum
amount that an insurance company agrees to pay in case of loss.
Limitations — Exclusions,
exceptions, or reductions of coverage contained in an insurance
Limits — (1) Maximum amount
of benefit payable for a given situation or occurrence. (2) Ages
below or above which the insurance company will not issue new policy
or above which it will not continue a policy in force.
Long-Term Disability — (1)
A disability having a duration longer than a short-term disability,
the exact duration being variable and a matter of reference; more
commonly anything longer than 90 days. (2) A form of group disability
insurance paying benefits for more than the customary 13 to 26 weeks;
more commonly, benefits of five years' duration or more, but again
depending on terms of reference.
Loss — Any diminution of quantity,
quality or value of property. With reference to policies of indemnity,
this term means a valid claim for recovery thereunder. In its application
to liability policies, the term refers to payments made on behalf
of the insured.
Loss of Use Insurance — Coverage
to compensate an insured for the loss of use of his property if
it cannot be used because of a peril covered by the policy.
Loss Payee/Lien Holder — A
person or entity with a legally secured insurable interest in another's
property, usually a financial institution that loaned money to buy
a car. The car is the loan collateral. If the auto is damaged in
an accident, loss payments will be made to you and to the loss payee
on your policy.
Managed Care — Managed care
is a philosophy of health care coverage that streamlines health
services and creates a health-care system that includes both the
financing and delivery of services to the consumer. It also takes
more responsibility for maintaining subscribers' health, not just
curing them once they are sick. It lowers costs by matching the
patient with appropriate care as efficiently as possible. Different
insurance carriers use different kinds of managed care. Although
the philosophy is popularly associated with Health Maintenance Organizations
(HMOs), other kinds of carriers also employ it.
Masonry Noncombustible Construction
— A building which has exterior walls constructed of masonry
materials, such as adobe, brick, concrete, gypsum block, hollow
concrete block, stone, tile, or other similar materials, with floors
and roof constructed of metal or other noncombustible materials.
Maxi Tail, or Full Tail —
Unlimited extended reporting period allowing for making claims after
expiration of a "claims-made" liability policy.
Medical Group Practice — As
defined by the American Group Practice Association, the American
Medical Association and the Medical Group Management Association:
"provision of health care services by a group of at least three
licensed physicians engaged in a formally organized and legally
recognized entity sharing equipment, facilities, common records
and personnel involved in both patient care and business management."
Medical Loss Ratio — Cost
of health care services provided as a percentage of premium revenues.
See underwriting loss.
Medical Payments — This pays
for medical and funeral expenses incurred in an auto accident, regardless
of fault. It will also cover injuries sustained by passengers in
your car, or while you're operating someone else's car (with their
permission), in addition to injuries you or your family members
incur when you're pedestrians.
Medicare Risk Contract — A
contract between a managed care plan and HCFA to provide services
to Medicare beneficiaries for a fixed monthly payment. Requires
all services to be provided on an at-risk basis.
Medicare Supplement — Voluntary
private insurance coverage purchased by Medicare enrollees covering
the cost of services not reimbursed by Medicare.
Member — Enrollee, beneficiary,
insured. Includes those enrolled or subscribed to a health insurance
plan and their eligible dependents.
Midi Tail — Automatic five-year
extended reporting period allowing for the making of claims after
expiration of a claims-made" liability policy, but only applies
to claims arising from occurrences which were reported no later
than 60 days after the end of the policy.
Mini Tail — Automatic 60-day
extended reporting period allowing for the making of claims after
expiration of a "claims-made" liability policy.
Mobile Home Policy — A Homeowners
policy written on a mobile home which is permanently situated.
Modified Fire-Resistive Construction
— A building which has exterior walls, floors and roof constructed
of masonry or fire-resistive materials.
Morbidity - Sickness — A morbidity
table shows the incidence of occurrence of sickness.
Morbidity Rate — Actuarial
term for the likelihood of medical expenses occurring.
Mortality - Death — A mortality
table shows the incidence of occurrence of death.
Mortgage (or Mortgagee) Clause —
A provision attached to a Fire or other direct damage policy that
covers mortgaged property, specifying that the loss reimbursement
shall be paid to the mortgagee as the mortgagee's interest may appear,
that the mortgagee's rights of recovery shall not be defeated by
any act or neglect of the insured, and giving the mortgagee other
rights, privileges, and duties. For instance, one duty is that the
mortgagee must report to the insurer any change in hazards that
he becomes aware of.
Mortgagee — The creditor to
whom a mortgage is given and who lends money on the security of
the value of the property mortgaged.
Mortgagor — The debtor who
receives money and in turn grants a mortgage on his or her property
as security for a loan.
Multi-car Discount — A discount
offered by some insurance companies for those with more than one
vehicle insured on the same policy. In some cases, if you drive
a company car insured by your company, your own insurance company
may give you the multi-car discount.
MVR - Motor Vehicle Record —
A motor vehicle record, also referred to as DL printout, or MVR,
contains information obtained from an individual's driver license
application, abstracts of convictions and accidents.
NAIC — National Association
of Insurance Commissioners. An association of state insurance commissioners,
active in discussions of regulatory problems and in the formation
and recommendation of uniform practices and legislation.
Named Insured — Any person,
firm or corporation designated by name as the insured person(s)
in a policy. Others may be protected by policy definition even though
their names aren't on the policy, such as other drivers operating
(with consent) the named insured's covered auto.
Named Non-Owner Policy — A
policy endorsement for one who operates any non-owned automobile
on a regular basis, such as driving a car provided by one's employer.
Named Perils — Perils specifically
covered on property insured. Contrast Named Perils Insurance with
All-risks Insurance, which covers all losses not specifically excluded.
National Flood Insurance Program (NFIP)
— Federal program providing flood insurance for fixed property.
Under a "dual" program coverage may be written directly
by the NFIP or by private carriers whose losses may be reimbursed
by the NFIP.
NOC. Not Otherwise Classified —
A term often found in the classification section of Liability or
Workers Compensation rating manuals. If a listing is followed by
an NOC, it means to use this classification if an insured cannot
be classified more specifically.
Non-Owned Auto — Any vehicle
that is not owned, borrowed, or leased by the insured, and which
is used primarily for a business purpose.
Occurrence Coverage — A policy
form providing liability coverage only for injury or damage that
occurs during the policy period, regardless of when the claim is
actually made. For example, a claim made in the current policy year
could be charged against a prior policy period, or may not be covered,
if it arises from an occurrence prior to the effective date. Contrast
with Claims-Made Coverage.
Open Enrollment — A period
of time when eligible subscribers may enroll in, or transfer between
available programs providing health care coverage. Federal HMO regulations
require that HMOs which meet certain criteria conduct annual open
enrollments for periods of not less than 30 days.
Ordinary Construction — A
building in which floors are on wood joists, in which the interior
finish usually conceals space where fire can spread, and which has
little protection of stair shafts.
Out-of-Area Benefits — Coverage
allowed to managed care plan members for emergency situations if
temporarily outside their HMO or MCO's prescribed service area.
Out-of-Area Services — Services
received by insurance plan enrollees when they are outside their
plan's established geographic area of service as defined in the
contract and service agreement. Usually not covered unless a delay
would adversely affect the member's health.
Outpatient Services — Medical
and other services provided by a hospital or other qualified facility,
such as a mental health clinic, rural health clinic, mobile X-ray
unit or free-standing dialysis unit. Those services include physical
therapy, diagnostic X-ray and laboratory tests.
Paid-Up — Life insurance on
which all premiums have been paid but that has not yet matured by
death or endowment, such as LIMITED PAYMENT policy on which the
premium-paying period has been completed or the insurance paid for
by using the cash value under the paid-up non-forfeiture option.
Participating Provider — A
provider who has contracted with a health care service contractor,
HMO, PPO, IPA or other managed care organization to provide health
Peak Season Endorsement — An
endorsement which provides increased amounts of coverage on inventories
during peak seasons, beginning and ending on dates specified in
Period of Restoration — The
period during which Business Income coverage applies. It begins
on the date direct physical loss occurs and interrupts business
operations, and ends on the date that the damaged property should
be repaired, rebuilt or replaced with reasonable speed.
Per Occurrence Limit — This
refers to the cap amount an insurance company will pay for all claims
arising from a single incident. In an automobile accident, it comprises
bodily injuries sustained by all parties. When Bodily Injury coverage
is purchased in split limits, the second limit is the "per
occurrence" limit: e.g. $100,000(per person)/$300,000(per occurrence)
Per Person Limit — This refers
to the cap amount an insurance company will pay for any one person's
injuries arising from a single incident. In an automobile accident,
it comprises bodily injuries sustained by each person. When Bodily
Injury is purchased in split limits, the first limit is the "per
person" limit: e.g. $100,000(per person)/$300,000(per occurrence)
Personal Injury (PI) — Injury
other than bodily injury arising out of false arrest or detention,
malicious prosecution, wrongful entry or eviction, libel or slander,
or violation of a person's right to privacy committed other than
in the course of advertising, publishing, broadcasting or telecasting.
Contrast with Advertising Injury.
Personal Injury Protection (PIP)
— Personal Injury Protection, part of Washington's 1994 "no
fault" auto insurance law that requires insurers to offer this
coverage, although consumers are not required to purchase it. It
provides coverage for bodily injury, loss of wages, burial expenses
and for household services expenses.
Personal Property — Any property
of an insured other than real property. Homeowner policies protect
the personal property of family members, and commercial forms are
used to protect many types of business personal property of an insured.
Personal Property Floater —
A Broad Form policy covering all personal property worldwide, including
at the insured's home. Similar coverage is available by endorsement
as part of the "Special" Homeowners policy form.
Physical Damage (PD) — Damage
to your covered vehicle from perils including (but not limited to)
collision or upset with another vehicle object, fire, vandalism
Point-of-Service Plan (POS) —
Incorporates features of both HMOs and PPOs, encouraging but not
requiring members to choose a primary care physician. As in HMOs,
primary care physicians act as "gatekeepers" to other
health care services. However, members may visit non-network providers,
but pay higher deductibles and copayments.
Policy — The written documents
of a contract for insurance between the insurance company and the
insured. Such documents include forms, endorsements, riders and
Policy Period — The period
of time in which a policy is in effect. (For example, six months
or one year).
Pooling — Combining risk.
Preauthorization — A method
to monitor and control utilization of a medical service by evaluating
need prior to it being performed.
Pre-Existing Condition — A
condition of health or physical condition that existed before the
policy was issued. Prior to 1993, insurance coverage was denied
or significantly delayed on the basis of pre-existing conditions.
In Washington state, however, carriers cannot use health screening
to reject applications, and the only waiting periods allowed may
be no more than nine months for a condition treated in the previous
Preferred Provider Organization (PPO) —
A health care arrangement between purchasers of care such as employers
and insurance companies and providers offering benefits at a reasonable
cost using incentives, such as lower deductibles and copays to get
members to use providers within a network. Use of non-preferred
physicians would involve a higher cost. Preferred providers must
agree to specified fee schedules and are required to comply with
certain utilization and review guidelines.
Preferred Risk — An insurance
classification indicating a risk that is superior to the average
risk on which the rate has been calculated. They are usually eligible
for a reduced rate.
Premium — (1) Part of the
consideration for the insurance, by whatever name called. (2) The
periodic payment made to keep a policy in force. Premium and rate
are sometimes incorrectly used interchangeably. Technically, rate
is the amount charged for a given unit of insurance coverage, and
premium is the sum of the unit rates for a given policy. (3) In
annuities, the purchase payment.
Pre-Paid Hospital Service Plan —
The common name for Health Maintenance Organization plan (HMO).
It provides comprehensive health care, usually by salaried personnel,
for members who pay a flat fee for the services, whether out-patient
or hospital treatment is needed.
Primary Care — Primary Care
is the first care a patient receives. It is often a family physician,
although patients also may receive Primary Care from a nurse, a
paramedic, or other types of health-care providers, depending on
the situation. Managed care systems try to resolve as many health
problems as possible at this level.
Prior Authorization — Managed
care procedure to control utilization of services by review and
approval of a medical service. See also preauthorization.
Proof of Loss — A formal statement
made by the insured to the insurance company regarding a loss. The
purpose of the proof of loss is to place before the company sufficient
information concerning the loss to enable it to determine its liability
under the policy or bond.
Property Damage Liability Insurance
— Protection against liability for damage to the property
of another, including loss of the use of the property, as distinguished
from liability for bodily injury to another. In the majority of
cases it is written along with Bodily Injury Liability protection.
Property Insurance — Insurance
that indemnifies a person with an interest in physical property
for its loss or the loss of its income producing abilities. This
definition encompasses all lines of insurance written by Property
and Inland Marine insurers and can also include certain kinds of
insurance written by Casualty insurers, e.g., Burglary and Plate
Pro Rata — (1) Distribution
of the amount of insurance in one policy, among the several objects
or places covered, in proportion to their value or to the amounts
shown. (2) The distribution of liability among the several insurance
companies having policies on the risk.
Pro Rata Cancellation — Termination
of an insurance contract before the policy expiration date on which
the premium returned to the insured person is adjusted in proportion
to the amount of time the policy was in effect.
Providers — Institutions and
individuals licensed to provide health care services (e.g. hospitals,
physicians, naturopaths, medical health clinicians, pharmacists,
Rain Insurance — A type of
coverage which protects an insured against losses caused by cancellation
of an outdoor event due to rain. The policy usually covers loss
of income. The rain, hail, snow or sleet usually must exceed a certain
amount and must occur during a stated period of time, either before
or during the event.
Reinsurance — Insurance for
insurers. A contract transferring all or part of a risk or liability
already covered under an existing contract. Allows an insurer to
protect itself against part or all of the losses incurred when honoring
all the claims of its members or subscribers. Also referred to as
Renewal — The process of keeping
an active policy in force through the issuance of a renewal policy.
Rental Reimbursement — This
optional coverage will reimburse you for a rental car if your vehicle
is disabled due to a covered loss. This coverage will pay all or
part of your rental car costs.
Replacement Cost — The cost
of replacing property without a reduction for depreciation. By this
method of determining value, damages for a claim would be the amount
needed to replace the property using new materials. Contrast with
Actual Cash Value.
Reporting Form — The form for
a periodic report to an insurer by an insured that covers the fluctuating
values of stocks of merchandise, furniture and fixtures, and improvements
and betterments. Premiums are adjusted annually, based on the average
values insured during the policy period. An insured with fluctuating
inventories might use this form.
Reserves — Restricted cash
investments or highly liquid investments intended to protect the
MCO against insolvency or bankruptcy.
Retroactive Date — Date on
a "claims made" liability policy which triggers the beginning
period of insurance coverage. A retroactive date is not required.
If one is shown on the policy, any claim made during the policy
period will not be covered if the loss occurred before the retroactive
Rider — An amendment attached
to a policy that modifies the conditions of the policy by expanding
or decreasing its benefits or excluding certain conditions from
Risk — (1) A chance of loss.
(2) A person or thing insured (Impaired or substandard risk: An
applicant whose physical condition or driving habits/record does
not meet the standard on which the rate is based.)
Risk Pool — A pool of money
to be used for defined expenses. Commonly, if the money put at risk
is not expended by the end of the year, some or all of it is returned
to those managing the risk.
Risk Sharing — Method used
by MCO and contracted provider to divide responsibility for financial
risk and rewards involved in caring for a plan's members and assigned
to a specific provider.
Schedule — (1) A list of specified
amounts payable for, usually, surgical procedure, dismemberments,
ancillary expenses or the like in HEALTH INSURANCE policies. (2)
The list of individual items covered under one policy as the various
buildings, animals and other property in PROPERTY INSURANCE or the
list of rings, bracelets, etc., insured under a JEWELRY floater.
Self-insurance — The practice
of an employer or organization assuming responsibility for the health
care losses of its employees. Usually a fund is established against
which claims payments are drawn. Claims processing is often handled
through and administrative services contract with an independent
organization, usually an insurer.
SHIBA — Statewide Health Insurance
Benefits Advisors program created in 1979 initially to assist senior
citizens and other Medicare beneficiaries with health insurance
issues at no charge. Now with a broader focus to assist health insurance
consumers statewide, using a corps of trained volunteers supported
by OIC staff and sponsored by local community-based organizations.
Short Rate Cancellation — A
policy termination in which the refunded premium is not proportional
to the amount of time remaining in the policy period due to the
fixed expenses incurred by the company. The insured will generally
pay more for each day of coverage than if the policy had remained
in force throughout the entire policy period.
Sidetrack Agreement — Any agreement
between a railroad and a customer who is served by a railroad sidetrack
built on his premises. Among other things, it provides that the
customer hold the railroad harmless for losses resulting from certain
types of accidents.
Sinkhole Collapse — The peril
of a sudden sinking or collapse of land into underground empty spaces
created by the action of water on limestone or similar rock formations.
This peril is now covered by the latest commercial property forms.
Other forms of earth movement continue to be excluded in most cases.
Special Limits — Refers to
limitation in a homeowner's policy placed on losses for specific
items of property, such as gold and silver bullion, currency, securities,
letters of credit, manuscripts, passports, tickets, stamps, boats,
trailers, firearms and silver and goldware. To obtain full coverage,
additional coverage must be purchased.
Split Limit — Any insurance
coverage with separately stated limits for different types of coverage.
Example: an automobile liability policy of 100/300/50 provides a
maximum of $100,000 bodily injury coverage per person, $300,000
bodily injury coverage per accident, and a property damage limit
of $50,000 per accident.
Statement of Values — Sometimes
property is written using a blanket rate and one single limit of
liability applying to all locations. In order to determine the blanket
or average rate, a rating bureau or company requires an insured
to submit a declaration of the amounts of value at each separate
location on a Statement of Values form.
Stop Loss — That point when
a third party has reinsurance to protect against an overly large
single claim or excessively high aggregate claims during a given
period of time. Large employers who are self-insured may also purchase
reinsurance for stop loss purposes. See reinsurance.
Strict Liability — Usually
used when referring to Products coverage. The liability that manufacturers
and merchandisers may be subject to for defective products sold
by them, regardless of fault or negligence. A claimant must prove
that the product is defective and therefore unreasonably dangerous.
Subrogation — Requires an
insured person to assign any rights to recover damages to his insurer.
Surplus Line — Coverage procured
in an unlicensed insurance company because of its unavailability
from an insurance company licensed in the state.
Tail — This term has been used
to describe both the exposure that exists after expiration of a
policy and the coverage that may be purchased to cover that exposure.
On "occurrence" forms a claims tail may extend for years
after policy expiration, and the losses may be covered. On "claims
made" forms tail coverage may be purchased to extend the period
for reporting covered claims beyond the policy period.
Tenants Policy — A Homeowners
form which is specifically designed for people who rent.
Term — (1) Relating to a contract
of health insurance that makes no provision for renewal or termination
other than by expiration of the policy term. (2) Life insurance
issued for a term of years, after which it expires without value.
(3) The period for which the coverage runs, which is usually the
period for which the premium is paid in a HEALTH INSURANCE policy.
Usually used as policy term.
Third-Party Administrator (TPA)
— An individual or company contracting with employers who
want to pay the cost of providing healthcare for their employees.
TPAs develop and coordinate self-insurance programs, process and
pay claims, may help locate stop loss insurance for the employer.
They also can analyze the effectiveness of the plan and utilization
of its benefits.
Towing and Labor Costs — This
endorsement, which is added to the physical damage coverage, provides
reimbursement up to a specified limit to tow your vehicle or pay
for on-site labor costs.
Transportation Expenses — Subject
to a daily and maximum dollar limit, this coverage (under the physical
damage portion of an automobile policy) pays for transportation
expenses incurred by the named insured only in the event of theft
of an entire covered auto. Coverage generally begins after a stated
minimum waiting period.
Umbrella Liability Policy —
A coverage basically affording high limit coverage in excess of
the limits of the primary policies as well as additional liability
coverages. These additional coverages are usually subject to a substantial
self-insured retention. The term "umbrella" is derived
from the fact that it is a separate policy over and above any other
basic Liability policies the insured may have.
Underwriter — (1) A person
trained in evaluating risks and determining what rates and coverages
that will be used for them. (2) An agent, especially a life insurance
agent, who might qualify as a "field underwriter." In
theory, the agent is supposed to do some underwriting before submitting
the case to the home office. Underwriter: i.e., to make a decision
on the basis of facts known on whether or not the risk is sound
and to report all facts known that might affect the rate.
Uninsured Motorists Bodily Injury
— Uninsured motorists bodily injury coverage (which must be
offered in most states) pays for a covered person's bodily injuries
of which an uninsured or hit-and-run motorist is legally liable,
but unable to pay.
Underinsured Motorists Bodily Injury
— Underinsured motorists bodily injury coverage (which must
be offered in most states) pays for a covered person's bodily injuries
of which a person with not enough insurance is legally liable.
Uninsured Motorists Property Damage
— Uninsured Motorist Property Damage Liability coverage pays
for property damages caused by uninsured drivers.
UIM — Underinsured motorist
coverage must be offered by automobile insurance companies as part
of an auto insurance policy. Consumers who do not want the coverage
must sign a waiver. This coverage protects an insured driver from
losses that should have been the responsibility of another driver,
but which are not covered at all, or not fully covered by the other
Underwriting Loss — When the
cost of providing medical services, plus overhead, exceeds premium
income, or the amount of incurred losses and expenses exceeds earned
Unearned Premium — That portion
of an advance premium payment that has not yet been used for coverage
written. Thus in the case of an annual premium, at the end of the
first month of the premium period, 11 months of the premium would
still be "unearned, etc."
Usage — This refers to the
primary function or purpose in which you intend to operate your
vehicle. For example, if you primarily drive your car to and from
work, the usage is considered "commute; "if you're self-employed
and you primarily drive to see customers, the usage is considered
"business;" if you're retired, your usage is considered
Usual, Customary and Reasonable (UCR)
— Health insurance plans pay a physician's full charge if
it is deemed reasonable and does not exceed his or her usual charges
and amount customarily charged by other physicians practicing in
the area for the service.
Utilization — Patterns of
use of a service or type of service within a specified time. Usually
expressed in rate per unit of population-at-risk for a given period.
Utilization experience multiplied by the average cost per unit of
service delivered equals capitated costs.
Utilization Review (UR) —
A systematic means to review and control patients' use of medical
care services as well as the appropriateness and quality of that
care. Usually involves data collection, review and/or authorization,
especially for services such as specialists, emergency room use
and hospitalization. Also known as utilization management or control.
VIN Vehicle Identification Number
— A Vehicle Identification Number is a 17-digit alpha-numeric
code that provides valuable information concerning the vehicle's
serial number, make, model, options, and year in official records
(like a Social Security number for your car).
Waiting Period — A period
of time between the beginning of a disability and the date benefits
begin. In Washington state, health insurance waiting periods are
limited to 90 days.
Waiver — (1) A rider waiving
(excluding) liability for a stated cause of accident or (especially)
sickness. (2) Provision or rider agreeing to waive (forego) premium
payment during a period of disability. (3) The giving up or surrender
of a right or privilege that is known to exist. It may be effected
by the agent, adjuster, or insurance company employee or official
orally or in writing.
Waiver of Collision Deductible (CDW)
— This option pays your collision deductible when you carry
collision coverage on a vehicle that is damaged by an uninsured
or hit-and-run motorist who is at fault. Coverage applies only when
there is actual physical contact and when you can identify the uninsured
driver or vehicle.
Wrap-Up — A package plan of
a broad type, usually found only in large situations, which is coordinated
in such a way as to be applicable to all Liability risks. An example
would be a wrap-up policy covering all contractors working on a
Withhold — The portion of
the fee or monthly capitation payment to the provider that is held
back by the MCO until the cost of referral for hospital services
has been determined. A provider who exceeds utilization norms does
not receive the withheld amount. The amount returned depends on
the individual utilization by the provider, referral patterns through
the year, groups of physicians or the overall plan pool, and financial
indicators for the overall capitated plan.
Whole Life — A life insurance
policy that runs for the whole life - that is, until death (except
that it will pay the face amount at the ultimate age on the mortality
table being used because, as far as that table goes, that age is
death for all surviving insureds). Premiums for a WHOLE LIFE policy
may be paid for the whole life or for a limited period during which
the higher premium charged pays up the policy.
|NOTE: Most of the terms, explanations and
definitions in this flyer were taken from various insurance
industry guides, reference books, dictionaries and the
Commission on Insurance Terminology, a group that tries
to bring consistency to the use of many of these terms.
Language and its use does not remain static. Meanings
and word usage can change over the years and from region
to region. We do not intend this to be a final statement
on what various words mean, but hope it will help the
average person better understand insurance.
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Copyright © 2005-2014 English Insurance Group, LLC
5005 200th ST SW, Suite 200 B, Lynnwood, WA 98036
Phone: (425) 673-7948 Fax: (425) 673-7942
IMPORTANT NOTE: This Web site provides only a simplified description
of coverages and is not a statement of contract. Coverage may not
apply in all states. For complete details of coverages, conditions,
limits and losses not covered, be sure to read the policy, including
all endorsements, or prospectus, if applicable. Please feel free to
contact us for further information.