Understanding your insurance policy is crucial for several reasons that impact both your financial security and peace of mind. Managing risk and ensuring that coverage aligns with an individual’s or organization’s needs, is something that should not be overlooked. In the world of property insurance, it is becoming increasingly common for the policyholder to know very little about the coverage they have. For most, having a policy in place often satisfies them and provides peace of mind. In most cases, the policyholder will not realize the potential problems and shortcomings of the policy until a claim is filed. At that point, it is too late to change anything.
Having a Claims Professional from LRG review your insurance policy is critically important for many reasons, each contributing to more accurate, comprehensive, and effective management of your insurance coverage and potential claims.Replacement Cost Value (RCV) refers to the amount it would cost to replace or repair a damaged or destroyed item or property with a new one of similar kind and quality, without considering depreciation. RCV provides for the full cost to restore the property to its original condition or replace it with a new item, ensuring that the policyholder is compensated enough to actually replace the lost or damaged item at current market prices. Some RCV policies withhold depreciation, while other RCV policies pay the full replacement cost without said deductions. For policies that deduct depreciation from the initial payment, said amounts are usually recoverable once the property is repaired.
Actual Cash Value (ACV) is the amount of money an insurance company would pay to replace or repair a damaged or destroyed item, taking into account depreciation. ACV represents the item's current value at the time of the loss, rather than the cost of replacing it with a new item.
Depreciation accounts for factors such as age, wear and tear, and obsolescence, which reduce the item's value over time. As a result, ACV coverage is generally less expensive than coverage for Replacement Cost Value (RCV).
For example, if a ten-year-old roof is damaged, the ACV would reflect the cost to replace the roof minus depreciation for the ten years of wear and tear. This means the payout may not be enough to fully cover the cost of a brand-new roof, as it reflects the roof's value at the time of the loss.
A deductible in an insurance claim is the amount of money that you, the policyholder, are responsible for paying out of pocket before your insurance coverage kicks in to cover the remaining. The deductible is a way for insurance companies to share the risk with policyholders and to prevent small or frivolous claims. Most policies have multiple deductibles for different types of perils. Even though opting for a higher deductible may reduce the premium, it may not be the best choice.
Depreciation in an insurance claim refers to the reduction in the value of an insured item or property due to factors such as age, wear and tear, and obsolescence. When you file a claim for a damaged or lost item, the insurance company typically calculates the item's value based on its condition at the time of the loss, not its original purchase price. This reduction in value is known as depreciation.
Clarifying What’s Covered and What’s Not: Insurance policies can be complex, with detailed language outlining what is covered and what is excluded. A thorough review helps policyholders understand the extent of their coverage, including specific perils, property, and liabilities that are protected under the policy. Understanding your policy ensures you know what is covered and what is not, helping you avoid unpleasant surprises when filing a claim. This helps set realistic expectations about what your insurance will and will not cover.
Know What Is Excluded: Every policy has exclusions and limitations that restrict coverage in certain situations. Reviewing the policy allows the policyholder to identify these gaps and take steps to mitigate them, whether by purchasing additional coverage, endorsements, or adjusting the terms of the policy.
Ensuring Adequate Coverage:
Life changes, such as acquiring new assets, home renovations, or changes in business operations, can affect insurance needs. Regular reviews ensure that coverage limits are sufficient to protect against potential losses. This is especially important for high-value items or specialized risks that may not be adequately covered under standard policy terms.
Preventing Insufficient Payouts: Underinsurance occurs when the coverage limits are lower than the actual value of the property or risk insured. Reviewing the policy helps to prevent underinsurance, which can lead to significant financial shortfalls in the event of a claim, leaving the policyholder to cover the difference out of pocket.
Familiarity with Obligations: Insurance policies often include specific terms and conditions that the policyholder must meet, such as maintenance requirements, reporting duties, or deadlines for filing claims. A review helps ensure that the policyholder is aware of and complies with these terms, reducing the risk of a claim being denied.
Insurance premiums are the payments that an individual or business makes to an insurance company in exchange for coverage under an insurance policy. These payments can be made on a regular basis, such as monthly, quarterly, or annually, depending on the terms of the policy. The amount of the premium is determined by various factors, including:
Type of Coverage: Different types of insurance (e.g., fire, flood, homeowners) have different premium rates based on the coverage provided.
Level of Coverage: Higher coverage limits or more comprehensive policies generally result in higher premiums.
Risk Factors: Insurers assess the risk associated with providing coverage to the policyholder.
Deductible Amount: Policies with higher deductibles (the amount the policyholder must pay out of pocket before insurance kicks in) usually have lower premiums, and vice versa.
Claims History: A history of frequent claims can lead to higher premiums, as the insurer perceives a greater risk of future claims.
All Insurers Are Not The Same: A good example is the Louisiana Insurance Market. Since 2021, a total of 11 insurance companies were declared insolvent. Do your research.
Review Financial Ratings: Look up the insurance company’s financial strength through independent rating agencies like A.M. Best, Moody’s, or Standard & Poor’s. Strong financial ratings indicate the company’s ability to pay out claims, which is crucial for long-term reliability.
Examine Financial Reports: Consider reviewing the company’s annual financial reports or stock performance (if publicly traded) to get a sense of its overall financial health.
Read Customer Reviews: Check online reviews on websites like the Better Business Bureau (BBB), Consumer Reports, or Trustpilot. Pay attention to recurring themes in customer feedback, such as issues with claims processing, customer service, or premium increases.
Review Complaint Ratios: Visit the National Association of Insurance Commissioners (NAIC) website to check the company’s complaint ratio. A lower ratio suggests better customer satisfaction compared to the industry average.
Look for Disciplinary Actions: Investigate whether the company has been subject to any disciplinary actions or legal issues that could indicate unethical practices.
Research History and Reputation: Look into the company’s history, reputation, and any awards or recognitions it has received. A company with a long history of reliable service is generally a safer bet.
Actual Cash Value - repayment value for indemnification due to loss or damage of property; in most cases it is replacement cost minus depreciation.
Actuary - business professional who analyzes probabilities of risk and risk management including calculation of premiums, dividends and other applicable insurance industry standards.
Adjuster - a person who investigates claims and recommends settlement options based on estimates of damage and insurance policies held.
Admitted Company - an insurance company licensed to do business in a state(s), domiciled in an alternative state or country.
Affiliate - a person or entity that directly, or indirectly, through one or more other persons or entities, controls, is controlled by or is under common control with the insurer.
Agent - an individual who sells, services, or negotiates insurance policies either on behalf of a company or independently.
Aggregate - the maximum dollar amount or total amount of coverage payable for a single loss, or multiple losses, during a policy period, or on a single project.
ALAE - an estimate of the claims settlement associated with a particular claim or claims.
Alien Company - an insurance company formed according to the laws of a foreign country. The company must conform to state regulatory standards to legally sell insurance products in that state.
Allied Lines - coverages which are generally written with property insurance, e.g., glass, tornado, windstorm and hail; sprinkler and water damage; explosion, riot, and civil commotion; growing crops; flood; rain; and damage from aircraft and vehicle, etc.
All-Risk - also known as open peril, this type of policy covers a broad range of losses. The policy covers risks not explicitly excluded in the policy contract.
Appraisal - an estimate of value.
Arbitration - a binding dispute resolution tactic whereby a conciliator with no interest in the outcome intercedes.
Assessed Value - estimated value for real or personal property established by a taxing entity
Assigned Risk - A governmental pool established to write business declined by carriers in the standard insurance market.
Authorized Company - an insurer licensed or admitted to do business in a particular state.
Authorized Reinsurance - reinsurance placed with a reinsurer who is licensed or otherwise allowed to conduct reinsurance within a state.
BCEGS - Building Code Effectiveness Grading Schedule - classification system for assessment of building codes per geographic region with special emphasis on mitigation of losses from natural disasters.
Beneficiary - an individual who may become eligible to receive payment due to will, life insurance policy, retirement plan, annuity, trust, or other contract.
Blanket coverage - coverage for property and liability that extends to more than one location, class of property or employee.
Boatowners/Personal Watercraft - covers damage to pleasure boats, motors, trailers, boating equipment and personal watercraft as well as bodily injury and property damage liability to others.
Boiler & Machinery or Equipment Breakdown & Machinery - coverage for the failure of boilers, machinery and other electrical equipment. Benefits include (i) property of the insured, which has been directly damaged by the accident; (ii) costs of temporary repairs and expediting expenses; and (iii) liability for damage to the property of others. Coverage also includes inspection of the equipment.
Broker - an individual who receives commissions from the sale and service of insurance policies. These individuals work on behalf of the customer and are not restricted to selling policies for a specific company but commissions are paid by the company with which the sale was made.
Builders' Risk Policies - typically written on a reporting or completed value form, this coverage insures against loss to buildings in the course of construction. The coverage also includes machinery and equipment used in the course of construction and to materials incidental to construction.
Burglary and Theft - coverage for property taken or destroyed by breaking and entering the insured's premises, burglary or theft, forgery or counterfeiting, fraud, kidnap and ransom, and off-premises exposure.
Business Interruption - loss of income as a result of property damage to a business facility.
Business owners Policy - business insurance typically for property, liability and business interruption coverage.
Calendar Year Deductible - in health insurance, the amount that must be paid by the insured during a calendar year before the insurer becomes responsible for further loss costs.
Capital and Surplus Requirement - statutory requirement ordering companies to maintain their capital and surplus at an amount equal to or in excess of a specified amount to help assure the solvency of the company by providing a financial cushion against expected loss or misjudgments and generally measured as a company's admitted assets minus its liabilities, determined on a statutory accounting basis.
Captive Agent - an individual who sells or services insurance contracts for a specific insurer or fleet of insurers.
Captive Insurer - an insurance company established by a parent firm for the purpose of insuring the parent's exposures.
Cash Value - amount due to the policyholder upon surrender of the insurance or annuity product
Casualty Insurance - a form of liability insurance providing coverage for negligent acts and omissions such as workers compensation, errors and omissions, fidelity, crime, glass, boiler, and various malpractice coverages.
Catastrophe Bonds - Bonds issued by an insurance company with funding tied to the company's losses from disasters, or acts of God. A loss exceeding a certain size triggers a reduction in the bond value or a change in the bond structure as loss payments are paid out of bond funds.
Catastrophe Loss - a large magnitude loss with little ability to forecast.
Ceded Premium - amount of premium (fees) used to purchase reinsurance.
Ceding Company - an insurance company that transfers risk by purchasing reinsurance.
Change in Valuation Basis - a change in the interest rate, mortality assumption or reserving method or other factors affecting the reserve computation of policies in force.
Claim - a request made by the insured for insurer remittance of payment due to loss incurred and covered under the policy agreement.
Claims Adjustment Expenses - costs expected to be incurred in connection with the adjustment and recording of accident and health, auto medical and workers' compensation claims.
Claims-made Form - A type of liability insurance form that only pays if the both event that causes (triggers)the claim and the actual claim are submitted to the insurance company during the policy term
Class Rating - a method of determining rates for all applicants within a given set of characteristics such as personal demographic and geographic location.
Coinsurance - A clause contained in most property insurance policies to encourage policy holders to carry a reasonable amount of insurance. If the insured fails to maintain the amount specified in the clause (Usually at least 80%), the insured shares a higher proportion of the loss. In medical insurance a percentage of each claim that the insured will bear.
Combinations - a special form of package policy composed of personal automobile and homeowners insurance.
Combined Ratio - an indication of the profitability of an insurance company, calculated by adding the loss and expense ratios.
Commercial Earthquake - earthquake property coverage for commercial ventures.
Commercial Farm and Ranch - a commercial package policy for farming and ranching risks that includes both property and liability coverage. Coverage includes barns, stables, other farm structures and farm inland marine, such as mobile equipment and livestock.
Commercial Flood - separate flood insurance policy sold to commercial ventures.
Commercial General Liability - flexible & broad commercial liability coverage with two major sub-lines: premises/operations sub-line and products/completed operations sub-line.
Commercial Mortgage-Backed Securities - a type of mortgage-backed security that is secured by the loan on a commercial property.
Commercial Multiple Peril - policy that packages two or more insurance coverages protecting an enterprise from various property and liability risk exposures. Frequently includes fire, allied lines, various other coverages (e.g., difference in conditions) and liability coverage. Such coverages would be included in other annual statement lines, if written individually. Include under this type of insurance multi-peril policies (other than farmowners, homeowners and automobile policies) that include coverage for liability other than auto.
Commercial Package Policy - provides a broad package of property and liability coverages for commercial ventures other than those provided insurance through a business owners policy.
Commercial Property - property insurance coverage sold to commercial ventures.
Commission - a percentage of premium paid to agents by insurance companies for the sale of policies.
Concurrent Causation - property loss incurred from two or more perils in which only one loss is covered but both are paid by the insurer due to simultaneous incident.
Conditions - requirements specified in the insurance contract that must be upheld by the insured to qualify for indemnification.
Condos - homeowners insurance sold to condominium owners occupying the described property.
Contract Reserves - reserves set up when, due to the gross premium structure, the future benefits exceed the future net premium. Contract reserves are in addition to claim and premium reserves.
Contractual Liability - liability coverage of an insured who has assumed the legal liability of another party by written or oral contract. Includes a contractual liability policy providing coverage for all obligations and liabilities incurred by a service contract provider under the terms of service contracts issued by the provider.
Crop - coverage protecting the insured against loss or damage to crops from a variety of perils, including but not limited to fire, lightening, loss of revenue, tornado, windstorm, hail, flood, rain, or damage by insects.
Crop-Hail Insurance - coverage for crop damage due to hail, fire or lightning.
Date of Issue - date when an insurance company issues a policy.
Declarations - policy statements regarding the applicant and property covered such as demographic and occupational information, property specifications and expected mileage per year .
Deductible - Portion of the insured loss (in dollars) paid by the policy holder
Direct Incurred Loss - loss whereby the proximate cause is equivalent to the insured peril.
Direct Loss - Damage to covered real or personal property caused by a covered peril.
Domestic Insurer - an insurance company that is domiciled and licensed in the state in which it sells insurance.
Dual Interest - insurance that protects the creditor's and the debtor's interest in the collateral securing the debtor's credit transaction. "Dual Interest" includes insurance commonly referred to as "Limited Dual Interest."
Dwelling Property/Personal Liability - a special form of package policy composed of dwelling fire and/or allied lines, and personal liability insurance.
Earned Premium - portion of insured's prepaid premium allocated to the insurance company's loss experience, expenses, and profit year- to -date.
Earthquake - property coverages for losses resulting from a sudden trembling or shaking of the earth, including that caused by volcanic eruption. Excluded are losses resulting from fire, explosion, flood or tidal wave following the covered event.
Effective Date - date at which an insurance policy goes into force.
Encumbrance - outstanding mortgages or other debt related to real estate and any unpaid accrued acquisition or construction costs.
Endorsement - an amendment or rider to a policy adjusting the coverages and taking precedence over the general contract.
Errors and Omissions Liability | Professional Liability other than Medical - liability coverage of a professional or quasi professional insured to persons who have incurred bodily injury or property damage, or who have sustained any loss from omissions arising from the performance of services for others, errors in judgment, breaches of duty, or negligent or wrongful acts in business conduct.
Event Cancellation - coverage for financial loss because of the cancellation or postponement of a specific event due to weather or other unexpected cause beyond the control of the insured.
Excess and Umbrella Liability - liability coverage of an insured above a specific amount set forth in a basic policy issued by the primary insurer; or a self insurer for losses over a stated amount; or an insured or self insurer for known or unknown gaps in basic coverages or self insured retentions.
Expense Ratio - percentage of premium income used to attain and service policies. Derived by subtracting related expenses from incurred losses and dividing by written premiums.
Experience Rating - rating system where each group is rated entirely on the basis of its own expected claims in the coming period, with retrospective adjustments for prior periods. This method is prohibited under the conditions for federal qualification.
Exposure - risk of possible loss.
Extra Expense Insurance - a type of property insurance for extraordinary expenses related to business interruption such as a back-up generator in case of power failure.
FAIR Plan - Fair Access to Insurance Requirements - state pools designed to provide insurance to property owners who are unable to obtain property insurance through conventional means.
Fair Value - the amount at which an asset (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale. Quoted market prices in active markets are the best evidence of fair value and shall be used as the basis for the measurement, if available. If a quoted market price is available, the fair value is the product of the number of trading units times market price.
Farmowners Insurance - farmowners insurance sold for personal, family or household purposes. This package policy is similar to a homeowners policy, in that it has been developed for farms and ranches and includes both property and liability coverage for personal and business losses. Coverage includes farm dwellings and their contents, barns, stables, other farm structures and farm inland marine, such as mobile equipment and livestock.
Federal Flood Insurance - coverage for qualifying residents and businesses in flood prone regions through the National Flood Insurance Act, a federally subsidized flood insurance program enacted in 1968.
Federally Reinsured Crop - crop insurance coverage that is either wholly or in part reinsured by the Federal Crop Insurance Corporation (FCIC) under the Standard Reinsurance Agreement (SRA). This includes the following products: Multiple Peril Crop Insurance (MPCI); Catastrophic Insurance, Crop Revenue Coverage (CRC); Income Protection and Revenue Assurance.
Fees Payable - fees incurred but not yet paid.
FEMA - Federal Emergency Management Agency - an independent agency, tasked with responding to, planning for, mitigating and recovery efforts of natural disasters.
Financial Reporting - insurance companies are required to maintain records and file annual and quarterly financial statements with regulators in accordance with statutory accounting principles (SAP). Statutory rules also govern how insurers should establish reserves for invested assets and claims and the conditions under which they can claim credit for reinsurance ceded.
Financial Statement - balance sheet and profit and loss statement of an insurance company. This statement is used by the NAIC, and by State Insurance Commissioners to regulate an insurance company according to reserve requirements, assets, and other liabilities.
Fire - coverage protecting the insured against the loss to real or personal property from damage caused by the peril of fire or lightning, including business interruption, loss of rents, etc.
Flood - coverage protecting the insured against loss or damage to real or personal property from flood. (Note: If coverage for flood is offered as an additional peril on a property insurance policy, file it under the applicable property insurance filing code.)
Foreign Insurer - an insurance company selling policies in a state other than the state in which they are incorporated or domiciled.
Fraternal Insurance - a form of group coverage or disability insurance available to members of a fraternal organization.
Gross Premium - the net premium for insurance plus commissions, operating and miscellaneous commissions. For life insurance, this is the premium including dividends.
Guaranty Fund - funding mechanism employed by states to provide funds to cover policyholder obligations of insolvent reporting entities.
Hazard - circumstance which tends to increase the probability or severity of a loss.
Hold-Harmless Agreement - A risk transfer mechanism whereby one party assumes the liability of another party by contract
Homeowners Insurance - a package policy combining real and personal property coverage with personal liability coverage. Coverage applicable to the dwelling, appurtenant structures, unscheduled personal property and additional living expense are typical. Includes mobile homes at a fixed location.
Hull Insurance - coverage for damage to a vessel or aircraft and affixed items.
Incurred Claims - paid claims plus amounts held in reserve for those that have been incurred but not yet paid.
Incurred Losses - sustained losses, paid or not, during a specified time period. Incurred losses are typically found by combining losses paid during the period plus unpaid losses sustained during the time period minus outstanding losses at the beginning of the period incurred in the previous period.
Indemnity, Principle of - a general legal principle related to insurance that holds that the individual recovering under an insurance policy should be restored to the approximate financial position he or she was in prior to the loss. Legal principle limiting compensation for damages be equivalent to the losses incurred.
Independent Adjuster - freelance contractor paid a fee for adjusting losses on behalf of companies.
Independent Agent - a representative of multiple insurance companies who sells and services policies for records which they own and operate under the American Agency System.
Independent Contractor - an individual who is not employed for a company but instead works for themselves providing goods or services to clients for a fee.
Individual Annuities- Deferred Non-Variable and Variable - an annuity contract that provides an accumulation based on both (1) funds that accumulate based on a guaranteed crediting interest rates or additional interest rate applied to designated considerations, and (2) funds where the accumulation vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder. The contract provides for the initiation of payments at some designated future date.
Inland Marine - coverage for property that may be in transit, held by a bailee, at a fixed location, a movable good that is often at different locations (e.g., off road constructions equipment), or scheduled property (e.g., Homeowners Personal Property Floater) including items such as live animals, property with antique or collector's value, etc. This line also includes instrumentalities of transportation and communication, such as bridges, tunnels, piers, wharves, docks, pipelines, power and phone lines, and radio and television towers.
Insurable Interest - A right or relationship in regard to the subject matter of the insured contract such that the insured can suffer a financial loss from damage, loss or destruction to it.
Insurance - an economic device transferring risk from an individual to a company and reducing the uncertainty of risk via pooling.
Insurance Holding Company System - consists of two or more affiliated persons, one or more of which is an insurer.
Insurance to Value - Amount of insurance purchased vs. the actual replacement cost of the insured property expressed as a ratio.
Insured - party covered by an insurance policy.
Insurer - an insurer or reinsurer authorized to write property and/or casualty insurance under the laws of any state.
International - includes all business transacted outside the U.S. and its territories and possessions where the appropriate line of business is not determinable.
Joint Underwriting Association (JUA) - a loss-sharing mechanism combining several insurance companies to provide extra capacity due to type or size of exposure.
Key-Persons Insurance - a policy purchased by, for the benefit of, a business insuring the life or lives of personnel integral to the business operations.
Lapse - termination of a policy due to failure to pay the required renewal premium.
Liability - a certain or probable future sacrifice of economic benefits arising from present obligations of a particular entity to transfer assets or to provide services to other entities in the future as a result of a past transactions(s) or event(s). three essential characteristics: a) It embodies a present duty or responsibility to one or more other entities that entails settlement by probable future transfer or use of assets at a specified or determinable date, on occurrence of a specified event, or on demand; b) The duty or responsibility obligates a particular entity, leaving it little or no discretion to avoid the future sacrifice; and c) The transaction or other event obligating the entity has already happened.
Limited Benefit - policies that provide coverage for vision, prescription drug, and/or any other single service plan or program. Also include short-term care policies that provide coverage for less than one year for medical and other services provided in a setting other than an acute care unit of the hospital.
Limited Payment Life Insurance - a form of whole-life insurance with a pre-defined number of premiums to be paid.
Limits - maximum value to be derived from a policy.
Lloyd's of London - association offering membership in various syndicates of wealthy individuals organized for the purpose of writing insurance for a particular hazard.
Loss - physical damage to property or bodily injury, Including loss of use or loss of income
Loss Adjustment Expense (LAE) - expected payments for costs to be incurred in connection with the adjustment and recording of losses. Can be classified into two broad categories: Defense and Cost Containment (DCC) and Adjusting and Other (AO). Can also be separated into (Allocated Loss Adjustment Expense) and (Unallocated Loss Adjustment Expense for ratemaking purposes.
Loss Frequency - incidence of claims on a policy during a premium period.
Loss of Use Insurance - policy providing protection against loss of use due to damage or destruction of property.
Loss Payable Clause - coverage for third party mortgagee in case of default on insured property, secured by a loan, that has been lost or damaged.
Loss Ratio - the percentage of incurred losses to earned premiums.
Loss Reserve - the amount that insurers set aside to cover claims incurred but not yet paid.
Loss Reserves - an estimate of liability or provision in an insurer's financial statement, indicating the amount the insurer expects to pay for losses incurred but not yet reported or reported claims that haven't been paid.
Losses Incurred - Includes claims that have been paid and/or have amounts held in reserve for future payment
Market Value - fair value or the price that could be derived from current sale of an asset.
Minimum Premium Plan - an arrangement under which an insurance carrier will, for a fee, handle the administration of claims and insure against large claims for a self-insured group. The employer self-funds a fixed percentage (e.g. 90%) of the estimated monthly claims, and the insurer covers the remainder.
Mobile Homes - Homeowners - homeowners insurance sold to owners occupying the described mobile home.
Mobile Homes under Transport - coverage for mobile homes while under transport for personal or commercial use.
Modified Guaranteed - an annuity that contains a provision that adjusts the value of withdrawn funds based on a formula in the contract. The formula reflects market value adjustments.
Member - A person who has enrolled as a subscriber or an eligible dependent of a subscriber and for whom the health organization has accepted the responsibility for the provision of health services as may be contracted for.
Moral Hazard - personality characteristics that increase probability of losses. For example not taking proper care to protect insured property because the insured knows the insurance company will replace it if it is damaged or stolen.
Morale Hazard - negligence or disregard on the part of the insured which could lead to probable loss.
Mortgage-Backed Securities - a type of asset-backed security that is secured by a mortgage or collection of mortgages. These securities must also be grouped in one of the top two ratings as determined by an accredited credit rating agency, and usually pay periodic payments that are similar to coupon payments. Furthermore, the mortgage must have originated from a regulated and authorized financial institution.
Multi-Peril Insurance - personal and business property coverage combining several types of property insurance in one policy.
Mutual Insurance Company - a privately held insurer owned by its policyholders, operated as a non-profit that may or may not be incorporated.
Mutual Insurance Holding Company - a company organized as a mutual and owning a capital stock insurer or insurers for the benefit of pooling risk for many people, typically those in the same industry.
Named Insured - the individual defined as the insured in the policy contract. .
Named Peril Coverage - insurance for losses explicitly defined in the policy contract.
National Association of Insurance Commissioners (NAIC) - the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S.
Negligence - failure to exercise reasonable consideration resulting in loss or damage to oneself or others.
Net Admitted Assets - total of assets whose values are permitted by state law to be included in the annual statement of the insurer.
Net Income - total revenues from an insurer's operations less total expenses and income taxes
Net Premiums Earned - premiums on property/casualty or health policies that will not have to be returned to the policyholder if the policy is cancelled.
NFIP - National Flood Insurance Program - flood insurance and floodplain management for personal and business property administered under the National Flood Act of 1968. Encourages participation by private insurers through a flood insurance pool .
Nonadmitted Assets - assets having economic value other than those which can be used to fulfill policyholder obligations, or those assets which are unavailable due to encumbrances or other third party interests and should not be recognized on the balance sheet.
Nonadmitted Insurer - insurance company not licensed to do business within a given state.
Occurrence - an accident , including injurious exposure to conditions, which results, during the policy period in bodily injury or property damage neither expected or intended from the standpoint of the insured. (Bickelhaupt and Magee)
Ocean Marine - coverage for ocean and inland water transportation exposures; goods or cargoes; ships or hulls; earnings; and liability.
Officer - a president, vice-president, treasurer, actuary, secretary, controller and any other person who performs for the company functions corresponding to those performed by the foregoing officers.
Option - an agreement giving the buyer the right to buy or receive, sell or deliver, enter into, extend or terminate, or effect a cash settlement based on the actual or expected price, level, performance or value of one or more Underlying Interests.
Other Underwriting Expenses - allocable expenses other than loss adjustment expenses and investment expenses.
Owner Occupied - homeowners insurance sold to owners occupying the described property.
Package Policy - two or more distinct policies combined into a single contract.
Peril - the cause of property damage or personal injury, origin of desire for insurance. "Cause of Loss"
Personal Earthquake - earthquake property coverage for personal, family or household purposes.
Personal Flood - separate flood insurance policy sold for personal, family or household purposes.
Personal Property - single interest or dual interest credit insurance (where collateral is not a motor vehicle, mobile home, or real estate) that covers perils to goods purchased or used as collateral and that concerns a creditor's interest in the purchased goods or pledged collateral either in whole or in part; or covers perils to goods purchased in connection with an open-end credit transaction.
Policy - a written contract ratifying the legality of an insurance agreement.
Policy Period - time period during which insurance coverage is in effect.
Policy Reserve - the amount of money allocated specifically for the fulfillment of policy obligations by a life insurance company; reserves are in place to safeguard that the company is able to pay all future claims.
Policyholders Surplus - assets in excess of the liabilities of a company or net income above any monies indebted to legal obligation.
Pollution - environmental contamination.
Pool - an association organized for the purpose of absorbing losses through a risk-sharing mechanism thereby limiting individual exposures.
Premises and Operations - policies covering the liability of an insured to persons who have incurred bodily injury or property damage on an insured's premises during normal operations or routine maintenance, or from an insured's business operations either on or off of the insured's premises.
Premium - Money charged for the insurance coverage reflecting expectation of loss.
Premiums Earned - the portion of premium for which the policy protection or coverage has already been given during the now-expired portion of the policy term.
Premiums Net - is the amount calculated on the basis of the interest and mortality table used to calculate the reporting entity's statutory policy reserves.
Premiums Written - total premiums generated from all policies (contracts) written by an insurer within a given period of time.
Primary Insurance - coverage that takes precedence when more than one policy covers the same loss.
Producer - an individual who sells, services, or negotiates insurance policies either on behalf of a company or independently.
Professional Errors and Omissions Liability - coverage available to pay for liability arising out of the performance of professional or business related duties, with coverage being tailored to the needs of the specific profession. Examples include abstracters, accountants, insurance adjusters, architects, engineers, insurance agents and brokers, lawyers, real estate agents, stockbrokers.
Property - coverage protecting the insured against loss or damage to real or personal property from a variety of perils, including but not limited to fire, lightening, business interruption, loss of rents, glass breakage, tornado, windstorm, hail, water damage, explosion, riot, civil commotion, rain, or damage from aircraft or vehicles.
Provisions - contingencies outlined in an insurance policy.
Proximate Cause - event covered under insured's policy agreement.
Public Adjuster - independent claims adjuster representing policyholders instead of insurance companies.
Pure Premium - that portion of the premium equal to expected losses void of insurance company expenses, premium taxes, contingencies, or profit margin.
Pure Risk - circumstance including possibility of loss or no loss but no possibility of gain.
Qualified Actuary - a person who meets the basic education, experience and continuing education requirements (these differ by line of business) of the Specific Qualification Standard for Statements of Actuarial Opinion, NAIC Property and Casualty Annual Statement, as set forth in the Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States, promulgated by the American Academy of Actuaries, and is in good standing of the American Academy of Actuaries who has been approved as qualified for signing casualty loss reserve opinions by the Casualty Practice Council of the American Academy of Actuaries.
Rate - value of insured losses expressed as a cost per unit of insurance.
Rebate - a refund of part or all of a premium payment.
Reinsurance - a transaction between a primary insurer and another licensed (re) insurer where the reinsurer agrees to cover all or part of the losses and/or loss adjustment expenses of the primary insurer. The assumption is in exchange for a premium. Indemnification is on a proportional or non-proportional basis.
Reinsurer - company assuming reinsurance risk.
Renters Insurance - liability coverage for contents within a renter's residence. Coverage does not include the structure but does include any affixed items provided or changed by the renter.
Replacement Cost - the cost of replacing property without a reduction for depreciation due to normal wear and tear.
Reported Losses - Includes both expected payments for losses relating to insured events that have occurred and have been reported to the insurance company, but not yet paid.
Reserve - A portion of the premium retained to pay future claims
Residence - the domicile location of a member as shown by his or her determination as a resident.
Retention - a mechanism of internal fund allocation for loss exposure used in place of or as a supplement to risk transfer to an insurance company.
Retention Limit - maximum amount of medical and hospital expense an insurer will carry on its own. The limit can be for an individual claim and/or for the insurers total claims, depending upon the terms of the reinsurance contract.
Retrocession - the portion of risk that a reinsurance company cedes or amount of insurance the company chooses not to retain.
Rider - an amendment to a policy agreement.
Risk - Uncertainty concerning the possibility of loss by a peril for which insurance is pursued.
Risk Retention Act - a 1986 federal statute amending portions of the Product Liability Risk Retention Act of 1981 and enacted to make organization of Risk Retention Groups and Purchasing Groups more efficient.
Risk Retention Group - group-owned insurer organized for the purpose of assuming and spreading the liability risks to its members.
Salvage - value recoverable after a loss.
Self-Insurance - type of insurance often used for high frequency low severity risks where risk is not transferred to an insurance company but retained and accounted for internally.
Standard Risk - a person who, according to a company's underwriting standards, is considered a normal risk and insurable at standard rates. High or low risk candidates may qualify for extra or discounted rates based on their deviation from the standard.
State of Domicile - the state where a company's home office is located.
Statement Value - the Statutory Accounting Principle book value reduced by any valuation allowance and non-admitted adjustment applied to an individual investment or a similar group of investments, e.g., bonds, mortgage loans, common stock.
Structured Settlements - periodic fixed payments to a claimant for a determinable period, or for life, for the settlement of a claim.
Subrogation - situation where an insurer, on behalf of the insured, has a legal right to bring a liability suit against a third party who caused losses to the insured. Insurer maintains the right to seek reimbursement for losses incurred by insurer at the fault of a third party.
Subrogation Clause - section of insurance policies giving an insurer the right to take legal action against a third party responsible for a loss to an insured for which a claim has been paid.
Surety Bond - a three-party agreement whereby a guarantor (insurer) assumes an obligation or responsibility to pay a second party (obligee) should the principal debtor (obligor) become in default.
Surplus - insurance term referring to retained earnings.
Surplus Line - specialized property or liability coverage available via nonadmitted insurers where coverage is not available through an admitted insurer, licensed to sell that particular coverage in the state.
Tenants - homeowners insurance sold to tenants occupying the described property.
Term - period of time for which policy is in effect.
Third Party - person other than the insured or insurer who has incurred losses or is entitled to receive payment due to acts or omissions of the insured.
Title Insurance - coverage that guarantees the validity of a title to real and personal property. Buyers of real and personal property and mortgage lenders rely upon the coverage to protect them against losses from undiscovered defects in existence when the policy is issued.
Total Liabilities - total money owed or expected to be owed by the insurance company.
Total Revenue - premiums, revenue, investment income, and income from other sources.
Travel Coverage - covers financial loss due to trip cancellation/interruption; lost or damaged baggage; trip or baggage delays; missed connections and/or changes in itinerary; and casualty losses due to rental vehicle damage.
Unallocated Loss Adjustment Expense (ULAE) - loss adjustment expenses that cannot be specifically tied to a claim.
Umbrella and Excess (Commercial) - coverage for the liability of a commercial venture above a specific amount set forth in a basic policy issued by the primary insurer; or a self-insurer for losses over a stated amount; or an insured or self-insurer for known or unknown gaps in basic coverages or self-insured retentions.
Umbrella and Excess (Personal) - non-business liability protection for individuals above a specific amount set forth in a basic policy issued by the primary insurer; or a self-insurer for losses over a stated amount; or an insured or self-insurer for known or unknown gaps in basic coverages or self-insured retentions.
Unauthorized Reinsurance - reinsurance placed with a company not authorized in the reporting company's state of domicile.
Underwriter - person who identifies, examines and classifies the degree of risk represented by a proposed insured in order to determine whether or not coverage should be provided and, if so, at what rate.
Underwriting - the process by which an insurance company examines risk and determines whether the insurer will accept the risk or not, classifies those accepted and determines the appropriate rate for coverage provided.
Underwriting Risk - section of the risk-based capital formula calculating requirements for reserves and premiums.
Unearned Premium - amount of premium for which payment has been made by the policyholder but coverage has not yet been provided.
Unearned Premium Reserve - all premiums (fees) received for coverage extending beyond the statement date; appears as a liability on the balance sheet.
Unpaid Losses - claims that are in the course of settlement. The term may also include claims that have been incurred but not reported.
Valued Policy - an insurance contract for which the value is agreed upon in advance and is not related to the amount of the insured loss.
Valued Policy Law - state legislation which specifies that the insured shall receive the face amount of the policy in the event of a total loss to a dwelling rather than the actual cash value regardless of the principle of indemnity.
Copyright © 2024, LRG CLAIMS LLC
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this site, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue. The content of this Website contains general information and is only intended for that purpose. The Firm expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this Website. The content on this site is for general information purposes only and is not meant to be a guarantee or promise of results.
Any information sent to The Firm by Internet e-mail or through the Website is not secure and is done so on a non-confidential basis. Transmission of information from this Website does not create a contractual relationship between you and The Firm, nor is it intended to do so. The transmission of the Website, in part or in whole, and/or any communication with us via Internet e-mail through this site does not constitute or create an agreement between us and any recipients.
Some links within the Website may lead to other web-sites, including those operated and maintained by third parties. The Firm includes these links solely as a convenience to you, and the presence of such a link does not imply a responsibility for the linked site or an endorsement of the linked site, its operator, or its contents.
This Website and its contents are provided “AS IS” without warranty of any kind, either expressed or implied, including, but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement.
Furthermore, The Firm does not wish to represent anyone desiring representation based upon viewing this Website in a state where this Website fails to comply with all laws and ethical rules of that state.
Reproduction, distribution, republication, and/or retransmission of material contained within The Firm Website is prohibited unless the prior written permission of The Firm has been obtained.
