Terms to know

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  1. Policy Owner -
    May or may not be the insured person, but the one with the rights to make changes, etc.
  2. Beneficiary -
    Person or entity to which the benefits are paid
  3. Premium Mode -
    The frequency of a payment; monthly, quarterly, semi-annually or annually.
  4. Risk - 3 Types:
    Preferred, Standard & Substandard
  5. Peril -
    Cause of Loss
  6. Mortality -
    Statistical chances of dying by using specific populations, diseases, ages, etc.
  7. Hazard - 4 Types:
    Physical, Moral, Morale and Legal
  8. Law of Large numbers -
    The larger the pool of information gathered, the more reliable it becomes.
  9. Loss Exposure -
    Degree to which a person or property is at risk.
  10. Par / Non-Par -
    • Participating (Mutual) or non-participating (Stock) in paying dividends to
    • an insured.
  11. Ideally Insurable Risk - 2 areas:
    Accidental, creates a financial hardship
  12. Adverse Selection -
    Tendency of those who need insurance to buy it.
  13. Spread of Risk -
    Transfer or pool the risk.
  14. Fraud -
    Deliberately providing false information for gain/profit.
  15. Concealment -
    Hiding material information.
  16. Warranty - 2 Types:
    Expressed or Implied.
  17. Materiality -
    Important facts to the contract. Representation - Oral or written expression of information.
  18. Misrepresentation -
    False information about a contract
  19. Authority - 2 Types:
    Expressed and Implied
  20. Transacting Insurance - 4 areas:
    Execution, negotiation, Solicitation of the contract, or any other transaction resulting in these
  21. Display of License -
    Must be in a prominent place in your office.
  22. Record Keeping -
    • Available in 30 days upon request; all policy information must be
    • accessible in 30 days notice and on file for 2 years.
  23. Printing License # and Fines -
    Must be printed on ALL material to the public; fines are for each offense and are $200 1st, $500 2nd, $1000 ea offense after that.
  24. Broker Fees -
    Must be disclosed.
  25. Notice of Appointment -
    Every licensee must have one on file with the DOI to be actively licensed.
  26. Code Administration -
    Commissioner doesn’t create the code, only determines how to implement it, etc.
  27. Conservation -
    1st attempt at restoring an insurance company that is close to insolvency
  28. LESLI list -
    List of Eligible Surplus Lines Insurers
  29. Proximate Cause -
    Unbroken chain of events that results in damage or injury due to negligence
  30. Liberalization Clause -
    Broadening coverage without any extra charge during a policy period
  31. Direct / Indirect Loss -
    Reduction of the quantity, quality or value of something do to a covered loss / Consequential losses as a result of the covered loss.
  32. Combined Ratio -
    Incurred losses + loss adjusted expenses and earned premium = Loss Ratio
  33. Short rate -
    Cancellation made by an insured prior to it’s expiration date and surcharged by the Company.
  34. Pro Rata -
    Cancellation made prior to the expiration date and @OT surcharged by the Company.
  35. Flat Rate -
    Cancellation of a policy back to its inception date with all premiums 100% refunded.
  36. Cancel / Non-renew / Lapse -
    Cease coverage/ Company not continue beyond expiration date / Cancels due to non-pay.
  37. Unearned Premium -
    Money the company owes an insured for the unused portion of time already paid for.
  38. Earned Premium -
    Money owed to the company for a coverage period provided but not yet paid for.
  39. Contingent / Expectant Interest -
    Just because I expect to own something in the future will not allow me to buy coverage for it now.
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Terms to know
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