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Glossary of Insurance Terms

A

A & H, A &S — Accident & Health or Accident & Sickness. Once commonly used as generic designations for the entire field, now called Health Insurance.

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 is dangerous.

Actual Cash 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.

Actuarial — 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.

Adjuster — 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.

Advertising 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 loss.

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.

B

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 issued.

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 apartment risks.

C

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 premiums.

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 of others.

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 covered expenses.

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 activities.

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 construction.

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 case.

D

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 activities.

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 of coverage.

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 begins.

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 annuity).

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 policy.

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 or injury.

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.

E

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 listed.

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 repaired.

F

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.

G

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.

H

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 needed.

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.

I

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 obligation.

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 Homeowners Policy.

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 insured.
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.

J

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.

K

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.

L

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 is withdrawn.

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 coverage.

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 policy.

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.

M

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.

N

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.

O

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.

P

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 care.

Peak Season Endorsement — An endorsement which provides increased amounts of coverage on inventories during peak seasons, beginning and ending on dates specified in the endorsement.

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 and theft.

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 attachments.

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 six months.

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 Glass coverages.

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, etc.)

Q

R

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 "stop loss."

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 date.

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 coverage.

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.

S

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. (PR)

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.

T

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.

U

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 driver's insurance.

Underwriting Loss — When the cost of providing medical services, plus overhead, exceeds premium income, or the amount of incurred losses and expenses exceeds earned premium.

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 "pleasure."

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.

V

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).

W

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 specific job.

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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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.