Insurance Glossary - CID Insurance

Broker Tools Insurance Glossary

Looking for a comprehensive resource to navigate the complex world of commercial insurance? Our glossary has got you covered. From key terms to common jargon, our user-friendly guide is designed to help you better understand the intricacies of commercial insurance. Start exploring today.

Insurance Acronyms

ACORD: The Association for Cooperative Operations Research and Development. ACORD publishes and maintains an archive of standardized forms used by the insurance industry for increased efficiency, accuracy, and speed of information processing.
AI: An Additional Insured (AI) is a person or organization added to an insurance policy by endorsement, who is also covered under the policy.
BIEE: Business Income and Extra Expense insurance (BIEE) provides coverage when a business shuts down temporarily due to a fire or other covered loss. It helps replace income and covered expenses like rent, payroll and other financial responsibilities while the property is being repaired or replaced.
BOP: A Businessowners Policy (BOP) is a type of insurance that combines multiple coverages, such as property, liability, and business interruption insurance, into a single policy for small businesses.
BOR: A Broker of Record (BOR) letter transfers the servicing rights from one insurance broker to another.
COI: A Certificate of Insurance (COI) is a document from an insurer to show proof that insurance is in place. They're also known as certificates of liability insurance or proof of insurance.
EBNR: Earned But Not Reported (EBNR) is the premium amount the insurer reasonably expects to receive for which contracts are not yet final and exact amounts are not definite.
EFT: An Electronic Funds Transfer (EFT) Authorization form is an automatic payment authorization form.
EOI: Evidence of Insurance (EOI) is a document issued by an insurer or broker that verifies the existence of an insurance policy and summarizes the key aspects and conditions of the policy and lists the types of first party coverages the Named Insured has.
ERP: An Extended Reporting Period (ERP) is a feature that can be added to a claims-made professional liability insurance policy. It allows claims to be reported even after the policy expires. This policy endorsement is also known as tail coverage.
GAAP: Generally Accepted Accounting Principles (GAAP) is an aggregate of the accounting standards, principles and best practices for the preparation of financial statements allowing for consistency in reporting.
GLBA: The Gramm-Leach Blily Act (GLBA), repealing Glass-Steagal Act of 1933, allows consolidation of commercial banks, investment institutions and insurance companies. Established a framework of responsibilities of federal and state regulators for these financial industries. It permits financial services companies to merge and engage in a variety of new business activities, including insurance, while attempting to address the regulatory issues raised by such combinations.
IBNR: Incurred But Not Reported (INBR) claims that have occurred but the insurer has not been notified of them at the reporting date. Estimates are established to book these claims. May include losses that have been reported to the reporting entity but have not yet been entered into the claims system or bulk provisions. Bulk provisions are reserves included with other IBNR reserves to reflect deficiencies in known case reserves. IBNR can sometimes include estimates of incurred but Not Enough Reported (IBNER)

IRIS: The Insurance Regulatory Information System (IRIS) is a baseline solvency screening system for the National Association of Insurance Commissioners (NAIC) and state insurance regulators established in the mid-1970s.
LAE: Loss Adjustment Expense (LAE) are 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.
LPR: A Lost Policy Release (LPR) is a statement that releases an insurer from its liabilities.
LRO: Lessor's Risk Only (LRO) covers commercial property landlords against certain risks and lawsuits from their tenants. If a tenant sues for a covered loss, the LRO policy would cover legal fees and tenant reimbursement for property damage or injuries.
MGA: A Managing General Agent (MGA) or a Managing General Underwriter (MGU) is a specialized type of insurance agent or broker that has been granted underwriting authority by an insurer, and can administer programs and negotiate contracts for an insurer.
NAIC: The National Association of Insurance Commissioners (NAIC) is 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.
NKLL: A No Known Loss Letter (NKLL) serves as a legal agreement between the policyholder and the insurer, and confirms that the policyholder had no losses or claims during the lapse period.
POI: Proof of Insurance (POI) is any type of documentation that a person can provide to another individual proving that the person has valid insurance with an insurance company. The most common form of a POI is a paper provided by the insurance company or broker listing the policy information and effective dates, commonly referred to as Evidence of Insurance or Certificate of Insurance.
PUD: A Planned Unit Development (PUD) is a community of single-family homes, and sometimes condos or townhomes, where every homeowner belongs to a homeowners association (HOA).
RCE: A Replacement Cost Estimate (RCE) is the value that insurance agents estimate to calculate dwelling coverage for a given property. This is the part of the policy that determines how much the insured will be paid in the event of a loss to the building.
SOV: A Statement of Values (SOV) is a declaration to insurers of which property the entity intends to insure. In most cases, the document is a spreadsheet with a long list of structures.
WOS: A Waiver of Subrogation (WOS) is an endorsement that prohibits an insurer from recovering the money they paid on a claim from a negligent third party.

Insurance Coverages

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.
Alternative Workers' Compensation: Coverage other than standard workers' compensation coverage, employer's liability and excess workers' compensation (e.g., large deductible, managed care).
Blanket Insurance: A type of insurance coverage for property and liability that extends to more than one location, class of property or employee.
Boiler and Machinery Insurance: A type of insurance that covers damage or loss caused by boilers, pressure vessels, and other machinery.
Builders Risk Insurance: A type of insurance that covers property damage or loss during construction or renovation projects.
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 Income Insurance: A type of insurance that covers lost income and expenses due to a covered loss, such as a fire or natural disaster.
Business Interruption Insurance: A type of insurance that covers lost income and expenses in the event of a business interruption.
Business Personal Property: A type of insurance that helps protect and cover the costs of owned or rented equipment, building and personal property at a company.
Businessowners Policy (BOP): A type of insurance that combines multiple coverages, such as property, liability, and business interruption insurance, into a single policy for small businesses.
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.
Claims-Made Policy: An insurance policy that covers claims made during the policy period, regardless of when the loss occurred.
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.
Commercial Crime Insurance: A type of insurance that covers losses due to criminal activity, such as theft, fraud, or embezzlement.
Commercial General Liability Insurance: A type of insurance that provides coverage for bodily injury, property damage, and personal injury claims.
Commercial Lines Insurance: Insurance coverage for businesses, as opposed to personal lines insurance for individuals.
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 Insurance: A type of insurance that covers damage or loss of commercial property, including buildings, equipment, and inventory.
Commercial Umbrella Insurance: A type of insurance that provides additional coverage beyond the limits of other insurance policies.
Completed Operations Coverage: A type of insurance that covers damages that occur after work has been completed by a business.
Comprehensive General Liability (CGL): Coverage of all business liabilities unless specifically excluded in the policy contract.
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.
Coverage: The scope of protection provided by an insurance policy.
Crime Insurance: A type of insurance that covers losses due to criminal activity such as employee theft, robbery, or forgery.
Cyber Liability Insurance: A type of insurance that covers losses due to data breaches, hacking, or other cyber attacks.
Dealer's Physical Damage Coverage: A type of insurance coverage that covers the insured's inventory of owned autos.
Difference in Conditions (DIC) Insurance: Special form of open-peril coverage written in conjunction with basic fire coverage and designed to provide protection against losses not reimbursed under the standard fire forms. Examples are flood and earthquake coverage.
Directors and Officers Liability Insurance: A type of insurance that covers the legal liability of directors and officers of a business for actions taken in their official capacity.
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."
Duty to Defend: Coverage that automatically provides legal counsel for the insured in the event that they are named in a suit that includes allegations that are covered under the policy so that they won’t have to worry about finding legal representation themselves.
Employee Dishonesty Insurance: A type of insurance that covers losses due to employee theft, fraud, or other dishonest acts.
Employers Liability: Employers' liability coverage for the legal liability of employers arising out of injuries to employees. This code should be used when coverage is issued as an endorsement, or as part of a statutory workers' compensation policy.
Employment Practices Liability Insurance: A type of insurance that covers claims related to wrongful termination, discrimination, or sexual harassment in the workplace.
Environmental Pollution Liability Insurance: A type of insurance that covers damages or losses related to pollution or other environmental risks.
Equipment Breakdown Insurance: A type of insurance that covers the cost of repairing or replacing damaged equipment.
Equipment Floater Insurance: A type of insurance that covers property that is not permanently attached to a building or vehicle, such as tools or equipment.
Errors and Omissions Insurance: A type of insurance that protects professionals from liability for negligence or mistakes in their work.
Excess Liability Insurance: A type of insurance that provides coverage above the limits of other insurance policies.
Excess Workers' Compensation: Either specific and/or aggregate excess workers' compensation insurance written above an attachment point or self-insured retention.
Extra Expense Insurance: A type of insurance that covers additional expenses incurred by a business due to a covered loss, such as renting temporary space or buying new equipment.

Fidelity Bond: A type of insurance that protects against losses due to employee theft, fraud, or other dishonest acts.
Fiduciary Liability Insurance: A type of insurance that covers the legal liability of fiduciaries, such as trustees or pension plan administrators.
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.
Fire Legal Liability: Coverage for property loss liability as the result of separate negligent acts and/or omissions of the insured that allows a spreading fire to cause bodily injury or property damage of others. An example is a tenant who, while occupying another party's property, through negligence causes fire damage to the property.
First-Party Coverage: Insurance coverage that provides benefits to the policyholder directly, rather than a third party.
Flood Insurance: A type of insurance that covers damages caused by flooding.
Full Prior Acts Coverage: Coverage for claims that may arise from services provided in the past that the insured is unaware may give rise to a claim.
Garagekeeper's Coverage: Covers damage to customers' autos while in Care, Custody, or Control.
Hired and Non-Owned Auto Insurance: A type of insurance that provides liability coverage for vehicles that are rented or used for business purposes, but not owned by the business.
Incontestability Clause: A provision in an insurance policy that limits the amount of time the insurer has to contest the validity of a claim.
Inland Marine Insurance: A type of insurance that covers property in transit, such as cargo on trucks or goods on display at trade shows.
Kidnap/Ransom Insurance: Coverage for ransom or extortion costs and related expenses.
Lessor's Risk Only: Lessor's Risk Only (LRO) covers commercial property landlords against certain risks and lawsuits from their tenants. If a tenant sues for a covered loss, the LRO policy would cover legal fees and tenant reimbursement for property damage or injuries.
Liquor Liability: Coverage for the liability of an entity involved in the retail or wholesale sales of alcoholic beverages, or the serving of alcoholic beverages, to persons who have incurred bodily injury or property damage arising from an intoxicated person.
Loss of Use Insurance: Policy providing protection against loss of use due to damage or destruction of property.
Mechanical Breakdown Insurance: Premiums attributable to policies covering repair or replacement service, or indemnification for that service, for the operational or structural failure of property due to defects in materials or workmanship, or normal wear and tear. (May cover motor vehicles, mobile equipment, boats, appliances, electronics, residual structures, etc.)
Medical Malpractice: Insurance coverage protecting a licensed health care provider or health care facility against legal liability resulting from the death or injury of any person due to the insured's misconduct, negligence, or incompetence, in rendering or failure to render professional services.
Medical Professional Liability: Insurance coverage protecting a licensed health care provider or health care facility against legal liability resulting from the death or injury of any person due to the insured's misconduct, negligence, or incompetence in rendering professional services. Medical Professional Liability is also known as Medical Malpractice.
Multi-Peril Insurance: Personal and business property coverage combining several types of property insurance in one policy.
Named Peril Coverage: Insurance for losses explicitly defined in the policy contract.
Occurrence-Based Insurance: A type of insurance that covers events that occur during the policy period, regardless of when the claim is made.
Owner’s and Contractor’s Protective Liability: A coverage that refers to a stand-alone policy that covers the named insured's liability for bodily injury (BI) and property damage (PD) caused, in whole or in part, by an independent contractor's work for the insured.
Package Policy: Two or more distinct policies combined into a single contract.
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.
Product Liability: Insurance coverage protecting the manufacturer, distributor, seller, or lessor of a product against legal liability resulting from a defective condition causing personal injury, or damage, to any individual or entity, associated with the use of the product.
Professional Liability (Errors and Omissions) Insurance: A type of insurance that protects professionals from liability for negligence or mistakes in their work.
Property in the Open: An insurance endorsement or add-on that provides additional coverage for business property that is located outside of a building or structure, and is therefore exposed to risks such as theft, vandalism, weather damage, or other perils.
Property Insurance: A type of insurance that covers damage or loss of property, including buildings, equipment, and inventory.
Property Management General Liability (Off-Premise): Coverage that follows the Management Company to their managed locations.
Property Management General Liability (Premise-Only): Coverage that does not follow the Management Company to the managed locations. Coverage is strictly limited to the insured’s occupied premises. This is to satisfy a landlord requirement only.
Self-Insurance: A 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.
Subrogation Clause: A 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 type of insurance that guarantees the performance of a contract, such as a construction project or public works contract.
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.
Uninsured/Underinsured Motorist Coverage (UMC): Provides coverage for a policyholder involved in a collision with a driver who does not have liability insurance or whose liability limits are too low to pay for all the damage.
Vacant Building/Land Insurance: A type of insurance that provides coverage for fully or mostly vacant buildings or parcels of land.
Waiver of Subrogation: A provision in an insurance policy that waives the insurer's right to seek recovery from a third party for losses paid to the insured.
Workers' Compensation Insurance: A type of insurance that provides coverage for employee injuries or illnesses that occur during the course of employment.

Insurance Terms

601 Form: A form required to be completed for ownership changes in state of California.
Accident: An unexpected event or circumstance without deliberate intent.
Accidental Bodily Injury: An unexpected injury to a person.
Act of God: An event caused by natural forces beyond human control, such as a hurricane or earthquake.
Actual Cash Value: The repayment value for indemnification due to loss or damage of property; in most cases it is replacement cost minus depreciation.
Additional Insured: A person or organization added to an insurance policy by endorsement, who is also covered under the policy.
Adjuster: A person who investigates claims and recommends settlement options based on estimates of damage and insurance policies held.
Admitted Carrier: An insurer or insurance company that has been filed and approved by their state's Department of Insurance (DOI). This means they are subject to all state regulations, and cannot deviate from their filed rates.
Advance Premiums: Occur when a policy has been processed, and the premium has been paid prior to the effective date. These are a liability to the company and not included in written premium or the unearned premium reserve.
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.
Agency Bill: The process of collecting premium from the Insured on behalf of an Insurer and then remitting the net premium (minus commission) to the Insurer based on an agreed schedule.
Aggregate Limit: The maximum amount of coverage provided by an insurance policy during the policy period, regardless of the number of claims made.
Agreed Value Policy: An insurance policy that covers a specific amount agreed upon by the insurer and the policyholder, regardless of the actual value of the property.
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.
Annual Statement: An annual report required to be filed with each state in which an insurer does business. This report provides a snapshot of the financial condition of a company and significant events which occurred throughout the reporting year.
Appraisal: An estimate of value.
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.
Balance Sheet: An accounting statement showing the financial condition of a company at a particular date.
Bailee: A person or organization that temporarily holds the property of another.
Binder: A temporary agreement that provides proof of coverage until a formal policy is issued.
Book Value: The original cost, including capitalized acquisition costs and accumulated depreciation, unamortized premium and discount, deferred origination and commitment fees, direct write-downs, and increase/decrease by adjustment.
Broker: An intermediary who sells insurance policies on behalf of clients.
Cancellation: The termination of an insurance policy before the expiration date.
Capital and Surplus: A company's assets minus its liabilities.
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.
Catastrophe Loss: A large magnitude loss with little ability to forecast.
Certificate of Insurance: A document that provides proof of insurance coverage.
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 a policyholder to an insurer for payment due to a loss.
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.
Class Rating: A method of determining rates for all applicants within a given set of characteristics such as personal demographic, business type, and geographic location.
Commencement Date: The date when the organization first became obligated for any insurance risk via the issuance of policies and/or entering into a reinsurance agreement. Same as "effective date" of coverage.
Commission: A percentage of premium paid to agents by insurance companies for the sale of policies.
Company Code: A five-digit identifying number assigned by NAIC, assigned to all insurance companies filing financial data with NAIC.
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.
Contingent Liability: The liability of an insured to persons who have incurred bodily injury or property damage from work done by an independent contractor hired by the insured to perform work that was illegal, inherently dangerous, or directly supervised by the insured.
Continuity Date/Knowledge Date: The earliest date from which a claims-made insurance policy will protect a Named Insured against a covered loss.
Date of Issue: The date when an insurer issues a policy.
Declaration Page: An insurance declaration page also known as a “dec page” summarizes the insurance coverage provided by the policy. The dec page is usually the first page of the policy, and the insured should receive a new dec page for each renewal period.
Deductible: The amount a policyholder must pay out-of-pocket before insurance coverage begins.
Depreciation: The decrease in value of an asset over time.
Direct Bill: The Insurer bills the policyholder direct for premium due and the policyholder remits payment direct to the Insurer.
Direct Incurred Loss: A 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.
Direct Writer: An insurer that sells policies to the insured through salaried representatives or exclusive agents only; reinsurance companies that deal directly with ceding companies instead of using brokers.
Direct Written Premium: Total premiums received by an insurer without any adjustments for the ceding of any portion of these premiums to the Reinsurer.
Domestic Insurer: An insurance company that is domiciled and licensed in the state in which it sells insurance.
Earned Premium: A portion of the insured's prepaid premium allocated to the insurer's loss experience, expenses, and profit year- to -date.
Effective Date: The date on which an insurance policy goes into force.
Endorsement: A written amendment or rider to an insurance policy adjusting the coverages and taking precedent over the general contract.
Exclusion: A provision in an insurance policy that specifies what is not covered by the policy.
Expense Ratio: The percentage of premium income used to attain and service policies. Derived by subtracting related expenses from incurred losses and dividing by written premiums.
Experience Modification: The percentage increase or decrease in insurance premiums for a Workers' Compensation policy that an employer pays depending on their amount of loss. Also known as an ExMod.
Experience Rating: A way of adjusting the Workers’ Compensation insurance premium for a specific risk, by comparing losses of an insured party with the average losses for employers in a similar industry.
Exposure: Risk of possible loss.
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.
Fees Payable: Fees incurred but not yet paid.
Final Audit: At the end of an annual policy period, a final premium audit may be conducted to determine that the appropriate amount of premium was paid for the insurance policy. Final premium audits can be based on actual payroll, operations and job classifications.
Financial Guaranty: A surety bond, insurance policy, or an indemnity contract (when issued by an insurer), or similar guaranty types under which loss is payable upon proof of occurrence of financial loss to an insured claimant, obligee or indemnitee as a result of failure to perform a financial obligation or any other permissible product that is defined as or determined to be financial guaranty insurance.
Financial Reporting: Insurers 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.
Foreign Insurer: An insurance company selling policies in a state other than the state in which they are incorporated or domiciled.
Goodwill: The difference between the cost of acquiring the entity and the reporting entity's share of the book value of the acquired entity.
Gross Billing: The premium for insurance without the deduction of any commission earned, including applicable taxes and fees charged.
Gross Premium: The net premium for insurance plus commissions, operating and miscellaneous commissions.
Hard Market: A market characterized by high demand and low supply.
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.
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.
Indemnification: The obligation of one party to compensate another party for losses or damages.
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.
Insurable Interest: The stake an individual or entity has in the value of the property or person being insured.
Insurance: An economic device transferring risk from an individual to a company and reducing the uncertainty of risk via pooling.
Insurance Carrier: The insurance company that issues an insurance policy. A carrier is another name for insurance company. The terms insurer, carrier, and insurance company are generally used interchangeably.
Insurance Producer: An individual who sells, services, or negotiates insurance policies either on behalf of a company or independently.
Insurance to Value: Amount of insurance purchased vs. the actual replacement cost of the insured property expressed as a ratio.
Insured: Party(ies) covered by an insurance policy.
Insured Peril: A risk or danger that is specifically covered by an insurance policy.
Insurer: The insurance company that issues an insurance policy. The terms insurer, carrier, and insurance company are generally used interchangeably.
Intermediary: A person, corporation or other business entity (not licensed as a medical provider) that arranges, by contracts with physicians and other licensed medical providers, to deliver health services for a health insurer and its enrollees via a separate contract between the intermediary and the insurer.

International: Includes all business transacted outside the U.S. and its territories and possessions where the appropriate line of business is not determinable.
Knowledge Date: The effective date of a Professional Liability policy issued by an insurer to the Named Insured and continuously renewed and maintained in effect to the inception of this policy period.
Lapse: The termination of an insurance policy due to non-payment of premiums.
Liability: The legal obligation to pay damages or compensation to someone who has suffered a loss or injury.
Limits: The maximum amount of coverage provided by an insurance policy.
Line of Business: Classification of business written by insurers.
Loss: Physical damage to property or bodily injury, Including loss of use or loss of income.
Loss Control: The process of identifying and mitigating risks to prevent losses or damages.
Loss Frequency: Incidence of claims on a policy during a premium period.
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.
Malpractice: Alleged misconduct or negligence in a professional act resulting in loss or injury.
Market Value: Fair value or the price that could be derived from current sale of an asset.
Mixed Use: A type of property that blends residential, commercial, industrial, entertainment and even industrial uses into one space.
Minimum Advance Premium: A premium that is fully earned by the insurer at the inception of the policy and is nonrefundable.
Minimum Earned Premium: The least amount of premium that an insurance company will charge for writing an insurance policy.
Minimum Deposit Premium: The lowest payment an insurer will accept to provide coverage for a policy period. If the insured cancels a policy under this arrangement, the insurer will only refund the premium above the agreed minimum.
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.
Named Insured: The person or entity named in an insurance policy as the policyholder.
Negligence: Failure to exercise reasonable consideration resulting in loss or damage to oneself or others.
Net Income: Total revenues from an insurer's operations less total expenses and income taxes.
Net Billing: The premium for insurance after the deduction of any commission earned, including applicable taxes and fees charged.
Net Premium: The premium for insurance after the deduction of any commission earned.
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.
Non-Admitted Carrier: An insurer or insurance company not licensed or approved by the state's insurance department to do business within a given state. This means they are not obligated to comply with any state insurance regulations.
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.
Occurrence Form: The CGL form is an occurrence policy. For coverage to apply, the incident must take place, or occur, during the policy period. If an incident takes place prior to the policy period or after the policy period, there would be no coverage.
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.
Owner Occupied: An owner-occupied property is a piece of real estate in which the person who holds the title (or owns the property) also uses the home as their primary residence.
Partnership: A business consisting of two or more owners who run their business in accordance with the terms of a partnership agreement.
Payroll Per Audit Endorsement: This occurs when the carrier updates the payroll on the current policy term of a Workers' Compensation policy to match what the insured reported on the previous policy terms final audit.
Peril: An event or circumstance that can cause a loss or damage to property or person.
Per-Occurrence Limit: The maximum amount of coverage provided by an insurance policy for a single event or occurrence.
Policy: A written contract between an insurer and policyholder that outlines the terms and conditions of insurance coverage.
Policy Period: The time period during which insurance coverage is in effect.
Pollution: Environmental contamination.
Pool: An association organized for the purpose of absorbing losses through a risk-sharing mechanism thereby limiting individual exposures.
Precise Pay/Pay As You Go: Allows policyholders to make smaller, more frequent premium payments by paying a portion of their annual premium each payroll period. Monthly audits based on payroll submitted to the insurer.
Preferred Risk: An insured, or applicant for insurance, who presents likelihood of risk lower than that of the standard applicant.
Premium: Money charged for the insurance coverage reflecting expectation of loss. The amount paid by a policyholder to an insurer for insurance coverage.
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: 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: The coverage that takes precedence when more than one policy covers the same loss.
Pro Rata: A method of dividing insurance policy benefits and premiums based on the amount of time covered.
Pure Premium: The portion of the premium equal to expected losses void of insurance company expenses, premium taxes, contingencies, or profit margin.
Pure Risk: A circumstance including possibility of loss or no loss but no possibility of gain.
Rate: Value of insured losses expressed as a cost per unit of insurance.
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.
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.
Retail Insurance Agent: An individual who sells, services, or negotiates insurance policies either on behalf of a company or independently.
Retail Insurance 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.
Retention: A mechanism of internal fund allocation for loss exposure used in place of or as a supplement to risk transfer to an insurer.
Retroactive Date: A retroactive date defines how far back in time a loss can occur for the insured's policy to cover their claim. If a claim happens prior to the retroactive date, the policy won't provide benefits. It's a feature of Claims-Made Professional Liability or Errors and Omissions insurance.
Return Premium: The amount due to the insured if the actual cost of a policy is less than what the insured has previously paid.
Revenue: The total amount of income generated by sale of goods and services related to the primary operations of the business.
Rider: An amendment to a policy agreement.
Risk: Uncertainty concerning the possibility of loss by a peril for which insurance is pursued.
Soft Market: A buyer's market characterized by abundant supply of insurance driving premiums down.
Sole Proprietor: A person who is the exclusive owner of a business, entitled to keep all profits after tax has been paid but liable for all losses.
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.
Subrogation: A 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.
Substandard Risk: Risks deemed undesirable due to medical condition or hazardous occupation requiring the use of a waiver, a special policy form, or a higher premium charge. Also known as an Impaired Risk.
Surplus Line: Specialized property or liability coverage available via non-admitted insurers where coverage is not available through an admitted insurer, licensed to sell that particular coverage in the state.
Tenant: A person or group that rents and occupies land, a house, an office, or the like, from another for a period of time.
Third Party: A 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.
Total Revenue: Premiums, revenue, investment income, and income from other sources.
Underwriter: An insurance professional who assesses risk and decides whether to issue a policy and at what cost.
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.
Unearned Commission: A percentage of premium charged back to an agent by insurance companies for which they have already been paid. The result of unearned commission is due to a reduction of the premium caused by an audit, endorsement, or cancellation of an insurance policy.
Unearned Premium: The amount of premium for which payment has been made by the policyholder but coverage has not yet been provided.
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.
Voluntary Endorsement: Any described volunteers designated and authorized by the board of directions of the organization and declared by written resolution prior to the injury.
Warranty: Coverage that protects against manufacturer's defects past the normal warranty period and for repair after breakdown to return a product to its originally intended use. Warranty insurance generally protects consumers from financial loss caused by the seller's failure to rectify or compensate for defective or incomplete work and cost of parts and labor necessary to restore a product's usefulness. Includes but is not limited to coverage for all obligations and liabilities incurred by a service contract provider, mechanical breakdown insurance and service contracts written by insurers.
Wholesaler: A wholesaler, or wholesale broker, is a type of insurance broker who acts as an intermediary between a retail broker and an insurer but has no contact with the insured. Wholesale agents place business brought to them by retail agents. CID Insurance is an insurance wholesaler.
Written Premium: The contractually determined amount charged by the reporting entity to the policyholder for the effective period of the contract based on the expectation of risk, policy benefits, and expenses associated with the coverage provided by the terms of the insurance contract.

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