Absolute Liability: Liability for damages even though fault or negligence cannot be proven.
Accident: An event or occurrence which is unforeseen and unintended.
Accidental Bodily Injury: Injury to the body as the result of an accident.
Accounting: The process of recording, summarizing, and allocating all items of income and expense of the company and analyzing, verifying, and reporting the results.
Act of God: A flood, earthquake or other non preventable accident resulting from natural causes that occur without any human intervention.
Activities of Daily Living: A list of activities, normally including mobility, dressing, bathing, toileting, transferring, and eating which are used to assess degree of impairment and determine eligibility for some types of insurance benefits.
Actual Cash Value (ACV): 1) The cost of replacing or restoring property at prices prevailing at the time and place of the loss, less depreciation, however caused; 2) replacement cost minus depreciation.
Actuarially Fair: The price for insurance which exactly represents the expected losses.
Actuary: A person professionally trained in the technical aspects of pensions, insurance and related fields. The actuary estimates how much money must be contributed to an insurance or pension fund in order to provide future.
Additional insured: A person, company or entity protected by an insurance policy in addition to the insured.
Adjuster: A person who investigates and settles losses for an insurance carrier.
Adjusting: The process of investigating and settling losses with or by an insurance carrier.
Adjustment Bureau: Organization for adjusting insurance claims that is supported by insurers using the bureau's services.
Administrative Services Only (AS0) Plan: An arrangement under which an insurance carrier or an independent organization will, for a fee, handle the administration of claims, benefits and other administrative functions for a self-insured group.
Advance Premium Mutual: Mutual insurance company owned by the policyowners that does not issue assessable policies but charges premiums expected to be sufficient to pay all claims and expenses.
Adverse Selection: The tendency of persons who present a poorer-than-average risk to apply for, or continue, insurance to a greater extent than do persons with average or better-than-average expectations of loss.
Age Limits: Stipulated minimum and maximum ages below and above which the company will not accept applications or may not renew policies.
Agent: An insurance company representative licensed by the state who solicits, negotiates or effects contracts of insurance, and provides service to the policyholder for the insurer.
Aggregate Deductible: Deductible in some property and health insurance contracts in which all covered losses during a year are added together and the insurer pays only when the aggregate deductible amount is exceeded.
Aggregate Indemnity: The maximum dollar amount that may be collected for any disability or period of disability under the policy.
Alien Insurer: An insurance company domiciled in another country.
Allied Lines: A term for forms of property insurance allied with fire insurance, covering such perils as windstorm, hail, explosion, and riot.
Allocated Benefits: Benefits for which the maximum amount payable for specific services is itemized in the contract.
All-Risks Policy: Coverage by an insurance contract that promises to cover all losses except those losses specifically excluded in the policy. See also: Risks of direct loss to property.
Amendment: A formal document changing the provisions of an insurance policy signed jointly by the insurance company officer and the policy holder or his authorized representative.
Amortization: Paying an interest-bearing liability by gradual reduction through a series of installments, as opposed to one lump-sum payment.
Annual Statement: The annual report, as of December 31, of an insurer to a state insurance department, showing assets and liabilities, receipts and disbursements, and other financial data.
Application: A signed statement of facts made by a person applying for life insurance and then used by the insurance company to decide whether or not to issue a policy. The application becomes part of the insurance contract when the policy is issued.
Arbitration: A form of alternative dispute resolution where an unbiased person or panel renders an opinion as to responsibility for or extent of a loss.
Arson: The willful and malicious burning of, or attempt to burn, any structure or other property, often with criminal or fraudulent intent.
Assessment Association: An insurer that does not charge a fixed premium for insurance, but rather assesses its members periodically to pay its losses. Assessment insurers usually collect an advance premium which is estimated to cover losses and expenses, but reserve the right to make additional assessments whenever the premium collected is insufficient.
Assessment Mutual: Mutual insurance company that has the right to assess policyowners for losses and expenses.
Assets: All funds, property, goods, securities, rights of action, or resources of any kind owned by an insurance company. Statutory accounting, however, excludes non-admitted assets, such as deferred or overdue premiums, that would be considered assets under generally accepted accounting principles (GAAP).
Assignment: The legal transfer of one person's interest in an insurance policy to another person.
Association Captive: Type of captive insurer owned by members of a sponsoring organization or group, such as a trade association.
Association Group: A group formed from members of a trade or a professional association for group insurance under one master health insurance contract.
Assumption of Risk Doctrine: Defense against a negligence claim that bars recovery for damages if a person understands and recognizes the danger inherent in a particular activity or occupation.
Attractive Nuisance: Condition that can attract and injure children. Occupants of land on which such a condition exists are liable for injuries to children.
Automatic Reinsurance: An agreement that the insurer must cede and the reinsurer must accept all risks within certain explicitly defined limits. The reinsurer undertakes in advance to grant reinsurance to the extent specified in the agreement in every case where the ceding company accepts the application and retains its own limit.
Automobile Insurance Plan: One of several types of "shared market" mechanisms where persons who are unable to obtain such insurance in the voluntary market are assigned to a particular company, usually at a higher rate than the voluntary market. Formerly called "Assigned Risk."
Automobile Liability Insurance: Protection for the insured against financial loss because of legal liability for car-related injuries to others or damage to their property.
Automobile Physical Damage Insurance: Coverage to pay for damage to or loss of an insured automobile resulting from collision, fire, theft, or other perils.
Automobile Reinsurance Facility: One of several types of "shared market" mechanisms used to make automobile insurance available to persons who are unable to obtain such insurance in the regular market.
Aviation Insurance: Aircraft insurance including coverage of aircraft or their contents, the owner's liability, and accident insurance on the passengers.
Average Indexed Monthly Earnings (AIME): Under the OASDI program, the person's actual earnings are indexed to determine his or her primary insurance amount (PIA).
Avoidance: see Loss Avoidance.
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