Corrective Order: An order issued by the commissioner specifying corrective actions that the commissioner has determined are required.

Credit Risk: A measure of the default risk on amounts that is due from policyholders, reinsures or creditors.

Disaster: A natural or man-made event that negatively affects life, property, livelihood or industry often resulting in permanent changes to human societies, ecosystems and the environment.

Declined Risk: A proposed insured who is considered to present a risk that is too great for an insurer to cover.

Evidence of Insurability: Proof that a person is an insurable risk.

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Face Amount: The amount of the death benefit payable under a life insurance policy.

Free Look Provision: An individual life insurance and annuity provision that gives the policy owner a stated time, usually 10 days after the policy is delivered, in which to cancel the policy and receive a full refund on the initial premium payment. 

Grace Period: A specified length of time within which a renewal premium that is due may be paid without penalty.

HSA: Health Savings Account

Insurance to Value: The amount of insurance written on property is approximately equal to its value. An insured most always wants to insure all property to value.

Incontestability Provision: An insurance and annuity provision that limits the time within which the insurer has the right to avoid the contract on the ground of material misrepresentation in the application for the policy. 

Insurable Interest: The interest an insurance policy owner has in the risk that is insured.  The owner of a life insurance policy has an insurable interest in the insured when the policy owner is likely to benefit if the insured continues to live and is likely to suffer some loss or detriment if the insured dies. 

Liability Insurance: Insurance coverage that offers protection against claims alleging that a property owner’s negligence or inappropriate action resulted in bodily injury or property damage to another party.

Loss of Use Insurance: Compensation for loss caused because the policyholder has lost the use of his property.

Loss Payable Clause: A policy condition that enables an insured to direct the company to pay any loss that may be due to a third party.

Material Misrepresentation: A misrepresentation that would effect the insurance company’s evaluation of a proposed insured. 

MEWA: Multiple Employer Welfare Arrangements

MHPA: Mental Health Parity Act

MS-DRG: Medicare Severity Diagnosis Related Groups

Mortality Tables: Charts that show the death rates an insurer may reasonably anticipate among a particular group of insured lives at certain ages.

Mortgage Insurance: A contract that insures the lender against loss caused by a mortgagor’s default on a government mortgage or conventional mortgage.

Mortagee Clause: A clause in an insurance policy that makes a claim jointly payable to the policyholder and the party that holds a mortgage on the property.

Multi Peril Insurance: Personal and business property insurance that combines in one policy several types of property insurance covering numerous perils.

Named Peril Policy: The insurance contract under which covered perils are listed. Benefits for a covered loss are paid to the policy-owner. If an unlisted peril strikes, no benefits are paid.

NAIC: National Association of Insurance Commissioners

NCCI: National Council on Compensation Insurance

Original Age Conversion: A conversion of a term life insurance policy to a permanent plan of insurance at a premium rate, based on the insured’s age when the original term policy was purchased. 

P&C: Property and Casualty

Permanent Life Insurance: Life insurance that provides coverage throughout the insured’s lifetime and also provides a savings element.

Policy Anniversary: As a general rule, the date on which coverage under an insurance policy became effective. 

Preferred Risk: A proposed insured who presents a significantly less than average likelihood of loss and who is charged a lower than standard premium rate. 

Renters Insurance: Coverage for the contents of renter’s home or apartment and for liability. Tenant policies are similar to homeowners insurance, except that they do not cover the structure.

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.

SCHIP: State Childrens Health Insurance Program

Tenants Insurance: See Renters Insurance

Umbrella Policy: Umbrella coverage is insurance coverage that extends the terms of a regular insurance policy once coverage limits for the regular policy have been reached. Specifically, umbrella coverage is for people who want protection against a large jury award that is not covered in their standard policy.

UM or UIM: Uninsured Motorist; Underinsured Motorist

UMPD: Uninsured Motorist Property Damage Coverage

Underwriting: The process of identifying and classifying the degree of risk represented by a proposed insured.

Underwriting Risk: A measure of the risk that arises from under-estimating the liabilities from business already written or inadequately pricing current or prospective business. 

USERRA: Uniformed Services Employment and Reemployment Rights Act