III IC-90 key terms

A written contract in which an insurer promises to pay specified losses or provide benefits in exchange for premiums paid by the insured. It states coverage, limits, exclusions, and conditions.

The amount of money an insured pays an insurer, usually monthly or annually, to keep a policy in force. It reflects the risk transferred and the coverage selected.

The maximum amount an insurer will pay for a covered claim under a policy, either per occurrence or in total. Amounts above the limit fall to the insured.

The amount an insured must pay out of pocket before the insurer begins paying a covered claim. Higher deductibles usually reduce the premium charged.

A provision that removes specific events, property, or persons from coverage. Insurers rely on exclusions to define the boundary of the risk they accept.

A written amendment attached to a policy that changes its terms, adding, removing, or altering coverage. It takes precedence over conflicting original policy wording.

A supplemental provision, common in life and health policies, that adds benefits or modifies coverage for an extra cost or under stated conditions.

The process an insurer uses to evaluate a risk, decide whether to accept it, and set terms and pricing. It relies on application data, history, and sometimes medical or inspection evidence.

Grouping applicants with similar expected loss characteristics so each group is charged a rate reflecting its risk. Common factors include age, health, occupation, and claims history.

A formal request by an insured or beneficiary for payment under a policy after a covered event. The insurer investigates and then pays, denies, or settles it.

A sworn statement and supporting documentation an insured submits to substantiate a claim. It typically details the date, cause, and amount of the loss.

A person who investigates a claim, determines coverage and loss value, and negotiates settlement. Adjusters may work for the insurer, the insured, or as independent contractors.

A person or entity named to receive policy proceeds, typically in life insurance. Primary and contingent designations determine who is paid if the first choice is unavailable.

A financial or legal stake in the person or property insured such that a loss would cause genuine hardship. It must exist at policy inception and, for property, at the time of loss.

The idea that insurance should restore the insured to approximately the pre-loss financial position, not create profit. It underpins actual cash value and replacement cost settlements.

A settlement method equal to replacement cost minus depreciation, reflecting the property's value at the time of loss. It is common in property policies when replacement cost is not elected.

A settlement basis that pays what it would cost to repair or rebuild with new materials of similar kind and quality, without deducting depreciation. Often subject to policy limits.

A property insurance requirement that the insured carry coverage equal to a specified percentage of property value, or claim payments are reduced proportionally.

A fixed dollar amount a health plan member pays for a covered service, such as a doctor visit or prescription. It is separate from deductibles and coinsurance percentages.

The tendency for insured people to take fewer precautions or behave less carefully because a loss will be paid. Insurers counter it with deductibles, exclusions, and claims investigation.

The tendency for people with higher-than-average risk to seek or retain insurance more than lower-risk people. Underwriting and pricing rules help limit its effect.

Insurance purchased by an insurer to transfer part of its risk to another insurer. It protects the ceding company from large or accumulated losses and supports capacity.

The amount of risk an insurer keeps for its own account after ceding the remainder to reinsurers. It is set by treaty or facultative arrangements.

An insurer's ability to meet its obligations to policyholders as they come due. Regulators monitor capital, reserves, and risk to protect consumers from insolvency.

Money an insurer sets aside to cover expected future claims and obligations. Reserves are liabilities on the balance sheet and are reviewed by actuaries and regulators.

Losses that have occurred but have not yet been reported to the insurer by the policyholder. Insurers estimate these reserves to reflect true claim obligations.

A professional who applies mathematics and statistics to price risk, estimate reserves, and model financial outcomes. Actuaries support rate setting, valuation, and solvency work.

A statistical table showing death rates by age and sometimes sex or other factors for a population. Life insurers use it to price products and set reserves.

The amount a life insurer pays to beneficiaries when the insured dies while coverage is in force. It may be reduced by outstanding loans or policy provisions.

The savings component that builds in permanent life insurance and can be borrowed against or withdrawn. It is distinct from the death benefit paid to beneficiaries.

The insurer's right, after paying a claim, to pursue the party responsible for the loss and recover the amount paid. It prevents the insured from collecting twice.

Protection that pays amounts an insured becomes legally obligated to pay because of injury or damage to others. It typically also covers legal defense costs.

An accident or event, including continuous or repeated exposure to conditions, that causes injury or damage during the policy period. It defines when coverage is triggered.

A liability policy that covers claims reported during the policy period, regardless of when the act occurred, provided the retroactive date is respected.

Extended reporting coverage purchased after a claims-made policy ends, allowing claims for acts occurring before termination to be reported later.

A group of doctors, hospitals, and other providers contracted with a health plan to deliver services at negotiated rates. Using in-network providers usually lowers member costs.

The form and statements a person submits to request insurance. It provides underwriting information and becomes part of the contract if incorporated.

The specific risks, property, persons, and services a policy protects, within stated limits and conditions. Coverage is defined by the insuring agreement, exclusions, and endorsements.