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Joshua Adamson
Joshua is a copywriter at Obrella who for more than 10 years has been creating content about insurance, health care, and more. He helps companies explain complex insurance subjects in simple ways so that customers can make smart buying decisions. He spends way too much time binge-watching Netflix, loves the outdoors and has a cat who tolerates him.
UPDATED: Sep 29, 2022
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Accident
Unexpected events known as "ooops," "s#!t," "oh man," and "what the heck!?"
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Accident Insurance
If you get hurt, count on this insurance to help you out with medical bills.
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Actuary
Someone whose glass is half empty. Or, someone who calculates risk as a living.
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Adjuster
The awesome person who helps settle your claim and get you your money as fast as they can.
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Adverse Selection
When people who have higher risk opt for more insurance. In investing, this can also mean having insider trading information and making an investment choice based on that.
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Affiliate
A partnership with another company or group.
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Agent
In some cases, agents have gadgets and spygear. In insurance, agents just have licenses to sell policies on their own or through an insurance company.
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Aggregate
The absolute most an insurance will pay you for claims filed during your policy agreement.
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Aircraft
Insurance for those things that fly in the sky.
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Allocated Loss Adjustment Expense (ALAE)
During a claim, the insurance company will pay the policyholder for what is lost and other people. These can be lawyers, investigators, and experts and are recorded in ALAE.
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Annuitant
The person who will receive the annuity once it's reached maturity.
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Annuity
You can purchase an annuity from a company by paying them money over a certain amount of time. Then, they will pay you when it's time to cash out your funds. Often times, people use annuities as extra retirement savings.
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Appraisal
A person's best guess for how much something is actually worth.
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Arbitration
When a mediary helps settle a legal dispute.
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Asset
Assets are the things you own that go "cha ching!" This can be property, investments, cash, and other property that can be exchanged for cold hard cash.
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B -
Balance Sheet
This report shows how a company is doing financially at any given moment.
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Beneficiary
The person(s) you give all your money to when you croak.
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Bonds
When you buy a bond, you're essentially giving a loan to a company (or government)—with the promise that they will pay you back with interest in a certain time frame. Companies do this to increase capital. Plus, it's nice to be the one earning int
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Bonds
When you buy a bond, you're essentially giving a loan to a company (or government)—with the promise that they will pay you back with interest in a certain time frame. Companies do this to increase capital. Plus, it's nice to be the one earning interest as a customer for once!
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Book Value
Everything you own is worth something. The book value tells you the widely agreed upon price—whether that be for a car, home, or electronic.
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Broker
The middleman who sells someone else's goods or services in order to earn a commission.
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C -
Claim
The way you get money from an insurance company if your things are damaged, destroyed, or stolen.
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Coinsurance
This type of insurance only pays a percentage of damages. In some cases, they might pay 80% of a claim, but you would be responsible for the other 20%.
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Coinsurance
This type of investment is separate from all others and is used for retirement.
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Collar
Like a good therapist, these restrictions keep the market stable by preventing companies from having gains or losses that are too extreme.
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Combinations
If you have home and auto insurance with the same carrier.
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Commercial Property
Any building that operates as a business will have commercial property insurance.
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Commission
The money salespeople and brokers earn when they make a sale.
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Complaint Index
How much lower or higher a percentage of complaints compared to the average company. Example: A company with a complaint index of 2.0 has twice as many complaints.
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Complaint Ratio
The number of confirmed complaints per $1 million in premiums written.
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Conditions
The rules you have to stick to in order for an insurance company to cover you or pay your claim if need be.
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Condos
Condos are usually a group of homes in a community. There is condo insurance that's made specially to cover these homes and the owners' belongings.
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Credit
Credit - Money that doesn't belong to you and that you have to pay back.
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Creditor Placed Insurance
Insurance a bank or lender puts on your home if you fail to insure it.
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Creditor-Placed Home
If a bank suspects that a mortgage customer hasn't put enough isnurance on their home or doesn't have it at all, they can buy some of their own. This protects banks from losing out on mortgage payments if a home is destroyed and homeowners default on loans.
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D -
Declarations
A summary of the highlights of your policy. It's clear and simple and usually on the first page of your policy.
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Demutualization
When a mutual insurance company (member-owned) turns into a shareholder-owned company. This allows the company to sell shares to outside investors and potentially take steps to be traded in the stock market.
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Earned Premium
This term is used internally by insurance companies. It means that if your policy costs $500 for the year and 6 months has gone by without you filing a claim, the insurance company has earned $250 in profit. It's not something you really need to be concerned about remembering.
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Encumbrance
Sometimes when you buy a home (usually foreclosed), there can be an outstanding mortgage. Since the bank still wants to be paid, you, the homeowner, will be responsible for the balance even though you weren't the previous owner of the home!
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Excess Workers' Compensation
If a company is self-insured, a workers compensation claim could wreak havoc on their finances. This insurance helps pay for workers compensation if the need arises.
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Experience Rating
This is when insurance companies compare their losses to other companies in order to see how certain groups of policyholders stack up in the risk category. It's basically to see who's the best and worst group to insure.
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FEMA - Federal Emergency Management Agency
When natural or manmade disasters strike, FEMA officials provide man power and aid to people and areas affected. In short, they're an emergency service organization/superheroes.
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Fair Access to Insurance Requirements Plan (FAIR Plan)
If you own property and can't get insurance, this state-sponsored program will cover you.
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Financial Guaranty
This helps attract investors by offering them the option to buy bonds that guarantee the insurance company will pay them back for the cost of the bond with interest.
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Financial Responsibility Law
This auto insurance term comes down to what you're responsible for paying when you cause an accident.
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Financial Statement
This number-heavy report shows the profits and losses of a company. It's used by companies to report their earnings and by regulators to monitor insurance companies.
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Fire Legal Liability
If you get rowdy and start a fire at someone else's home or your own grilling experiment causes the nextdoor neighbor's fence to burn down, this type of coverage will pay for that.
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Franternal Insurance
Non-profit organizations can get this for their members.
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G -
Generally Accepted Accounting Principles (GAAP)
How companies keep the books.
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Group Code
A three, four, or five digit number that indicates if a company is part of a larger insurance company.
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H -
Hard Market
When there are more people who want a product than the product itself, it's called a hard market. Think of it as products that are "hard to get."
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Health Excess/Stop Loss
If your health insurance claim goes beyond what your policy will cover, this type of coverage will reimburse you for the difference (only the specified amount you set for that plan, though).
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Hold-Harmless Agreement
This contract signs over liability from one company to another.
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Independent Agent
Someone who sells insurance for a number of insurance companies and works with the American Agency System.
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Insurable Interest
In order to purchase an insurance policy, you must be insuring something that will cost you money if it's damaged, lost, or destroyed. In other words, you can't insure something that doesn't belong to you or won't impact you financially if it's ruined or stolen.
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Insurance to Value
How much insurance coverage you have in relation to how much it would cost to replace what's insured. So if you have a $200,000 home, but it would cost $300,000 to replace it and all your belongings, that's how much you should insure it for.
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Insured
The smartest people alive, or, those who are covered by an insurance policy(ies).
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Insurer
Someone who is legally allowed to provide insurance.
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Intermediary
In health insurance, an intermediary is a middle man that unites patients and healthcare providers through insurance policies.
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Internet Liability Insurance/Cyber Insurance
If your WiFi time in the coffee shop results in someone hacking your accounts, you will be reimbursed by this insurance.
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Inurred Losses
The total amount an insurance company pays in claims during a policy period.
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K -
Kidnap/Ransom Insurance
If someone ever sends you a note with glued-on letters, this insurance will help pay for extortion costs.
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L -
Level Premium Insurance
This type of life insurance policy has steady premiums throughout the whole term instead of others that typically have higher initial payments and dwindle with time.
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Liability Insurance
Liability insurance covers any costs associated with repairs and medical damage done to another vehicle.
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Long Duration Contracts
Contracts that go beyond 13 months and aren't allowed to be cancelled or have premium hikes.
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Long-term Disability Income Insurance
We hope this doesn't happen to you, but if you're out of commission for two years or longer, this insurance will pay you in monthly installments to provide you with a steady income.
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M -
Malpractice
When a professional's negligence causes death or injury. Doctors get sued for this all the time and that's why they have malpractice insurance.
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Mechanical Breakdown Insurance
This covers structures, cars, boats, electronics, and appliances in case they fail due to mechanical error.
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Medical Professional Liability
Doctors get sued for a lot of silly things that aren't their fault. Also known as medical malpractice, this coverage protects doctors, hospitals, and other health care institutions from getting sued for a patient's own negligence.
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Modified Guaranteed
If you don't like taking big risks with your money, you'd like this type of annuity that gains interest steadily over time without the risk of losing any (unless you cash out before time is up on the contract).
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Morale Hazard
When your own negligence could cause you to damage or destroy posessions.
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Mortgage
Loans people get to buy a home.
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Mortgage Insurance
Lenders purchase this type of insurance so that if a homeowner dies before paying off his/her mortgage, they'll be reimbursed for the remaining balance.
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Negligence
When your head is up in the clouds and not paying attention to how your actions can harm yourself or others.
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Net Income
How much money you actually have after you pay the bills and the tax man.
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Nuclear Energy Liability
You're covered in case you get exposed to radioactive chemicals and are glowing green.
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O -
Ocean Marine
If you have a yacht or cargo ship, use this insurance for smooth sailing.
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Officer
The clerks of the insurance world.
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P -
Par Value
How much a stock or bond is worth.
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Pet Insurance Plans
Your little furry children can get insurance too! These plans help pay for vet bills if they're sick or involved in an accident with you.
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Policyholders Surplus
The net worth of a company once assets and liabilities are taken into account.
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Premises and Operations
This is part of liability insurance and protects the insuree from losing money if someone sues them after being hurt on their property.
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Premium Margin
This is another tricky one. Since stocks go up and down like it's going out of style, a premium margin is in place to cover the risk of it costing more to cash out than the person paid for their stock options. Unless you're buying, selling, and trading shares, don't worry about it.
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Producer
An agent or broker who sells insurance.
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Property
Your stuff! In the case of insurance, it's all that you own that is covered in case of fire, natural disaster, theft, and other circumstances beyond your control.
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Provisions
These are the rules every insurance policy has.
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Proximate Cause
The main cause of an injury. So if you hurt your neck in a car accident when someone plowed into you, that driver would be the proximate cause.
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R -
Rate
The amount you pay for your insurance policy.
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Rebate
Money you get back after purchase.
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Renewable Term Insurance
Insurance you can extend without having to requialify for coverage.
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Reported Losses
Before a claim is paid, insurance companies tally up the items that need to be replaced and how much they'll cost. This is called reported losses.
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Reserve Credit
Also know as "Deadbeat Insurance," (well, only by us), reserve credit is when a company puts money into savings to pay for hits they take when people don't make their payments.
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Residual Market Plan
These plans are put in place by state regulators and ensure that even high risk drivers are able to get insurance policies.
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Retrospective Rating
Insurance companies look at how many claims you filed during a policy and that's reflected in your rate. Less claims = a lower premium.
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Rider
These are the à la carte insurance options. In other words, protection you can add onto your policy to cover valuables like jewelry and art.
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Risk Based Capital Ratio
This number tells regulators if an insurance company has enough money to support policies.
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Salvage
The amount of money you can get back after a loss.
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Securitization of Insurance Risk
This can be thought of as a safety net for insurance companies. In order to protect themselves in case a major disaster forces them to pay out substantial amounts, they buy these bonds as financial back-up.
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Short Term Disability Income
If you have more than a boo-boo or are seriously sick and can't work, you can apply for a government benefit that will support you financially for a certain amount of time.
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Subrogation
If a refrigerator causes a fire in your apartment, the insurance company can go after the manufacturer for reimbursement.
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Superfund
This government sponsored fund cleans up environmental disasters and polluted land and water.
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Surety Bond
It takes three to tango with a surety bond. That's because three or more parties have to go in together on this deal. Basically how it works is that party A will require party B to prove that they will come through on their end of the deal—or pay up—so a third party, party C, will come into the picture to agree to make payment if B fails to do so. This is mostly used in large scale business deals.
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Surplus
The amount of earnings an insurance company retains.
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Swap
This is a doozy and is defined as "an agreement to exchange or net payments as the buyer of an Option, Cap or Floor and to make payments as the seller of a different Option, Cap or Floor." Want it in English? Well, we can translate that to mean: financial trades companies make with each other in order to better their cash flow, interest rates, and financial state. At the end of the day, they have to understand it, not you!
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T -
Tenants
People who live in a property. Usually, this means renters.
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Term
The length of your policy.
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Term Insurance
If you kick the bucket between a certain age bracket on your policy, your beneficiaries will receive a payout for this insurance.
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Third Party
If you get in an accident or cause damage to someone's else's property, they are the third party in the insurance claim who will require reimbursement.
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Total Revenue
How much income you have.
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Treaty
Treaty insurance is kind of insurance for insurance companies. Every time an insurance company draws up a policy for a new customer, they take on more risk. Since too much risk is a bad thing, they sell some of this risk to reinsurance companies for a fee. The reinsurance company is then responsible to pay out any claims associated with those policies.
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U -
Underwriter
The person who writes an insurance policy. A lot of times, insurance companies use different underwriters.
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Underwriting
This is the process when an insurance company analyzes you versus your risk and comes up with a policy and quote.
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Universal Life Insurance
This flexible option allows you to change up your policy and add money into its savings account as things change in your life.
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V -
Variable Annuity
This savings option uses premium payments to buy stock.
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W -
Warrant
This locked-in price is given by insurance companies to shareholders to allow them to buy shares at a certain price within a set time.
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Warranty
If that darn stove, car, or computer breaks within a certain time after purchasing it, the company will replace or fix it with no cost to you if it was because of a manufecturer defect.
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Whole Life Insurance
You can keep this life insurance plan until you die and your loved ones will get a check once that happens.
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Workers Compensation
If you're hurt at work and need medical attention or time off, your company should have one of these policies that will help fund your income while you mend.
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