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HACKER INSURANCE |
A coverage that
protects businesses engaged in electronic
commerce from losses caused by hackers.
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HARD MARKET |
A seller’s market in
which insurance is expensive and in short
supply. (See
Property/casualty insurance cycle)
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HOMEOWNERS
INSURANCE POLICY |
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The typical homeowners
insurance policy covers the house, the
garage and other structures on the property,
as well as personal possessions inside the
house such as furniture, appliances and
clothing, against a wide variety of perils
including windstorms, fire and theft. The
extent of the perils covered depends on the
type of policy. An all-risk policy offers
the broadest coverage. This covers all
perils except those specifically excluded in
the policy.
Homeowners insurance also covers
additional living expenses. Known as Loss of
Use, this provision in the policy reimburses
the policyholder for the extra cost of
living elsewhere while the house is being
restored after a disaster. The liability
portion of the policy covers the homeowner
for accidental injuries caused to third
parties and/or their property, such as a
guest slipping and falling down improperly
maintained stairs. Coverage for flood and
earthquake damage is excluded and must be
purchased separately. (See
Flood insurance;
Earthquake insurance)
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HOUSE YEAR |
Equal to 365 days of
insured coverage for a single dwelling. It
is the standard measurement for homeowners
insurance.
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HURRICANE
DEDUCTIBLE |
A percentage or dollar
amount added to a homeowner’s insurance
policy to limit an insurer’s exposure to
loss from a hurricane. Higher deductibles
are instituted in higher risk areas, such as
coastal regions. Specific details, such as
the intensity of the storm for the
deductible to be triggered and the extent of
the high risk area, vary from insurer to
insurer and state to state.
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IDENTITY THEFT
INSURANCE |
Coverage for expenses
incurred as the result of an identity theft.
Can include costs for notarizing fraud
affidavits and certified mail, lost income
from time taken off from work to meet with
law-enforcement personnel or credit
agencies, fees for reapplying for loans and
attorney's fees to defend against lawsuits
and remove criminal or civil judgments.
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IMMEDIATE ANNUITY |
A product purchased
with a lump sum, usually at the time
retirement begins or afterwards. Payments
begin within about a year. Immediate
annuities can be either fixed or variable.
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INCURRED BUT NOT
REPORTED LOSSES / IBNR |
Losses that are not
filed with the insurer or reinsurer until
years after the policy is sold. Some
liability claims may be filed long after the
event that caused the injury to occur.
Asbestos-related diseases, for example, do
not show up until decades after the
exposure. IBNR also refers to estimates made
about claims already reported but where the
full extent of the injury is not yet known,
such as a workers compensation claim where
the degree to which work-related injuries
prevents a worker from earning what he or
she earned before the injury unfolds over
time. Insurance companies regularly adjust
reserves for such losses as new information
becomes available.
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INCURRED LOSSES |
Losses occurring
within a fixed period, whether or not
adjusted or paid during the same period.
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INDEMNIFY |
Provide financial
compensation for losses.
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INDEPENDENT AGENT |
Agent who is
self-employed, is paid on commission, and
represents several insurance companies. (See
Captive agent)
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INDIVIDUAL
RETIREMENT ACCOUNT/IRA |
A tax-deductible
savings plan for those who are
self-employed, or those whose earnings are
below a certain level or whose employers do
not offer retirement plans. Others may make
limited contributions on a tax-deferred
basis. The Roth IRA, a special kind of
retirement account created in 1997, may
offer greater tax benefits to certain
individuals.
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INFLATION GUARD
CLAUSE |
A provision added to a
homeowners insurance policy that
automatically adjusts the coverage limit on
the dwelling each time the policy is renewed
to reflect current construction costs.
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INLAND MARINE
INSURANCE |
This broad type of
coverage was developed for shipments that do
not involve ocean transport. Covers articles
in transit by all forms of land and air
transportation as well as bridges, tunnels
and other means of transportation and
communication. Floaters that cover expensive
personal items such as fine art and jewelry
are included in this category. (See
Floater)
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INSOLVENCY |
Insurer’s inability to
pay debts. Insurance insolvency standards
and the regulatory actions taken vary from
state to state. When regulators deem an
insurance company is in danger of becoming
insolvent, they can take one of three
actions: place a company in conservatorship
or rehabilitation if the company can be
saved or liquidation if salvage is deemed
impossible. The difference between the first
two options is one of degree – regulators
guide companies in conservatorship but
direct those in rehabilitation. Typically
the first sign of problems is inability to
pass the financial tests regulators
administer as a routine procedure. (See
Liquidation;
Risk-based capital)
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INSTITUTIONAL
INVESTOR |
An organization such
as a bank or insurance company that buys and
sells large quantities of securities.
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INSURABLE RISK |
Risks for which it is
relatively easy to get insurance and that
meet certain criteria. These include being
definable, accidental in nature, and part of
a group of similar risks large enough to
make losses predictable. The insurance
company also must be able to come up with a
reasonable price for the insurance.
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INSURANCE |
A system to make large
financial losses more affordable by pooling
the risks of many individuals and business
entities and transferring them to an
insurance company or other large group in
return for a premium.
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INSURANCE POOL |
A group of insurance
companies that pool assets, enabling them to
provide an amount of insurance substantially
more than can be provided by individual
companies to ensure large risks such as
nuclear power stations. Pools may be formed
voluntarily or mandated by the state to
cover risks that can’t obtain coverage in
the voluntary market such as coastal
properties subject to hurricanes. (See
Beach and windstorm plans;
Fair access to insurance requirements plans
/ FAIR plans;
Joint underwriting association / JUA)
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INSURANCE
REGULATORY INFORMATION SYSTEM / IRIS |
Uses financial ratios
to measure insurers’ financial strength.
Developed by the National Association of
Insurance Commissioners. Each individual
state insurance department chooses how to
use IRIS.
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INSURANCE SCORE |
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Insurance scores are
confidential rankings based on credit
information. This includes whether the
consumer has made timely payments on loans,
the number of open credit card accounts and
whether a bankruptcy filing has been made.
An insurance score is a measure of how well
consumers manage their financial affairs,
not of their financial assets. It does not
include information about income or race.
Studies have shown that people who manage
their money well tend also to manage their
most important asset, their home, well. And
people who manage their money responsibly
also tend to handle driving a car
responsibly. Some insurance companies use
insurance scores as an insurance
underwriting and rating tool.
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INSURANCE-TO-VALUE |
Insurance written in
an amount approximating the value of the
insured property.
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INTEGRATED BENEFITS |
Coverage where the
distinction between job-related and
non-occupational illnesses or injuries is
eliminated and workers compensation and
general health coverage are combined. Legal
obstacles exist, however, because the two
coverages are administered separately.
Previously called twenty-four hour coverage.
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INTERMEDIATION |
The process of
bringing savers, investors and borrowers
together so that savers and investors can
obtain a return on their money and borrowers
can use the money to finance their purchases
or projects through loans.
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INTERNET INSURER |
An insurer that sells
exclusively via the Internet.
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INTERNET LIABILITY
INSURANCE |
Coverage designed to
protect businesses from liabilities that
arise from the conducting of business over
the Internet, including copyright
infringement, defamation, and violation of
privacy.
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INVESTMENT INCOME |
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Income generated by
the investment of assets. Insurers have two
sources of income, underwriting (premiums
less claims and expenses) and investment
income. The latter can offset underwriting
operations, which are frequently
unprofitable |
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JOINT AND SURVIVOR
ANNUITY |
An annuity with two
annuitants, usually spouses. Payments
continue until the death of the longest
living of the two.
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JOINT UNDERWRITING
ASSOCIATION / JUA |
Insurers which join
together to provide coverage for a
particular type of risk or size of exposure,
when there are difficulties in obtaining
coverage in the regular market, and which
share in the profits and losses associated
with the program. JUAs may be set up to
provide auto and homeowners insurance and
various commercial coverages, such as
medical malpractice. (See
Assigned risk plans;
Residual market)
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JUNK BONDS |
Corporate bonds with
credit ratings of BB or less. They pay a
higher yield than investment grade bonds
because issuers have a higher perceived risk
of default. Such bonds involve market risk
that could force investors, including
insurers, to sell the bonds when their value
is low. Most states place limits on
insurers’ investments in these bonds. In
general, because property/casualty insurers
can be called upon to provide huge sums of
money immediately after a disaster, their
investments must be liquid. Less than 2
percent are in real estate and a similarly
small percentage are in junk bonds.
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