Company Profile
- A synopsis of a company's performance in the state of Texas. Includes
licensing data, a rating provided by A.M. Best Company, financial
information regarding the company's assets and liabilities, complaint
history and a record of the companies activities as it pertains to the
interests it has in Texas.
Complaint
- The formal mechanism to start an investigation of potential
wrongdoings by insurers, agents and premium finance companies licensed
and doing business in the start of Texas.
Complaint History
- Information collected or maintained by the Texas Department of
Insurance relating to the number of justified, verified as accurate, and
documented as valid, complaints received against a particular insurer,
agent or premium finance company and the disposition of the complaints.
Comprehensive Coverage (Physical Damage Other than Collision)
- Pays for damage to or loss of your automobile from causes other than
accidents. These include hail, vandalism, flood, fire, and theft.
Conditional Receipt - A premium receipt given to an applicant which makes the insurance effective only if or when a specified condition is met.
Contestable Period
- A period of up to 2 years that an insurance company may deny payment
of a claim because of suicide or a material misrepresentation on your
application.
Contingent Beneficiary
- Another party or parties who will receive the proceeds if the primary
beneficiary should predecease the person whose life is insured.
Contract
- In most cases, the term "contract" refers to an insurance policy. A
policy is considered to be a contract between the insurance company and
the policyholder.
Conversion Privilege
- The right to change (convert) insurance coverage from one type of
policy to another. For example, the right to change from an individual
term insurance policy to an individual whole life insurance policy.
Credit Life Insurance
- This is a special type of coverage usually designed to pay off your
loan or charge account balance if you die. Some lenders or sellers may
require credit life insurance before they will approve your loan. If
credit life is required, the lender or seller cannot require you to
purchase it from them or a particular insurance company. If you have an
existing life policy, the creditor has to accept an assignment of
benefits under your existing policy instead of requiring you to purchase
a credit life policy. Credit life insurance premium rates for loans of
10 years or less are regulated by the Texas Department of Insurance, but
premium rates for loans that are more than 10 years old are
unregulated.
F
Face Value - The initial amount of death benefit
provided by the policy as shown on the face page of the contract. The
actual death benefit may be higher or lower depending on the options
selected, outstanding policy loans or premium owed.
First Party Loss - A situation involving only the insurer and insured.
Free Examination Period - Also
known as "10-day free look" or "Free Look," it is the time period after a
life insurance policy or an annuity is delivered during which the
policy owner may review it and return it to the company for a full
refund of the initial premium. Variable life policies are required to
include a "free-look" provision. For other coverage, it is at the
company's option.
G
Gap Insurance - Insurance that pays the difference
between the actual cash value of a vehicle and the amount still to be
paid on the loan, Some gap policies may also cover the amount of the
deductible.
Grace Period(s) - The time - usually 31 days - during
which a policy remains in force after the premium is due but not paid.
The policy lapses as of the day the premium was originally due unless
the premium is paid before the end of the 31 days or the insured dies.
This is not a "free-insurance" period.
Group Life Insurance - This type of life insurance
provides coverage to a group of people under one contract. Most group
contracts are sold to businesses that want to provide life insurance for
their employees. Group life insurance also can be sold to associations
to cover their members and to lending institutions to cover the amounts
of their debtor loans. Most group policies are for term insurance.
Generally, the business will be issued a master policy and each person
in the group will receive a certificate of insurance.
Group of Companies - Several insurance companies under common ownership and often common management.
H
Health Maintenance Organization (H.M.O.) - Prepaid
group health insurance plan which entitles members to services of
participating physicians, hospitals and clinics. Emphasis is on
preventative medicine.
Home Service Life - Home service refers to a method of
selling and servicing insurance, mostly life and health insurance, and
does not identify the type or relative cost of the product that is sold.
Some companies that market on a home service basis sell what is known
as "industrial life insurance." These are most often low death benefit
policies with face amounts that may vary from $1,000 to $5,000 and which
accumulate cash values at a very low rate. They are intended primarily
to cover the expenses of a last illness and burial. The relative cost of
industrial life insurance is extremely high compared to some other cash
value policies and term life insurance policies.
I
Incontestability - A provision that places a time
limit - up to two years - on a company's right to deny payment of a
claim because of suicide or a material misrepresentation on your
application.
Independent Adjuster - A person who charges a fee to the insurance company to adjust the company's claim.
Indexed Life Insurance - A whole life plan of insurance
that provides for the face amount of the policy and, correspondingly,
the premium rate, to automatically increase every year based on an
increase in the Consumer Price Index (CPI) or another index as defined
in the policy.
Insurable Interest - A financial interest in the property
insured, prerequisite to a valid contract of insurance. In life
insurance, a person's or party's interest - financial or emotional - in
the continuing life of the insured. Insured - The person or firm covered
by an insurance policy.
Insurer - The insurance company.
Interpleader - This is a
procedure when conflicting claims are made on a life insurance policy by
two or more people. Using this procedure the insurance company pays the
policy proceeds to a court, stating the company cannot determine the
correct party to whom the proceeds should be paid.
Irrevocable Beneficiary - A
named beneficiary whose rights to life insurance policy proceeds are
vested and whose rights cannot be canceled by the policy owner unless
the beneficiary consents.
J
K
L
Lapse - Termination of a policy due to non-payment of premiums.
Liability - Responsibility to another for one's negligence.
Liability Insurance - Pays for
injuries to the other party and damages to the other vehicle resulting
from an accident you caused. It also pays if the accident was caused by
someone covered by your policy, including a driver operating your car
with your permission.
Liability Limits - The maximum
amount your liability policy will pay. Your policy must pay at least
$20,000 per person for injuries and deaths, up to $40,000 for all
victims of an accident, plus $15,000 for property damage. You can
purchase higher liability limits for additional premium.
Loss - The amount an insurance company pays on a claim.
Loss History - Refers to an
insured's history of losses (claims) with other companies, or the
company they are currently with. A company will consider "loss history"
when underwriting a new policy or considering a renewal of an existing
policy. Companies view "loss history" as an indication of an insured's
propensity for a claim in the future.
M
Material Misrepresentation - A significant
misstatement in an application form. If a company had access to the
correct information at the time of application, the company might not
have agreed to accept the application.
Medical Payments & Personal Injury Protection (PIP)
- Both pay limited medical and funeral expenses if you, a family
member, or a passenger in your car is injured or killed in a motor
vehicle accident. PIP also pays lost-income benefits.
Mortality Charge - The cost of
the insurance protection element of a universal life policy. This cost
is based on the net amount at risk under the policy, the Insured's risk
classification at the time of policy purchase, and the Insured's current
age.
Mortality Expenses - The cost
of the insurance protection based upon actuarial tables which are based
upon the incidence of death, by age, among given groups of people . This
cost is based on the amount at risk under the policy, the insured's
risk classification at the time of policy purchase, and the insured's
current age.
N
Named Driver Exclusion - An endorsement that provides that a policy does not cover accidents when a specifically named person is the driver.
Named Driver Policy - A policy that covers only the
drivers specifically named in the policy. Generally, all other drivers
are excluded from coverage under the policy. This type of policy is
usually written by surplus lines companies.
Net Cash Value - The cash value amount available to a
policy owner after adjustments have been made to the cash surrender
value to account for policy loans and dividends.
Non-Owners Policy - Insurance coverage that offers
liability, uninsured motorist, and medical payments to a named insured
who does not own a vehicle.
Nonparticipating Policy - A life insurance policy that does not grant the policy owner the right to policy dividends.
Non-renewal - A decision by an insurance company not to renew a policy.
O
P
Paid-Up - This event occurs when a policy will not require any further premiums to keep the coverage in force.
Paid-Up Additions - Additional amounts of insurance purchased using dividends; these insurance amounts require no further premium payments.
Peril - A cause of property losses. Usually used in the context of "a peril insured against."
Policy - The contract issued by the insurance company to the insured.
Policy Loan - An advance made by a life insurance company to a policy owner. The advance is secured by the cash value of the policy.
Policy Owner - The person or party who owns an individual
insurance policy. This person may be the insured, the beneficiary or
another person. The policy owner usually is the one who pays the premium
and is the only person who may make changes to a policy.
Policy Period - The period a policy is in force, from the beginning or effective date to the expiration date.
Preferred Provider Organization (P.P.O.) - Hospital,
physician, or other provider of health care which an insurer recommends
to an insured. A P.P.O. allows insurance companies to negotiate directly
with hospitals and physicians for health services at a lower price than
would be normally charged.
Premium - The amount paid by an insured to an insurance company to obtain or maintain an insurance policy.
Premium Expense Charges - An amount deducted from each premium payment, which reduces the amount credited to the policy.
Property Damage (PD) - Physical damage to property.
Providers - Usually references doctors or those who are providing a medical service.
Public Adjuster - A person hired by you to settle the claim with the insurance company to settle the claim on your behalf.
Q
R
Rated Policy - A policy issued at a higher premium
to cover a person classified as a greater-than-average risk, usually
due to impaired health or a dangerous occupation.
Redlining - Refusal by an insurance company to underwrite or to continue to underwrite questionable risks in a given geographical area.
Refund - Amount of money being returned to the policyholder.
Reinstatement - The process by which a life insurance
company puts back in force a policy which had lapsed because of
nonpayment of renewal premiums.
Renewal Policy - A policy issued as a renewal of a policy expiring in the same company or agency; not new business.
Rental Reimbursement Coverage - Pays a set daily amount for a rental car if your car is being repaired because of damage covered by your auto policy.
Replacement Cost - The cost associated with replacing property at current market prices.
Rescind - To take away or remove. To avoid so as to
restore the involved parties to the positions they would have occupied
had there been no contract.
Return Premium - The premium returned to an insured for canceling or amending a policy.
Rider - A written agreement attached to the policy
expanding or limiting the benefits otherwise payable under the policy.
Same as an "endorsement."
Rule of 78 - This is a method for calculating the amount
of unused premium which takes into account the fact that more insurance
coverage is required in the early months of the loan, since the payoff
of the loan is greater. As the loan is paid off, less coverage is being
paid for, so the refund percentage decreases.
Rule of Anticipation - This is a similar method to "Rule
of 78" where the amount of unused premium takes into account the fact
that more insurance coverage is required in the early months of the
loan, since the payoff of the loan is greater. As the loan is paid off,
less coverage is being paid for, so the refund percentage decreases.
S
Single Interest Insurance - Insurance coverage for only one of the parties having an insurable interest in that property.
Single-Premium Whole Life Policy - A type of limited-payment policy that requires only one premium payment.
Staff Adjuster - Employee of the insurance company's claim department.
Subrogation - Assignment of rights of recovery from insured.
Suicide Clause - Life insurance policy wording which
specifies that the proceeds of the policy will not be paid if the
insured takes his or her own life within a specified period of time
after the policy's date of issue.
Surcharge - An extra charge added to your premium by an
insurance company. For automobile insurance, a surcharge is usually
added if you have at-fault accidents.
Surplus Lines - Coverage from
out-of-state companies not licensed in Texas but legally eligible to
sell insurance on a "surplus lines" basis. Surplus lines companies
generally charge more than licensed companies and often offer less
coverage.
Surrender Charges - Charges that are
deducted if your life insurance policy or annuity is cashed in
(surrendered). These charges also are deducted if you borrow money on
your policy or if your policy lapses for non-payment.
T
Third Party Administrator (T.P.A.) - An organization
that performs managerial and clerical functions related to an employee
benefit insurance plan by an individual or committee that is not an
original party to the benefit plan.
Third Party Loss - A situation involving a person other
than the insurer and insured; i.e., a person making a liability claim
against the insured.
Towing and Labor Coverage - Pays for towing charges when
your car can't be driven. Also pays labor charges, such as changing a
flat tire, at the place where your car broke down.
U
Underwriter - The person who reviews an application for insurance and decides if the applicant is acceptable and at what premium rate.
Underwriting - The process an insurance company uses to decide whether to accept or reject an application for a policy.
Unearned Premium - The insured's remaining premium equity in his policy; that part of the policy premium that has not been "used up."
Uninsured/Underinsured Motorist (U.M./U.I.M.) Coverage - Pays
for your injuries and property damage caused by a hit-and-run driver or a
motorist without liability insurance. It will also pay when your
medical and car repair bills are higher than the other driver's
liability coverage.
Universal Life Insurance - The key characteristic of
universal life insurance is flexibility. Within limits, you can choose
the amount of insurance and the premium you wish to pay. The policy will
stay in force as long as the policy value is sufficient to pay the
costs and expenses of the policy. The policy value is
"interest-sensitive," which means that it varies in accordance with the
general financial climate. Lowering the death benefit and raising the
premium will increase the growth rate of your policy. The opposite also
is true. Raising the death benefit and lowering the premium will slow
the growth of your policy. If insufficient premiums are paid, the policy
could lapse without value before the maturity date is reached. (The
maturity date is the time your policy ceases and cash surrender value
would be payable if the policyholder is still living.) Therefore, it is
your responsibility to pay consistently a premium that is high enough to
ensure that your policy's value will be adequate to pay the monthly
cost of the policy. The company is required to send you an annual report
and also to notify you if you are in danger of losing your policy due
to insufficient value.
Usual and Customary - these charges may be based on: rates
usually charged by physicians and providers in your area; rate averages
compiled by independent rating services; or rate averages compiled by
the insurance company.
V
Variable Annuity - A form of annuity policy under
which the amount of each benefit payment is not guaranteed and specified
in the policy, but which instead fluctuates according to the earnings
of a separate account fund.
Variable Life Insurance - A type of whole life policy in
which the death benefit and the cash value fluctuate according to the
investment performance of a separate account fund that the policyholder
selects. Because the investment account is regulated by the Securities
and Exchange Commission, you must be presented with a prospectus before
you purchase a variable life policy.
Viatical Settlement Agreements - Viatical settlements
involve the sale of an existing life insurance policy by a viator
(person with a life threatening or terminal illness) to a viatical
settlement company in return for a cash payment that is a percentage of
the policy's death benefit.
W
Whole Life Insurance - Whole life insurance
policies are one type of cash value insurance. Whole life policies offer
protection through a lifetime - that is, for a person's "whole life."
From the day you buy the policy, you pay a scheduled premium,. The
scheduled premium may be level or may increase after a fixed time
period, but it will not change from the amount(s) shown in the policy
schedule. It is important that you look at the policy schedule to be
sure you understand what your premium payments will be and that you can
afford them over time. This premium is based on your age at the time of
purchase. Initially, it will be higher than the premium paid for a term
policy, but you are likely to end up paying less in premiums when you
are older, if you keep the policy for a long time. Part of each premium
payment will go to cash value growth, part for the death benefit and
part for expenses (such as commissions and administrative costs). There
is no need to renew whole life policies. As long as you pay your premium
when due, your coverage will continue in force throughout your life.
X
Y
Z
Odds and ends and getting car insurance quotes FAQ
Tip on adding your boyfriend or girlfriend on the title of the vehicle: If the names on the title are separated by "OR", then you alone can remove his/her name. If the separation word is "AND", you will need his/her signature.
When getting car insurance quotes, you need to specify which use you intend to do of your car, what you use the car for:
- Social only
You drive the wehicle to the shops to do your shopping. You drive your car to drop off the kids at school.
You drive it to go fishing or to go to school. And any other trips similar to this.
- Commuting
You drive it to work, and it sits parked in the parking lot at work all day until work is done, then you drive it home.
- Business use
You drive the car to client sites for meetings, and other functions during your normal work day.
When choosing what usage, we can combine this any way we need to, for the use of the car. You drive it to work and park it there all day, and then drive the
kids to school, it's social and commuting. You drive it for work (business) and
your wife drives it to go shopping, it's social and business use.
When buying insurance, who the actual owner of the car is, makes no difference.
What matters is:
1) Who is going to be the main (principal) driver.
2) The policy holder must have an insurable interest in the car. By insurable interest we mean that the policy holder (or the beneficiary) must stand to suffer a direct financial loss if the event (against which the insurance cover was bought) does occur.
Disclaimer: This information is
intended to be a guide to understanding common insurance terms.
FreeAutoRater.com does not intend this information to be official or
legally binding. This list should be used as a basic guide to
understanding these terms and should not be considered complete or
definitive.
