We hope that our extensive glossary of common (and some not-so-common)
insurance terms and phrases proves helpful to you! Simply
start below by choosing the first letter of the word or phrase
you want to learn more about.
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B-SHARE VARIABLE ANNUITY - A form of variable
annuity contract with no initial sales charge but if the contract
is cancelled the holder pays deferred sales charges (usually from
5 to 7 percent the first year, declining to zero after from 5 to
7 years). The most common form of annuity contract.
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BALANCE SHEET - Provides
a snapshot of a company’s
financial condition at one point in time. It shows assets, including investments
and reinsurance, and liabilities, such as loss reserves to pay claims in the
future, as of a certain date. It also states a company’s equity, known
as policyholder surplus. Changes in that surplus are one indicator of an insurer’s
financial standing.
BANK HOLDING COMPANY - A company that owns or controls
one or more banks. The Federal Reserve has responsibility for regulating and
supervising bank holding company activities, such as approving acquisitions and
mergers and inspecting the operations of such companies. This authority applies
even though a bank owned by a holding company may be under the primary supervision
of the Comptroller of the Currency or the FDIC.
BASIS POINT - 0.01 percent of the yield of a mortgage,
bond or note. The smallest measure used.
BEACH AND WINDSTORM PLANS - State-sponsored insurance
pools that sell property coverage for the peril of windstorm to people unable
to buy it in the voluntary market because of their high exposure to risk. Seven
states (AL, FL, LA, MS, NC, SC, TX) offer these plans to cover residential and
commercial properties against hurricanes and other windstorms. Georgia and New
York provide this kind of coverage for windstorm and hail in certain coastal
communities through other property pools. Insurance companies that sell property
insurance in the state are required to participate in these plans. Insurers share
in profits and losses. (See Fair access
to insurance requirements plans / FAIR plans; Residual
market)
BINDER - Temporary authorization of coverage issued
prior to the actual insurance policy.
BLANKET INSURANCE - Coverage for more than one type
of property at one location or one type of property at more than one location.
Example: chain stores.
BODILY INJURY LIABILITY COVERAGE - Portion of an
auto insurance policy that covers injuries the policyholder causes to someone
else.
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BOILER AND MACHINERY INSURANCE - Often called Equipment
Breakdown, or Systems Breakdown insurance. Commercial insurance that covers
damage caused by the malfunction or breakdown of boilers, and a vast array
of other equipment including air conditioners, heating, electrical, telephone,
and computer systems.
BOND - A security that obligates the issuer to
pay interest at specified intervals and to repay the principal amount of the
loan at maturity. In insurance, a form of suretyship. Bonds of various types
guarantee a payment or a reimbursement for financial losses resulting from
dishonesty, failure to perform and other acts.
BOND RATING - An evaluation of a bond’s financial strength,
conducted by such major ratings agencies as Standard & Poor’s and Moody’s
Investors Service.
BOOK OF BUSINESS - Total amount of insurance on
an insurer's books at a particular point in time.
BROKER
- An intermediary between a customer and
insurance companies. Brokers typically search the market for coverage appropriate
to their clients. They work on commission and usually sell commercial, not
personal, insurance. In life insurance, agents must be licensed as securities
brokers/dealers to sell variable annuities, which are similar to stock market-based
investments.
BURGLARY AND THEFT INSURANCE
- Insurance for the
loss of property due to burglary, robbery or larceny. It is provided in a standard
homeowners insurance policy and in a business multiple peril policy.
BUSINESS INCOME INSURANCE (also known as BUSINESS INTERRUPTION
INSURANCE) - Commercial coverage that reimburses a business owner for
lost profits and continuing fixed expenses during the time that a business
must stay closed while the premises are being restored because of physical
damage from a covered peril, such as a fire. Business interruption insurance
also may cover financial losses that may occur if civil authorities limit access
to an area after a disaster and their actions prevent customers from reaching
the business premises. Depending on the policy, civil authorities coverage
may start after a waiting period and last for two or more weeks.
BUSINESSOWNERS POLICY / BOP
- A policy that combines
property, liability and business interruption coverages for small- to medium-sized
businesses. Coverage is generally cheaper than if purchased through separate
insurance policies.
Click here for our auto insurance glossary.
Click here for our Health Insurance Glossary.
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