Glossary of Terms

JKJ has compiled a compressive listing of insurance terms, along with definitions that explain what kind of protection each service is designed to bring.

Choose the first letter of the term you wish to find:

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Alternative Insurance Coverage
This is when companies opt for a combination of self-insurance and insurance coverage.

For instance, some companies may want to absorb portions of their insurance coverage internally and self-insure through funds set aside strictly for that purpose, i.e. a line of credit or a bond.
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Auto
A good auto insurance policy protects an automobile and guarantees a way of coping with the expense of accidents, vandalism or theft, all with a minimum of hassle.

The ability to sue and to be sued varies widely state by state, a good policy ensures the policyholder is being protected against potentially devastating lawsuits, regardless of where they live or drive.

Some auto insurance packages also offer options such as comprehensive long-term care if a policyholder or his or her family are injured in an accident.
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Auto (Commercial)
Commercial coverage covers many of the same things as a personal insurance policy, such as liability, collision and comprehensive, medical payments, and coverage for uninsured motorists.

While the major coverage is the same, a business auto policy differs from a personal auto policy in many technical respects.

Whether a business auto insurance policy or personal policy is needed depends on the kind of driving, including details about how vehicles are used in a business, who uses them, or whether employees are likely to be driving their own cars for a business.
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Core Insurance Benefits (Group)
Core Benefits generally refer to the following types of coverage:

• Group Health Insurance
• Group Prescription
• Group Life Insurance
• Group Disability
• Group Dental and Vision
• Medical Savings Accounts
• Business Travel Accident
• International Health & Life Insurance Coverage
• Partial Self-Funded Health Plans
• Section 125 Spending Accounts & Premium Reduction Plans
• Cafeteria Plans
• Paid Time Off

Directors & Officers Liability
This is coverage for directors and officers of firms or organizations against liability claims arising out of alleged errors in judgment, breeches of duty, and wrongful acts related to their organizational activities.
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General Liability
This is a broad term that simply means liability insurance (excluding automobile) that provides third party protection. This would include premises risks and operations, contractual liability, products and completed operations.

Larger corporations tend to carry a significant amount of general liability insurance, while smaller companies usually carry smaller policies that are more adaptive to their specific needs.
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Group Benefits
Group benefits refer to any benefit plan, usually carried by an employer, that provides insurance benefits to a group of people, usually employees and their families, if applicable. It can vary from only a few covered employees to tens of thousands of covered employees.
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Homeowners Insurance
Homeowners insurance protects a home and its contents against loss, whether by natural causes, unintentional fire, theft, etc. It can cover not only rebuilding a home and replacing lost items, but also cover expenses such as hotel costs caused by relocating after a tragedy.

One must be careful, however, since many policies have explicit and strict limits on the kind of reimbursement they will offer. Expensive personal property (collections, antiques, etc.) are seldom covered under a standard policy, and a homeowner's valuables must be carefully considered when they choose their insurance.

Likewise, many policies will only rebuild a home to current construction standards, but will not compensate for any specialty work, additions, or other items that may have significantly added value to a home.
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Life/Disability Insurance
Life Insurance comes in many shapes and sizes, customizable to age, investment experience, income, and other important factors.

Life insurance, far from being only to provide beneficiaries with money upon a death, can be used as tax shelters, as a means of earning high-interest income, and as part of other investment strategies.

Under a Term Life contract, the insurance company promises to pay the beneficiaries a sum of money in the event that the policy holder dies within a period of time defined in the contract (such as 5, 10, 15, 20 or 30 years). Term Life is like leasing a car; at the end of the term the contract expires and nothing is owned.

A Whole Life contract provides a minimum level death benefit upon the insured's death or the policy maturity that is equal to the death benefit.

Universal Life combines term insurance and a side-fund investment into a single contract. These are interest-sensitive and allow for a more flexible premium payment schedule, varied by the policyholder.

Variable Life insurance policies fluctuate according to the investment performance of the underlying mutual funds which support them. They have a minimum death benefit and no guaranteed cash value.

Variable Universal Life allows the policyholder the choice of variable, separate, investment accounts in which they may deposit funds, and can increase or decrease accordingly.

Disability insurance helps to protect employees in case they become disabled. With this coverage, they can be sure to continue to provide for themselves and their loved ones, and continue to meet expenses such as mortgage, car payments, and other fixed costs.
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Medical Savings Accounts
Money is set aside for medical expenses, and the beneficiary has total control over the use of that money - whether it be for procedures, transportation, etc. With MSA's, the definition of "medical provider" is broad: it includes dentists, chiropractors, acupuncturists, and many other allopathic and non-allopathic doctors and healers.

An MSA has two parts:

• A health insurance policy with a high deductible.
• A tax-free saving's account, similar to an IRA that can be used to pay that deductible.

MSA's are ideal for the self-employed and the small business owner, because they offer a way to get extra coverage while lowering tax liability.
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Personal Insurance
Personal insurance describes any insurance that is not employer-provided, and can cover a wide array of services. See our Personal Insurance section of this website to learn more about what kinds of things this includes.
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Product Liability
This would cover an organization against any financial loss arising out of the legal liability incurred by a manufacturer, merchant, or distributor of a product. This usually complements general liability coverage and provides outstanding protection for a company.
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Property Insurance (Commercial)
This provides financial protection against loss or damage to a commercial property caused by specified perils, such as fire, windstorm, hail, explosion, aircraft, motor vehicles, vandalism, malicious mischief, riot and civil commotion, and smoke.

It is critical to consider the kinds of hazards present before selecting any property insurance - carefully selected options like flood and fire insurance can make the difference between bankruptcy and solvency.
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Professional Liability
This policy protects against financial losses from lawsuits filed by the policyholder's clients, for professional services performed negligently or not performed at all.

'Professionals' are expected to have extensive technical knowledge or training in a particular area of expertise, and to perform the services for which they were hired, according to the standards of conduct in that profession. If a client feels a 'professional' failed to do their duties properly, they can sue for damages.

When this liability is limited to acts of negligence, professional liability insurance is called errors and omissions liability.
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Recreational Vehicle Insurance
This covers boats, water bikes, ATVs and Quad Runners, snowmobiles, and other small recreational vehicles to protect against lawsuits and to protect the investment in the vehicles themselves.

This area is often overlooked, leaving people vulnerable to lawsuits from accidents that occur when they are riding on one of their recreational vehicles and become involved in an accident.
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Risk Management
Risk Management is a comprehensive program designed to minimize the risk an employer faces, both from internal lawsuits from their own employees, and from external lawsuits from third-parties.

It also covers different kinds of life insurance and disability insurance, directors and officers insurance, and other critical areas of risk management. See our Risk Management & Property and Casualty Insurance section for more information.
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Section 125
Section 125 plans provide tax savings for both employer & employees. This federal tax-qualified program allows qualified insurance benefits to be purchased with before-tax dollars.

Under a Section 125 Plan, pre-tax dollars are used to purchase benefits. These programs are truly a win-win situation for both employees and employers and a great way to cut down on tax liability while increasing insurance coverage.
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Self-funding Management
Self-funding is the self-retention of risk in lieu of transferring risk to a third party, such as an insurance provider. This plan shifts most or all of the liability risk to an employer, while giving them control over the management and finances of the plan. It also eliminates insurer charges completely, and gives employers far greater leverage in creating customized health plans and reduced healthcare costs.

To be successful, a self-funding employer must carefully consider their options. To learn more about this, see our Group Benefits management section of this website.
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Umbrella/Excess Liability
This insurance can be offered for a person or for a company, and in both cases it essentially does two things:

It protects against any losses in excess of the amounts covered by other liability insurance policies. So if a standard policy caps at payments of $1,000,000, Excess Liability will cover amounts in excess of that amount.

Secondly, it protects the insured in situations not covered by the usual liability policies. Injury losses that may be limited or excluded under most policies will receive broader coverage under an umbrella policy. For instance, in most business policies, 'personal injury' protection is limited to specific bodily injury. Many umbrella policies expand upon this definition.
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Valuable Property
In most cases homeowners insurance provides only basic protection for your personal possessions, with extensive limits on coverage and special exclusions for many truly valuable items.

The following list includes example items where supplemental insurance is commonly needed:

• Jewelry
• Art and antique items
• Glassware and ceramics
• Music and entertainment collection
• Computer systems
• Home businesses
• Other valuables, such as stamps, cameras, coins, firearms, furs, musical instruments

Most conventional insurance will allow only for the 'repair' of an item, even if the 'repair' would radically depreciate the value of the property (a broken Ming Vase, for instance). Valuable Property insurance considers the difference between 'valued coverage', 'replacement coverage', and 'repaired coverage'.
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Voluntary Benefits (Group)
Voluntary Benefits are offered above and beyond core benefits. These extra features provide a value-adding incentive for employees, offering protection that covers many of the areas conventional, core benefits neglects. Voluntary Benefits include some or all of the following:

• Life Insurance, Short-term Disability, Long-term Disability
• Group Auto & Home Payroll Deduction Program
• Wellness Programs
• Group Long Term Care
• Cancer/Critical Illness Policies
• Work/Life Programs
• Group Legal
• Pet Insurance
• Concierge Service

Worker's compensation insurance is bought as a separate policy. Although in-home business and business owners policies (BOPs) are sold as package policies, they don't include coverage for workers' injuries.
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