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Glossary

Glossary

Actual Cash Value
The value of restoring property in comparison to the value of property of an equivalent nature; The cost of replacing or restoring property at prices prevailing at the time and place of the loss, minus depreciation.
Adjuster
An investigatorthat settles losses for an insurance carrier.
Agent
A representative providing service to the policyholder for the insurer by negotiating, servicing, or effecting insurance policies.
Annuity
A series of regular or periodic payments to be paid or received under contract.
Applicant
An individual or party seeking an insurance policy.
Application
A written form questioning an applicant about desired coverage and any factors that may affect the level of risk.
Assigned Risk
A pool of insurers that share an undesirable risk as a group. Usually, the companies would rather not insure the risk but they must be insured, by law.
Auto Collision Coverage
This insurance is optional (unless a car loan requires it) coverage which covers damage to a policyholder’s vehicle caused by collision or a rollover.
Auto Comprehensive Physical Damage Coverage
This insurance is optional and covers damage to the policyholder’s vehicle caused by forces other than a collision or rollover.
Automatic Premium Loan
Some life insurance policies contain a provision that automatically pays for past due premiums, automatically creating a loan to the policyholder in order to prevent a lapse of coverage.
Beneficiary
An individual or party designated to receive policy benefits when the policyholder is deceased.
Binder
A temporary written or oral contract to give a policyholder insurance coverage while an application is pending. The binder is subject to the premium and all terms of the policy to be issued.
Binding Receipt
A receipt of temporary coverage until the pending appliation is rejected or approved.
Broker
A representative for insurance organization that works with agents or companies to arrange the right policy for an agent’s client.
Buy-Sell Agreement
A Buy-Sell agreement is an arrangement by multiple owners of a business to buy the share of an owner who acquires a disability or becomes deceased. Precise terms of the buying and selling process are determined before the event of death or disability takes place.
Cancellation
When a policy is discontinued before its expected end date by either the policyholder or the insurer.
Cash Value
The cash amount of a life insurance policy that is terminated before it reaches maturity.
Certificate of Insurance
A statement of coverage issued under contract.
Claim
A request for payment from a policyholder for a covered loss in the contract.
Collision Insurance
This protects against the collision of a policyholder’s vehicle, regardless of fault.
Comprehensive Automobile Insurance
This coverage protects against damage to a policyholder’s vehicle caused by forces other than collision.
Compulsory Auto Liability Insurance
Some states have a legal requirement that motorists carry a minimum coverage.
Conditions
The section in an insurance policy that states the obligations of both the policyholder and the insurer.
Contingent Beneficiary
If the primary beneficiary dies before the policyholder, the contingent beneficiary receives the policy benefits upon the insured’s death.
Contract
A binding, legally-enforced agreement between two or more parties.
Conversion Privilege
The right to exchange a term life insurance policy for a long-term life insurance policy.
Convertible Term Life Insurance
A type of term life insurance policy that allows the policyholder to exchange it for a long-term policy.
Declination
The refusal to insure an individual after review of the application.
Deductible
The amount the policyholder agrees to pay out of pocket when there is a loss. After the deductible is paid, the insurance company is obligated to pay the remainder. Increasing the deductible helps decrease the amount of the policy premium.
Depreciation
The reduced property value due to age and use.
Double Indemnity
A clause available in a life insurance policy for an additional premium from which the beneficiary will receive twice the amount of the policy value if the policyholder dies unnaturally and usually prior to an established age.
Endorsement
An addendum to a policy that changes the original terms of the contract.
Extended Term Life Insurance
A benefit allowing the policyholder to decide whether or not to forfeit the policy under which the coverage from the original policy can be extended for its original net cash value.
Face Amount
The amount stated in a life insurance policy as payment on death of the policyholder.
Grace Period
A determined length of time after a premium payment is due in which the policyholder can make the payment and will be covered for the rest of the term of the policy.
Group Health Insurance
A plan created for a group such as employees of a company or members of an organization.
Guaranty Association
An association formed in each state to protect consumers and support insurers in case of bankruptcy. Guaranty associations are funded through insurer assessments.
HSA (Health Savings Account)
A health insurance plan allowing for self directed payment of medical bills tax deferred.
Incontestable Clause
Wording in a life insurance policy that places a time limit for a policyholder’s right to dispute misstatements in the contract; usually two years.
Indemnification
Partial or complete compensation by payment, repair, or replacement to the victim of damage or a loss.
Indemnity
A legal principle that specifies a policyholder should not collect more than the actual cash value of a loss, but should be restored to an equivalent financial state as before the loss.
Insolvent
Having insufficient resources to meet financial obligations.
Insurable Risk
The conditions that make the risk insurable are: a) the outcome of a risk must be a definite loss completely out of the control of the policyholder, b) a large number of policy holders must face the same possible outcomes of risk, c) there must be a dollar amount in association with the outcome of the risk, d) it can not be likely for the outcome of the risk to affect all policyholders at the same point in time, e) there must be a definite loss produced by the outcome of the risk that is financially serious.
Insurable Interest
Interest in a piece of insured property that would be lost if the property was damaged.
Insured
An individual or party protected by an insurance policy, including the “named insured” and any other entities (such as beneficiaries) under policy terms.
Insurer
The party who pays losses or benefits in the insurance contract.
Irrevocable Beneficiary
A beneficiary who cannot be removed from a life insurance policy by the policyholder without the beneficiary’s consent.
Key Man Employee
An employee who is “key” to the success of a business. In the case the key man acquires a disability or dies, the business is insured against the result of revenue loss under a key man insurance policy.
Lapse
When a policy is terminated due to nonpayment of the policyholder.
Liability
A legal responsibility to cover the losses of a third party harmed by a policyholder’s acts or omissions.
Liability Coverage
Protection for a business against third party liability claims – even if they are unfounded. Defense protection in court is covered as well as amount of judgment within the policy limit.
Life Insurance
After the death of a policyholder, life insurance covers expenses such as funeral costs, unpaid bills, and estate taxes. Furthermore, this policy will cover mortgage payments and family expenses such as college tuition for a child. These policies vary depending on individual needs.
Loss
An occurrence paid by an insurance policy.
Loss Expense – Allocated
Expenses that can definitely be charged to a claim (such as legal fees) that will be covered by an insurance company.
Loss Expense – Unallocated
Expenses (such as salaries) incurred in association with an insurance carrier’s claim departments operation unable to be charged to an individual claim.
Medical Payments Coverage
Coverage for medical and funeral expenses as a result of injuries from an insured vehicle, regardless of fault.
Misrepresentation
Any communication by an insurance company that does not correctly represent the policy terms.
Negligence
When a policyholder fails to use a reasonable amount of care and caution.
No-fault Insurance
A system created by law in some states that requires the policyholder’s own insurance company to pay for losses, regardless of fault.
Offer and Acceptance
An applicant for insurance makes an offer by filling out an application and enclosing payment or submitting to a physical examination if requested. It is also considered an offer when an insurer accepts an application before payment. Acceptance occurs when the insurance company issues a policy.
Paid-up Policy
An active life insurance policy that is paid in full – no further premiums required.
Peril
Loss or damage.
Personal Injury Protection
Medical, hospital, wage-loss and funeral expenses of the policyholder covered by the insurer, regardless of fault.
Physical Damage
Damage or loss to a vehicle caused by a collision, fire, theft, or other perils.
Permanent Insurance
Life insurance policies that continue for as long as they are paid for.
Personal Property Insurance
Property other than real estate that is protected in the event of loss or damage.
Policy
The written terms of an insurance contract between the insured and the insurer.
Policy Declaration
The section of the policy that details basic underwriting information such as the policyholder’s name, address, and description of insured property.
Policy Limits
The maximum amount that can be collected or used to restore property, under the terms of the policy.
Policy Loan
A loan with cash value from an insurance company to a policyholder.
Policyholder
The person or business that purchases the insurance policy.
Policy Period
The duration of time a policy lasts.
Preexisting Condition
A physical illness dating before the policy started but not disclosed in the contract.
Preferred Risk
Factors such as lifestyle, physical condition, and occupation among other characteristics of a policyholder which suggest superior longevity in comparison with others of the same age.
Premium
The price for insurance coverage during a specified length of time.
Primary Beneficiary
The first beneficiary designated to receive benefits of a life insurance policy upon the policyholder’s death.
Proof of Loss
Proof of loss must be supplied to the insurance company by the policyholder for the loss to be covered.
Property Damage Coverage
Protection from an insurance company against legal liability for loss or damage by the policyholder’s vehicle to a third party’s property.
Protection Amount
The face value that will be paid to a beneficiary upon a policyholder’s death.
Rate
The factor used for pricing a premium on an insurance policy.
Rated Policy (Extra Risk Policy)
An insurance policy issued at a premium higher than the average rate due to a higher risk.
Rebating
Prohibited by law, rebating is an incentive (usually part of the insurance commission to the policyholder) to buy or renew an insurance contract.
Reimbursement
Payment from the insurance company of a loss or damage, not exceeding the policy limits.
Reinstatement
The restoration of a lapsed policy.
Renewable Term Life Insurance
The option to renew a term life insurance policy for a premium without evidence of insurability, such as a medical exam.
Revocable Beneficiary
A beneficiary in a life insurance policy that can be removed before death by the policyholder without consent.
Rider
An addendum to a policy that becomes part of the contract.
Risk
The degree of chance of loss or injury.
Salvage
Monetary recovery by the insurance company from the sale of property of the policyholder following a loss or settlement.
Settlement
The amount and method of a claim or benefit payment agreed upon with an insurance company by a claimant or beneficiary.
Standard Risk
A prospect policyholder that is evaluated as an average risk and can pay the standard premium for the policy.
Substandard Risk
A prospect policyholder that does not meet the standard risk for an automobile insurance policy and must pay an extra premium.
Term Insurance
Short-term life insurance that is only effective if the policyholder dies within a determined period of time.
Underwriter
a) An insurance agency receiving premiums for a policy and providing coverage to a policyholder; b) an employee of the insurance agency that determines whether or not to accept a risk; c) the agent that sells the policy.
Underwriting
The process of classifying risks when reviewing applications.
Unilateral
A one-sided contract under which the insurance company is the only party that pledges anything; under this circumstance, the policyholder does not even agree to pay a premium.
Uninsured (Underinsured) Motorist Coverage
Insurance covering the bodily injury of passengers in the policyholder’s vehicle from a collision with the owner of an uninsured vehicle, causing the accident.
Uninsurable Risk
When an applicant is not insurable because he or she is considered an excessive risk.
Universal Life
A life insurance policy with a flexible premium and a two-part contract: a) renewable term insurance and b) premiums are deposited into a cash value account (after the insurance company deducts monthly cost for the term coverage).
Waiver
An attachment to a policy that exempts disabilities or injuries that would normally be covered in the contract.

The Quarles Agency of Georgia, Inc.
506 Roswell Street, Ste. 240
Marietta, GA 30060
Phone: 770-333-9091
800-695-0091
Fax: 770-333-9095