Insurance Term Glossary


Let's not let insurance jargon confuse us anymore. Get some helpful and straightforward definitions of some oft perplexing insurance terms.

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Insurance Definitions T - U


T

TPA: Third party administrator; an organization that contracts to provide administrative services, including claim handling, to other businesses.

Target risk:
(1) A large risk that attracts unusually keen competition among insurers, agents or brokers, or
(2) A large, hazardous risk for which insurance is difficult to place.

Temporary insurance agreement: A life insurance term used to describe the amount of insurance provided by the insurer between the period of time when the application is taken and the first premium made, and the time the policy is issued. The limit of insurance on the temporary agreement may be less than the policy limit applied for. Most often the temporary insurance agreement is designed to pay if the insured dies before the policy is issued, only if that company would have issued the policy except for the prior death of the insured.

Term: Generally, the period of time for which a policy or bond is issued.

Term insurance: A type of life insurance policy that provides protection for a specified time period; most do not have cash value.

Third party (under a liability insurance policy): A person, not a party to the insurance contract, who has an alleged or actual claim for injury or damage against the person insured under the policy.

Tort: A legal term referring to a civil wrong committed by a person which causes undue harm or loss to someone else. In the insurance industry, some states ask the insured to choose either "limited tort" or "full tort" when purchasing auto insurance. If insured selects limited tort, he/she usually saves on insurance premiums, but relinquishes rights to sue another person for pain and suffering after an accident. On the other hand, if the insured selects full tort, his/her premiums are typically higher, but he/she may legally sue another party for pain and suffering caused by an accident.

Total disability: Frequently defined as the inability to perform any of the duties of one's occupation.

Total loss: Typically, a total loss refers to property with damages totaling more than 75% of its entire value. Generally, a total loss property is more expensive (or simply too unsafe) to repair than the property’s actual cash value.

Trust agreement: A supplemental settlement agreement which distributes the proceeds in a special way, much as a regular fiduciary trust does. Insurance companies cannot enter into trust agreements.

Trustee: A person appointed to manage the property of another.

Twisting: The practice of inducing a policy owner in one company to lapse, forfeit, or surrender a policy for the purpose of taking out a policy in another company. It is a crime in all states and is typically classified as a misdemeanor.

U

Umbrella policy: A liability insurance policy that takes over where basic liability insurance policies leave off. An umbrella policy usually has a liability limit of $1 million or more, which is added on top of the limit for any other policy, such as a homeowner's policy that covers liability.

Underlying limits: The limits of liability of the policy(ies) underlying an umbrella or excess policy.

Underwriter: In short, one who underwrites. An underwriter decides whether to accept or reject applications based on the insurer's written standards, and their own experienced judgment. An agent is often referred to as a "field underwriter."

Underwriting: A systematic process for evaluating risks. It involves evaluating, selecting, classifying and rating each risk, and establishing the standards of coverage and amount of protection to be offered to each acceptable risk.

Unearned premium: That portion of the premium which has not yet been earned and which is consequently owed to the policyholder if the policy is canceled.

Unfair trade practices: Practices that constitute unfair methods of competition or unfair or deceptive acts or practices. They include misrepresentation, twisting, rebating, deceptive or false advertising, inequitable claim settlement, and unfair discrimination.

Uniform simultaneous death act: The act which states that, when an insured and beneficiary die at the same time, it is presumed that the former (the insured) survived the latter.

Uninsured / Underinsured Motorist Insurance: Coverage for the insured’s injuries and/or property damage, up to the policy limit, when a legally liable driver has either no insurance or insufficient insurance limits to completely cover the insured’s injuries.

Universal life: A life policy that has flexible premiums and death benefits. Premiums are paid into an interest-bearing account from which maintenance fees, if any, and costs of insurance are deducted.

Use and occupancy insurance: Protection against actual loss sustained, including loss of net profits and such fixed charges and expenses as must continue during enforced disruption of manufacturing and business operations, caused by fire or other contingencies insured against.