Additional income, or profit, that’s left over after you pay your premiums and your insurance company pays its overhead and operating expenses. Your insurer reinvests these funds and uses the interest and dividends earned on investment income to pay claims of higher-than-average amounts, as well as large numbers of claims due to a single catastrophic … Read more
An insurance salesperson who works directly with agents and insurance companies to find customers the lowest rate and best coverage. Usually paid on commission, an insurance broker is a licensed agent acting as an intermediary in your favor, rather than on behalf of the insurer. Representing numerous insurance carriers, brokers usually sell several different types … Read more
Compensation that offsets a casualty or loss suffered by a policyholder. Typical forms of insurance indemnity include cash payments, replacement of identical or nearly identical parts or products, repair and reinstatement. Indemnity may be paid by insurance companies when customers suffer loss covered under their insurance policy. If others are involved in the claim, it … Read more
Pays the full cost of replacing or repairing a damaged or destroyed home, even when that amount extends above policy limits. Designed to protect policyholders after major disaster, when reconstruction expense runs high and homeowners are financially vulnerable, guaranteed or extended replacement cost policies cost more than a standard homeowners policy. However, they usually cover … Read more
Life insurance policies with fixed and invariable premiums, cash value and face amounts. The value of guaranteed cost/non-participating policies does not fluctuate based on loss experience, expense or investment. This is an advantage for the insured because the insurance company won’t pass along additional costs if it experiences adverse financial conditions. However, non-participating policies don’t … Read more
The period of time following an insurance premium’s due date during which you can still make a payment without your policy lapsing. As with grace periods on other debts, the insurance grace period gives you an extra amount of time to juggle bills or wait for a paycheck before paying your monthly premium. If you … Read more
Protects the assets of a person or business from suit due to injury or damage. Covered types of general liability insurance include bodily injury, property damage, personal injury and damage from slander or false advertising. Compensatory damages are also normally included. Insurers usually state within a general liability insurance policy the maximum amount payable during … Read more
Protects against damage due to flooding in a disaster. Excluded under standard homeowners and renters insurance policies, flood insurance coverage may be purchased as a separate policy to complement home insurance. Meant to guard against water and other damages that result from flooding, flood insurance is sold by the National Flood Insurance Program (NFIP) and … Read more
Insures movable property, covering losses wherever they occur. Floaters often insure valuable, expensive and hard-to-replace items, like jewelry, furs, antiques, art and musical instruments. Where the standard homeowners policy leaves off, a floater begins, ensuring that items of real and often sentimental value are protected against loss. By providing broader coverage than the normal home … Read more
The percentage of insurance premiums used to pay for an insurer’s expenses, including overhead, marketing and commissions. Expense ratio is calculated as underwriting expense divided by net premiums earned. More specifically, the expense ratio is money used in acquiring, writing and servicing an insurance policy. Business expenses like advertising, used to attract customers; commissions, used … Read more