Insurance Terms

Carrier

Is an insurance or reinsurance company that insures or "carries" the insurance or reinsurance. An insurance carrier is a company that sells insurance. The term carrier is used interchangeably with insurance company, underwriter, and insurance provider. Insurance carriers sell policies, like home, auto, and life insurance, directly to consumers.

Declaration Page (US) / Schedule (UK)

This sheet summarizes the coverage and includes pertinent information. The schedule typically consists of the insurance company name and address, the name and address of the policyholder, the policy number, effective dates, and the actual coverage in the contract. It will also include the limits, premiums, and deductibles, and how to file a claim. All the information on this document should be carefully reviewed for accuracy (check for misspellings of name or incorrect address of policyholders). It's essential to understand what and how much is covered and what is excluded from the policy.

Deductible / Excess - Deductible (US)

Is the amount an insured must pay out of pocket before an insurance company will issue payment for the remainder of the claim. Excess (UK) is a pre-agreed amount of money that you need to pay to your insurance provider in the event of a claim, such as a car accident or a flood at home.

Endorsement / MTA - Endorsement (US)

Also called a rider, is a change made to the insurance policy that adjusts coverage. Adding an endorsement to an existing insurance contract usually means adding or modifying coverage. MTA (UK) stands for mid-term adjustment and refers to a change to an insurance policy before the end of the policy period. The adjustment to the policy can cause a difference in the premium. MTK (UK) Stands for mid-term adjustment and refers to a change to an insurance policy before the end of the policy period. The adjustment to the policy can cause a difference in the premium.

FNOL (First Notice of Loss)

The initial report made to the insurer in the event of theft, loss, or damage of an insured asset / insured event. The FNOL is usually the first step in the claims process.

General Insurance (UK) / P&C Insurance (US)

General insurance is non-life insurance. It includes products such as motor, travel, pet, health, and home insurance. P&C refers to Property and Casualty and refers to insurance products unrelated to life insurance and typically includes policies covering homes, contents, motor, and commercial lines.

GWP (Gross Written Premium)

The insurance premium (the cost of buying insurance), including any commission but excluding taxes.

Indemnity

Most insurance policies are contracts of indemnity. Indemnity is compensation to a party for a loss or damage that has already occurred or might occur in the future. The concept of indemnity is based on a contractual agreement made between two parties. One party (the indemnitor) agrees to pay for potential losses or damages caused by the other party (the indemnitee). Essentially, the insurance company guarantees compensation for losses or damages sustained by a policyholder in exchange for the premium payment. Crucially with indemnity, the policyholder should be put back in the position they were in before the loss.

Insurance Broker

Is an intermediary who negotiates and places an insurance policy on behalf of a customer. The broker is the customer’s representative and is different from an Agent who represents the insurance company. Brokers are specialists in dealing with insurance and often have access to insurance policies and covers that a customer would not have access to directly from the insurer.

IPT - Insurance Premium Tax (UK Only)

The tax paid on all gross written premiums for the majority of insurance contracts, currently 12%

Insurer

Is the company that carries the risk and decides the premium that a customer must pay for the policy. The insurer will pay all valid claims.

Personal Lines Insurance

Is insurance bought by an individual to cover their own risk, e.g., home insurance, motor insurance, travel insurance. Personal lines insurance refers to any kind of insurance that covers individuals against loss that results in death, injury, or loss of property. These insurance lines generally protect people and their families from losses they couldn't afford to cover on their own.

Premium

Amount paid to insurance companies in return for taking on a portion of the risk. The amount depends on different factors, including the coverage limits and deductibles one chooses.

Subrogation

A term describing the right of most insurance carriers to legally pursue a third party that caused an insurance loss to the insured. Subrogation is necessary to recover the amount of the claim paid by the insurance carrier to the insured for the loss.

Sum Insured

This is the amount of cover the customer has purchased. For example, if a person has home insurance for a house that costs USD 200,000 to rebuild, the Sum Insured is USD 200,000. Typically, this is the maximum limit of indemnity in most policies.

Underwriting

This is the process of determining whether to accept a risk and, if so, what amount of insurance the company will write on the acceptable risk and at what rate. Underwriters are companies, individuals, or insurance companies that carry on this critical activity on their own account or for that of others.