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Insurance Definitions and Insurance Terms
Insurance Terms By Alphabet
Insurance Glossary and Insurance Terms Definitions are below.

Choose the letter of the alphabet that your Insurance question or term falls under. You may browse the
definitions to obtain an understanding of the product you have. These definitions are not limited to just car
Insurance. Thank you for visiting our site.
SALVAGE
Damaged property an insurer takes over to reduce its loss after paying a claim. Insurers receive salvage
rights over property on which they have paid claims, such as badly-damaged cars. Insurers that paid claims
on cargoes lost At sea now have the right to recover sunken treasures. Salvage charges are the costs
associated with recovering that property.

SCHEDULE
A list of individual items or groups of items that are covered under one policy or a listing of specific benefits,
charges, credits, assets or other defined items.

SECONDARY MARKET
Market for previously issued and outstanding securities.

SECURITIES AND EXCHANGE COMMISSION / SEC
The organization that oversees publicly-held Insurance companies. Those companies make periodic
financial disclosures to the SEC, including an annual financial statement (or 10K), and a quarterly financial
statement (or 10-Q). Companies must also disclose any material events and other Information about their
stock.

SECURITIES OUTSTANDING
Stock held by shareholders.

SECURITIZATION OF Insurance RISK
Using the capital markets to expand and diversify the assumption of Insurance risk. The issuance of bonds
or notes to third-party investors directly or indirectly by an Insurance or reinsurance company or a pooling
entity as a means of raising money to cover risks.

SELF-INSURANCE
The concept of assuming a financial risk oneself, instead of paying an Insurance company to take it on.
Every policyholder is a self-insurer In terms of paying a deductible and co-payments. Large firms often self-
insure frequent, small losses such as damage to their fleet of vehicles or minor workplace injuries. However,
to protect injured employees state laws set out requirements for the assumption of workers compensation
programs. Self-insurance also refers to employers who assume all or part of the responsibility for paying the
health Insurance claims of their employees. Firms that self insure for health claims are exempt from state
Insurance laws mandating the illnesses that group health insurers must cover.

SEVERITY
Size of a loss. One of the criteria used In calculating premiums rates.

SEWER BACK-UP Coverage
An optional part of homeowners Insurance that covers sewers.

SINGLE PREMIUM ANNUITY
An annuity that is paid In full upon purchase.

SOFT MARKET
An environment where Insurance is plentiful and sold At a lower cost, also known as a buyers’ market.

SOLVENCY
Insurance companies’ ability to pay the claims of policyholders. Regulations to promote solvency include
minimum capital and surplus requirements, statutory accounting conventions, limits to Insurance company
investment and corporate activities, financial ratio tests, and financial data disclosure.

SPREAD OF RISK
The selling of Insurance In multiple areas to multiple policyholders to minimize the danger that all
policyholders will have losses At the same time. Companies are more likely to insure perils that offer a good
spread of risk. Flood Insurance is an example of a poor spread of risk because the people most likely to buy
it are the people close to rivers and other bodies of water that flood.

STACKING
Practice that increases the money available to pay auto liability claims. In states where this practice is
permitted by law, courts may allow policyholders who have several cars insured under a single policy, or
multiple vehicles insured under different policies, to add up the limit of liability available for each vehicle.

STATUTORY ACCOUNTING PRINCIPLES / SAP
More conservative standards than under GAAP accounting rules, they are imposed by state laws that
emphasize the present solvency of Insurance companies. SAP helps ensure that the company will have
sufficient funds readily available to meet all anticipated Insurance obligations by recognizing liabilities earlier
or At a higher value than GAAP and assets later or At a lower value. For example, SAP requires that selling
expenses be recorded immediately rather than amortized over the life of the policy.

STOCK Insurance COMPANY
An Insurance company owned by its stockholders who share In profits through earnings distributions and
increases In stock value.

STRUCTURED SETTLEMENT
Legal agreement to pay a designated person, usually someone who has been injured, a specified sum of
money In periodic payments, usually for his or her lifetime, instead of In a single lump sum payment

SUBROGATION
The legal process by which an Insurance company, after paying a loss, seeks to recover the amount of the
loss from another party who is legally liable for it.

SUPERFUND
A federal law enacted In 1980 to initiate cleanup of the nation’s abandoned hazardous waste dump sites and
to respond to accidents that release hazardous substances into the environment. The law is officially called
the Comprehensive Environmental Response, Compensation, and Liability Act.

SURETY BOND
A contract guaranteeing the performance of a specific obligation. Simply put, it is a three-party agreement
under which one party, the surety company, answers to a second party, the owner, creditor or “obligee,” for
a third party’s debts, default or nonperformance. Contractors are often required to purchase surety bonds if
they are working on public projects. The surety company becomes responsible for carrying out the work or
paying for the loss up to the bond “penalty” if the contractor fails to perform.

SURPLUS
The remainder after an insurer’s liabilities are subtracted from its assets. The financial cushion that protects
policyholders In case of unexpectedly high claims

SURPLUS LINES
Property/casualty Insurance Coverage that isn’t available from insurers licensed In the state, called admitted
companies, and must be purchased from a non-admitted carrier. Examples include risks of an unusual
nature that require greater flexibility In policy terms and conditions than exist In standard forms or where the
highest rates allowed by state regulators are considered inadequate by admitted companies. Laws
governing surplus lines vary by state.

SURRENDER CHARGE
A charge for withdrawals from an Insurance based contract before a designated surrender charge period.

SWAPS
The simultaneous buying, selling or exchange of one security for another among investors to change
maturities In a bond portfolio, for example, or because investment goals have changed.

NOTICE: These glossary definitions provide a brief description of the terms and phrases used within the
Insurance industry. These definitions are not applicable In all states or for all Insurance and financial
products. This is not an Insurance contract. Other terms, conditions and exclusions apply. Please read your
official policy for full details about coverages. These definitions do not alter or modify the terms of any
Insurance contract. If there is any conflict between these definitions and the provisions of the applicable
Insurance policy, the terms of the policy control. Additionally, this informational resource is not intended to
fully set out your rights and obligations or the rights and obligations of the Insurance company, agent or
agency. If you have questions about your Insurance, you should contact your Insurance agent, the
Insurance company, or the language of the Insurance policy.
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