GA. See General Agent.
GAAP. See Generally Accepted Accounting Principles.
GAB. See General Adjustment Bureau, Inc.
Gain and Loss Exhibit. The portion of the convention blank that represents an analysis of gains, losses and surplus during an accounting period.
Gambling. A situation where there is a chance of either loss or gain. It is the opposite of insurance, which either eliminates or reduces risk of loss.
GAMC. See General Agents and Managers Conference.
Garage Coverage Form. A commercial auto insurance coverage form used to insure automobile dealers, repair shops, service stations and garage risks. Garage liability, garagekeepers coverage and physical damage coverages may be included.
Garage Keepers Legal Liability Insurance. Coverage that protects a garage keeper against liability for damage to vehicles in the keeper’s care, custody or control caused by specific perils.
Garage Liability Insurance. Protects garage owners or automobile dealers for liabilities arising out of their business operations.
Gatekeeper Model. Under this model of HMO and PPO organizations, the primary care physician (the gatekeeper) is the initial contact for the patient for medical care and for referrals. Also called a closed access or closed panel.
Gender Rule. A method of determining which parent’s medical coverage will be primary for dependent children; the father’s coverage is often considered primary and pays first.
General Account. An investment portfolio used by the insurer for investment of premium income. This portfolio generally consists of safe, conservative, guaranteed investments, such as real estate and mortgages.
General Adjustment Bureau, Inc. (GAB). An independent company that adjusts claims of all types for insurance companies. GAB also provides training programs for adjusters.
General Agency System. The marketing of life insurance through general agents.
General Agent (GA). An individual appointed by a life or health insurer to administer its business in a given territory. General agents are responsible for building their own agency and service force and are compensated on a commission basis, with possibly some additional expense allowances.
General Agents and Managers Conference (GAMC). An association of insurance general agents and managers affiliated with the National Association of Life Underwriters.
General Aggregate Limit. A commercial general liability limit that applies to all damages paid for bodily injury, property damage, personal injury, advertising injury and medical expenses, except damages included in the products-completed operations hazard.
General Agreement. A brief statement stating that all of the remaining provisions of the contract (the policy terms) apply. The reason that the general agreement is so brief is that each coverage section contains a much more detailed insuring agreement.
General and Insurance Expense. See General Operating Expense.
General Average. A partial loss incurred to save the total venture from destruction. Any such losses are prorated among all parties to the venture, including the parties whose interests first suffered such loss (e.g., throwing cargo overboard in order to save a ship from a particular peril).
General Cover Form. An older term for reporting form policy. See Reporting Form.
General Exclusions. Exclusions that eliminate coverage for war risks, nuclear risks, floods and other types of water damage.
General Liability Insurance. A form of insurance designed to protect owners and operators of businesses from a wide variety of liability exposures, including liability arising out of accidents resulting from the premises or the operations of an insured, products sold by the insured, operations completed by the insured and contractual liability.
General LTC Rider. A long-term care rider that is attached to a life insurance policy but stands alone or is independent of the life policy. Any LTC benefits paid do not reduce life insurance benefits.
General Operating Expense. The expense of an insurer other than commissions and taxes. Also called general and insurance expense.
General Partnership. A business enterprise owned and operated by two or more persons for the purpose of generating business income and profits.
General Power of Appointment. A donee is given the authority to pass on a property interest to whomever he or she pleases.
General Property Form. A form that covers the property of commercial risks from whatever perils are specified in the contract.
Generally Accepted Accounting Principles (GAAP). These principles have substantial authoritative support for use in the insurance business. They are intended to produce financial results consistent with those of other industries and to assure consistency in financial reporting. Contrast with Statutory Accounting Principles.
Generation Skipping Transfer. A transfer of property due to death or by gift, to a person who is two or more generations below the grantor.
Generic Drug. A drug that is exactly the same as a brand name drug and that is allowed to be produced after the brand name drug’s patent has expired. It is also called a “generic equivalent.”
Generic Equivalence. See Generic Drug.
Geographical Limitation. A contractual provision that specifically names geographical areas outside of which the insurance is not effective. Also called territorial limitation.
GI Insurance. See United States Government Life Insurance.
Gift. A sale, exchange or transfer of property without adequate consideration.
Gift Tax. Federal and state tax on gifts made by one person to another.
Glass Coverage Form. A commercial property form that insures plate glass, lettering, frames and ornamentation. It replaced earlier commercial glass insurance forms.
Good Driver Discount. A system that entitles good drivers (as defined by driving safety record, number of miles driven annually, number of years driving experience, etc.) to discounts on auto insurance rates and premiums. See also Safe Driver Plan.
Good Student Discount. A discount granted to students with high scholastic ratings. This discount offered offers up to as much as 25 percent off premiums.
Goodwill. An intangible business asset. The value of a business that is built up through the reputation of the business concern and its owners.
Governing Classification. The classification assigned to the operations of an insured that carries the largest amount of payroll. If a company has several different operations in one plant, the one that employs most workers will usually be ruled the governing classification.
Grace Period. A prescribed period, usually 30 to 31 days from the premium due date, when an insurance contract is in force and the premium may be paid. The grace period simply allows the policyholder additional time to pay a premium after the due date.
Graded Commission. A compensation scale for agents that provides for varying commission rates depending upon the class, type or volume of insurance written. Contrast with Flat Commission.
Graded Death Benefits. A provision in life insurance contracts for death benefits that, in the early years of the contract, are less than the face amount of the policy but that increase with the passage of time. Most commonly found in juvenile policies issued at or near age zero.
Graded Premium. A modified life insurance policy for which the initial premium is low, and then increases over a period of time (usually five years), after which it becomes a level premium.
Grading Schedule for Cities and Towns. A schedule prepared by the National Board of Fire Underwriters to determine which of ten grades to assign to a city for fire rating purposes, based on such factors of fire protection as water supply.
Graduated Life Table. A mortality table in which the experience has been smoothed out by formula. See also Experience.
Grantee. The buyer of real estate.
Grantor. The seller of real estate.
Grantor Retained Annuity Trust (GRAT). A trust in which the grantor substitutes retention of a right to payment of a fixed income in exchange for a fixed period of time.
Grantor Retained Interest Trust (GRIT). An irrevocable trust whereby the grantor of the trust property (e.g., a personal residence) receives an income for a fixed period of time.
Grantor Retained Unitrust Trust (GRUT). A trust in which a grantor substitutes retention of a right to a fixed percentage of the trust value in exchange for a fixed period of time.
Grievance Procedure. A procedure that allows a member of a health plan or a provider of benefits to express complaints and seek remedies.
Gross Earnings. An accounting term that is arrived at by subtracting the cost of goods sold from the total sales. Traditionally, the term was used primarily in business interruption insurance to determine how much insurance a policyholder should carry. The latest business income insurance forms have dropped this term.
Gross Earnings Form. A form once used widely in business interruption insurance. Coverage was written on either the gross earnings form or the earnings form. Business income coverage forms no longer refer to gross earnings.
Gross Line. The total limit accepted by an insurer on an individual risk, including the amount to be reinsured.
Gross Negligence. Willful and wanton negligence or misconduct. See also Negligence.
Gross Premium. (1) The premium for participating life insurance. If an insured elects to use dividends to pay premiums, this becomes the net premium when dividends are subtracted from it. Contrast with net premium. (2) The net premium plus operating expenses, commissions and other expenses.
Ground Coverage. Similar to collision and comprehensive coverage in an automobile policy. This insurance covers a plane’s hull from specific perils when the plane is on the ground. There are different forms of ground coverage: “Not in Flight” covers the plane on the ground only but includes taxiing. “Not in Motion” covers the plane on the ground and not in motion.
Group. Coverage of a number of individuals under one contract. The most common group is employees of the same employer.
Group Annuity. A retirement plan for a group of persons (usually employees of a single employer) funded by a single annuity contract which is written on a group basis.
Group Certificate. The document provided to each member of a group plan that shows the benefits provided under the group contract issued to the employer or other insured.
Group Contract. A contract of insurance made with an employer or other entity that covers a group of persons identified by reference to their relationship to the entity buying the contract. Generally covers employees of a common employer, members of a trade association or trusteeship, members of a welfare or employee benefit association, members of a labor union or members of a professional or other association not formed only for the purpose of obtaining insurance.
Group Credit Insurance. Insurance on the life or health of debtors of a creditor, payable for reduction or extinguishment of the debts in case of the disability or death of the debtor.
Group Deposit Administration Contract. A funding contract for a qualified plan whereby contributions are accounted for on an unallocated basis for the benefit of all plan participants.
Group Disability Benefits. Coverage for a group of individuals for loss of compensation due to accident or sickness. These work-related benefits are available from a qualified plan, a salary continuation plan, employee stock plans, workers’ compensation, etc. Group disability benefits are of short duration—a year or less—and cover only a percentage of lost income.
Group Health Insurance. The same as group life insurance but with the application to health insurance coverages. See Group Life Insurance.
Group I Rates. Under the latest commercial lines program, this term replaces the term “fire rates” for property coverages.
Group II Rates. Under the latest commercial lines program, this term replaces the term “extended coverage rates” for property coverages.
Group Life Insurance. Life insurance provided for members of a group. It is most often issued to a group of employees but may be issued to any group provided it is not formed for the purpose of buying insurance. The cost is lower than for individual policies because administrative expenses per life are decreased, there are certain tax advantages and measures taken against adverse selection are effective. See also franchise insurance, true group and master policy.
Group Model HMO. A health plan where a group of physicians is reimbursed for services they provide at a negotiated rate. The HMO also contracts with hospitals for the care of the patients of the physicians who belong to the group.
Group of Companies. See Fleet of Companies.
Group Ordinary Life Insurance. Level premium ordinary life insurance issued on a group basis.
Group Permanent Insurance. (1) A form of life insurance whereby members of a group are provided one of several plans of permanent life insurance on a group basis instead of the more usual plan of term life insurance. (2) A retirement plan that combines life insurance with retirement benefits. It uses the level premium method under a group contract.
Group Property and Liability Insurance. The same as group life insurance but applied to property and liability coverages. See Group Life Insurance.
Group Renewable Term Insurance. Yearly renewable term insurance on a group basis; often called group life insurance.
Group Retirement Income Insurance. Level premium retirement income insurance issued on a group basis.
Guaranteed Cash Value. In whole life insurance, the policy’s cash value increases over the life of the policy until at the insured’s age 100 the cash value is equal to the policy’s face amount.
Guaranteed Continuable. See Guaranteed Renewable.
Guaranteed Cost. A premium charged on a prospective basis, fixed or adjustable, or on a specified rating basis, but never on the basis of loss experience. In other words, the cost is guaranteed to the extent that it will not be adjusted based on the loss experience of the insured during the period of coverage.
Guaranteed Insurability. An option in life and health insurance contracts that permits the insured to buy additional prescribed amounts of insurance at prescribed future time intervals without evidence of insurability.
Guaranteed Interest. Interest that is guaranteed to be paid on a fixed annuity investment contract. There are two types of guaranteed interest: current and minimum.
Guaranteed Period. Also known as a period certain, this means that payments of a life insurance policy to the beneficiaries will be guaranteed for a specified period of time.
Guaranteed Renewable. A contract that the insured has the right to continue in force by the timely payment of premiums for a substantial period of time as set forth in the contract. During that period of time, the insurer has no right to make any change in any provision of the contract other than a change in the premium rate for all insureds in the same class. Contrast with Non-cancelable, from which Guaranteed Renewable should be distinguished.
Guaranteed Replacement Cost. The surest way to arrange full coverage. This policy pays up to 50 percent more than the face value of the policy to rebuild a home. (A few companies offer unlimited coverage.)
Guaranteed Standard Issue (GSI). An underwriting term used to describe the fact that a group insurance contract was issued without reference to any medical underwriting. All group participants are covered regardless of health history.
Guarantor. One who guarantees or promises to back up another’s actions or debts. It is used in surety bonds, usually the surety company is the guarantor.
Guaranty Funds. Funds created by state law from contributions by insurers operating in the state which are used to make good any unpaid claims or otherwise to make money available to insolvent companies. Each state has a different plan. See Insurance Guaranty Act.
Guardian. A person appointed by the court to take care of affairs of another (e.g., a guardian to take care of the affairs of a minor or a mentally incompetent).
Guertin Laws. The valuation and nonforfeiture laws which have been standard in all states since 1947, named for Alfred Guertin, then actuary of the New Jersey Insurance Department and head of the NAIC committee which developed the model bill for these laws. See also Nonforfeiture Values.
Guest Law. Some states have legislation that restricts the rights of a guest to collect from the driver of an automobile he is riding in on the grounds of ordinary negligence. Usually such cases require proof of willful and wanton negligence on the part of the driver before the guest can collect. See also Assumption of Risk.
Guest Property Coverage. Commercial crime coverage for hotels, motels, inns and other lodging facilities to protect the property of guests against loss or damage. Includes coverage for guests’ property while it is in a safe deposit box on the insured’s premises, or for an insured’s legal liability for loss or damage to guests’ property while in the insured’s premises or in the insured’s possession.
Guideline Premium. A universal life insurance term used to describe the maximum premium that may be paid while still qualifying as life insurance under the federal Internal Revenue Code.
Guiding Principles. Rules established by major property and liability trade associations for the adjustment of losses, particularly with respect to how losses should be apportioned between insurance companies under certain circumstances.
Hail Insurance. Insurance against loss of crops caused by hail.
Hangarkeepers Legal Liability Insurance. Protection against liability for damage or injury to others arising out of the ownership, maintenance or use of the premises for an aircraft hanger.
Hazard. A specific situation that increases the probability of the occurrence of loss arising from a peril, or that influences the extent of the loss (e.g., slippery floors, unsanitary conditions, shingled roofs, congested traffic, unguarded premises, uninspected boilers, etc.).
Hazard, Legal. See Legal Hazard.
Hazard, Moral. See Moral Hazard.
Hazard, Morale. See Morale Hazard.
Hazard, Physical. See Physical Hazard.
Hazardous Avocation. A pricing factor related to occupational risk. Includes such hobbies as skin diving, scuba diving, sky diving and auto racing. Insurance companies ask insureds to inform them of any such high-risk hobbies when considering applications for disability income.
HCFA. See Health Care Financing Administration.
HCFA 1500. A form used by providers of health services to bill their fees to health carriers. It was developed by the government agency known as the Health Care Financing Administration.
Head Office. See Home Office. The term “head office” is primarily used in British insurance operations, whereas “home office” is used for American operations.
Health Benefits Package. The coverages offered by a health plan to an individual or group.
Health Care Financing Administration (HCFA). Part of the Department of Health and Human Services, responsible for administration of the Medicare and Medicaid programs. The HCFA establishes standards for medical providers which must be complied with if the provider is to meet certification requirements.
Health History. A form used by underwriters to assist in evaluating groups or individuals to determine whether they are acceptable risks.
Health Insurance. Insurance against loss by sickness or bodily injury. The generic form for those forms of insurance that provide lump sum or periodic payments in the event of loss occasioned by bodily injury, sickness or disease and medical expense. The term health insurance replaces such terms as accident insurance, sickness insurance, medical expense insurance, accidental death insurance and dismemberment insurance. The form is sometimes called accident and health, accident and sickness, accident or disability income insurance.
Health Insurance Association of America (HIAA). An association supported by life and health insurers to provide the research, public relations, education and legislative base for the promotion of voluntary private health insurance.
Health Maintenance Organization (HMO). A prepaid medical service plan that provides services to plan members. Medical providers contract with the HMO to provide medical services to plan members. Members must use contracted providers. The emphasis is on preventive medicine, and it is an alternative to employee benefit plans. Employers of more than 25 persons are required to offer the alternative of HMO to employees, but not if the cost exceeds that of present employee benefit plans.
Health Plan. Any plan that covers health care services such as HMOs, insured plans, preferred provider organizations, etc.
Health Service Agreement (HSA). An agreement between employer and the health plan that outlines a description of benefits, enrollment procedures, eligibility standards, etc.
Health Services. Benefits covered under a health contract.
Hearsay. Testimony based on what someone else has said or told a witness.
HHS. The U.S. Department of Health and Human Services, which administers the OASDHI, Medicare and Public Assistance programs.
HIAA. See Health Insurance Association of America.
High Pressure Tactics. An illegal method of marketing insurance policies (often associated with Medicare supplement policies) employing tactics that induce the purchase or recommend the purchase of coverage through force, fright, explicit or implied threat or undue pressure.
Highly Protected Risk (HPR). Property risks which meet the standards required for lower rates. Risks of this type are usually protected by sprinklers and have better-than-average construction and occupancy. It is often used in connection with the factory mutuals, factory insurance association and improved risk mutuals.
HIQA. Health Insurance Quality Award. An award granted annually by the International Association of Health Underwriters or the National Association of Life Underwriters for high persistency of health insurance policies written by agents. See also Persistency.
Hired Automobile. Autos the insured leases, hires, rents or borrows, but not autos owned by employees or members of their households.
HIV. See Human Immunodeficiency Virus.
HMO. See Health Maintenance Organization.
HO-1 The Basic Homeowners Form. Covers the dwelling, other structures on premises and personal property against 11 named perils—mostly having to do with fire and water damage.
HO-2 The Broad Homeowners Form. Insures the dwelling, other structures and personal property against loss by all basic form perils plus six additional perils.
HO-3 The Special Homeowners Form. Insures personal property against loss by the same broad form perils included on HO-2 and insures the dwelling and other structures against “risk of direct physical loss” except to the extent that exclusions and limitations apply. HO-3 has a number of exclusions. Also called the all-risk form.
HO-4 Tenant Broad Form. This policy and HO-6 both insure personal property against all of the perils found on the broad form. Also called the renters form.
HO-6 Condo Unit Owner Form. Provides coverage for stated perils and also applies to the limited dwelling coverage for alterations and other owned building items.
HO-8 Modified Homeowners Form. Special coverage for older homes.
Hold Harmless Agreement. A contractual arrangement whereby one party assumes the liability inherent in a situation, thereby relieving the other party of responsibility. Typically found in contracts like leases, sidetrack agreements and easements (e.g., a typical lease may provide that the lessee must “hold harmless” the lessor for any liability from accidents arising out of the premises). The effect: the lessee must provide a defense for the lessor, and if any judgment is rendered against the lessor, the lessee would have to pay.
Hold-Up. A form of robbery. See Robbery.
Holographic Will. A valid will that is completely handwritten and signed by the testator.
Home Health Agency. A certified facility approved by a health plan to provide services under contract.
Home Health Care. Care received at home as part-time skilled nursing care, speech therapy, physical or occupational therapy, part-time services of home health aides or help from homemakers or choreworkers.
Home Health Services. Health care services provided by a licensed home health agency in the patient’s home. It is a covered expense under Part A of Medicare.
Home Office. Generally the corporate headquarters of insurers and the location where the chief officers of the organization are housed.
Home Office Life Underwriters Association. An organization offering a course of study for home office life underwriters.
Home Service Insurance. A variation in the industrial life concept, home service life insurance policies are usually modest in size, ranging from $10,000 to $15,000 in face value, and are typically sold on a monthly debit plan (automatic bank draft) or payments by mail.
Homeowners Insurance Policy. A property and liability insurance contract that provides insurance against any of the property and liability perils to which a homeowner or renter is exposed. It covers the average residential and personal exposures that most individuals and families encounter.
Honesty Clause. See Full Reporting Clause.
Honorable Undertaking. Reinsurance contracts state that: “This agreement is considered by the parties hereto as an honorable undertaking, the purpose of which is not to be defeated by a strict or narrow interaction of the language thereof.”
Hospice. An organization that provides pain relief, symptom management and supportive services for the terminally ill and their families. Hospice care is covered under Part A of Medicare.
Hospice Care. An optional benefit available under LTC insurance.
Hospital Affiliation. A contract whereby one or more hospitals agrees to provide benefits to members of a specific health plan.
Hospital Alliances. A group of hospitals that work together to share common services and reduce health costs. By grouping together, they are better able to compete with other alliances or chains.
Hospital Benefits. Benefits payable for hospital room and board, plus miscellaneous charges resulting from hospitalization.
Hospital Confinement Rider. An optional disability income rider that waives the elimination period when an insured is hospitalized as an inpatient.
Hospital Expense Insurance. See Hospitalization Insurance.
Hospital Income Insurance. Insurance that provides a stated weekly or monthly payment while the insured is hospitalized, regardless of expenses incurred and regardless of whether or not other insurance is in force. The insured can use the weekly or monthly benefit as he chooses, for hospital or other expenses.
Hospital Indemnity. Coverage that pays based on daily, weekly or monthly limits regardless of the amount of actual hospital expenses.
Hospital Insurance. Also identified as Part A of Medicare, this provides inpatient hospital care, skilled nursing care home health and hospice care subject to a benefit period deductible and co-payments for certain services.
Hospital Tax. A Social Security tax of 1.45 percent on an unlimited amount of income, paid by both the employee and employer to prepay for Part A of Medicare.
Hospitalization Expense Policy. A policy that covers daily hospital room and board charges and also covers miscellaneous hospital expenses (such as x-ray, etc.). It often covers emergency treatment charges or includes a surgical benefit.
Hospitalization Insurance. Insurance that provides reimbursement within contractual limits for hospital and specific related expenses arising from hospitalization caused by injury or sickness.
Host Liability. Liability for the damages a guest caused after an insured allowed him to consume alcohol—and engage in various other activities—and then leave. Some states have laws that mandate a host’s liability, much like a restaurateur’s or a bartender’s liability. In at least 21 states, statutory liability extends to noncommercial servers. In 10 other states, similar liability has been established by common law.
Hostile Fire. See Fire.
House Confinement. A provision in some health insurance contracts that requires an insured to be confined to the house in order to be eligible for benefits. This provision is most commonly found in policies providing loss of income benefits.
Household Personal Property. Household goods, furniture and personal belongings of residents of a farm dwelling. The Farm Property Coverage Form uses the term “household” to distinguish it from the separate coverage for “farm” property. Contrast with Farm Personal Property.
Housekeeping. The general care, cleanliness and maintenance of an insured’s property. It is an important underwriting consideration in many forms of insurance, such as workers’ compensation and property.
HPR. See Highly Protected Risk.
HR-10 Plan. See Keogh Act Plan.
HR-10. A qualified retirement plan for the self-employed. Also known as a Keogh Plan.
HUD. United States Department of Housing and Urban Development.
Hull Policy. A contract that provides indemnification for damage sustained to or loss of an insured vessel or airplane.
Hull Syndicates. A group of companies that agree to share or prorate insurance on oceangoing vessels or aircraft. Coverage on the ship or plane itself is called hull insurance.
Human Immunodeficiency Virus. The virus, known as HIV, which causes acquired immunodeficiency syndrome, an infectious and incurable disease commonly referred to as AIDS.
Human Life Value. A method of determining life insurance needs by considering a person’s income, expenses, remaining years of earning capacity and depreciation in the value of the dollar over time.