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B-SHARE VARIABLE ANNUITY
A form of variable annuity contract with no initial sales charge but if the contract is cancelled the holder pays
deferred sales charges (usually from 5 to 7 percent the first year, declining to zero after from 5 to 7 years). The most
common form of annuity contract.

BALANCE SHEET
Provides a snapshot of a company’s financial condition at one point in time. It shows assets, including investments
and reinsurance, and liabilities, such as loss reserves to pay claims in the future, as of a certain date. It also states a
company’s equity, known as policyholder surplus. Changes in that surplus are one indicator of an insurer’s financial
standing.

BANK HOLDING COMPANY
A company that owns or controls one or more banks. The Federal Reserve has responsibility for regulating and
supervising bank holding company activities, such as approving acquisitions and mergers and inspecting the
operations of such companies. This authority applies even though a bank owned by a holding company may be
under the primary supervision of the Comptroller of the Currency or the FDIC.

BASIS POINT
0.01 percent of the yield of a mortgage, bond or note. The smallest measure used.

BEACH AND WINDSTORM PLANS
State-sponsored insurance pools that sell property coverage for the peril of windstorm to people unable to buy it in
the voluntary market because of their high exposure to risk. Seven states (AL, FL, LA, MS, NC, SC, TX) offer these
plans to cover residential and commercial properties against hurricanes and other windstorms. Georgia and New
York provide this kind of coverage for windstorm and hail in certain coastal communities through other property
pools. Insurance companies that sell property insurance in the state are required to participate in these plans.
Insurers share in profits and losses

BINDER
Temporary authorization of coverage issued prior to the actual insurance policy.

BLANKET INSURANCE
Coverage for more than one type of property at one location or one type of property at more than one location.
Example: chain stores.

BODILY INJURY LIABILITY COVERAGE
Portion of an auto insurance policy that covers injuries the policyholder causes to someone else.

BOILER AND MACHINERY INSURANCE
Often called Equipment Breakdown, or Systems Breakdown insurance. Commercial insurance that covers damage
caused by the malfunction or breakdown of boilers, and a vast array of other equipment including air conditioners,
heating, electrical, telephone, and computer systems.

BOND
A security that obligates the issuer to pay interest at specified intervals and to repay the principal amount of the
loan at maturity. In insurance, a form of suretyship. Bonds of various types guarantee a payment or a reimbursement
for financial losses resulting from dishonesty, failure to perform and other acts.

BOND RATING
An evaluation of a bond’s financial strength, conducted by such major ratings agencies as Standard & Poor’s and
Moody’s Investors Service.

BOOK OF BUSINESS
Total amount of insurance on an insurer's books at a particular point in time.

BROKER
An intermediary between a customer and an insurance company. Brokers typically search the market for coverage
appropriate to their clients. They work on commission and usually sell commercial, not personal, insurance. In life
insurance, agents must be licensed as securities brokers/dealers to sell variable annuities, which are similar to
stock market-based investments.

BURGLARY AND THEFT INSURANCE
Insurance for the loss of property due to burglary, robbery or larceny. It is provided in a standard homeowners
policy and in a business multiple peril policy.

BUSINESS INCOME INSURANCE (also known as BUSINESS INTERRUPTION INSURANCE)
Commercial coverage that reimburses a business owner for lost profits and continuing fixed expenses during the
time that a business must stay closed while the premises are being restored because of physical damage from a
covered peril, such as a fire. Business interruption insurance also may cover financial losses that may occur if civil
authorities limit access to an area after a disaster and their actions prevent customers from reaching the business
premises. Depending on the policy, civil authorities coverage may start after a waiting period and last for two or
more weeks.

BUSINESS OWNERS POLICY / BOP
A policy that combines property, liability and business interruption coverages for small- to medium-sized
businesses. Coverage is generally cheaper than if purchased through separate insurance policies
INSURANCE GLOSSARY
OF INSURANCE TERMS
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