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MAJOR MEDICAL

Coverage for serious or expensive medical cost or hospitalization.

MAJOR MEDICAL INSURANCE

That form of medical insurance designed to supplement a basic medical expense plan in the event of extra-ordinary medical expenses which the average person cannot pay without great hardship. There is usually a deductible or coinsurance or both involved.

MALPRACTICE

Professional misconduct or lack of ordinary skill in the performance of a professional act. Coverage for malpractice liability is excluded by most public liability policies; this is a specialized form of insurance.

MANUAL RATES

Usually the cost of a unit of insurance or bond protection of the various kinds of insurance and bonds as published in the pertinent manuals, but may also refer to rates developed by the application of a recognized rating plan.

MANUFACTURERS' AND CONTRACTORS'

Method of classification of comprehensive Liability policies where the exposure is most accurately measured by the payroll of the business rather than the area occupied, such as carpenters, plumbers, etc.

MARINE INSURANCE

A form of insurance which is primarily concerned with the protection of goods in transit and the means of transportation. Originally written to cover ships and their cargos at sea, it was gradually extended to cover inland from the place of departure to the place of consignment. A recent development of marine insurance is inland marine.

MARINE OCEAN

Insurance to cover property in process of transportation on shipboard. Differs from most insurance in that it is all risk and based on intent even though not specifically insured against.

MASTER POLICY

Sometimes called "master contract". Issued to the employer under a group insurance plan, and containing all the insuring clauses which define employee benefits. Individual employees participating in the group plan receive individual "certificates", which seldom repeat all the insuring clauses contained in the master policy. Can also refer to the primary, or reference policy number with which all other policies in the household are cross-referenced.

MATERIAL DAMAGE INSURANCE

See Property Insurance.

MATERIAL FACT

Any circumstances which might affect the probability of loss and hence might influence the underwriter in the acceptance or rejection of the risk.

NATURE POLICIES

Refers to CGL policies that have existed as "claims -made" policies for more than four years.

MATURITY

The date at which a security, like a bond, is redeemed at face value by the issuer.

MATURITY VALUE

The proceeds payable on an Endowment contract at the end of the specified endowment period, or payable on an Ordinary Life Contract at the last age of the mortality table if the insured is still living at that age. The maturity value of a policy is the same as the face amount of the policy and is equal to the reserve value of the contract on its maturity date. The actual amount payable by the company may, of course, be increased by dividend additions or accumulated dividend deposits, or decreased by outstanding loans.

MAXIMUM VALUE POLICY

See Stated Value Policy.

MEDICAL EXAMINATIONS

Usually conducted by a licensed physician, the medical examination is part of the application. Thus it becomes part of the policy contract, and is attached thereto. The so-called "non-medical" in reality is a short-form medical report, and is filled out by the agent. Various company rules, such as amount of insurance applied for or already in force, age of applicant, sex, past physical history, data revealed by inspection report, etc., determine whether the examination shall be "medical" or "non-medical."

MEDICAL PAYMENTS

Payments made to, or on behalf of, the insured for the incurred cost of medical, surgical, hospital, ambulance or professional nursing services necessitated by personal injury. In automobile insurance, medical payments include the reasonable costs of a funeral in case of death.

MEMBERSHIP FEE

A flat sum (one time fee) charged in addition to the premium to cover the acquisition cost of the policy. Membership fees are not permitted in all states.

MERCHANDISE

Comprises property and articles usually handled in the insured business.

MERIT RATING

A system for measuring the difference of an individual risk by some standard in order to reflect the difference in the rate.

MESSENGER

Means the same as custodian, and any other person in the regular employ of the insured and duly authorized to have the care and custody of the insured property while being conveyed outside the premises.

MINIMUM PREMIUM

The smallest amount for which an insurance company will write a particular policy. It is intended to cover the expense of issuing a policy, for which a lesser amount of premium might prove inadequate.

MINIMUM PREMIUM [LIFE] (Uniflex)

The minimum amount of premium dollars that must be paid in the first policy year.

MINI-TAIL

Refers to the provision that automatically extends the reporting period of an expiring CGL "claims - made" policy to 60 days for claims not covered by renewal or replacement policies.

MINOR

Usually, any person under eighteen or twenty-one years of age, though there are many variations for different persons among jurisdictions.

MISDELIVERY

A term sometimes used to describe a form of product liability insurance which is especially designed for wholesale and retail distributors of gasoline, kerosene, fuel oil, grease, lubricating oil and automobile accessories. In addition to providing the customary coverage for liability arising out of the possession, consumption, handling or use away from the insured's premises of products sold or handled. It also covers liability arising out of mistakes made in delivering the product.

MISREPRESENTATION

A false statement as to a past or present material fact, made in an application for insurance, and that induces an insurer to issue a policy it would not otherwise have issued. Also, an agent who misrepresents a policy's terms, dividends, etc., may be guilty of a misdemeanor, and is subject to such penalty as may be prescribed by state law.

MISSTATEMENT OF AGE PROVISION

If the age of the insured is misstated in an application for life insurance, the benefit payable usually is adjusted to what the premiums paid should have purchased.

MIXED COMPANY

A company having capital stock but providing in its charter that the policy owners shall share in the control of the company and in the distribution of surplus, according to some definite arrangements. Most mixed companies issue both participating and nonparticipating policies.

MODIFIED LIFE

Ordinary insurance with a premium during the first few years, usually five, that is only slightly larger than the rate for term insurance. The premium is larger for the remainder of life than the premium for Ordinary Life would be at the original age of issue but less than the rate at the attained age at the time of change.

MONEY

Bank notes (signed or unsigned), bullion, coin, currency, uncancelled and precanceled postage stamps in current use, and United States Savings Stamps not attached to registered certificates.

MONOLINE POLICY

A policy containing a single coverage part plus the common policy conditions and common declarations.

MONTHLY DEBIT ORDINARY

Ordinary Life Insurance sold on a monthly premium basis with premiums collected by the agent.

MONTHLY DEDUCTION [LIFE] (Universal Life and Uniflex)

The amount deducted from the Accumulation Account each month to pay for the insurance coverage. This includes the monthly risk charge and any monthly administration charge for servicing the policy.

MONTHLY INCOME CONTRACT

A combination of permanent life insurance and a Decreasing Term insurance rider designed to pay the face amount of the contract at the date of death and a specified monthly income until a specified date, usually 10, 15, or 20 years from the date of issue of the contract.

MORAL HAZARD

The effect of personal reputation, character, associates,. personal living habits, financial responsibility, and environment upon an individual's general insurability.

MORBIDITY TABLE

A statistical table showing data relating to the incidence of sickness.

MORTGAGE

Deed conveying property to a creditor as security. The borrower is the mortgagor and the lender the mortgagee.

MORTGAGE INSURANCE

One of the basic uses for life insurance. So-called because many family heads leave insurance for the specific purpose of paying off any mortgage balance outstanding at their death. Many companies have designed special policies for this purpose. Insurance is generally made payable to a family beneficiary instead of to the mortgagee.

MORTGAGEE CLAUSE

A provision attached to a property insurance policy. It states that loss shall be payable to the mortgagee as interest may appear, and that the mortgagee's right to recover shall not be affected by any act or omission of the insured.

MORTALITY SAVINGS

The difference between the actual mortality losses and the amount expected according to the mortality tables in use.

MORTALITY TABLE

"The instrument by means of which are measured the probabilities of life and death". It can be likened to the march of an imaginary generation through time.

MOTORCYCLE

A two-wheeled land motor vehicle licensed for use on public roads.

MULTI LINE POLICY

A policy containing two or more coverage parts plus the common policy conditions and common declarations.

MULTIPLE LOCATION PREMIUM AND DISPERSION PLAN

A means of providing a volume discount to the Fire and Extended Coverage rating. Considerations are applied in three ways:

1. The volume of premium developed is in excess of $2,500.

2. The dispersion of exposure by two or more locations; and

3. The past experience developed by the overall risk covering past five years.

MULTIPLIER

A factor applied to the base rate to adjust the premium for increased or decreased exposure, e.g., a territorial multiplier of Commercial Auto rating factor. This is not an additive as is the Comprehensive Liability limit factor; therefore, as an example, if the multiplier is .894 the base rate is simply multiplied by .894.

MUTAL BENEFIT ASSOCIATIONS

Companies operating on the cooperative or assessment plan to pay individual losses.

MUTUAL FUNDS

These are mutually owned funds invested in diversified securities. Shareholders are issued certificates as evidence of their ownership and participate proportionately in the earnings of the fund.

MUTUAL INSURANCE COMPANY

A corporation owned, operated and controlled by its policyholders. It is organized under the subject to the general corporation and insurance laws of the state in which it is incorporated. The corporation assumes the defined insurable hazards of its member-policyholders charging them a premium and returning to them, at stated intervals, the savings which are affected by the careful management of the company. There is no capital stock and there are no stockholders. A board of directors is elected by the policyholders. The directors elect officers to manage the corporation.

MUTUAL LIFE INSURANCE COMPANY

One which has no capital stock, is owned by the policy owners, is managed by a board of directors chosen by the policy owners, and usually issues participating insurance only.

NAMED INSURED

A policyholder, the person to whom the policy is issued; any person or corporation, or any member thereof, specifically mentioned as insured in a policy, as distinguished from others, who, though unnamed, are protected under certain circumstances. The most common application of this principle is in connection with the "omnibus clause" in automobile liability policies.

NAMED PERILS

Named peril property coverage specifies perils insured against, as compared to "all risk" coverage which specifies perils not covered.

NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS (NAIC)

A national organization of insurance officials who meet regionally and nationally to discuss matters of common interest.

NATIONAL ASSOCIATION OF LIFE UNDERWRITERS (NALU)

A national organization for agents, having state and local associations throughout the country. Executive headquarters are in Washington, D.C.

NATIONAL SERVICE LIFE INSURANCE (NSLI)

Insurance created by Act of Congress in 1940 for provision of policies for individuals on active service with naval and military forces. Persons entering the military service after December 31, 1956, cannot now purchase this insurance. However, persons discharged with a service-connected disability may purchase it with a certain time limit.

NATURAL PREMIUM; NET NATURAL PREMIUM

The premium which is sufficient to pay for a given amount of insurance from one premium date to the next. A policy issued on this basis is called a Yearly Renewable Term policy, and the net natural premium rate for it is called a yearly renewable term rate. The premium advances each year with the age of the insured. The yearly renewable term plan is impracticable since at the older ages few persons can afford or are willing to pay the necessary premiums.

NEGLIGENCE

Failure to use that degree of care which an ordinary person of reasonable prudence would use or not use under the circumstances. Negligence may arise out of acts of omission or commission. Negligence may be contributory, imputed or comparative, depending on circumstances. The basis for liability insurance.

MET ASSETS

The total property of a person after deducting all liabilities.

NET COST

This term ordinarily refers to the cost of insurance in a mutual company after deducting the policy dividends from the premiums deposited. Since there are no dividends on non-participating policies, the net cost of such policies is equal to the total premiums paid. In determining the net cost of a policy over a period of years, allowance should also be made for the cash surrender value at the end of the given period.

NET LOSS EXPENSE

The aggregate expenses, with deductions for all credits including reinsurance, of investigating and adjusting claims.

NET LOSSES

The aggregate of loss payments less all deductions for all credits including deductions for re-insurance recoveries during a given period.

NET PREMIUMS

The premiums calculated on the basis of a given mortality table and a given rate of interest, without any allowance for loading.

NET RATE

A final rate after all discounts have been allowed.

NET RETENTION

The amount of risk carried by the original insurer on any line, the balance being reinsured.

NEW BUSINESS

Policies written in response to applications for insurance as distinguished from renewal and cancellation rewrite policies.

NEW WRITINGS

See Premiums, Net.

NEXT OF KIN

The nearest blood relative of a person. This term does not include a spouse.

NINETY DAY ITEMS

Uncollected premiums over 90 days old and considered non-admitted assets.

NO PAYROLL DIVISION (N.P.D.)

Payroll may not be divided into individual categories for rating purposes.

N.O.C.

See Not Otherwise Classified.

NON-ADMITTED ASSETS

Assets that the insurer carries on its books, but that must be deducted from gross assets to determine its financial condition in reporting to a state insurance department. Also, adjustments to book value of an asset to bring it into agreement with statutory value.

NON-ASSESSABLE POLICY

An insurance contract under the terms of which the insured cannot be called upon for any contribution (assessment) in addition to the premium stated or provided for in the policy.

NON-CANCELABLE POLICY

In health insurance a policy on which the insurer may not refuse to renew the contract nor can the premium be increased.

NON-CONCURRENCY

The situation which exists when a number of fire or other policies covering the same property are not identical as to the forms of coverage afforded. When this situation exists, the adjustment of losses becomes extremely difficult and usually unsatisfactory.

NON-CONTRIBUTORY PLAN

A group insurance plan in which the entire premium is paid by the employer.

NON-FORFEITURE OPTIONS

This term refers to privileges allowed under terms of the contract after cash values have been created. Four privileges exist: (1) surrender for full cash value; (2) loans up to full amount of cash value; (3) paid-up policy for an amount of insurance which cash value, as a single premium, will buy at net rates; (4) Term insurance for full face amount of original policy or as long a period as cash value will last to pay necessary premiums.

NON-MEDICAL INSURANCE

Life insurance issued on a regular basis without requiring the applicant to submit to a regular medical examination. In passing on the risk, the company relies on the applicant's own answers to questions regarding his/her physical condition and on personal references or inspection reports.

NON-MEDICAL LIMITS

Policy face amount limits for which a company will issue policies on a regular basis without requiring the applicant to submit to a medical examination.

NON-OWNERSHIP LIABILITY

This protects the policyholder against claims for bodily injury or property damage liability arising out of the use of automobiles not owned by but used by his/her employees (or other people) in the course of his business.

NON-PARTICIPATING POLICY

One under which the insured is not entitled to dividends or other refunds.

NON-VALUE POLICY

A property insurance policy which does not guarantee to pay any specified sum in case of loss, but only the actual cash value at the time of loss. The policy may provide for a maximum dollar amount of coverage.

NOT OTHERWISE CLASSIFIED (NOC)

Classification to be used on risks that are not more specifically described.

NOT WRITTEN (N.W.)

Do not submit applications or requests for coverage on any risk listed as "not written".

NOTARY PUBLIC

An official authorized to attest deeds, signatures, etc.

NOTE

See Promissory Note.

N.P.D.

No Payroll Division. Payroll may not be divided into individual categories for rating purposes.

N.X.

No exposure.

OMNIBUS CLAUSE

A now obsolete clause in standard automobile insurance contracts extending coverage to certain others in addition to the named insured under certain expressed conditions. The present-day term is "definition of insured" clause.

OPEN POLICY

One in which the value of the subject matter is not agreed upon, but is left to be ascertained in case of loss.

OPTIONAL MODES OF SETTLEMENTS

See Settlement Options.

ORDINARY CARE

That degree of care which an ordinary person of reasonable prudence would use under the circumstances.

ORDINARY LIFE INSURANCE

Life insurance of the commercial companies not issued on the weekly premium basis. Under ordinary insurance the premiums are not collected weekly and the amount of protection is usually $1,000 or more.

OTC

See Other Than Collision.

OTHER INSURANCE CLAUSE

A provision found in most policies stating how a loss will be handled in the event there is other insurance covering the same loss.

OTHER THAN COLLISION (OTC)

Sudden and accidental damage to the vehicle Other Than Collision. Formerly referred to as Comprehensive in some States.

OUTBOARD BOAT

The source of power, the motor is completely separate from the boat.

OVERHEAD

The cost of doing business, exclusive of sales cost.

OWNERS¼, LANDLORDS' AND TENANTS' LIABILITY (OL&T)

Method of classification of Comprehensive Liability policies where the exposure is best measured by units of area, such as stores and offices.

OWNERSHIP

The legal title to property. Possession is not essential to ownership.