Glossary of Insurance Terms

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Impaired property - A liability exclusion relating to the insured’s faulty products or work that results in an "impairment" to the property to which it is attached assuming the insured can salvage the situation by replacing the property or redoing the work.

Improvements and betterments - Anything that adds to the value of property. Commonly used to describe a tenant’s use interest in fixtures added to the landlord’s building. May also refer to permanent changes made by a condominium unit-owner to his/her unit, such as the addition of new kitchen cabinets.

Increased cost of construction - A damaged building may have to be upgraded to be repaired under building codes in force at the time of reconstruction. Building owners in such situations need guidance in buying insurance to cover this added exposure.

Incurred losses - The value of claim payments plus reserves.

Indemnity - A fundamental concept governing insurance: compensation for loss or injury sustained.

Independent adjuster - An individual or member of a firm who contracts with insurers to investigate claims and suggest appropriate settlements. Contrast with Public adjuster.

Independent agent - A "retailer" of insurance who, by contractual arrangement with a number of insurance companies, sells and services property and liability insurance. The independent agent "owns" the policy information and expiration dates of his client’s coverage and thus controls renewals and their placement.

Independent Insurance Agents of America (IIAA) - An association of insurance agents who are independent contractors, and represent one or more insurers. Sometimes referred to as the "Big I."

Indirect damage - Sometimes referred to as indirect loss, this is loss resulting from a peril, but not directly caused by that peril. An example is fire damaging a freezer (direct damage), with resultant food spoilage (indirect damage).

Inflation guard endorsement - An endorsement attached to an insurance policy whereby the limits of liability on a piece of property are increased on a regular basis by a certain percentage in order to offset increasing building costs associated with inflation.

Inherent vice - A flaw in an item of property that will, in time, reveal itself and show the property as damaged. Property insurance does not normally cover such damage.

Inland marine insurance - Property insurance signaling broad coverage of properties exposed to the transportation peril and those subject to being used or kept at a location other than the insured’s customary premises. Eligible property is identified in the Nationwide Definition of Marine Insurance.

Innkeepers legal liability - A bailee coverage purchased by innkeepers to cover the property of their guests.

Insolvency fund - See Guarantee funds.

Inspection Report - A report prepared for an insurer by an outside organization. It provides information about an applicant’s or insured’s physical, financial, and moral attributes.

Insurable interest - The potential for financial loss associated with damage or destruction of property.

Insurable risk - The exposure to significant, measurable accidental loss from identifiable perils. The exposure, while not catastrophic, must be shared by a sufficient number of potential insureds so that the cost of loss for one can be measured and affordably shared throughout the market.

Insurance - A mechanism whereby risk of financial loss is transferred from an individual, company, organization, or other entity to an insurance company.

Insurance contract - A legal document defining circumstances under which the insurer will pay, and the amount to be paid. Also see Insurance policy.

Insurance exchange - See Reciprocal exchange.

Insurance Institute for Highway Safety - A not-for-profit research organization, well known for its auto "crash tests."

Insurance policy - The document containing the contract between the insured and the insurer which defines the rights and duties of the contracting parties.

Insurance Services Office (ISO) - An organization providing statistical information, actuarial analyses, policy language, and related services for the insurance industry.

Insurance to value - The concept of purchasing sufficient insurance coverage so as to closely approximate the value of the property being insured.

Insured - The party or parties whose interests are covered in a nonlife insurance contract. The less common term Assured is sometimes used synonymously.

Insuring agreement - In an insurance contract, the insurer’s promise to pay.

Integrated risk financing - A type of risk financing designed to provide integrated protection against catastrophic losses. It may incorporate both traditional and non-traditional types of exposures, or it may include only traditional property and casualty risks.

Interline endorsements - Commercial endorsements that apply, or could apply, to more than one coverage as part of a package policy.