Insurance Glossary: N-O

Question: What is a Named Insured?

Answer: A named insured is a person or entity designated in the policy as the insured. Others may have an insurable interest, but are not shown by name.

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Question: What is a Named Perils Policy?

Answer: A named perils policy specifies the exact causes of loss for which the insurer will pay if damages occur. This contract normally falls short of the coverage provided by an “all-risks” policy which insures against everything except what is excluded. Insurance companies have gone away from using the term “all-risk” in favor of other terms.

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Question: What is National Association of Insurance Commissioners (NAIC)?

Answer: The National Association of Insurance Commissioners (NAIC) is a voluntary organization that conducts insurance research. The results often lead to law and regulation recommendations at the state level. The members are insurance commissioners, superintendents, and directors.

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Question: What are Natural Perils?

Answer: There are three broad categories of perils commonly covered by insurance. There are human perils and economic perils, which might be combined. The natural perils include: rain, hurricane, wind, earthquake or flood and many others.

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Question: What is a Natural Premium?

Answer: A natural premium is calculated using the mortality table, it is the estimate of a year’s worth of life insurance for a certain aged person for every $1,000 worth of insurance.

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Question: What is Negligence?

Answer: The term “negligence” is a basis for determining whether a person is legally liable for her failure to exercise the care that an ordinary prudent person would exercise. It can result from either doing something which a prudent person would not do . . . or failing to do something which a prudent person would do.

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Question: What is Net Cash Value?

Answer: Net cash value is the amount paid to the beneficiary upon the insured’s death or paid to the insured after terminating the policy. It is the cash value plus dividends, but minus any outstanding loans.

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Question: What is No-Fault Automobile Insurance?

Answer: Laws for no-fault automobile insurance is meant to streamline the compensation of victims of automobile accidents by payment of smaller amounts through and by their own insurance carriers. These payments are made regardless of fault and without the necessity of proving negligence on anyone’s part. In theory these laws have great application. In practice many in the insurance industry believe no-fault has created fertile ground for improper claims activity. Those on both sides of the argument are adamant their system is the best.

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Question: What is a Non-admitted Insurance Company?

Answer: A non-admitted insurance company is one that isn’t licensed to operate in a certain state or country. These companies usually work through excess and surplus lines brokers to place unique or distressed risks. Companies can be admitted (licensed) in some states and non-admitted in others.

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Question: What is a Non-Assessable Policy?

Answer: In order for mutual insurance companies to provide increased security for their policyholders they sometimes have assessable policies, meaning the policyholders could be asked to help pay for losses should a catastrophe deplete the company’s assets. A non-assessable policy is more common in the United States and it is rare that this feature has been called into play on those policies that are.

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Question: What is a Non-Resident Agent?

Answer: Insurance agents must hold a valid license in each state where they write business for each line of business they choose to sell. A non-resident agent lives in one state but writes business in another and must obtain a special license. The non-resident license assumes a valid license is held in the agent’s resident state.

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Question: What is Non-Standard Insurance?

Answer: Insurance companies use the law of large numbers and the commingling of risk within homogeneous exposure units to create predictable loss situations. Sometimes risk characteristics are such that it becomes hard to find enough similar risks to create a large pool. These risks are charged a premium that reflects the increased uncertainty in a non-standard insurance policy. Risks that are considered non-standard fall into three general classes. Unique – like insuring Barbara Streisand’s nose. Unusual – like an indemnification policy for a hole-in-one policy. High Value – like a $1,000,000,000,000 limit of liability for a nuclear reactor or hull coverage for a cruise ship.

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Non-Valued Policy

In insurance, a non-valued policy is one that does not state the amount to be paid. Most property policies, such as homeowners policies are non-valued-a maximum amount available is shown but the amount of any one claim or loss is not (unless a total ensues, when in many states the policy becomes “valued”).

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Question: What is a Non-Valued Policy?

Answer: In insurance, a non-valued policy is one that does not state the amount to be paid. Most property policies, such as homeowners policies are non-valued-a maximum amount available is shown but the amount of any one claim or loss is not (unless a total ensues, when in many states the policy becomes “valued”).

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Question: What is a Non-Waiver Agreement?

Answer: If the insurance company is uncertain whether or not coverage exists under the policy’s terms they will ask the insured to sign a non-waiver agreement that states the insured stipulates that the continuance of a loss adjustment process by the insurer shall not be construed as an admission of liability by the insurer. This is a fairly common occurrence with liability policies because many times only a court can determine liability.

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Question: What is a Noncancelable Policy?

Answer: In a noncancelable policy, it is a stipulation in disability and health insurance plans in which the premium cannot be increased during the policy term or until the insured reaches a certain age.

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Question: What is a Noncontributory Plan?

Answer: A noncontributory plan is a pension plan in which the employer is the only one making contributions.

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Question: What is Nonfleet Automatic?

Answer: Nonfleet automatic is commercial automobile provision for newly purchased vehicles. The insurer provides like coverage “automatically” to similar autos already on the policy, as long as the vehicles are reported to the insurer within a specified period of time.

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Question: What is Nonforfeiture Value?

Answer: Nonforfeiture value is a benefit that has accrued in a whole life insurance policy. It is the cash surrender value and is paid to the insured when the policy lapses from nonpayment of premiums or terminated for other reasons.

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Question: What is a Nonmedical Application?

Answer: In a health or life insurance policy, a nonmedical application does not require the applicant to take a medical exam. Health-related questions are usually part of the application, however.

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Question: What is Nonowned Automobile Liability Insurance?

Answer: Nonowned automobile liability insurance is standard coverage for the policyholder against liability losses that happen while driving an automobile that is neither owned or hired by the policyholder.

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Question: What is Nonrenewal?

Answer: If an insurance company wishes to end coverage on certain policies at the expiration date rather than offering a “renewal” they must comply with state laws for nonrenewal which include a specific time period and often a statement of reasons.

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Question: What is a Notice of Loss?

Answer: A notice of loss is normally an extensive form submitted by an insured to the insurer regarding the occurrence of a loss. Or, it could be as simple as a phone call to an 800 number. It must be made within a specified amount of time after a loss occurs, in a format that is acceptable to the company and must include specific information.

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Question: What is a Notice of Occurrence?

Answer: A notice of occurrence is normally an extensive form submitted by an insured to the insurer regarding an occurrence that might result in a loss. Or, it could be as simple as a phone call to an 800 number. It must be made within a specified amount of time after a loss occurs, in a format that is acceptable to the company and must include specific information.

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Question: What is Nuisance Value?

Answer: An insurance company may pay a small amount, a nuisance value, to a claimant even though it is doubtful that the courts would assign liability to the insured if the amount to defend and process the claim would exceed the amount needed to settle at that point.

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Question: What is a Nursing Home Professional Liability Policy?

Answer: A nursing home professional liability policy protects a nursing home against claims for injury resulting from negligence.

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Question: What is Nursing Liability?

Answer: Nursing liability is a professional liability insurance policy that protects individuals against being held legally liable for loss or damage that arises out of the insured’s nursing duties.

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Question: What is an Obligee?

Answer: An obligee is a person protected from loss by a surety bond.

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Question: What is an Obligor?

Answer: An obligor is one bound by a surety bond to make a payment or other action to another.

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Question: What is an Occasional Driver?

Answer: An Occasional Driver is someone under 21 who lives in the household and drives a particular car less than twenty-five percent of the time or puts on less than twenty-five percent of the mileage. This definition varies between companies and policies. Other drivers who do not fit the definition of Occasional Driver are known as Principle Drivers.

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Question: What is Occupancy?

Answer: Occupancy is how a building is used.

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Question: What is an Occupational Accident or Disease?

Answer: Occupational accident or disease is an impairment of health due to continuous exposure to hazards inherent in a person’s occupation.

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Question: What is an Occupational Hazard?

Answer: An occupational hazard is a risk accepted as a hazard due to a person’s occupation.

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Question: What is an Occurrence?

Answer: An occurrence is defined in the policy but is normally an unfortuitous event that results in a bodily injury or property loss compensable under the policy terms.

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Question: What is an Occurrence Policy?

Answer: An occurrence policy uses the time of an event as the trigger to start coverage.

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Question: What is Off-Premises Clause?

Answer: An off-premises clause in an insurance policy can be written to provide coverage for property that is stored at locations other than those listed in the policy.

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Question: What is Officers and Directors Liability Insurance?

Answer: Officers and directors liability insurance covers officers and directors of a corporation for damages arising from negligent or wrongful acts in the course of their duties. Also covers expenses incurred in defending lawsuits arising from alleged wrongful acts of officers or directors.

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Question: What is Open Enrollment?

Answer: An open enrollment is the period of time in which subscribers may enroll in a health insurance plan.

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Question: What is Option B- Universal Life?

Answer: Option B- universal life is when the death benefit is combined with the cash value to create an increasing death benefit. Both are paid upon the death of the insured.

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Question: What is Option A- Universal Life?

Answer: Option A- universal life is when the death benefit remains level, while the cash value increases throughout the term of the policy. The death benefit is paid upon the death of the insured.

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Question: What are Optional Life Insurance Settlement Modes?

Answer: In life insurance, optional life insurance settlement modes are different ways that the insured or beneficiary can receive payment of benefits.

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Question: What is an Optionally Renewable Contract?

Answer: In group health insurance, an optionally renewable contract allows the insurer to decide whether or not to renew the policy at the end of the term.

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Question: What is Ordinance or Law Coverage?

Answer: An ordinance or law coverage provides for the cost to demolish the undamaged portion of the building, the cost to replace with enhanced construction as required by law, and cost for debris removal after demolition.

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Question: What is Ordinary Life Insurance?

Answer: Ordinary life insurance covers the insured during their lifetime. Policy amounts are available in multiples of $1,000 and premiums are collected annually.

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Question: What is Original Age Conversion?

Answer: When converting from a term life to permanent life insurance policy, an original age conversion is when the premium rate is calculated by the age at which the term life policy was purchased and additional premium is charged to reflect the converted policy terms.

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Question: What is Other Insurance Clause?

Answer: The other insurance clause specifies how a loss will be split between insurance companies when more than one policy covers a loss. Often deciding who will pay the claim is a matter of who has written the more specific policy.

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Question: What is Overlapping Insurance?

Answer: Overlapping insurance is when more than one policy covers a loss the policies are said to “overlap”. If two policies are written to share coverage they are said to be “contributing”. In the case of overlapping coverage the policy which is considered to have the more specific coverage is asked to respond.

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Question: What is Partial Disability?

Answer: A partial disability is the inability to perform one more tasks at one’s place of employment.

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Question: What is a Partial Disability Benefit?

Answer: A partial disability benefit is when the insured is paid a percentage of the total disability benefit for less than total disability.

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Question: What is Partial Disability Insurance?

Answer: Partial disability insurance is for persons that suffer from a partial disability. Often, it provides the insured with rehabilitation benefits and job retraining.

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