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Business Insurance Glossary — I Through O

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K

L

M

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I

Incident
An event for which a policy holder submits an insurance claim.

Income benefits
Proceeds from an insurance policy paid to the policy holder's beneficiary.

Incurred but not reported losses ("IBNR")
Reserves for claims filed with an insurer or reinsurer long after the event that caused the injury or loss or for claims reported for which the full extent of the injury or loss is not yet known. Insurance companies regularly adjust reserves for such losses as new information becomes available.

Incurred losses
Losses (paid or unpaid) that occur within a set period of time.

Indemnify
To provide monetary compensation to a policy holder for losses.

Identity theft
When a thief steals private information such as someone's Social Security number, credit card or driver's license, and uses this data to assume the victim's identity for fraudulent personal financial gain. (See also business identity theft insurance)

Independent adjuster
A freelance service provider who is hired on a contract basis by insurance companies to investigate and settle insurance claims.

Independent Practice Association — IPA
An option that may be included in an employer's employee benefits package, this is a Health Maintenance Organization (HMO) in which the participating physicians maintain separate offices. (See also Health Maintenance Organization — HMO and Preferred Provider Organization — PPO)

Inland marine coverage
Protection for portable property in transit that is not covered by a typical business property policy. Examples of property that may be covered by this type of insurance include contractors' tools and equipment, and specialty documents or artwork displayed by gallery owners.

Insolvency
When a business is unable to pay debts as agreed.

Insurable risk
An accidental, non-catastrophic event that has the potential to cause predictable, measurable loss.

Insurance
Designed to lessen financial losses, this system reassigns the potential risks of many policy holders to a company that provides contractual protection in exchange for a premium.

Insurance score
A confidential numerical ranking that is assigned to a business based on its credit history.

Insurance-to-value
The amount — approximately equal to a property's assessed worth — for which an insurance policy is written.

Insurer
The company that assumes financial responsibility for the risks of many policy holders in exchange for a premium. Claims are paid out after a loss according to terms specified in the policy.

Integrated benefits
Coverage where the distinction between job-related and non-occupational illnesses or injuries is eliminated and workers' compensation and general health coverage are combined. Legal obstacles may exist because the two coverages are administered separately. (Previously called twenty-four hour coverage.)
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K

Key person life insurance
If a major shareholder, partner or other employee essential to a company's success were to die, this coverage would replace lost income so the company could continue to operate.
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L

Liability coverage
This type of auto insurance pays for injuries and/or property damage caused by a policy holder when he or she is determined to be at fault in an automobile accident. (See also collision coverage, comprehensive coverage and uninsured motorist coverage)

Liability limit
The maximum amount for which an insurance company agrees to provide financial compensation.

Licensed agent
An individual who is certified by the state to offer guidance to consumers about insurance and is authorized to sell insurance products and services.

License bonds
A type of surety bond that some business owners must carry as a condition of conducting business that states the policy holder will conduct business in accordance with the law.

Lifetime maximum
The highest amount a health insurance company will pay out on covered losses throughout the course of a policy holder's life.

Limit
The maximum dollar amount an insurance company will pay out for a named loss.

Life insurance
This type of coverage pays a beneficiary under a life insurance policy a set amount in the event of the insured's death.

Livestock insurance
If a farm or ranch operation incurs loss as a result of the death (or necessary destruction due to illness) of its animals, this policy would compensate the policyholder for covered losses. (See also agricultural insurance and crop insurance)

Loss reduction
Also known as loss mitigation, by following an insurer's specific recommendations for preventing or reducing liability, a company may be able to reduce premiums for certain coverages. Recommendations may include providing workplace safety tips to employees, developing a disaster preparation plan and installing devices that reduce losses, such as alarms and sprinklers.

Loss of income
If a landlord's property becomes uninhabitable as a result of a covered loss, this insurance would replace rental income that would have been generated by the property.

Loss of rents
When a leased property becomes uninhabitable as a result of a covered loss, this type of protection would cover the property's lease payments so the business could continue operations.
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M

Managed care
Contractual care agreements between insurance companies and health care providers, under which certain doctors and hospitals agree to offer reduced-cost medical services to members.

Medical benefits
Health care services offered at a reduced cost to employees. Often this coverage is included in a company's overall compensation plan.

Medical payments coverage
Compensation provided to a policy holder (or a covered passenger) that pays for reasonable and necessary health care treatments related to injuries sustained in a covered auto accident — regardless of who is at fault.

Mitigate risk
To lessen the impact of a potential hazard.
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N

Named peril
An event specifically listed in an insurance policy for which losses will likely be covered.

No-fault coverage
Required in some states, this type of auto insurance pays for medical bills, lost wages, replacement services and funeral expenses — regardless of who is at fault in the accident. (See also Personal Injury Protection — PIP)
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O

Out-of-pocket maximum
The highest amount that a policy holder must pay toward covered health care costs.
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