An unplanned event, unexpected and undesigned, which occurs suddenly and at a definite place.

Accidental Bodily Injury

An injury sustained accidentally. Only the result need be accidental. Contrast with Accidental Means.

Acquisition Cost

The expenses incurred by an insurer or reinsurance company that are directly related to putting the business on the books of the company. The largest portion of this cost is usually the agent's or sales representative's commission or bonus.

Actual Cash Value

An amount equivalent to the replacement cost of lost or damaged property at the time of the loss, less depreciation. With regard to buildings, there is a tendency for the actual cash value to closely parallel the market value of the property.


A specialist trained in mathematics, statistics, and accounting who is responsible for rate, reserve, and dividend calculations and other statistical studies.

Additional Insured

A person other than the named insured who is protected under the terms of the contract. Usually, additional insureds are added by endorsement or referred to in the wording of the definition of "insured" in the policy itself.

Admitted (or Allowed) Assets

Assets whose values are permitted by state law to be included in the annual statement of the insurer.

Admitted Reinsurance

A company is “admitted” when it has been licensed and accepted by appropriate insurance governmental authorities of a state or country. In determining its financial condition a ceding insurer allowed to take credit for the unearned premiums and unpaid claims on the risks reinsured if the reinsurance is placed in an admitted reinsurance company.

Advance Payment

Premiums paid in advance of the current policy period, including the amount tendered with an application by an applicant for Life Insurance.

Age Limits

The ages below which or above which an insurer will not write certain forms of insurance or above which it will not continue a policy presently in force.


One who solicits, negotiates or effects contracts of insurance on behalf of an insurer. His right to exercise various functions, his authority, and his obligations and the obligations of the insurer to the agent are subject to the terms of the agency contract with the insurer, to statutory law, and to common law.

Aggregate Limit

Usually refers to Liability Insurance and indicates the amount of coverage that the insured has under the contract for a specific period of time, usually the contract period, no matter how many separate accidents may occur.

Alien Insurer

An insurer formed under the laws of a country other than the United States. A U.S. company selling in other countries is also an alien insurer.


Terms or words in an insurance policy which make the meaning unclear or which can be interpreted in more than one way. The rule of law is that any ambiguity in the policy is construed against the insurer and in favor of the insured. This is because the contract is one of adhesion; that is, the insured must adhere to what the insurer has written. If the insurance does not make its contract clear, it is responsible.

Amortized Value

The value of bonds purchased by an insurance company which are eligible for amortization. For example, if a 10-year bond were purchased at $50 more than its face value, that $50 would be "amortized" or spread over the 10-year period. Each year the bonds would be valued at $5 less than the year before.


The items on the balance sheet of the insurer which show the book value of property owned. Under state regulations, not all property or other resources can be admitted in the statement of the insurer. This gives rise to the term "non-admitted assets."

Automatic Cover

Coverage given automatically by a policy, usually for a specified period and limited amount, to cover increasing values and newly acquired and changing interests.