Glossary
of Insurance Terms
GAP INSURANCE
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An automobile
insurance option, available in some states, that covers the difference
between a car’s actual cash value when it is stolen or wrecked
and the amount the consumer owes the leasing or finance company.
Mainly used for leased cars. (See Actual cash value)
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GENERALLY ACCEPTED ACCOUNTING PRINCIPLES/GAAP
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Generally accepted accounting principles (GAAP)
accounting is used in financial statements that publicly-held
companies prepare for the Securities and Exchange Commission.
(See Statutory accounting principles / SAP)
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GENERIC AUTO PARTS
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Auto crash
parts produced by firms that are not associated with car manufacturers.
Insurers consider these parts, when certified, at least as good
as those that come from the original equipment manufacturer (OEM).
They are often cheaper than the identical part produced by the
OEM. (See Crash parts;
Aftermarket parts; Competitive replacement parts;
Original equipment manufacturer parts / OEM)
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GLASS INSURANCE
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Coverage for glass breakage caused by all risks;
fire and war are sometimes excluded. Insurance can be bought for
windows, structural glass, leaded glass, and mirrors. Available
with or without a deductible.
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GRADUATED DRIVER LICENSES
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Licenses for younger drivers that allow them
to improve their skills. Regulations vary by state, but often
restrict night time driving. Young drivers receive a learner’s
permit, followed by a provisional license, before they can receive
a standard drivers license.
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GRAMM-LEACH-BLILEY ACT
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Financial services legislation, passed by Congress
in 1999, that removed Depression-era prohibitions against the
combination of commercial banking and investment-banking activities.
It allows insurance companies, banks, and securities firms to
engage in each others’ activities and own one another.
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GROUP INSURANCE
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A single policy
covering a group of individuals, usually employees of the same
company or members of the same association and their dependents.
Coverage occurs under a master policy issued to the employer or
association.
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GUARANTEED INCOME CONTRACT / GIC
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Often an option
in an employer-sponsored retirement savings plan. Contract between
an insurance company and the plan that guarantees a stated rate
of return on invested capital over the life of the contract.
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GUARANTEED REPLACEMENT COST COVERAGE
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Homeowners policy that pays the full cost of
replacing or repairing a damaged or destroyed home, even if it
is above the policy limit. (See Extended
replacement cost coverage)
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GUARANTY FUND
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The mechanism
by which solvent insurers ensure that some of the policyholder
and third party claims against insurance companies that fail are
paid. Such funds are required in all 50 states, the District of
Columbia and Puerto Rico, but the type and amount of claim covered
by the fund varies from state to state. Some states pay policyholders’
unearned premiums – the portion of the premium for which no coverage
was provided because the company was insolvent. Some have deductibles.
Most states have no limits on workers compensation payments. Guaranty
funds are supported by assessments on insurers doing business
in the state.
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GUN LIABILITY
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A new legal
concept that holds gun manufacturers liable for the cost of injuries
caused by guns. Several cities have filed lawsuits based on this
concept.
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