Glossary
of Insurance Terms
MALPRACTICE INSURANCE
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Professional liability coverage for physicians,
lawyers, and other specialists against suits alleging negligence or
errors and omissions that have harmed clients.
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MANAGED CARE
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Arrangement between an employer or insurer and
selected providers to provide comprehensive health care at a discount
to members of the insured group and coordinate the financing and delivery
of health care. Managed care uses medical protocols and procedures agreed
on by the medical profession to be cost effective, also known as medical
practice guidelines.
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MANUAL
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A book published
by an insurance or bonding company or a rating association or bureau
that gives rates, classifications, and underwriting rules.
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MARINE INSURANCE
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Coverage for goods in transit, and for the commercial
vehicles that transport them, on water and over land. The term may apply
to inland marine but more generally applies to ocean marine insurance.
Covers damage or destruction of a ship’s hull and cargo and perils include
collision, sinking, capsizing, being stranded, fire, piracy, and jettisoning
cargo to save other property. Wear and tear, dampness, mold, and war
are not included. (See Inland marine and Ocean marine)
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MCCARRAN-FERGUSON ACT
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Federal law signed in 1945 in which Congress
declared that states would continue to regulate the insurance business.
Grants insurers a limited exemption from federal antitrust legislation.
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MEDIATION
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Nonbinding procedure in which a third party
attempts to resolve a conflict between two other parties.
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MEDICAID
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A federal/state
public assistance program created in 1965 and administered by the states
for people whose income and resources are insufficient to pay for health
care.
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MEDICAL MALPRACTICE INSURANCE
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See Malpractice
insurance
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MEDICAL PAYMENTS INSURANCE
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A coverage in which
the insurer agrees to reimburse the insured and others up to a certain
limit for medical or funeral expenses as a result of bodily injury or
death by accident. Payments are without regard to fault.
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MEDICAL UTILIZATION REVIEW
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The practice used
by insurance companies to review claims for medical treatment.
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MEDICARE
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Federal program for people 65 or older that
pays part of the costs associated with hospitalization, surgery, doctors’
bills, home health care, and skilled-nursing care.
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MEDIGAP/MEDSUP
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Policies that supplement federal insurance benefits
particularly for those covered under Medicare.
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MINE SUBSIDENCE COVERAGE
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An endorsement to
a homeowners insurance policy, available in some states, for losses
to a home caused by the land under a house sinking into a mine shaft.
Excluded from standard homeowners policies, as are other forms of earth
movement.
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MONEY SUPPLY
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Total supply of
money in the economy, composed of currency in circulation and deposits
in savings and checking accounts. By changing the interest rates the
Federal Reserve seeks to adjust the money supply to maintain a strong
economy.
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MORTGAGE GUARANTEE INSURANCE
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Coverage for the mortgagee (usually a financial
institution) in the event that a mortgage holder defaults on a loan.
Also called private mortgage insurance (PMI).
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MORTGAGE INSURANCE
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A form of
decreasing term insurance that covers the life of a person taking
out a mortgage. Death benefits provide for payment of the outstanding
balance of the loan. Coverage is in decreasing term insurance,
so the amount of coverage decreases as the debt decreases. A variant,
mortgage unemployment insurance pays the mortgage of a policyholder
who becomes involuntarily unemployed. (See Term insurance)
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MORTGAGE-BACKED SECURITIES
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Investment grade securities backed by a pool
of mortgages. The issuer uses the cash flow from mortgages to meet interest
payments on the bonds.
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MULTIPLE PERIL POLICY
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A package policy,
such as a homeowners or business insurance policy, that provides coverage
against several different perils. It also refers to the combination
of property and liability coverage in one policy. In the early days
of insurance, coverages for property damage and liability were purchased
separately.
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MUNICIPAL BOND INSURANCE
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Coverage that guarantees bondholders timely
payment of interest and principal even if the issuer of the bonds
defaults. Offered by insurance companies with high credit ratings,
the coverage raises the credit rating of a municipality offering
the bond to that of the insurance company. It allows a municipality
to raise money at lower interest rates. A form of financial guarantee
insurance. (See Financial
guarantee insurance)
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MUNICIPAL LIABILITY INSURANCE
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Liability insurance for municipalities.
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MUTUAL HOLDING COMPANY
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An organizational
structure that provides mutual companies with the organizational and
capital raising advantages of stock insurers, while retaining the policyholder
ownership of the mutual.
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MUTUAL INSURANCE COMPANY
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A company owned
by its policyholders that returns part of its profits to the policyholders
as dividends. The insurer uses the rest as a surplus cushion in
case of large and unexpected losses.
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