Glossary
of Insurance Terms
UMBRELLA POLICY
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Coverage for losses above the limit of an underlying
policy or policies such as homeowners and auto insurance. While
it applies to losses over the dollar amount in the underlying
policies, terms of coverage are sometimes broader than those of
underlying policies.
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UNDERINSURANCE
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The result
of the policyholder’s failure to buy sufficient insurance. An
underinsured policyholder may only receive part of the cost of
replacing or repairing damaged items covered in the policy.
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UNDERWRITING
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Examining, accepting, or rejecting insurance
risks and classifying the ones that are accepted, in order to
charge appropriate premiums for them.
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UNDERWRITING INCOME
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The insurer’s
profit on the insurance sale after all expenses and losses have
been paid. When premiums aren’t sufficient to cover claims and
expenses, the result is an underwriting loss. Underwriting losses
are typically offset by investment income.
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UNEARNED PREMIUM
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The portion
of a premium already received by the insurer under which protection
has not yet been provided. The entire premium is not earned until
the policy period expires, even though premiums are typically
paid in advance.
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UNINSURABLE RISK
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Risks for
which it is difficult for someone to get insurance. (See
Insurable risk)
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UNINSURED MOTORISTS COVERAGE
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Portion of an auto insurance policy that protects
a policyholder from uninsured and hit-and-run drivers.
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UNIVERSAL LIFE INSURANCE
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A flexible
premium policy that combines protection against premature death
with a type of savings vehicle, known as a cash value account,
that typically earns a money market rate of interest. Death benefits
can be changed during the life of the policy within limits, generally
subject to a medical examination. Once funds accumulate in the
cash value account, the premium can be paid at any time but the
policy will lapse if there isn’t enough money to cover annual
mortality charges and administrative costs.
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UTILIZATION REVIEW
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See
Medical utilization review
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