Insurance Glossary
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A
Accident
An event occurred against the will of the insured, which as a result of sudden and unforeseen impacts or external causes has lead to bodily injury or death of the insured.
Acquisition costs
Expenses ensuing from conclusion or renewal of insurance contracts. The acquisition costs may be direct (such as acquisition commissions) and indirect (such as advertising and administrative expenses related to preparation of offers, conclusion of contracts and renewal of contracts already concluded).
Actuary
A specialist qualified in the theory and appliance of the mathematics, statistics, economical sciences, calculus of probability and finances, who is responsible for building up the grounds of the insurance and financial products, health and pension insurance schemes. Actuary’s responsibilities are related to the correct and precise calculation of the prices of the products, as well as the necessary reserves that are to be kept for future exposures.
Acute disease
A disease, having acute beginning and progressive nature, imposing emergency tests and treatment because of suddenly appeared pains and direct menace to the life of the insured.
Aggregate limit (Limit for all events)
Usually refers to liability insurance and indicates the total amount of coverage under the insurance contract for the contract period, no matter how many separate insurance events might occur.
Arson
Fire caused deliberately by third persons.
B
Beneficiary
A person specified by the insured under the insurance contract, who has the right to receive the full amount or a part of the insurance indemnity or the sum insured.
Bonus-malus
A system that adjusts the premium paid by a customer to the insurer according to his individual claim history. “Bonus” usually is a discount in the premium, which is given on the renewal of the policy, if no claim is made in the previous year. “Malus” is an increase in the premium, which is made on the renewal of the policy, if there is a claim in the previous year.
C
Catastrophic event
Occurrence of a covered risk, to which a big number of insured persons are exposed at the same time and as a result of which significant damages are caused (e.g. earthquake, flood etc.)
Cedent
Insurer or reinsurer, who cedes all or part of the risks under concluded insurance contracts and pays reinsurance premiums to a reinsurer or to an insurer, performing active reinsurance.
Coinsurance
Splitting or spreading the liability under insurance contracts between two or more insurers.
Covered risk
A certain risk covered by the insurer with the insurance contract, upon the occurrence of which the insurer pays insurance indemnity or the agreed cash amount.
D
Deductable
Agreed liability of the insured to participate in covering certain part of the damages upon occurrence of insurance event.
Disease
Disease is an aggregate of complaints and clinical manifestations diagnosed in licensed health care units and registered in official medical document, causing a temporary disability.
E
Earthquake
Vertical or horizontal wave-like quakes of earth layers, caused by sudden natural upheaval and smashing in the earth crust or in deeper earth zones. Damages are manifested in cracking or demolition of buildings and equipment and the properties located in them.
Excluded risk
Occurrence of events, leading to realization of a risk, for which the insurer has explicitly stated in the contract that they are not covered.
Ex gratia
Compromise payment of insurance indemnity made by the insurer on goodwill.
Explosion
A sudden and unforeseen manifestation of force, provoked by gasses, liquids or steam and/or mixtures of them tending to expansion as a result of a chemical reaction. Explosion provokes breaking, crashing, distortion, tearing, burning or smoking of the insured properties.
F
Financial Supervision Commission
A specialized state institution for regulation and control over the investment, insurance and social insurance market in the Republic of Bulgaria.
Fire
A blaze-fire, appeared at a place not being hearth, or came out of it, and in a condition to spread through its own energy. Damages are manifested in full or partial burning, melting, scorching, smoking, charring, smoldering or contamination from the application of water, foam or fire extinguishing preparations.
Flood
Overflowing of big water quantities as a result of river and water-basin bank overflow, falls of all kinds, quick snow or ice melting, leading to wetting, taking away, overturning of the property insured and flood of cellar and other premises.
Force majeure circumstances
Circumstances occurred as a result of an unforeseen accidental and insuperable force.
G
General Insurance Conditions
Standardized clauses applicable to unlimited number of insurance contracts irrespective of their name.
Green Card Certificate
International certificate for insurance issued on behalf of a National Bureau under Item 21 in compliance with Recommendation No. 5 adopted on 25 January 1949 by the Subcommission of the Commission on Land Transport of the United Nations Economic Commission for Europe.
Guarantee Fund
A legal entity with a legal seat in Sofia, paying compensations in relation to the compulsory insurances Motor Third Party Liability and Accident of the passengers in the public transport vehicles. All the insurers, offering the above insurances, make contributions to the Guarantee Fund at an amount set by the Insurance Code.
H
Hail
Hail is ice-grain-fall that in most of the cases is accompanied by rain. Damages are manifested in breaking, crashing and other mechanical damages leading to wetting.
I
Implosion
The opposite event of the explosion, representing instantaneous and explosive-dangerous fill in a volume, in which the pressure is lower than the atmospheric one (vacuum). Damages on the properties are manifested in breaking, crashing, distortion and tearing.
Insurance
Activity of providing insurance cover against risks by virtue of a contract, comprising of raising and spending funds designated for indemnities and other cash amounts upon occurrence of contract- or law-envisaged events, or materialization of circumstances, as well as activities directly related thereto.
Insurance agent
A private individual or a merchant, who in return for payment and upon assignment by an insurer performs insurance intermediation on insurer’s behalf and at insurer’s expense.
Insurance broker
A business enterprise or a sole proprietor, who in return for payment performs insurance intermediation under assignment by a consumer of insurance services, and under assignment by an insurer or a reinsurer, performs reinsurance intermediation.
Insurance contract
A contract, binding the insurer to undertake certain risks in return for premium payment, and upon occurrence of an insurance event to pay an insured or a third party-beneficiary an insurance indemnity or a cash sum.
Insurance event
The occurrence of a covered risk under insurance within the period of insurance cover.
Insurance interest
A legally recognized necessity of protection against the consequences of an insurance event.
Insurance intermediary
Insurance broker or insurance agent, performing insurance intermediation for payment.
Insurance policy
A document, certifying the contract concluded between the insurer and the insured.
Insurance pool
Association of insurers and/or reinsurers for reciprocal coinsurance or reinsurance of risks under a certain line of business. Each pool member cedes his liability to the pool and respectively assumes a certain part of the aggregated risk mass, formed by the risks ceded by all pool members. The pools are usually established for covering catastrophic risks (such as earthquake) or risks that are accumulated.
Insurance portfolio
An aggregate of effective insurance contracts under a certain line of business or as a whole for a certain insurer.
Insurance premium
The cash amount due by the insured to the insurer (insurance price).
Insurance risk
Objectively existing probability of damaging property and non-property wealth, the realization of which is uncertain, unknown and independent from the will of the insured person.
Insurance services consumer
Insurance services consumer is the insured person, the third person beneficiary, the third injured person, other persons, for whom rights have arisen under an insurance contract, as well as a natural person and a legal person, who shows interest in utilizing the services provided by an insurer or an insurance intermediary with regard to its object of operations.
Insured
A person, whose property and/or non-property wealth is subject of an insurance contract.
Insurer
A legal entity duly registered under the Trade Act as a joint-stock company or a cooperative society duly registered under the Cooperation Law, having been granted a license for performing insurance activity.
Insuring person
A private individual or a legal entity, concluding the insurance contract with the insurer and paying the insurance premium under this contract. The insuring person could insure himself or third persons (e.g. when an employer insures his employees, he shall be considered as insuring person and the employees – as insured persons).
L
Landslide or collapse of land strata
Natural tearing off and slow movement of earth layers of geological character or sudden single fall down of enormous earth or rocky masses of the same character, leading to pull-down or deformation of buildings, equipment or installations, covering, cracking, sinking or destruction of bases, as well as damage on properties, located in them.
Liability limit
The maximum liability of the insurer towards the insured, the beneficiary or the third injured person.
Life insurance
Insurance of the risk of occurrence of various events related to the life, health or bodily entireness of the insured. Main feature of the life insurance is that upon occurrence of insurance event the insurer pays a sum agreed beforehand. Other important feature of the life insurance is that the insurance contracts may be long-term (e.g. for a period of 10, 15, 20, 25 and more years) and they also may have a saving character.
M
Member State
A country, which is a member of the European Union or another country, belonging to the European Economic Area.
Motorist
Owner, user, holder or driver of a motor vehicle, who upon and in connection with holding the above motor vehicle or using it may cause harms to third parties.
N
Non-life insurance
Insurance of the risk of destruction, damage or perish of movable or immovable property (e.g. Casco insurance or insurance against fire). Part of the non-life insurance is also the insurance of liabilities for property and non-property damages (e.g. Motor Third Party Liability). Main feature of the non-life insurance is that upon occurrence of insurance event the insurer pays an insurance indemnity, i.e. the amount due by the insurer depends on the size of the damage caused to or by the insured.
O
Overinsurance
Overinsurance is when the agreed sum insured exceeds the actual value or the recovery value of the property insured.
P
Period of insurance cover
Period, during which the insurer covers the insurance risk.
Permanent disability
A definitive decreased by defined percentage or totally lost ability for performing work activities as a result of a disturbed function of certain organ or the whole organism.
Policy
See insurance policy.
Premium
See insurance premium.
R
Reinsurance
Activity of assuming, by virtue of a of a reinsurance contract, all or part of the risks covered by an insurer in exchange for ceding insurance premium (active reinsurance) and the activities directly related thereto.
Risk class
Grouping of insured persons or objects with a similar level of risk.
S
Storm
An atmospheric process, characteristic with wind speed over 15 m/sec. Hurricane, whirl-wind and wind-spout are also deemed as storm. Damages are manifested in overturning, breaking, bursting, tearing, separation, taking away and other mechanical damages or property destruction.
Sum insured
A cash amount negotiated or set by a normative act and specified under an insurance contract, representing the upper limit of the insurer’s liability toward an insured person, a person beneficiary or a third injured person.
T
Temporary disability
Seriously disturbed ability to perform work activities as a result of transitory disturbance of the general or local functions of the organism, which are recoverable within a certain period of time.
Third party liability
Liability of the insured for material and non-material damages caused by him to third parties.
Torrential rain
Falling of big quantities for a short period of time, leading to wetting, taking away, sliming of draining units and subsequent flooding.
U
Underinsurance
Underinsurance is when the agreed sum insured is less than the actual value or the recovery value of the property insured.
Underwriter
Representative of the insurer responsible for underwriting risks (insurance contract conclusion).
Underwriting
Process of selecting risks for insurance and classifying them according to their degrees of insurability so that the appropriate rates may be assigned. The process also includes rejection of those risks that do not qualify.
V
Vandalism
Damage or destruction of insured property by third persons without intention that to be taken away of possession unlawfully.
