Glossary

A policy in an insurance context is a written contract of insurance between the insurer and the policyholder. It is typically composed of a declarations page, policy form, and endorsements or riders that amend the policy form.

A policyholder is the person in actual possession of insurance policy; the policy owner.

Policyholder dividends are a return of premium, under the terms of the policy (usually a workers compensation policy), resulting from income in excess of losses and expenses.

Policyholder surplus is the difference between an insurer's admitted assets and liabilities—that is, its net worth. This figure is used in determining the insurer's financial strength and capacity to write new business.

Policy conditions are found is an insurance policy and identify the general requirements of an insured and the insurer on matters such as loss reporting and settlement, property valuation, other insurance, subrogation rights, and cancellation and nonrenewal. The policy conditions are usually stipulated in the coverage form of the insurance policy.

Policy definitions often determine the scope of coverage in insurance policies. These policies rely on terms and phrases that have very special and often very specific meanings. Since these terms and phrases are usually repeated many times in the insurance policy, a single definition of the term or phrase is included in the definitions section of the policy instead of being repeated whenever the term is used. The reader is alerted when a defined term is used in the insurance policy, usually by its placement within quotation marks. Since definitions may have a significant impact on the scope of coverage, they must be carefully reviewed when interpreting the policy's coverage intent.

The policy expense allowance is an amount payable to the cedent by the reinsurer in lieu of actual commissions and expenses incurred by the cedent.

Policy fee is a one-time charge or flat per policy charge that does not change with the size of the policy.

A policy loan is a loan from the insurer to a life insurance policy owner using the cash value of the policy as security for the loan.

The policy owner is the person who has ownership rights of an insurance policy, usually the policyholder or insured.