Glossary

A tender of defense is the act in which one party places its defense and all costs associated with said defense with another due to a contract or other agreement. This transfers the obligation of the defense and possible indemnification to the party to which the tender was made.

Terminal Coverage (IH 00 72) covers damage to vehicles garaged or stored at a common location sometimes included in a property insurance policy or inland marine floater. This coverage is purchased by organizations that otherwise self-insure automobile physical damage exposures but desire to protect against a catastrophic loss affecting a number of vehicles garaged or stored together.

A terminal dividend is an additional dividend that is paid to the policyholder when a life insurance policy is terminated. The terminal dividend is usually paid only after a minimum in-force period of 10 to 20 years. The terminal dividend generally applies only to life insurance policies written through mutual insurance companies and represents the policyholder's equitable portion of the overall increase in the insurer's surplus over the period the policy was in force. Some companies pay a terminal dividend no matter how a policy is terminated, while others only pay it under certain conditions.

A terminal operator is the term used to describe the operator of a commercial wharf when the wharf is located in a larger terminal facility that is under common management.

A terminal reserve is a life insurance reserve that is established at the end of each life policy year. It is the sum that, with additions from all future premium receipts plus investment income, will pay all future maturities under a life insurance policy. It can also be considered the reserve at the end of the policy year, and in the sum sufficient with the net premiums coming due, that is necessary to provide mortality charges and mature the policy according to its terms, all computed upon a table of mortality adopted and the rate of interest assumed.

Termination is the formal ending of a reinsurance agreement by its natural expiration, cancellation, or commutation by the parties. Termination can be on either a cutoff or a runoff basis. Under cutoff provisions, the parties' obligations are fixed as of the agreed cutoff date. Otherwise, obligations incurred while the agreement was in force are run off to their natural extinction.

Term life insurance refers to a policy that gives protection for only a definite period of time (e.g., 1, 3, or 5 years). If death occurs during the term for which the policy is written, proceeds are payable to the beneficiary. If the insured survives the term, the policy expires. There is no cash value build-up in a term policy. Guaranteed renewable term insurance can be renewed without proof of insurability. Under other types of term insurance, the insured must once again undergo an underwriting process (e.g., a medical examination).

Terrorism is the use of violence to produce terror for political or ideological purposes. Terrorism is distinct from war in that it need not be the act of a military force or be directed by a sovereign power. Foreign acts of terrorism may be certified as an insurable loss exposure under the Terrorism Risk Insurance Act.

A terrorism endorsement is a provision attached to an insurance policy that restricts, excludes, or otherwise explains coverage for loss due to terrorist acts. The passage of the Terrorism Risk Insurance Act (TRIA) of 2002 voided all terrorism exclusion endorsements then in force on commercial property and casualty policies, to the extent that such exclusions eliminated coverage for certified acts of terrorism as covered by the federal program. It also led to the creation of many standard terrorism endorsements that provide for a wide range of terrorism coverage options: from no terrorism coverage at all (permissible only when the insured rejects or fails to pay for TRIA terrorism coverage) to full coverage for both international and domestic terrorism, subject to the $100 billion program-year cap established in the Act.

Terrorism insurance covers loss due to acts of terrorism. Unless endorsed to exclude loss due to terrorism, commercial insurance policies issued in the United States (for example, commercial property policies, commercial general liability (CGL) policies, and commercial auto policies) generally provide terrorism insurance coverage. Terrorism insurance also may be written on a stand-alone terrorism policy.