Glossary

Uberrimae fidei is a Latin phrase that means "in utmost good faith." Certain legal contracts, including insurance policies, are said to be executed in utmost good faith since they presume full disclosure of all pertinent facts on the part of both contracting parties.

The ultimate loss is the total sum the insured, its insurer(s), and/or its reinsurer(s) pay for a fully developed loss (i.e., paid losses plus outstanding reported losses and incurred but not reported losses). It may not be possible to know the exact value of ultimate losses for a long time after the end of a policy period. Actuaries are employed to assist with these projections for purposes of financial modeling and/or year-end reserve determinations.

Ultimate net loss (UNL) is a term used to specify insured damages in an umbrella liability policy. Most umbrella policies include a specific definition of the covered damages encompassed by the term. This will typically include amounts actually payable to claimants in settlement or judgment. If defense and other supplementary payments are included within the policy's limit of liability, they may also be included in the policy's ultimate net loss definition.

Ultra vires acts are acts that are beyond the powers conferred on a corporation by its charter or by the laws of its state of incorporation. Corporate directors are not only liable for their own ultra vires acts but can also be held liable for ultra vires acts authorized by the board as a whole. For example, if a corporation's charter bans loans to directors and officers, the granting of such a loan by the board would constitute an ultra vires act for which all board members could be held legally liable. Coverage for ultra vires acts are excluded by directors and officers liability policies if they are considered to have been dishonest, fraudulent, or malicious or if such acts violate criminal statutes.

An umbrella liability policy is a policy designed to provide protection against catastrophic losses. It generally is written over various primary liability policies, such as the business auto policy, commercial general liability policy, watercraft and aircraft liability policies, and employers liability coverage. The umbrella policy serves three purposes: it provides excess limits when the limits of underlying liability policies are exhausted by the payment of claims, it drops down and picks up where the underlying policy leaves off when the aggregate limit of the underlying policy in question is exhausted by the payment of claims, and it provides protection against some claims not covered by the underlying policies, subject to the assumption by the named insured of a self-insured retention.

An unaffiliated business involves insureds not in the same corporate organization (less than 50 percent ownership) or not under common management control. It is also known as unrelated or open market risk or insurance of noncontrolled entities.

Unallocated benefit refers to a provision in health insurance policies that provides for reimbursement of miscellaneous hospital expenses without regard to a schedule but subject to a maximum.

Unallocated loss adjustment expense (ULAE) refers to all external, internal, and administrative claims handling expenses, including determination of coverage, that are not included in allocated loss adjustment expenses.

Unauthorized is a term that is sometimes used to describe an insurer not licensed to write business in a particular state. Most states maintain a list of "authorized" surplus lines insurers.

Unbundling refers to the practice of separating risk handling and risk funding services either from a multiline insurer or from themselves. Captives that require a "front" may also be required to purchase all of some of the services from the same insurer. This is a "bundled" program. Unbundling indicates the ability to purchase services from any vendor, not just those associated with the fronting insurer.