Glossary

Valued business interruption coverage is business interruption coverage that provides for the payment of a stipulated amount for each day of fully interrupted operations rather than for payment of the amount of loss actually sustained. Also referred to as "per diem business interruption coverage." Valued business interruption coverage once was fairly common in boiler and machinery insurance.

Valued coverage is property coverage that provides for payment of a stipulated dollar amount (rather than the actual cash value or replacement cost of the property) in the event of total loss. Fine arts coverage is often written on a valued basis. Some states have valued policy laws, which require that fire insurance on buildings be treated as valued coverage in the event of a total loss.

A valued policy is a policy that pays a predefined loss amount not related in any way to the actual incurred loss. It is used mostly in life and death insurance.

Values are the exposure data that must be submitted by an insurer as part of its underwriting submission to allow for premium calculation.

Value of risk is the contribution to shareholder value or other stakeholder interests resulting from a risk-taking activity. Like the "captive value added" concept, VOR looks at components of the cost of risk as an investment required to further organizational objectives.

Vanishing premium refers to policies where future premiums are paid by the buildup in cash value or the experience account of the insured. A vanishing premium is used mostly in life insurance but can be a feature of policies of indemnity written on a finite risk basis.

A variable annuity is an annuity that provides lifetime income payments that vary in relation to the performance of the underlying investment portfolio managed by the insurer.

A variable interest entity is an affiliated or nonaffiliated entity in which a company is deemed to have a financial interest, even if such interest is not evidenced contractually. It is typically used to hold or transfer tangible and intangible assets and liabilities.

Variable premium life insurance refers to a life insurance policy that allows the insured to vary the premium payments subject to certain limitations. The policy benefits and cash value vary with the premium payments. The most common form of variable premium life insurance is universal life insurance.

A vehicle identification number (VIN) is a unique alphanumeric code assigned to a specific motor vehicle to identify it. For most modern vehicles, the VIN is a standardized 17-character number that can indicate information such as the vehicle's manufacturer, model year, body type, engine, assembly plant, and production sequence. In an auto insurance context, insurers use the VIN to verify the covered vehicle, support underwriting and rating, check vehicle history or prior losses, process claims, confirm title or registration information, and help prevent fraud. An incorrect or missing VIN can affect policy issuance, pricing, proof of insurance, lienholder records, or claim handling.