Glossary

A supplemental employee retirement plan is a nonqualified retirement program—that is, one not subject to the Employee Retirement Income Security Act (ERISA). It is usually for highly compensated employees, allowing for deferral of income.

Supplemental extended reporting period refers to the optional extended reporting period (of unlimited duration) under the standard claims-made commercial general liability policy. The insured must request and pay for this coverage to activate it.

A supplementary contract is an agreement between a life insurance company and a policyholder or beneficiary by which the insurer retains the cash sum payable under the policy and makes payments in accordance with the settlement option chosen.

Supplementary payments is a term used in liability policies for the costs associated with the investigation and resolution of claims. Supplementary payments are normally defined to include such items as first aid expenses, premiums for appeal and bail bonds, pre- and post-judgment interest, and reasonable travel expenses incurred by the insured at the insurer's request when assisting in the defense of a claim. Actual settlements or judgments are considered damages rather than supplementary payments. Attorneys' fees may be considered as either damages or supplementary payments, depending on the policy. Commercial general liability and business automobile liability policies cover supplementary payments in addition to their limits of liability. In contrast, supplementary payments reduce the limit of coverage under most (although not all) professional liability policies.

A surcharge in the construction context is where you place more of something than is natural; for example, they will add 20 feet of stone over a construction site to "surcharge" the soil underneath from the weight. This is a common term for adding more weight to the edge of an excavation where there was no weight before. These additional vertical loads or weights placed on the ground surface near an excavation can include spoil piles, equipment, vehicles, or other materials. The closer a surcharge load is to the edge of the excavation, the greater the potential for destabilizing the soil and causing a cave-in.

A surety guarantees the performance of another party by agreeing to stand in the place of its principal if the principal fails to do what it has promised to do. The contract through which the guarantee is executed is called a surety bond.

A surety bond is a contract under which one party (the surety) guarantees the performance of certain obligations of a second party (the principal) to a third party (the obligee). For example, construction contractors are often asked to provide a variety of surety bonds guaranteeing their promise to enter into a contract at the bid price (bid bond), their completion of the contract (performance bond), or the delivery of a project free of liens (payment bond).

Surplus in an insurance context is the amount by which an insurer's assets exceed its liabilities. It is the equivalent of "owners' equity" in standard accounting terms. The ratio of an insurer's premiums written to its surplus is one of the key measures of its solvency.

A surplus debenture is a debt instrument accounted for as equity under statutory accounting rules, used when investors loan surplus to an insurer rather than posting a letter of credit. This is also referred to as a subordinated debenture.

A surplus line refers to risks placed with nonadmitted insurers.