Glossary

Seasonal risk indicates a business that operates during only part of the year (such as a ski resort) or experiences seasonal peaks of production or income (such as a toy manufacturer).

The secondary beneficiary is the person named to receive benefits if the primary beneficiary is not alive upon the death of the insured or if the primary beneficiary does not collect all benefits before their own death.

In commercial auto insurance rating, the secondary classification is based on the specific industry for which the vehicle is being used. The secondary classification is a tool for gathering statistical data for assessment of factors other than the primary classification factors of size of vehicle, radius of operations, and business use.

Secondary dependent properties is a commercial property insurance term relating to dependent properties business income or extra expense coverage (previously referred to as contingent business income or extra expense coverage). Dependent properties business income or extra expense coverage provides coverage for the insured's income or expense loss resulting from damage by a covered cause to property of another business on which the insured depends to purchase the insured's good and services, to supply materials or services to the insured, or to attract customers to the insured's business. A secondary dependent location is a facility of yet another business that provides materials or supplies to (or accepts materials and supplies from) a primary dependent location of the insured. Beginning with the 2012 editions, standard dependent property business income and extra expense coverage endorsements include an option to cover loss due to damage from a covered cause of loss to secondary contributing and recipient dependent properties.

Under federal law, Medicare is a secondary payer (only secondarily responsible) for paying medical expenses for individuals covered by Medicare who are also covered by any type of private insurance. An example of how this concept applies is in the context of workers compensation claims. The medical expenses of a Medicare-eligible injured worker should be paid by the workers compensation insurer or self-insurer as the primary payer, with Medicare serving as the back-up or secondary payer of the medical expenses.

Second surplus reinsurance refers to a reinsurance treaty that is supplementary to a first surplus treaty. It is the amount that exceeds the total of the reinsured's original insurer's net retention plus the full limit of the first surplus treaty.

Section 501(c) of the US Internal Revenue Code is the section under which a significant number of nonprofit corporations/associations in the United States are organized. This section enumerates 28 different types of nonprofit organizations that are exempt from some types of federal income taxes. Many states have laws that specify the types of nonprofit organizations that are exempt from state taxes, as well. Organizations described in Section 501(c)(3) are commonly referred to as charitable organizations. They are eligible to receive tax-deductible contributions but must not be operated for the benefit of private interests, nor may any part of a Section 501(c)(3) organization's net earnings benefit any private shareholder or individual.

Section 702 of the Civil Rights Act of 1964 exempts religious organizations from the Act's bar on religious discrimination against employees. Section 702 states that the exemption will apply to "a religious corporation, association, educational institution, or society with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities."

The Securities Act of 1933 ensures the availability of complete and reliable information about securities being sold to the public. The most important components of the Act are Section 5, which makes it illegal to offer or sell securities to the public unless they have first been registered with the Securities and Exchange Commission (SEC), and Section 11, which imposes civil liability for material misstatements in registration statements. Failure to comply with the Act's technical or substantive requirements in connection with a public offering of a security can result in liability of the corporation and its directors and officers.

Securities class action claims are brought by a publicly held corporation's shareholders alleging that actions by the firm's directors and officers caused a loss in market value of the firm's shares. Coverage for such claims is available under directors and officers liability insurance policies. To date, 16 securities class action claims have been settled for amounts in excess of $100 million.