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ABANDONMENT
Relinquishment of ownership of property that has been lost or damaged and “abandoned” to the Insurance Company for the purpose of claiming a total loss.
ABNORMAL RETURN
Stock return beyond that predicted by general market movements. Many active portfolio managers seek out investment opportunities that offer abnormal returns.
ABOVE-GROUND SWIMMING POOL
Swimming pool built above ground level.
ACTIVE PORTFOLIO MANAGEMENT
A money manager (investor) attempts to earn a return above the risk-free rate or an index through forecasting of broad market trends or by identifying sectors or securities that are mispriced in the market.
ACTUAL CASH VALUE
The actual or current value at the time of the loss. Actual cash value takes depreciation into consideration.
ADDITIONAL INSURED
An individual or a corporation other than the one named in the insurance policy who is protected by the terms of the policy. Most automobile policies, for example, insure a specific individual as an insured, but also insure anyone driving with the insured’s consent. The additional insured may be “named” or “unnamed” in the insurance policy.
ADDITIONAL LIVING EXPENSE INSURANCE
Coverage applicable when an insured’s dwelling is damaged by an insured peril to such an extent that one cannot live in it until repaired. This insurance pays the extra amount it costs to live elsewhere until repairs are made, such as the cost of living in a hotel.
ADJUSTER
An individual who represents an insurer on investigations and dealings with respect to settlement of claims. This may be a salaried employee of an insurer or one who operates as an independent adjuster.
AFTER-TAX
The final cost of an investment to an investor in a particular tax bracket, after calculating the effect of income tax.
ALARM SYSTEM
System guarding against theft and/or fire.
ALL-RISK POLICY
A name given to an insurance policy that covers against the loss caused by all perils except those which are specifically excluded by the terms of the policy.
AMERICAN DEPOSITORY RECEIPT
An instrument traded on the New York Stock Exchange (NYSE) that represents ownership in a foreign company (valued in American dollars).
AMORTIZATION
The paying back of a debt by spreading the payments (which include a portion of both principal and interest) over a period of time.
AMOUNT OF INSURANCE
The limit of payment for which an insurer is liable under a policy.
ANNUITY
A continuous disbursement of a fixed sum of money for a given period of time. It may be a fixed annuity, offering a constant rate of interest, or a variable annuity, which is adjusted according to the performance of its underlying assets.
APPLICANT
The person or firm requesting insurance.
APPRAISE
To set and state in writing the true value of property.
ARBITRATION
Referral of a dispute to one or more impartial persons chosen by the disputing parties to determine their rights and/or obligations. The parties agree in advance to abide by the arbitration agreement. Each party has a chance to be heard.
ARBITRATION CLAUSE
A clause in an insurance policy that provides arbitration in the event of a disagreement.
ARSON
The deliberate and intentional burning of property by its owner or by another person.
ASSET
What a firm or individual owns.
ASSET CLASS
A way of describing a group of investments with similar performance characteristics. Commonly used categories of assets include long-term equity, international equity, government bonds, corporate bonds, precious metals, and cash.
ASSET MIX (ASSET ALLOCATION)
The allocation of money to be used for investment purposes between different types of investments such as stocks, bonds, and treasury bills.
AUTOMOBILE FLEET
A group of automobiles under the same ownership and management which may, because of the number, justify a discount in the insurance premium. Usually five or more vehicles.