Insurance Terms Glossary

Umbrella Liability Coverage

This type of liability insurance provides excess liability protection. Your business needs this coverage for the following three reasons:

• It provides excess coverage over the "underlying" liability insurance you carry.
• It provides coverage for all other liability exposures, excepting a few specifically excluded exposures. This is subject to a large deductible of $10,000.
• It provides automatic replacement coverage for underlying policies that have been reduced or exhausted by loss.

Underinsured Motorist Coverage

Fills in when a negligent party doesn't have enough insurance to cover your loss or claim.

Underlying Limits

Associated with excess and umbrella coverages. Refers to the limit of the primary policy and where the umbrella or excess coverage begins. Most excess and umbrella policies have a required underlying limit.

Unearned Premium

The amount of the unused policy premium at the time of a cancellation or expiration relative to the policy term. For example, if the policy term is one year then the unearned premium at the six month point is 50% of the total premium. This is not an indicator of how much you'll get back if you cancel the policy because the total premium was partially based on the term.

Universal Life Insurance

A combination of term life insurance with a savings plan. This approach provides more flexibility as to the death benefit and insured contributions.