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REINSTATEMENT—(1) restoration of a policy that has lapsed or been cancelled for non-payment of premium; (2) the payment of a claim under many forms of insurance reduces the principal amount of the policy by the amount of the claim. Provision is usually made for a method of reinstating the policy to its original amount. This may be done automatically either with or without premium consideration or at the request of the insured.

REINSURANCE—the means by which an insurance company transfers (or "cedes") part of the risk to another company; basically, insurance for insurance companies. Reinsurance is generally used to further spread the risk when the limits or exposure are beyond the amount which the company wants to handle alone. Reinsurance may be placed on a FACULTATIVE or TREATY basis.

RENEWAL—the reinstatement in form, force, and effect of something that is about to expire. With an insurance policy it is made either by the issuance of a new policy or renewal receipt or certificate under the same conditions, to take effect upon the expiration of the old policy.

REPLACEMENT COST—VALUATION method providing that the insured will be paid the cost of replacing the damaged property without deduction for DEPRECIATION. It is essentially an exception to the principle of INDEMNITY, because the insured is receiving new property to replace used property that was lost. The usual replacement cost wording provides that the property must actually be replaced before the insured may collect a claim under it—i.e., if the insured chooses a cash payment, rather than making repairs, the coverage reverts to ACTUAL CASH VALUE.

RIDERS—another name for clauses or endorsements; but more specifically, printed forms of special provisions that are not contained in the policy contract. In bonding, life insurance, and the Personal Accident department, such clauses are called riders instead of endorsements.

SCHEDULE OF INSURANCE—the list of individual items covered under one policy, such as the various buildings, animals, and other property in farm insurance or the list of the rings, bracelets, etc., insured under a jewelry floater.

SELF-INSURANCE—setting aside of funds by an individual or organization to meet his or its losses, an accumulation of a fund to absorb fluctuations in the amount of loss, the losses to be charged against the funds so satisfied or accumulated.

SELF-INSURED RETENTION—in umbrella liability insurance, the amount (stated in the policy declarations) of a loss the insured assumes in losses where the umbrella policy provides primary coverage—i.e., those losses that are covered under the terms of the umbrella policy but not under those of any underlying policy. Unlike a DEDUCTIBLE, it does not apply to all losses. An alternative term is RETAINED LIMIT. (See DROP DOWN PROVISION)

SEPARATION OF INSUREDS—a condition found in some insurance policies that enables the insurer to treat various INSUREDS under the policy separately. For example, if a department store employee were to beat up a customer and the customer sued the employee and the store, a CGL policy insuring the business could deny coverage to the employee due to the intentional injury (CGL exclusion "a") but still provide coverage for the business.

SHORT RATE CANCELLATION—the insured receives less return premium than he would on a straight PRO RATA CANCELLATION, because the insurance company charges a penalty on top of earned premium, usually because the insured cancelled the policy mid-term.

SURETY—a person or corporation collaterally bound for the payment of money or the performance of an act or duty by another.

SURETY BOND—a contract in which one party (the SURETY) agrees to be responsible to another party (the OBLIGEE) for the obligation or performance of a third party (the PRINCIPAL).

SURVEY—(1) a careful examination of the insurance requirements of an insurance buyer and the report of such examination; (2) an insurance engineer's study of a risk for underwriting and/or accident and occupational disease prevention purposes.

TERM—a period of time for which a policy or bond is issued.

TERM INSURANCE—a common expression used mainly in life insurance for a policy that has no cash value and the benefit is payable only for a loss that arises during a specific time period. (Example: five-year term, 10-year term)