Material Misrepresentation
The policyholder / applicant makes a false statement of any material (important) fact on his/her application. For instance, the policyholder provides false information regarding the location where the vehicle is garaged.

Misquote
An incorrect estimate of the insurance premium.

Policy
The written contract of insurance.

Policy
The maximum amount a policy will pay, either overall or under a particular coverage.

Premium
The amount of money an insurance company charges for insurance coverage.

Premium Financing
A a policyholder contracts with a lender to pay the insurance premium on his/her behalf. The policyholder agrees to repay the lender for the cost of the premium, plus interest and fees.

Pro-rata Cancellation
When the policy is terminated midterm by the insurance company, the earned premium is calculated only for the period coverage was provided. For example: an annual policy with premium of $1,000 is cancelled after 40 days of coverage at the company's election. The earned premium would be calculated as follows: 40/365 days X $1,000=.110 X $1,000=$110.

Quote
An estimate of the cost of insurance, based on information supplied to the insurance company by the applicant.

Reinstatement
The restoring of a lapsed policy to full force and effect. The reinstatement may be effective after the cancellation date, creating a lapse of coverage. Some companies require evidence of insurability and payment of past due premiums plus interest.

Rider
Usually known as an endorsement, a rider is an amendment to the policy used to add or delete coverage.

Short-rate Cancellation
When the policy is terminated prior to the expiration date at the policyholder's request. Earned premium charged would be more than the pro-rata earned premium. Generally, the return premium would be approximately 90 percent of the pro-rata return premium. However, the company may also establish its own short-rate schedule.

Solicitor
A licensed employee of a fire and casualty agent or broker who may act for the agent or broker in some circumstances.

Surcharge
An extra charge applied by the insurer.

Surrender
To terminate or cancel a life insurance policy before the maturity date. In the case of a cash value policy, the policyholder may exercise one of the nonforfeiture options at the time of surrender.

Underwriting
The process of selecting applicants for insurance and classifying them according to their degrees of insurability so that the appropriate premium rates may be charged. The process includes rejection of unacceptable risks.

Waiting Period
A period of time set forth in a policy which must pass before some or all coverages begin.