Insurance Glossary

DECLARATION

The section of an insurance policy, often called the “dec page,” that summarizes key information such as the policyholder’s name and address, the insured property, coverage limits, policy period, premium, and endorsements.

DEDUCTIBLE

The portion of a covered loss paid by the policyholder before insurance benefits apply. Deductibles may be a fixed dollar amount, a percentage, or a time-based requirement. Higher deductibles generally result in lower premiums.

DEFERRED ANNUITY

An annuity contract in which income payments begin at a future date, allowing funds to accumulate on a tax-deferred basis during the accumulation period.

DEFINED BENEFIT PLAN

A retirement plan that guarantees a specific benefit amount at retirement, typically based on years of service and salary history.

DEFINED CONTRIBUTION PLAN

A retirement plan in which employers and employees contribute to individual accounts, often with employer matching contributions up to a set limit.

DEMAND DEPOSIT

Funds held in checking accounts that can be withdrawn by the account holder at any time without prior notice.

DEMUTUALIZATION

The process by which a mutual insurance company converts into a publicly traded stock company, transferring ownership from policyholders to shareholders.

DEPOSITORY INSTITUTION

A financial institution that primarily accepts deposits from the public, including banks, credit unions, and savings institutions.

DEREGULATION

The reduction or removal of government controls over insurance rates and policy forms, often applied to commercial insurance markets.

DERIVATIVES

Financial contracts whose value is based on an underlying asset, such as stocks, bonds, interest rates, or currencies, often used to manage financial risk.

DIFFERENCE IN CONDITIONS

A specialized commercial property policy designed to cover gaps and exclusions in standard insurance policies, tailored to the policyholder’s specific risks.

DIMINUTION OF VALUE

The reduction in a vehicle’s market value after it has been damaged and repaired following an accident.

DIRECT PREMIUMS

Premiums collected directly from policyholders by an insurer before deducting premiums paid for reinsurance.

DIRECT SALES / DIRECT RESPONSE

A method of selling insurance directly to consumers through company employees, mail, phone, or the Internet, without using independent agents.

DIRECT WRITERS

Insurance companies that sell policies directly to customers through exclusive agents, employees, mail, or online channels. In reinsurance, it refers to reinsurers that transact directly with insurers.

DIRECTORS AND OFFICERS LIABILITY INSURANCE (D&O)

Coverage that protects corporate directors and officers against claims alleging wrongful acts, including negligence and misrepresentation, often brought by shareholders or regulators.

DIVIDENDS

Payments returned to policyholders from an insurer’s earnings, typically viewed as a partial refund of premium rather than taxable income. Policies that pay dividends are known as participating policies.

DOMESTIC INSURANCE COMPANY

An insurance company that is incorporated under the laws of the state in which it operates.