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G

GAP Insurance

An automobile insurance option, available in some states, that covers the difference between a car’s actual cash value when it is stolen or wrecked and the amount the consumer owes the leasing or finance company. Mainly used for leased cars. (See Actual cash value)

General Reinsurance

See Property Casualty Insurance

Generally Accepted Accounting Principles (GAAP )

Generally accepted accounting principles (GAAP) accounting is used in financial statements that publicly-held companies prepare for the Securities and Exchange Commission. (See Statutory accounting principles / SAP)

GAAP Equity

Amount of investment a shareholder has in an entity. Total Equity – Debt.

Generic Auto Parts

Auto crash parts produced by firms that are not associated with car manufacturers. Insurers consider these parts, when certified, at least as good as those that come from the original equipment manufacturer (OEM). They are often cheaper than the identical part produced by the OEM. (See Crash parts; Aftermarket parts; Competitive replacement parts; Original equipment manufacturer parts / OEM)

Gentlemen's Agreement

A concept often applied to reinsurance agreements which emphasize the reliance upon the mutual integrity and good will of the parties to the agreement in order to solve disputes. See Honorable Undertaking.

Glass Insurance

Coverage for glass breakage caused by all risks; fire and war are sometimes excluded. Insurance can be bought for windows, structural glass, leaded glass, and mirrors. Available with or without a deductible.

Grace Period

A period (usually 31 days) after the Premium due date, during which an overdue Premium may be paid without penalty. The Policy remains in force throughout this period.

Graduated Driver Licences

Licenses for younger drivers that allow them to improve their skills. Regulations vary by state, but often restrict night time driving. Young drivers receive a learner’s permit, followed by a provisional license, before they can receive a standard drivers license.

GRAMM-LEACH-BLILEY Act

Financial services legislation, passed by Congress in 1999, that removed Depression-era prohibitions against the combination of commercial banking and investment-banking activities. It allows insurance companies, banks, and securities firms to engage in each others’ activities and own one another.

Gross Line

The maximum limit a Ceding Company or reinsurer is willing to accept before taking Credit for reinsurance coverage. Such limits are usually expressed per insured, per line of business, etc. See Net Line.

Gross Reserves

Reserves before any credit for reinsurance (retro). Also known as Assumed Reserves.

Ground Up (From the)

A phrase referring to reinsurance losses subject to the contract under consideration before the application of the retention, but after reduction because of any other reinsurance which inures to the benefit of the coverage being considered. Also sometimes used to describe losses before reduction for inuring reinsurance.

Group Insurance

A single policy covering a group of individuals, usually employees of the same company or members of the same association and their dependents. Coverage occurs under a master policy issued to the employer or association.

Guarantee Endorsement

An Endorsement added to an insurance policy covering the policyholder's mortgaged property to provide that, in the event of the insolvency of the insurance company, the reinsurer shall pay directly to the mortgagee and/or the policyholder the amount of loss which would have been recovered from the reinsurer by the insurance company. The Endorsement may provide that the reinsurer will pay the full loss amount in accordance with the insurance protection afforded by the insurance company. The Guarantee Endorsement is also known as the Mortgagee Endorsement, and is similar in concept to the Cut-Through Endorsement.

Guarantee Period

Period during which the level of interest specified under a fixed Annuity is guaranteed.

Guaranteed Cost Reinsurance

A form of reinsurance which has no adjustable or experience refund features. The final premium rate for the coverage is exactly set forth and fixed in the contact. Compare with Non-experience Rated.

Guaranteed Death Benefit

Basic death benefits guaranteed under variable Annuity contracts.

Guaranteed Income Contract / GIC

Often an option in an employer-sponsored retirement savings plan. Contract between an insurance company and the plan that guarantees a stated rate of return on invested capital over the life of the contract.

Guaranteed Insurability

An option that permits the Policyholder to buy additional stated amounts of life insurance at stated times in the future without evidence of insurability.

Guaranteed Living Benefit

A guarantee in a variable Annuity that a certain level of Annuity payment will be maintained. Serves as a protection against investment risks. Several types exists.

Guaranteed Replacement cost Coverage

Homeowners policy that pays the full cost of replacing or repairing a damaged or destroyed home, even if it is above the policy limit. (See Extended Replacement cost coverage)

Guaranty Fund

The mechanism by which solvent insurers ensure that some of the policyholder and third party claims against insurance companies that fail are paid. Such funds are required in all 50 states, the District of Columbia and Puerto Rico, but the type and amount of claim covered by the fund varies from state to state. Some states pay policyholders’ unearned premiums – the portion of the premium for which no coverage was provided because the company was insolvent. Some have deductibles. Most states have no limits on Workers Compensation payments. Guaranty funds are supported by assessments on insurers doing business in the state.

Gun Liability

A new legal concept that holds gun manufacturers liable for the cost of injuries caused by guns. Several cities have filed lawsuits based on this concept.