Glossary of Insurance Terms

R

Rate

The cost of a unit of insurance as determined by insurance companies and state regulators. The rate serves as the basis for the premium.

Rated policy

A policy issued at a higher premium to cover a person classified as a greater-than-average risk, usually because of impaired health or a dangerous occupation or hobby.

Real property

Land and most things attached to the land such as buildings and vegetation.

Referral

A process by which the primary care physician makes a request to a managed care plan on behalf of the enrollee to receive medical care from a nonparticipating provider or specialist.

Reinsurance

An agreement between two or more insurance companies by which the risk of loss is proportioned. Thus the risk of loss is spread and a disproportionately large loss under a single policy does not fall on one insurance company. Acceptance by an insurer, called a reinsurer, of all or part of the risk of loss of another insurance company. An insurance company issuing an automobile liability policy, with a limit of $100,000 per accident may reinsure its liability in excess of $10,000. A fire insurance company which issues a large policy generally reinsures a portion of the risk with one or several other companies.

Replacement cost on contents

This additional coverage pays for your losses on the basis of how much it would cost to replace or repair the item at current costs without deducting for depreciation. If the item is not replaced or repaired, only the actual cash value is payable.