Net Admitted Assets – total of assets whose values are permitted by state law to be included in the annual statement of the insurer. Mutual Insurance Holding Company – a company organized as a mutual and owning a capital stock is insurance expense a debit or credit insurer or insurers for the benefit of pooling risk for many people, typically those in the same industry. Municipal Bond Guarantee Insurance – coverage sold to municipalities to guarantee the principle payment on bonds issued. Mobile Homes under Transport – coverage for mobile homes while under transport for personal or commercial use. Joint-Life Annuity – an annuity contract that ceases upon the death of the first of two or more annuitants. International – includes all business transacted outside the U.S. and its territories and possessions where the appropriate line of business is not determinable.
- One of the most common pitfalls in expense management is the incorrect categorization of expenses.
- Disability Income – Long-Term – policies that provide a weekly or monthly income benefit for more than five years for individual coverage and more than one year for group coverage for full or partial disability arising from accident and/or sickness.
- Option – an agreement giving the buyer the right to buy or receive, sell or deliver, enter into, extend or terminate, or effect a cash settlement based on the actual or expected price, level, performance or value of one or more Underlying Interests.
- FAIR Plan – Fair Access to Insurance Requirements – state pools designed to provide insurance to property owners who are unable to obtain property insurance through conventional means.
- Independent Contractor – an individual who is not employed for a company but instead works for themselves providing goods or services to clients for a fee.
- Common timing issues include recognizing expenses too early or too late, failing to account for prepaid expenses or accruals, and inconsistent application of accounting principles across reporting periods.
What is incurred loss insurance?
FAIR Plan – Fair Access to Insurance Requirements – state pools designed to provide insurance to property owners who are unable to obtain property insurance through conventional means. Encumbrance – outstanding mortgages or other debt related to real estate and virtual accountant any unpaid accrued acquisition or construction costs. Disability Income – a policy designed to compensate insured individuals for a portion of the income they lose because of a disabling injury or illness. Directors & Officers Liability – liability coverage protecting directors or officers of a corporation from liability arising out of the performance of their professional duties on behalf of the corporation. Difference In Conditions (DIC) Insurance – special form of open-peril coverage written in conjunction with basic fire coverage and designed to provide protection against losses not reimbursed under the standard fire forms.
Related Terms with Definitions
Medicare Advantage Plan – an HMO, PPO, or Private Fee-For Service Plan that contracts with Medicare Advantage Prescription Drug Plan also includes drug benefits. The plan may provide extra coverage such as vision, hearing, dental, and/or health and wellness programs. Medicare pays a fixed amount for insured’s care every month to the companies offering Medicare Advantage plans. Living benefits rider – a rider attached to a life insurance policy providing long term care for the terminally ill. Liquor Liability – coverage for the liability of an entity involved in the retail or wholesale sales of alcoholic beverages, or the serving of alcoholic beverages, to persons who have incurred bodily injury or property damage arising from an intoxicated person.
Advance Your Accounting and Bookkeeping Career
In most cases, an insurer is unaware of all claims that have been filed at a specific point in time or for the current accounting period. It allows for better matching of revenues with the expenses incurred to generate them, providing a more accurate view of profitability. Proper expense recognition practices contribute to more reliable financial forecasting and budgeting.
- Group Health – health insurance issued to employers, associations, trusts, or other groups covering employees or members and/or their dependents, to whom a certificate of coverage may be provided.
- Proper expense recognition is a cornerstone of sound financial practices and contributes significantly to a company’s overall financial health and reputation.
- Rent expense is typically incurred on a daily basis, regardless of when the payment is due.
- Travel Coverage – covers financial loss due to trip cancellation/interruption; lost or damaged baggage; trip or baggage delays; missed connections and/or changes in itinerary; and casualty losses due to rental vehicle damage.
- The distinction between an incurred and paid expense is whether or not an outstanding fee has been refunded.
Common examples include interest on loans, employee wages earned but not yet paid, and taxes incurred but not yet due. Marketing and advertising expenses are usually incurred when the service is rendered or the advertisement is published. Insurance premiums are usually considered incurred over the coverage period, not just when the payment is made. Incurred expenses represent a fundamental concept that extends beyond simple payment transactions. Understanding the details of expense recording and its influence on financial records is essential for sustaining strong business finances. Workers’ Compensation – insurance that covers an employer’s liability for injuries, disability or death to persons in their employment, without regard to fault, as prescribed by state or federal workers’ compensation laws and other statutes.
- Investments with original maturities of three months or less qualify under this definition.
- Determining the timing of expense incurrence can significantly impact financial reporting and decision-making processes.
- Such case law seems to be the predominant consensus—that the mere entering into legal liability of the expense gives rise to the ALE payment.
- Joint-Life Annuity – an annuity contract that ceases upon the death of the first of two or more annuitants.
- Understanding these methods is crucial for determining when an expense is considered incurred and how it affects financial reporting.
- Variable Universal Life – combines the flexible premium features of universal life with the component of variable life in which excess credited to the cash value of the account depends on investment results of separate accounts.
Time Passage
Conditions – requirements specified in the insurance contract that must be upheld by the insured to qualify for indemnification. Commercial Mortgage-Backed Securities – a type of mortgage-backed security that is secured by the loan on a commercial property. Combinations – a special form of net sales package policy composed of personal automobile and homeowners insurance.