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Insurance Company: A Brief History and Definition

Written by Michele Wilmonen. Posted in Definitions Last Updated: 07/15/2011

Like all businesses, the insurance company started out small with one product and grew into the multiple product corporations that we know today.

Files of Insurance Company Products

Insurance companies sell many different types of insurance.

Insurance companies are now everywhere and unless a person has been living under a rock, they have been a part of all of our lives at one point or another.

But, if someone ever asked you what an insurance company actually is what would you say?

Most people would only be able to answer that it is a company that sells insurance. But, the history and exactly what these companies sell can’t accurately be explained in one simple sentence.

Insurance Company History

The concept of insurance has been around since 3000 B.C. and was started to protect goods while being transported from the seller to the buyer over the seas.

The Chinese were the first to come up with the idea of insurance and it was passed on over the centuries from one culture to another. Today we still have this type of insurance along with home, auto, life, burial and health insurance. Out of all the insurance policies that are available today, the auto policy is the one that is the most frequently sold.

In 1897, the very first of these auto policies was sold in Dayton, Ohio by Travelers Insurance Company. At this time when the automobile was first being introduced, liability insurance was not mandatory to have like it is today. It was a purchase that was made by smart vehicle owners to protect themselves and their vehicle if an accident were to happen.

It wasn’t until 1927, when Massachusetts became the first state to make carrying insurance mandatory for motorists. Over the years, many states followed suit and now it is mandatory to carry the minimum of at least liability insurance on your vehicle to be allowed to drive in all states.

What do Insurance Companies Sell?

Insurance companies sell financial protection for you in the case that the item you purchased an insurance policy on becomes damaged or causes damages.

In the case of auto insurance; insurance companies sell you liability insurance so that you don’t have to worry about paying for the damages or medical bills to a person that you hit with your car out of your own pocket. Comprehensive and collision coverage are available so that you don’t have to pay to get your vehicle fixed.

Other products car insurance companies sell to protect you financially:

  • Towing/ Road Side Assistance
  • Rental Car Coverage
  • Personal Injury Protection
  • Medical Payments
  • Bodily Injury Liability
  • Property Damage Liability
  • Comprehensive Coverage
  • Collision Coverage
  • GAP Coverage

As you can see an insurance company has more to it than just “a company that sells insurance.”

C.L.U.E. Reports: Keeping Track of Your Claim Record

Written by Michele Wilmonen. Posted in Definitions Last Updated: 11/17/2015

C.L.U.E. reports keep your insurance company in the know about your past claims history so that they can charge you the appropriate premium for your coverage.

C.L.U.E. Reports are a Claims Summary

C.L.U.E. Reports provide the insurance company with a record of your past insurance claims.

When you call to get a quote for new car insurance you may be taken aback when the person giving you your quote goes over your loss history with you.

Wait a minute! You didn’t include that information when you answered their questions. But, there it is right in front of them; every claim that you have had in the last 7 years. Just exactly how did they get that information if you didn’t give it to them?

You can thank your C.L.U.E. report (or CLUE report) for enlightening this insurance company of your past claims history.

What Is a C.L.U.E. Report?

A C.L.U.E. report is a database the insurance companies use to communicate your loss history with each other. C.L.U.E. stands for Comprehensive Loss Underwriting Exchange and is administered by a company called ChoicePoint. A C.L.U.E. report will show every past car accident where a claim was filed with your insurance company and every claim that you have had on your homeowner’s policies as well.

An insurance company has to subscribe to be able to obtain or submit information to this database.

So, if your current insurance company is not a subscriber they cannot submit your claim information to C.L.U.E. and your new company will not see your claim in there. Also if the insurance company that you are getting a quote with is not a subscriber they will not be able to pull any of your past claim information from the C.L.U.E. database.

Think that you will be able to find a cheaper rate by finding a company that doesn’t subscribe to C.L.U.E. so that they will not know about your past claims history? Don’t bother. Most insurance companies today subscribe to this database and even for the few that don’t, they have their own methods to be able to find your information.

Who Uses C.L.U.E. Reports?

The main users of the C.L.U.E. database are insurance companies so that they can accurately base your rates according to your claims history. You can also request your own C.L.U.E. report on yourself for car accidents or for the property that you own.

To request your own C.L.U.E. report call 1-866-312-8076.

What if There Is a Wrong Entry On my C.L.U.E. Report?

If your insurance company is telling you that there is an entry on your C.L.U.E. report that you disagree with or you have requested your own report and there is something there that you don’t feel is correct, just like with a credit report, you have the right to dispute the entry. To file a dispute or even to have a note added to your C.L.U.E. report about a past claim, you can contact ChoicePoint.

ChoicePoint will make a note on your report for you or will contact the insurance company for more information if you are disputing the information that they reported to the C.L.U.E. database.

IIA and CPCU: Education for the Insurance Professional

Written by Michele Wilmonen. Posted in Definitions Last Updated: 05/27/2011

Education within the insurance field to enhance the ethical & technical knowledge of its professionals is just as important as in any other field of business.

Graduating from a IIA or CPCU Course

Insurance professionals enhance their knowledge of insurance by earning IIA certifications or a CPCU designation.

Just like with any other professional field, insurance has its own profession specific education and designations. Unlike in other fields though, this education is not a requirement (like a law degree) to get a job in the insurance field. But, having this education under your belt does present you as a better candidate for open insurance positions and also promotions.

What Is the IIA and CPCU?

The Insurance Institute of America (IIA) and the Chartered Property Casualty Underwriter (CPCU) designation program, provide training and education for those that are in the insurance field. Their training is specific to just property and casualty insurance (homeowners, auto and businesses).

They offer classes in claims adjusting, underwriting, reinsurance, premium auditing and also risk management.

Where did the IIA and CPCU Start?

The Insurance Institute of America was the first of the two that was started and was founded in 1909. It is still the oldest national organization that has provided education in the fields of property and liability insurance on a continuous basis.

The American Institute for Chartered Property Casualty Underwriter started the CPCU designation program and was founded in 1942. It was a combination of all the parts of the property and casualty insurance industry coming together to promote ethical behavior and competence in the technical aspects of insurance.

Both the Insurance Institute of America and the American Institute for CPCU merged in 1953 to provide education to insurance professionals as one entity.

Is There any Significance to these Acronyms?

For an insurance professional to earn a CPCU designation and be a member of the CPCU Society, it takes hard work and a long series of courses and testing. Once they have earned this designation they can put the acronym CPCU after their name in all of their business correspondence. Because it is an insurance specific designation and not something that is general knowledge, only those in the insurance field really understand and respect being able to put CPCU after you name.

But, this designation is the same as being able to put CPA (Certified Public Accountant) or RN (Registered Nurse) after your name in other fields. In insurance the CPCU designation means that this person has meet the experience requirement, passed their insurance knowledge courses and tests and also met their ethics requirements.

Do the Institutes Do Anything Else?

The institutes also include the Insurance Research Council which collects and analyzes insurance data to provide information through research reports. They also offer executive education programs through The Wharton School at the University of Pennsylvania.

In addition, there is also the Institute for Global Insurance Education (IGIE) that the institutes are a part of with the insurance institutes of nine additional nations to “provide a forum for members to discuss educational issues with global implications.”

For more information about the IIA and the CPCU visit their website at:

Insurance: What Exactly Does It Mean?

Written by Michele Wilmonen. Posted in Definitions Last Updated: 05/16/2011

Defining insurance, understanding the concept of indemnity and covered perils and how it relates to auto insurance.

Insurance Files

Insurance puts you back to where you were before a covered peril.

We all know what people mean when they are talking about insurance, but how many people can quote a solid definition?

The Webster’s dictionary description of insurance is: “Coverage by contract whereby one party undertakes to indemnify or guarantee another against loss by a specified contingency or peril”.  Do you understand now? If not, don’t worry we will explain further.

Indemnify After A Loss

As the definition says above, insurance is a contract to indemnify. The word indemnify is not a word that is used in everyday language, but it’s an important word here. Indemnify means to return someone to the condition that they were in prior to an incident happening.

As an example, if your auto insurance company were to indemnify you after you had an accident where you vehicle was a total loss, they would pay you for the worth of the vehicle prior to the accident. A lot of people get upset that their insurance company doesn’t pay them enough for their vehicle and believe they are actually in a worse place as they now have to go and get a new vehicle.

But remember this, your contract with your insurance company is to put you back into the very same place that you were prior to the accident, which means that they give you what the car is worth so that you can buy a replacement car that is similar.  If they were to pay you more so that you can get a better or a newer car, you are no longer being put back to where you were you as you are actually being put in a better position than you were in prior to the accident and this is not indemnification.

Specific Contingency or Peril

A specific contingency or peril is simply what you are purchasing the insurance policy to protect you against. If you purchase a commercial auto policy, you are purchasing protection for your vehicles that are used for your business. If you purchase health insurance, you are purchasing protection from high medical bills that you may have due to health issues. The policy that you purchase is specific to what you need protection for.

At the same time because this is specific, you cannot use one insurance policy to cover every single thing that you need protection for. A health insurance policy cannot protect your home from a fire and your commercial auto policy cannot protect your personal motorcycle in the case of an accident.

The insurance policy that you purchase also has specific perils that it does and does not cover. A peril is something bad that can happen and cause damage to the item that you are insuring. If you are concerned about a specific peril, you need to consult your insurance agent to make sure that you have coverage. If your basic policy does not provide the coverage that you need, they may be able to suggest additional coverage that you can add or a different insurance company that offers the coverage.

Insurance Commissioner: Helping Insurance Work In Your State

Written by Michele Wilmonen. Posted in Definitions Last Updated: 05/16/2011

The Insurance Commissioner – or Director – for your state handles every insurance complaint, insurance license application and rate request that sets your insurance premiums.

The Insurance Commissioner is found in the state capital

Your state Insurance Commissioner is located in your state capital.

When we hear the word commissioner, the first two associations that come to mind for most is a police commissioner and Commissioner Gordon from the series Batman®. The majority of us have no clue that there is another commissioner that affects our lives almost daily and that is our state’s Insurance Commissioner.

The decisions that are made by your Insurance Commissioner’s office have an effect on every insurance policy that you have purchased to protect your belongings and your life.

Who Is the Insurance Commissioner?

The Insurance Commissioner, also known in some states as the Insurance Director, is the head of all things insurance in your state. The actual commissioner is just the head of the department and oversees the operations, they are not the person that you would see directly if you had to get an insurance license or file a complaint.

The Insurance Commissioner’s office works the same as any other government department, you have the head of the department as a whole (Insurance Commissioner or Director), then you have someone that is in charge of each smaller department (life insurance, personal insurance, ect) and then you have all the employees below them that do most of the work.

So when you are advised to file a complaint or ask a question about an insurance agent in your area with your Insurance Commissioner, you will actually be contacting the Insurance Commissioner’s office and an employee that works in that office will be helping you.

Where is the Insurance Commissioner located?

Insurance Commissioners are located in every state and are usually located in your state’s capital.  If you wish to find out information about your insurance company or to file a complaint you would contact the Insurance Commissioner that is in your state, you do not have to find out what state the insurance company is based out of. This is because your insurance company had to be licensed to do business in your state and is subject to your state’s insurance rules and regulations, which are most likely different from the state that the insurance company is based out of.

To find out who to contact in your state the National Association of Insurance Commissioners has a map on their site that will not only tell you who your Insurance Commissioner is, but also has a link that will take you straight to your state’s insurance website.

What does the Insurance Commissioner Do?

The office of the Insurance Commissioner (or Insurance Director) handles everything that you can possibly imagine that is connected to insurance. This means complaints about insurance companies that write in their states, complaints about rates, they approve or deny an insurance companies request to raise or set insurance rates in their state, they license companies and agents, offer continuing education and they enforce and create the insurance rules and regulations for the state.  They can also answer questions that you may have about the reliability of specific agents or insurance companies that write in your state.

The Insurance Commissioner is not just in charge of auto insurance either, they are the authority for all fields of insurance; auto, home, commercial and health just to name a few.

®Batman is the property of DC Comics.

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