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Umbrella Liability Policy

Provides broad coverage for an insured’s liability over and above liability covered by underlying contracts or retention limits.

Unauthorized Company

An insurer not permitted to sell insurance within a state, except for Surplus Lines or Reinsurance companies. All insurers must be “authorized,” which means they must obtain a Certificate of Authority from the state. However, Surplus Lines companies (such as Lloyds of London) and companies who “reinsure” other companies are exempt from this requirement. Most states allow Surplus Lines companies (who are “unauthorized”) to write the risks that authorized companies won’t take. Surplus Lines companies do not participate in the State Guarantee Fund or Association and are generally unregulated as to rates and policy forms used.

Underinsured Motorist Coverage (UIM)

Coverage on an Auto policy that stacks coverage for an insured onto inadequate coverage of an individual who negligently caused injury to that insured.


1) A salaried company employee trained in evaluating risks and selecting the proper rates and coverages. No license is required. 2) A producer, especially a Life-insurance producer, is considered to be a “Field Underwriter” or “Front Line Underwriter.” In theory, the producer is supposed to do some underwriting before submitting the application to the home office underwriter in order to assist in making a decision on the basis of known facts. The producer is required to report all facts known to him/her that might affect the risk. Remember, the producer represents the insurer, not the insured.


The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower’s creditworthiness and the quality of the property itself.


The process of evaluating a risk for the purpose of issuing insurance coverage on it. Also known as risk “classification.” The underwriter’s job is to select business that fits into the rate structure of the insurer, allowing the insurer to not only pay claims and expenses, but to make an underwriting profit.

Undivided Interest

See Tenancy in Common.

Unearned Premium

That portion of an advance premium payment that has not yet been used for coverage written. Thus, in the case of an annual premium, at the end of the first month of the premium period, 11 months of the premium would still be “unearned.” So, if the insurer cancelled a Health policy that had an annual premium of $1,200 after one month on a pro-rata basis, they would have to refund $1,100 in unearned premium.

Unenforceable Contract

A contract that has all the elements of a valid contract, yet neither party can sue the other to force performance of it. For example, an unsigned contract is generally unenforceable.

Uniform Commercial Code

A codification of commercial law that attempts to make uniform all laws relating to commercial transactions, including chattel mortgages and bulk transfers. Security interests in chattels are created by an instrument known as a security agreement. To give notice of the security interest a financing statement must be recorded.

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