Embedded and Service Contracts Glossary · Insurance

Administrator (service contracts): the person responsible for administering service contracts and for the filings a state's service contract law requires; registers with the commissioner and keeps the records (Service Contracts & Warranties).
Attach rate: the share of eligible purchases on which the buyer adds the embedded coverage offered; the demand curve of an embedded program (Embedded Insurance).
Contractual liability insurance: a policy covering a service contract or home warranty company's obligations to holders, which in Florida can replace the unearned premium reserve when it covers 100% of claim exposure (Service Contracts & Warranties).
Dealer obligor: a vehicle dealer that is itself the provider obligated on the service contracts it sells, so the program's security depends on the dealer (Vehicle Service Contracts & GAP).
Debt cancellation contract: a loan term under which a lender agrees to cancel all or part of the debt on a specified event, regulated for national banks as a banking product rather than insurance (Vehicle Service Contracts & GAP).
Embedded insurance: coverage offered inside the purchase of another product (a trip, a rental, an order, a lease, a car), by a partner who is licensed, holds a limited lines license, only refers, or sells a product that isn't insurance (Embedded Insurance).
GAP waiver: a term of a credit contract under which the creditor forgives the difference between the balance owed and the vehicle's value after a total loss; the waiver form of GAP, as opposed to GAP insurance (Vehicle Service Contracts & GAP).
Home warranty: a contract to repair or replace a home's systems and appliances (and in Florida, structural components) for a fee, regulated as its own line of business in some states (Home Warranties & Product Protection).
Limited lines license: a narrow producer license for coverage incidental to another sale, such as travel, rental car, credit, self-storage or portable electronics insurance (Embedded Insurance).
Mechanical breakdown insurance: a policy issued by an authorized insurer covering the same failures as a service contract; excluded from the NAIC model's service contract definition (Service Contracts & Warranties).
Offer presentation: the record of an embedded offer as shown to a buyer (content version, disclosures, unselected default, the buyer's choice), kept for sold and declined offers (Embedded Insurance).
Provider fee: the consideration paid for a service contract (in the NAIC model, the amount in excess of the reimbursement insurance premium); not subject to premium tax (Service Contracts & Warranties).
Provider (obligor): the person contractually obligated to perform under a service contract, which must meet the state's financial security rule (Service Contracts & Warranties).
Reimbursement insurance policy: a policy issued to a service contract provider under which the insurer discharges the provider's obligations to holders, including refunds, if the provider doesn't perform (Service Contracts & Warranties).
Repair authorization: the administrator's approval of a covered repair, with an amount and an authorization number, given before a facility repairs a vehicle or product under a service contract (Vehicle Service Contracts & GAP).
Service contract: a contract for a separately stated price and a specific duration to repair, replace or maintain property after failure from defects or wear and tear; not insurance in most states when it meets the state's regime (Service Contracts & Warranties).
Service dispatch: one technician visit on one item of a home warranty or protection plan claim, with its diagnosis and repair, replace or cash decision (Home Warranties & Product Protection).
Service warranty: Florida's term for a consumer product service contract regulated under chapter 634, Part III (Service Contracts & Warranties).
Vehicle service contract (VSC): a service contract covering repairs to a vehicle after the factory warranty, usually sold and financed at the dealer (Vehicle Service Contracts & GAP).
Warranty (Magnuson-Moss): a promise given with the product at no extra charge as part of the basis of the bargain; one that costs extra or comes after the sale is a service contract (Service Contracts & Warranties).