Term
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Definition
| Any condition or situation that presents the possibility of a loss. |
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Term
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Definition
| A mathematical principle stating that as the number of similar but independent exposure units increases, the relative accuracy of predictions about future outcomes (losses) based on these exposure units also increases. |
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Term
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Definition
| A measure of the loss exposure assumed by the insurer, used in pricing insurance. |
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Term
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Definition
| Any condition or situation that presents the possibility that a property loss will happen. |
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Term
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Definition
| Land, buildings, and other structures attached to the land or embedded in it. |
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Term
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Definition
| All tangible or intangible property that is not real property. |
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Term
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Definition
| Revenue minus expenses and taxes during a given time period. |
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Term
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Definition
| An indirect loss caused by a reduction in revenue, an increase in expenses, or both during a given time period. |
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Term
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Definition
| Any condition or situation that presents the possibility of a claim alleging legal responsibility of a person or business for injury or damage suffered by another party. |
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Term
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Definition
| A claim for monetary damages because of injury to another party or damage to another party's property. |
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Term
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Definition
| Any condition or situation that presents that possibility of a financial loss to an individual or a family by such causes as death, sickness, injury, or unemployment. |
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Term
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Definition
| Any condition or situation that presents the possibility of a financial loss to a business becuase of the death, disability, retirement, or resignation of key employees. |
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Term
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Definition
| To restore a party who has sustained a loss to the same financial position that party held before the loss occurred. |
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Term
| Fire and Allied Lines Insurance |
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Definition
| Insurance that covers direct damage to or loss of insured property. |
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Term
Business Income Insurance
(Business Interruption Insurance) |
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Definition
| Insurance that covers the loss of net income or additional expenses incurred by a business as the result of a covered loss to its property. |
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Term
|
Definition
| Insurance that covers money, securities, merchandise, and other property from various causes of loss such as burglary, robbery, theft, and employee dishonesty. |
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Term
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Definition
| Insurance that covers ships and their cargo against such causes of loss as fire, lightning, and 'perils of the seas'. |
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Term
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Definition
| Insurance that covers miscellaneous types of property, such as movable property, goods in domestic transit, and property used in transportation and communication. |
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Term
| Auto Physical Damage Insurance |
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Definition
| Insurance that covers loss of or damage to specified vehicles from collision, fire, theft, or other causes. |
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Term
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Definition
| Insurance that covers an insured's legal liability arising out of the ownership, maintenance, or use of an automobile. |
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Term
| Commercial General Liability Insurance |
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Definition
| Insurance that covers liability loss exposures arising from a business organization's premises and operations, its products, or its completed work. |
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Term
| Personal Liability Insurance |
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Definition
| Insurance that provides liability coverage to individuals and families for bodily injury and property damage arising from the insured's personal premises or activities. |
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Term
| Professional Liability Insurance |
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Definition
| Insurance that provides liability coverage to professionals for errors and omissions arising out of their professional duties. |
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Term
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Definition
| Life insurance that provides lifetime protection, accrues cash value, and has premiums that remain unchanged during the insured's lifetime. |
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Term
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Definition
| The monetary amount, considered to be a form of savings, that accumulates in a whole life insurance policy. |
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Term
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Definition
| Life insurance that provides coverage for a specified period, such as ten or twenty years, with no cash value. |
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Term
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Definition
| Insurance that provides life-insurance protection and a savings component. |
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Term
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Definition
| Insurance that covers medical expenses that result from illness or injury. |
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Term
| Disability Income Insurance |
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Definition
| A type of health insurance that provides periodic income payments to an insured who is unable to work because of sickness or injury. |
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Term
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Definition
| An insurer that is owned by its stockholders and formed as a corporation for the purpose of earning a profit for the stockholders. |
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Term
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Definition
| An insurer that is owned by its policyholders and formed as a corporation for the purpose of providing insurance to them. |
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Term
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Definition
| The process by which a mutual insurer owned by its policyholders becomes a stock company, which is then owned by its stockholders. |
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Term
Reciprocal Insurance Exchange
(Interinsurance Exchange) |
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Definition
| An insurer owned by its policyholders, formed as an unincorporated association for the purpose of providing insurance coverage to its members (called Subscribers), and managed by an attorney-in-fact. |
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Term
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Definition
| The policyholders of a reciprocal insurance exchange who agree to insure each other. |
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Term
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Definition
| In a reciprocal insurance exchange, the contractually authorized manager of the reciprocal who administers its affairs and carries out its insurance transactions. |
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Term
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Definition
| An insurer formed as a subsidiary of its parent company, organization, or group, for the purpose of providing all or part of the insurance on the parent company or companies. |
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Term
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Definition
| A contractual agreement that transfers some or all of the potential costs of insured loss exposures from policies written by one insurer to another insurer. |
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Term
|
Definition
| The insurer that transfers some or all of the potential costs of its insured loss exposures to another insurer. |
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Term
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Definition
| The insurer that assumes some or all of the potential costs of insured loss exposures of the primary insurer in a reinsurance contractual agreement. |
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Term
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Definition
| A state workers' compensation insurance plan that is the only source of workers' compensation insurance allowed in that state. |
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Term
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Definition
| A state workers' compensation insurance plan that competes with private insurers to provide workers' compensation insurance. |
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Term
Residual Market Plan
(Shared Market Plan) |
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Definition
| A program that makes workers' compensation insurance available to those who cannot obtain voluntary coverage from private insurers. |
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Term
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Definition
| A state fund that provides a system to pay the claims of insolvent insurers, generally funded by assessments collected from all insurers licensed in the state. |
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Term
| National Association of Insurance Commissioners (NAIC) |
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Definition
| An association of the commissioners of the insurance departments of each state, the District of Columbia, and the U.S. territories and possessions, whose purpose is to coordinate insurance regulation activities among the various state insurance deparments. |
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Term
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Definition
| A document drafted by the NAIC, in a style similar to a state statute, that reflects the NAIC's proposed solution to a given problem or issue and provides a common basis to the states for drafting laws that affect the insurance industry. |
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Term
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Definition
| The process insurers use to calculate the rates that determine the premium to charge for insurance coverage. |
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Term
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Definition
| The amount per exposure unit for insurance coverage, used to arrive at a premium when multiplied by the number of exposure units. |
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Term
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Definition
| The price of the insurance coverage provided for a specified period. |
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Term
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Definition
| A person who uses complex mathematical methods and technology to analyze loss data and other statistics and to develop systems for determining insurance rates. |
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Term
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Definition
| A ratemaking concept through which actuaries base rates on calculated loss experience to place insureds with similar characteristics in the same rating class. |
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Term
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Definition
| A rating concept that holds that rate structures discriminate unfairly if they impose a higher rate on an insured for factors beyond the insured's control, such as age or gender. |
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Term
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Definition
| Applying different standards or methods of treatment to insureds who have the same basic characteristics and loss potential, such as charging higher-than-normal rates for an auto insurance applicant based solely on the applicant's race, religion, or ethnic background. |
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Term
|
Definition
| An insurance rating law that requires rates to be approved by the state insurance department before they can be used. |
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Term
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Definition
| An insurance rating law that requires prior approval only if the new rates are a specified percentage above or below previously filed rates. |
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Term
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Definition
| An insurance rating law that requires insurers to file rates with the state insurance department but does not require insurers to wait for approval before using the rates. |
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Term
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Definition
| An insurance rating law that requires rates to be filed within a specified period after they are first used in the state. |
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Term
Open Competition
(No-file Law) |
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Definition
| An insurance rating law that does not require rates to be filed with the state. |
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Term
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Definition
| An insurance rating law that requires all insurers to adhere to rates established by the state insurance department for a particular type of insurance. |
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Term
| Exempt Commercial Policyholders |
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Definition
| An organization with sufficient size and sophistication to be permitted to buy property, liability, and automobile insurance using rates and/or policy forms not filed with state insurance departments. |
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Term
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Definition
| Classes of inland marine insurance that are exempt from filing requirements. |
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Term
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Definition
| The ability of an insurer to meet its financial obligations as they become due, even those resulting from insured losses that may be claimed several years in the future. |
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Term
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Definition
| The process, conducted by state insurance refulators, of verifying the solvency of insurers and determining whether their financial condition enables them to meet their financial obligations and to remain in business. |
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Term
| Insurance Regulatory Information System (IRIS) |
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Definition
| An information and early-warning system established and operated by the NAIC to monitor the financial soundness of insurers. |
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Term
Licensed Insurer
(Admitted Insurer) |
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Definition
| An insurer authorized by the state insurance department to sell insurance within that state. |
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Term
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Definition
| An insurer incorporated in the same state in which it is writing insurance. |
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Term
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Definition
| An insurer licensed to operate in a state but incorporated in another state. |
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Term
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Definition
| An insurer licensed in a U.S. state but incorporated in another country. |
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Term
| Market Conduct Regulation |
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Definition
| Regulation of the practices of insurers in regard to four areas of operation: sales practices, underwriting practices, claim practices, and bad-faith actions. |
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Term
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Definition
| Collectively, insurers who voluntarily offer insurance coverages at rates designed for customers with average or better-than-average loss exposures. |
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Term
| Excess and Surplus Lines (E&S) Insurance |
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Definition
| Insurance coverages unavailable in the standard market that are written by nonadmitted insurers. |
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Term
Nonadmitted Insurer
(Unlicensed Insurer) |
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Definition
| An insurer that is not licensed in many of the states in which it operates and that writes E&S insurance coverages. |
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Term
|
Definition
| A claim payment that an insurer has made. |
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Term
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Definition
| The sum of paid losses and changes in loss reserves for a particular period. |
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Term
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Definition
| Amounts designated by insurers to pay claims for losses that have already occurred but are not yet settled. |
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Term
| Net Investment Gain or Loss |
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Definition
| An insurer's gains or losses from the sale of invested assets plus net investment income. |
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Term
| Net Underwriting Gain or Loss |
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Definition
| An insurer's earned premiums minus its losses and underwriting expenses for a specific period. |
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Term
| Overall Gain or Loss from Operations |
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Definition
| Net investment gain or loss plus net underwriting gain or loss. |
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Term
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Definition
| Types of property, both tangible and intangible, owned by an entity. |
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Term
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Definition
| Types of property, such as cash and stocks, that regulators allow insurers to show as assets on their financial statements. |
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Term
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Definition
| Types of property, such as office furniture and equipment, that regulators do not allow insurers to show as assets on financial statements because these assets cannot readily be converted to cash at or near their market value. |
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Term
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Definition
| Financial obligations, or debts, owed by a company to another entity, usually the policyholder in the case of an insurer. |
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Term
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Definition
| The amount estimated and set aside by insurers to pay claims for losses that have already occurred but are not yet settled. |
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Term
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Definition
| The total of an insurer's unearned premiums on all policies at a particular time. |
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Term
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Definition
| An insurer's total admitted assets minus its total liabilities. |
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Term
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Definition
| A financial statement that shows a company's financial position at a particular point in time. For an insurer, it includes the insurer's admitted assets, liabilities, and policyholders' surplus. |
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Term
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Definition
| A financial statement that shows a company's revenues, expenses, and net income for a particular period, usually one year. |
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Term
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Definition
| An insurer's incurred losses (including loss adjustment expenses) for a given period divided by its earned premiums for the same period. |
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Term
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Definition
| An insurer's incurred underwriting expenses for a given period divided by its written premiums for the same period. |
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Term
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Definition
| An insurer's policyholder dividends for a given period divided by its earned premiums for the same period. |
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Term
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Definition
| The sum of the loss ratio and the expense ratio. |
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Term
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Definition
| Net investment income divided by earned premiums for a given period. |
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Term
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Definition
| The combined ratio minus the investment income ratio. |
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Term
Capacity Ratio
(Premium-to-surplus ratio) |
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Definition
| Written premiums divided by policyholders' surplus. |
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Term
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Definition
| A person who sells insurance products for one or more insurers. |
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Term
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Definition
| A legal relationship that exists when one party, the agent represents or acts on behalf of another party, the principal. |
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Term
|
Definition
| In the agency relationship, the party that is authorized by the principal to act on the principal's behalf. |
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Term
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Definition
| In the agency relationship, the party that authorizes the agent to act on its behalf. |
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Term
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Definition
| A legal representative of one or more insurers for which the representative has a contractual agreement to sell insurance. |
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Term
Agency Contract
(Agency Agreement) |
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Definition
| A written agreement between an insurer and an agent that specifies, among other things, the scope of the agent's authority to conduct business for the insurer. |
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Term
| Error and Omissions (E&O) |
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Definition
| Negligent acts committed by a person conducting insurance business that give rise to legal liability for damages; a failure to act that creates legal liability. |
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Term
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Definition
| The authority that the principal specifically grants to the agent. |
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Term
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Definition
| An insurance agent's authority to effect coverage on behalf of the insurer. |
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Term
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Definition
| An oral or written agreement to provide temporary insurance coverage until a formal written policy is issued. |
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Term
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Definition
| The authority implicitly conferred on an agent by custom, usage, or a principal's conduct indicating intention to confer such authority. |
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Term
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Definition
| A third party's reasonable belief that an agent has authority to act on the principal's behalf. |
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Term
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Definition
| A business, operated for the benefit of its owner (or owners) that sells insurance, usually as a representative of several unrelated insurers. |
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Term
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Definition
| A producer who works for an independent agency who can be either the owner or an employee of the agency. |
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Term
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Definition
| The record of an insurance agency's present policyholders and the dates their policies expire. |
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Term
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Definition
| An independent business owner or firm that sells insurance by representing customers rather than insurers. |
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Term
| Managing General Agency (MGA) |
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Definition
| An independent business or organization that appoints and supervises independent agents for insurers that use the independent agency system. |
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Term
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Definition
| An agent that has a contract to sell insurance exclusively for one insurer or a group of related insurers. |
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Term
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Definition
| A system of insurance marketing that uses sales representatives who are employees of the insurer. |
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Term
|
Definition
| A system of insurance marketing that relies primarily on mail, phone, and/or internet sales. |
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Term
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Definition
| An insurer's use of more than one marketing system or distribution channel. |
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Term
Sales Commission
(Commission) |
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Definition
| A percentage of the premium that the insurer pays to the agency or producer for new policies sold or existing policies renewed. |
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Term
|
Definition
| A commission that an insurer pays, usually annually, to an independent agency that is based on the premium volume and profitability level of the agency's business with that insurer. |
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Term
|
Definition
| An insurer employee who visits agents representing the insurer, develops and maintains sound working relationships with those agents, and motivates the agents to produce a satisfactory volume of profitable business for the insurer. |
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Term
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Definition
| An insurer employee who works in the insurer's office in an underwriting position but also travels to visit and maintain rapport with agents and sometimes clients. |
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Term
| Unfair Trade Practices Law |
|
Definition
| State law that specifies certain prohibited business practices. |
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Term
|
Definition
| A practice, prohibited in most states, of offering a cash payment or something of value to an applicant as an inducement to buy or maintain insurance. |
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Term
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Definition
| The process of selecting insureds, pricing coverage, determining insurance policy terms and conditions, and then monitoring the underwriting decisions made. |
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Term
|
Definition
| An insurer employee who evaluates applicants for insurance, selects those that are acceptable to the insurer, prices coverage, and determines policy terms and conditions. |
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Term
|
Definition
| A situation that occurs because people with the greatest probability of loss are the ones most likely to purchase insurance. |
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Term
|
Definition
| The amount of business an insurer is able to write, usually based on a comparison of the insurer's written premiums to its policyholders' surplus. |
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Term
|
Definition
| A type of insurance rate that applies to all insureds in the same rating category or rating class. |
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Term
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Definition
| A rating plan that modifies class rates to reflect loss characteristics of a particular insured. |
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Term
Individual Rate
(Specific Rate) |
|
Definition
| A type of insurance rate that reflects the unique characteristics of an insured or the insured's property. |
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Term
|
Definition
| A type of individual rate that is used to develop a premium for a unique exposure for which there is not established rate. |
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Term
|
Definition
| A policy form that contains standard insurance wording; it is used by insurers that subscribe to the services of insurance advisory organizations. |
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Term
|
Definition
| A condition that increases the frequency or severity of a loss. |
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Term
Book of Business
(Portfolio) |
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Definition
| A group of policies with a common characteristic, such as territory or type of coverage. Can also refer to all policies written by a particular insurer or agency. |
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Term
|
Definition
| An arrangement whereby a reinsurer agrees to automatically reinsure a portion of all eligible insurance of the primary insurer. |
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Term
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Definition
| An arrangement whereby the primary insurer chooses which policies to submit to the reinsurer and the reinsurer can accept or reject any policies submitted. |
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Term
|
Definition
| The scope of decisions that an underwriter can make without receiving approval from someone at a higher level. |
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Term
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Definition
| A process in which members of the home office underwriting department examine files to see whether underwriters are following underwriting guidelines. |
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Term
Expert Systems
(Knowledge-based systems) |
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Definition
| Computer software programs that supplement the underwriting decision-making process. These systems ask for the information necessary to make an underwriting decision, ensuring that no information is overlooked. |
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Term
|
Definition
| A condition that may lead a person to intentionally cause or exaggerate a loss. |
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Term
Attitudinal Hazard
(Morale Hazard) |
|
Definition
| A hazard that involves carelessness about, or indifference to, potential loss on the part of an insured or applicant. |
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Term
|
Definition
| A tangible characteristic of property, persons, or operations that tends to increase the frequency or severity of loss. |
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Term
|
Definition
| A characteristic of the legal or regulatory environment that hampers an insurer's ability to collect a premium commensurate with the exposure to loss. |
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Term
|
Definition
| A demand by a person or business seeking to recover from an insurer for a loss that may be covered by an insurance policy. |
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Term
|
Definition
| Anyone who submits a claim to an insurer. |
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Term
|
Definition
| The insured in an insurance contract. |
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Term
|
Definition
| A person or business who is not a party to the insurance contract but who asserts a claim against the insured. |
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Term
Claim Representative
(Adjuster) |
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Definition
| A person responsible for verifying coverage, determining the cause of loss, determining the amount of damages or extent of loss, and settling or otherwise concluding a claim. |
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Term
| Staff Claim Representative |
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Definition
| An insurer employee who performs some or all of the insurer's claim handling activities. |
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Term
| Inside Claim Representative |
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Definition
| An insurer employee who handles claims that can be settled by phone, mail, or e-mail from inside the insurer's office. |
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Term
Outside Claim Representative
(Field Claim Representative) |
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Definition
| An insurer employee who handles claims that cannot be handled easily by phone, mail, or e-mail. |
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Term
|
Definition
| A claim representative who offers claim handling services to insurers for a fee. |
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Term
|
Definition
| Authority expressly given to a producer by an insurer to settle and pay certain types of claims up to a specified limit. |
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Term
|
Definition
| A person hired by an insured to represent the insured in handling a claim. |
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Term
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Definition
| An arrangement in which an organziation pays for its losses with its own resources rather than by purchasing insurance. |
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Term
| Third-party Administrator (TPA) |
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Definition
| An organization that contracts to provide administrative services, including claim handling, to other businesses. |
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Term
| Reservation of Rights Letter |
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Definition
| A notice sent by the insurer advising the insured that the insurer is proceeding with a claim investigation but that the insurer retains its right to deny coverage later. |
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Term
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Definition
| A coverage verification criterion that exists when a person or other entity would suffer a financial loss if the subject property were damaged. |
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Term
|
Definition
| The cost to replace property minus an allowance for the property's depreciation. |
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Term
|
Definition
| The allowance for physical wear and tear or technological or economic obsolescence. |
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Term
|
Definition
| The cost to repair or replace property using new materials of like kind and quality with no deduction for depreciation. |
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Term
|
Definition
| A method of valuing property in which the insurer and the insured agree, at the time the policy is written, on the maximum amount that will be paid in the event of a total loss. |
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Term
|
Definition
| The insurer's right, assumed from the insured, to recover payment from a third party that is legally responsible for the loss. |
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Term
|
Definition
| The insurer's rights to recover and sell or otherwise dispose of insured property on which the insurer has paid a total loss or a constructive total loss. |
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Term
|
Definition
| A loss such that property cannot be repaired for less than its actual cash value minus the anticipated salvage value. |
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Term
|
Definition
| Money claimed by, or a monetary award to, a party who has suffered bodily injury or property damage for which another party is legally responsible. |
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Term
|
Definition
| Damages intended to compensate a victim for actual harm suffered; these damages include special damages and general damages. |
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Term
|
Definition
| Compensatory damages for specific, out-of-pocket expenses, such as doctor and hospiital expenses. |
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Term
|
Definition
| Compensatory damages awarded for losses that do not have a specific economic value, such as pain and suffering. |
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Term
|
Definition
| Damages awarded by a court to punish wrongdoers who cause bodily injury or property damage to others and to deter others from committing similar wrongs. |
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Term
|
Definition
| A loss reserve assigned to an individual claim. |
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Term
| Unfair Claim Practices Law |
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Definition
| A state law that specifies illegal claim practices. |
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Term
|
Definition
| A complete written contract of insurance. |
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Term
|
Definition
| A legally enforceable agreement between two or more parties. |
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Term
|
Definition
| Something of value given by each party to a contract. |
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Term
|
Definition
| A contract in which one or more parties must perform only under certain conditions. |
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Term
|
Definition
| An obligation to act in complete honesty and to disclose all relevant facts. |
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Term
|
Definition
| An intentional failure to disclose a material fact. |
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Term
|
Definition
| In insurance, a fact that would affect the insurer's decision to provide or maintain insurance or to settle a claim. |
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Term
|
Definition
| A false statement of a material fact on which a party relies. |
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Term
|
Definition
| A contract to which one party (the insured) must adhere as written by the other party (the insurer). |
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Term
|
Definition
| A contract in which the insurer agrees, in the event of a covered loss, to pay an amount directly related to the amount of the loss. |
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Term
|
Definition
| The principle that insurance should provide a benefit no greater than the loss suffered by the insured. |
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Term
|
Definition
| A policy in which the insurer pays a stated amount in the event of a specified loss (usually a total loss), regardless of the actual value of the loss. |
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Term
Declarations Page
(Declarations, Dec) |
|
Definition
| An insurance policy information page or pages providing specific details about the insured and the subject of the insurance. |
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Term
|
Definition
| An insurance policy statement indicating that the insurer will under certain circumstances, make a payment or provide a service. |
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Term
|
Definition
| A policy provision that eliminates coverage for specified exposures. |
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Term
|
Definition
| Any provision that qualifies an otherwise enforceable promise of the insurer. |
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Term
Manuscript Policy
(Manuscript Endorsement) |
|
Definition
| An insurance policy that is specifically drafted according to terms negotiated between a specific insured (or group of insureds) and an insurer. |
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Term
|
Definition
| A single document that contains all the agreements between the insurer and the insured; forms a complete policy by itself. |
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Term
|
Definition
| A document that amends an insurance policy. |
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Term
|
Definition
| A policy consisting of several different documents, none of which by itself forms a complete contract. |
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Term
|
Definition
| Termination of a policy, by either the insurer or the insured, during the policy term. |
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Term
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Definition
| The unused premium (based on the pro rata portion of the premium for the number of days remaining in the policy) returned to the insured when a policy is canceled. |
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Term
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Definition
| A refund of premium that is less than what the pro rata refund would be; sometimes used when the insured cancels a policy midterm. |
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Term
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Definition
| A policy condition providing that if a policy form is broadened at no additional premium, the broadened coverage automatically applies to all existing policies of the same type. |
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Term
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Definition
| The transfer of rights or interest in a policy to another party by the insured. |
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Term
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Definition
| Currency, coins, bank notes, and sometimes traveler's checks, credit card slips, and money orders held for sale to the public. |
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Term
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Definition
| Written instruments representing either money or other property, such as stocks and bonds. |
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Term
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Definition
| In insurance, a broad term that includes cars, trucks, trailers, buses, and other motorized vehicles designed for road use. |
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Term
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Definition
| Various types of land vehicles and the equipment attached to them, such as tractors, buildozers, forkligts, and backhoes, designed primarily for off-road use. |
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Term
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Definition
| A vehicle used for sports and recreational activities, such as a dune buggy, all-terrain vehicle, or dirt bike. |
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Term
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Definition
| The actual means by which property is damaged or destroyed. |
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Term
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Definition
| A specific cause of loss listed and described in an insurance policy. |
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Term
Special Form
(Open Perils Policy) |
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Definition
| A policy that provides coverage for any direct loss to property unless the loss is caused by a peril specifically excluded. |
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Term
Mortgagee
(Mortgageholder) |
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Definition
| A lender that loans money on a home, building, or other real property. |
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Term
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Definition
| The person or organization that borrows money from a mortgagee to finance the purchase of real property. |
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Term
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Definition
| A person or business that holds property entrusted to them by others. |
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Term
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Definition
| Any type of insurance that indemnifies an insured who suffers a financial loss because property has been lost, stolen, damaged, or destroyed. |
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Term
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Definition
| A policy designed to cover property that floats, or moves, from location to location. |
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Term
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Definition
| A fire that stays in its intended place, such as a fire in a fireplace. |
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Term
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Definition
| A fire that leaves its intended place, such as a spark that escapes a fireplace and sets the carpet on fire. |
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Term
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Definition
| The event that sets in motion an uninterrupted chain of events contributing to a loss. |
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Term
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Definition
| Damage caused by a motor vehicle to some other kind of property. |
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Term
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Definition
| Willful and malicious damage to or destruction of property. |
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Term
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Definition
| Accidental leakage or discharge of water or other substance from an automatic sprinkler system. |
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Term
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Definition
| A cause of loss involving the sudden sinking or collapse of land into underground empty spaces created by the action of water on limestone or similar rock formation. |
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Term
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Definition
| A cause of loss involving the sinking of ground surface when underground open spaces, resulting from the extraction of coal or other minerals, are gradually filled in by rock and earth from above. |
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Term
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Definition
| A cause of loss involving lava flow, ash, dust, particulate matter, airborne volcanic blast, or airborne shock waves resulting from a volcanic eruption. |
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Term
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Definition
| The taking of property from inside a building by someone who unlawfully enters or exits the building. |
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Term
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Definition
| The taking of property from a person by someone who has caused or threatened to cause the person harm. |
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Term
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Definition
| Any act of stealing; includes burglary and robbery. |
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Term
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Definition
| Damage to a motor vehicle caused by its impact with another vehicle or object, or by the vehicle's overturn. |
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Term
Comprehensive
(Other than Collision) |
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Definition
| Losses to a covered auto by fire, theft, vandalism, falling objects, flood, and various other perils. |
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Term
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Definition
| For other than collision coverage in commercial auto policies, a named perils alternative that is less expensive than comprehensive because fewer causes of loss are covered. |
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Term
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Definition
| A reduction in the value of property that results directly and often immediately from damage to that property. |
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Term
Time Element Loss
(Indirect Loss) |
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Definition
| Loss of income or extra expenses resulting from direct loss to property. |
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Term
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Definition
| Expenses that reduce the length of a business interruption or enable a business to continue some operations when the property has been damaged by a covered cause of loss. |
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Term
| Additional Living Expense |
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Definition
| A coverage in homeowners policies that indemnifies the insured for the additional expenses that are incurred following a covered property loss so that the household can maintain its normal standard of living while the dwelling is being restored. |
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Term
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Definition
| The policyholder whose name(s) appears on the declarations page of an insurance policy. |
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Term
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Definition
| The person or organization whose name appears first as the named insured on a commercial insurance policy; this person or organization is usually responsible for paying premiuums and has the right to receive any return premiums, to cancel the policy, and to receive the notice of cancellation or nonrenewal. |
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Term
Mortgagee Clause
(Mortgageholders Clause) |
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Definition
| A clause in a property insurance policy that protects the insurable interest of the mortgagee by giving it certain rights, such as the right to be named on claim drafts for losses to insured property and the right to be notified of policy cancellation. |
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Term
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Definition
| A lender, named on an insurance policy, who has loaned money on personal property, such as a car. |
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Term
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Definition
| A clause that provides that a loss will be paid to both the insured and the loss payee as their interests appear and gives the loss payee certain rights. |
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Term
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Definition
| A portion of a covered loss that is subtracted from the amount the insurer would otherwise be obligated to pay the insured. |
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Term
| Insurance to Value Provision |
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Definition
| A provision in property insurance policies that encourages insureds to purchase an amount of insurance that is equal to, or close to, the value of the covered property. |
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Term
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Definition
| An insurance to value provision in many property insurance policies providing that if the property is underinsured, the amount that an insurer will pay for a covered loss is reduced. |
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Term
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Definition
| A person or an organization's status as legally responsible for injury or damage suffered by another person or organization. |
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Term
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Definition
| The Constitution itself and all the decisions of the Supreme Court that involve the Constitution. |
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Term
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Definition
| The formal laws, or statutes, enacted by federal, state, or local legislative bodies. |
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Term
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Definition
| A body of principles and rules established over time by courts on a case-by-case basis. |
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Term
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Definition
| The category of law that applies to wrongful acts that society deems so harmful to the public welfare that government takes the responsibility for prosecuting and punishing the wrongdoers. |
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Term
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Definition
| The category of law that deals with the rights and responsibilities of citizens with respect to one another; applies to legal matters not governed by criminal law. |
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Term
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Definition
| The branch of civil law that deals with contracts and settles contract disputes. |
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Term
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Definition
| A wrongful act, other than a crime or breach of contract, committed by one party against another. |
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Term
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Definition
| The branch of civil law that deals with civil wrongs other than breaches of contract. |
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Term
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Definition
| A person or an organization's failure to exercise the level of care that a reasonably prudent person would have exercised under similar circumstances. |
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Term
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Definition
| A person, a business, or another party who has committed a tort. |
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Term
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Definition
| Legal responsibility that occurs when one party is held liable for the actions of another party. |
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Term
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Definition
| A deliberate act (other than a breach of contract) that causes harm to another person. |
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Term
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Definition
| The intentional threat of bodily harm. |
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Term
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Definition
| The unlawful physical contact with another person. |
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Term
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Definition
| An intentional false communication, either written or spoken, that damages another's reputation or good name. |
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Term
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Definition
| A spoken untrue statement that damages a person's reputation. |
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Term
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Definition
| A written or printed untrue statement that damages a person's reputation. |
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Term
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Definition
| Any unlawful physical restraint of another's freedom. |
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Term
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Definition
| An encroachment on another person's right to be left alone. |
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Term
Strict Liability
(Absolute Liability) |
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Definition
| Legal liability that arises from inherently dangerous activities or dangerously defective products that result in injury or harm to another, regardless of how much care was used in the activity. Also used to describe the liability imposed by certain statutes, such as workers' compensation laws. |
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Term
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Definition
| A contractual provision that obligates one party to assume the financial consequences of legal liability for another party. |
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Term
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Definition
| A promise, either written or implied, such as a promise by a seller to a buyer that a product is fit for a particular purpose. |
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Term
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Definition
| Legal liability imposed by a specific statute or law. |
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Term
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Definition
| Insurance that covers losses resulting from bodily injury to others or damage to the property of others for which the insured is legally liable and to which the coverage applies. |
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Term
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Definition
| As defined in many liability policies, any physical injury to a person, including sickness, disease, and death. |
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Term
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Definition
| Insurance term referring to physical injury to, destruction of, or loss of use of tangible property. |
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Term
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Definition
| Injury, other than bodily injury, arising from intentional torts such as libel, slander, or invasion of privacy. |
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Term
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Definition
| Various expenses the insurer agrees to pay under a liability insurance policy (in addition to the liability limits) for items such as premiums on bail bonds and appeal bonds, loss of the insured's earnings because of attendance at trials, and other reasonable expenses incurred by the insured at the insurer's request. |
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Term
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Definition
| Interest that may accrue on damages before a judgment has been rendered. |
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Term
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Definition
| Interest that may accrue on damages after a judgment has been entered in a court and before the money is paid. |
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Term
| Medical Payments Coverage |
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Definition
| Coverage that pays necessary medical expenses incurred within a specified period by a claimant (and in certain policies, by an insured) for a covered injury, regardless of whether the insured was at fault. |
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Term
| Occurrence Basis Coverage |
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Definition
| Coverage for liability claims that occur during the policy period, regardless of when the claim is submitted to the insurer. |
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Term
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Definition
| Coverage for liability claims that are first made against the insured during the policy period for covered events that occur on or after the retroactive date and before the end of the policy period. |
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Term
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Definition
| The date in a claims-made policy on or after which injury or damage must occur in order to be covered. |
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Term
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Definition
| The maximum amount an insurer will pay for injury to any one person for a covered loss. |
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Term
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Definition
| The maximum amount an insurer will pay for all covered losses from a single occurrence, regardless of the number of persons injured or the number of parties claiming property damage. |
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Term
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Definition
| The maximum amount an insurer will pay for all covered losses during the covered policy period. |
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Term
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Definition
| Separate limits for bodily injury and property damage liability coverage. |
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Term
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Definition
| The maximum amount an insurer will pay for the insured's liability for both bodily injury and property damage that arise from a single occurrence. |
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Term
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Definition
| The process of managing exposures to accidental losses. |
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Term
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Definition
| How often a loss occurs in a given period. |
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Term
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Definition
| Monetary amount of damage that results from a loss. |
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Term
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Definition
| A risk management technique that attempts to decrease the frequency or severity of losses. |
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Term
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Definition
| A risk control technique that eliminates a loss exposure and reduces the chance of loss to zero. |
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Term
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Definition
| A risk control technique that seeks to lower the frequency of loss from a particular loss exposure. |
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Term
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Definition
| A risk control technique that seeks to lower the severity (decrease the dollar amount) of losses. |
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Term
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Definition
| A risk control technique that isolates loss exposures from one another to minimize the adverse effect of a single loss. |
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Term
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Definition
| A risk control technique that uses backups, spares, or copies of critical property, information, or capabilities. |
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Term
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Definition
| A risk management technique that includes steps to pay for or transfer the cost of losses. |
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Term
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Definition
| A risk financing technique that involves retaining all or part of a particular loss exposure. |
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Term
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Definition
| A risk financing technique in which one party transfers the potential financial consequences of a particular loss exposure to another party that is not an insurer. |
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