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Property & Casualty

Personal & Commercial Insurance

Abandonment The abdication of insured property into the hands of another or into the possession of no one in particular
Absolute Liability A type of liability that occurs due to extremely dangerous operations, such as the use of explosives or working at extreme heights
Accident An unplanned, unforeseen event which occurs suddenly and at a specific place
Actual Cash Value(ACV) The required amount to pay damages or for property loss, which is calculated based on the property's current replacement value minus depreciation
Additional Coverage A provision in an insurance policy that allows coverage for specific loss expense without increase in premium
Additional Insured's Individuals or business that are not named as insured on the declaration page, but are protected by the policy, usually in regard to a specific intrest
Adhesion A contract offered on a "take-it-or-leave-it" basis by an insurer, in which the insured's only option is to accept or reject the contract. any ambiguities in the contract will be settled in favor of the insured
Admitted Insurer An insurance company authorized and licensed to transact business in a particular state
Adverse Selection The tendency of risks with higher probability of loss to purchase and maintain insurance more often than the risks who present lower probability
Agent An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of an insurer
Aggregate Limit The maximum limit of coverage available under a liability policy during a policy year regardless of the number of claims that may be made or the number of accidents that may occur
Agreed Value A property policy with provision agreed upon by the insurer and the insured as to the amount of insurance that represents a fair valuation for the property at the time the insurance is written
Aleatory A contract in which the participating parties agree to exchange unequal amounts. Insurance contracts are aleatory in that the amount the insured will pay in premiums is unequal to the amount the insurer will pay in the event of a loss
Alien Insurer An insurance Company that is incorporated outside the United States
Apparent Authority The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created
Appraisal An assessment of property to determine either the correct amount of insurance to be written or the amount of loss to be paid
Arbitration Method of claim settlement used when the insured and insurer cannot agree upon the amount of the loss
Assignment The transfer of a legal right or interest in an insurance policy. In property and casualty insurance, assignments of policies are usually valid only with the prior written consent of the insurer
Authorized Insurer An insurance company that has qualified and received a Certificate of Authority from the Department of Insurance to transact insurance in the state
Auto A land motor vehicle, trailer or Semi-trailer designed for use on public roads, including attached machinery or equipment; auto does not include mobile equipment
Avoidance A method of dealing with risk by deliberately keeping away from it (ect; if a person wanted to avoid the risk of being killed in an airplane crash, he might never choose to fly in a plane)
Bailee A person or entity that has possession of personal property entrusted to him/her by the owner. example, a television repair person that has possession of a customer's tv would be a bailee
Beneficiary The person who receives the proceeds from the insurance policy
Binder A temporary contract that puts an insurance policy into force before the premium has been paid
Blanket Bond A type of bond that covers losses caused by the dishonest employees
Blanket Insurance A single property insurance policy that provides coverage for multiple classes of property at one location, or provides coverage for one or more classes of property at multiple locations
Bodily Injury Liability Legal liability arising from death or physical trauma to a person as a result of a negligent or purposeful act and omissions by an insured
Boycott An unfair trade practice in which one person refuses to do business with another until he or she agrees to certain conditions
Builders Risk Coverage Form A commercial property form that covers buildings under construction
Building and Personal Property Coverage Form A commercial property form that covers buildings, and /or their contents
Burglary The forced entry into another's premises with felonious intent
Cancellation The termination of an in-force insurance policy by either the insured or the insurer prior to the expiration date shown in the policy
Casualty Insurance A type of insurance that covers loses caused by injury to persons or damage to the property of others
Cease and Desist Order A demand of a person to stop committing an action that is in violation of a provision
Certificate of Authority A document that authorizes a company to start conducting business and specifies the kind(s) of insurance a company can transact. It is illegal for an insurance company to transact insurance without this certificate
Certificate of Insurance A legal document that indicates that an insurance policy has been issued, and that states both the amount and types of insurance provided
Claim A demand made by the insured to cover a loss protected by the insurance policy
Class Rating The practice of computing a price per unit of insurance that applies to all applicants possessing a given set of characteristics
Coercion An unfair trade practice in which an insurer uses physical or mental force to persuade an applicant to buy insurance
Coinsurance An agreement between an insurer and insured in which both parties are expected to pay a certain portion of the potential loss and other expenses
Combined Single A single dollar limit of liability applying to the total of damages for bodily injury and property damage combined, resulting from one accident or occurance
Commercial Lines Type of insurance that pertains to business, mercantile or manufacturing establishments
Commissioner (Superintendent, Director) The chief executive and administrative officer of a state insurance department
Common Law An unwritten body of law based on past judicial decisions as well as usages and customs
Complaint A written statement of a liability claim given by the claimant; a reason for a lawsuit
Components Factors that determine rates, including loss reserves, loss adjusting expenses, operating expenses and profits
Comprehensive Coverage Also known as Other Than Collision coverage, it covers losses by fire, theft, vandalism, falling objects, etc
Concealment The withholding of known facts which, if material, can void a contract
Conditional Contract A type of an agreement in which both parties must perform certain duties and follow rules of conduct to make the contract enforceable
Conditions The section of an insurance policy that indicates the general rules or procedures that the insurer and insured agree to follow under the terms of the policy
Consideration (" ") The binding force in a contract that requires something of value to be excgd for the transfer of risk.(" ")on the part of the insd is the representations made in the app & the pymnt of prem: on the part of the insurer-promise to pay in the event of loss
Consultant A person who, for a fee, offers any advice, counsel, opinion or service regarding the benefits ,advantages or disadvantages promised under a policy of insurance
Consumer Reports Written and/or oral statements regarding a consumer's credit, character, reputation or habits collected by a reporting agency from employment records, credit reports & other sources
Contract An agreement between two or more parties enforceable by law
Controlled Business An entity that obtains & possesses a license solely for the purpose of writing business on the owner, immediate family, relatives, employer & employees
Concurrent Causation Multiple events leading to one loss
Death Benefit The amount payable upon the death of the person whose life is insured
Declarations The section of an insurance policy containing the basic underwriting info such as insured's name, address, amt of coverage & premiums & descrp of insds locations
Deductible The portion of the loss that is to be paid by the insured before any claim benefits may be paid by the insurer
Defamation An unfair trade practice in which one agent or insurer makes an injurious statement about another with the intent of harming the person's or company's reputation
Deposit Premium Audit A condition that allows the insurer to audit the insured's books or records at the end of the policy term to make sure adequate premium has been collected for the exposure
Depreciation The lessening of value of real & personal property due to the age and wear & tear
Direct Losses Physical damage to buildings and/or personal property as a result of direct consequence of a particular peril
Disability A physical or mental impairment, either congenial or resulting from an injury or sickness
Disclosure An act of identifying the name of the producer, representative or firm, limited insurance representative, or temporary insurance producer on any policy solicitation
Domestic Insurer An insurance company that is incorporated in the state
Domicile of Insurer Insurer,s location of incorporation and the legal liability to write business in a state
Economic Loss The estimated total cost (both insured & uninsured) of an accident
Endorsement A printed addendum to a contract that is used to change the policy's original terms, conditions, or coverages
Estoppel A legal impediment to denying a fact or restoring a right that has been previously waived
Excess Policy A policy that only pays for loss after the primary policy has paid its limit
Exclusions Causes of loss, exposures, conditions, etc...listed in the policy for which the benefits will not be paid
Exclusive or Captive Agent An agent who represents only one company and is compensated by commissions
Experience Rating Method of determining the premium based on the insured's own past loss experience
Exposure A unit of measure used to determine rates charged for insurance coverage
Express Authority The authority granted to an agent by means of the agent 's written contract
Extensions of Coverage A provision in some property policies which allows the extension of a major coverage to certain types of loss to property not specifically insured
Fair Plan Fair Access to Insurance Requirements plan is a state-run program that makes insurance obtainable to those in high risk areas who have been unable to acquire ins through other channels
Fiduciary An agent/broker who handles insure'r's funds in a trust capacity
First Named Insured The individual whose name appears first on the policy's declaration
Flood A general and temporary condition of partial or complete inundation of normally dry land areas from overflow of inland or tidal waters or from the unusual & rapid accumulation or runoff of surface waters from any source
Foreign Insurer An Insurance company that is incorporated in another state
Fraternal Benefit Society A life or health insurance company formed to provide insurance for members of an affiliated lodge, religious, or fraternal organization with a representative form of government
Fraud Intentional misrepresentation or deceit with the intent to induce a person to part with something of value
Functional Replacement Cost The cost to replace damaged property with less expensive and more modern construction or equipment
Gross Negligence Reckless behavior that shows disregard for the safety or lives of others
Hazard A circumstance tha increases the likelihood of a loss
Hazard, Moral The effect of a person's reputation, character, living habits, etc... On his/her insurability
Hazard, Morale The effect a person's indifference concerning loss has on the risk to be insured
Hazard, Physical A type of hazard that arises from the physical characteristics of an individual, such as a physical disability due to either current circumstance or a condition present at birth
Implied Authority Authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance of the principal
Indemnity Compensation to the insured that restores them to the same financial position that they enjoyed prior to the loss
Independent Agents Agents that sell the insurance products of several companies & work for themselves or other agents
Indirect Losses Losses resulting from a peril, but not directly caused by it. Indirect losses may include business disruption, rent insurance, extra expenses & other consequences that occur over time
Inflation Guard A coverage extension that automatically increases amounts of insurance on buildings by an agreed upon percentage annually
Insurable Interest Any interest an insured may have in property that is the subject of insurance, so that the damage or destruction of that property would cause the insured financial loss
Insurance The transfer of the possibility of a loss (risk) to an insurance company which in turn spreads the costs of unexpected losses to many individuals
Insurance Policy A contract between an insured and an insurance company which agrees to pay the insured for loss caused baby specific events
Insured The person or organization that is protected by insurance; the party to be indemnified
Insured Contract A definition on liability forms that describes the types of contracta in which liability is assumed by the insd & Included for cvrg in the pol.ex: insd contract are leases of premises,elevator maintenance agrmnts
Insurer An entity that indemnifies against losses, provides benefits, or renders services (also known as the "company" or "insurance company")
Insurance Agreement The section of an insurance policy containing the insurer's promise to pay, the description of coverage provided and perils insured against
Intentional Tort Any deliberate act that causes harm to another person
Interline Endorsement A written amendment designed to eliminate redundancy and minimize the number of endorsements in the policy
Judgement Rating An approach used when credible statistics are lacking or when the exposure units are so varied that it is impossible to construct a class
Law of Large Numbers A principal stating that the larger the number of similar exposure units considered, the more closely the losses reported will equal the underlying probability of loss
Legal Liability A liability under the law that occurs when a person is responsible for injuries or damages to another due to negligence
Liability Responsible under the law
Liberalization A property insurance clause that extends broader legislated or regulated coverage to current policies, as long as it does not result in a higher premium
Lien A charge, security or encumbrance on property
Limit of Liability The maximum amount for which an I surer is liable
Lloyd's Association Organizations that provide support facilities for underwriters or groups of individuals that accept insurance risk
Loss The reduction, decrease, or disappearance of value of the person or property insured in a policy, by a peril insured against
Loss Payable Clause A provision in property insurance that is used to cover the interest of a secured lender in personal property
Loss Ratio A calculation used by insurance companies to relate income from loss expenses: loss ratio=(incurred losses + loss adjusting expenses) / earned premium
Loss Valuation A factor in determining the premium charged and the amount of insurance required
Market Value A seldom used method of valuing a loss based upon the amount a willing buyer would pay to a wiling seller for the property prior to the loss
Misrepresentation A false statement or lie that can render the contract void
Monoline Policy A policy written separately as a single coverage
Mutual Assessment Insurer A mutual insurance company with the right to assess policyholders additional amounts of premium to meet operational needs
Mutual Companies Insurance organizations that have no capital stock, but are owned by the policyholders
Mysterious Disappearance A dissappearance of property that cannot be explained as to the location, time or the manner of property loss
Named Insured The individual (s)whose name appears on the policy's declaration page
Named Peril The cause of loss specifically covered by the insurance policy. No coverage is provided for unlisted perils
Negligence The failure to use the care that a reasonable, prudent person would under the same or similar circumstances
No Benefit to the Bailee A provision that excludes any assignment or granting of any policy provision to any person or organization holding, storing, repairing, or moving insd property for a fee
Nonadmitted Insurer An insurance company that has not applied, or has applied & been denied a Certificate of Authority and may not transact Ins
Nonconcurrency A situation in which other insurance is written on the same risk, but not on the same coverage basis
Nonrenewal A termination of a policy by an insurer on the anniversary or renewal date
Notice of Claim A provision that spells out an insured's duty to provide the insurer with reasonable notice in the event of a loss
Occurrence A broader definition of loss, which differs from accident in that it includes losses caused by continuous exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected
Open Peril Term used in property insurance to describe the breadth of coverage provided under an insurance policy form that insures "any risk of loss" that is not specifically excluded
Pair and Set Clause A clause included in many property and inland marine policies, which provides that the insurer is not obligated to pay for the total value of a set of items if only one item has been lost, damaged or destroyed
Partnership A legal entity in which 2 or more persons agree to share the profits and losses of the business
Passive A description of an anti-theft device or system for autos which is activated automatically when the driver turns on the ignition key to the off position & the key is removed
Peril The cause of a possible loss
Personal Injury Liability Legal responsibility for an injury to the character of another person caused by libel, slander, false arrest, invasion of privacy and other acts
Personal Lines Insurance Type of coverage available to individuals and families for non-business risks
Policy Limits The maximum amount an insured may collect, or for which an insured is protected under the terms of the policy
Policy Period A period of time a policy is in effect (also known as Policy Term)
policyholder The person in possession of an insurance policy; may or may not be the policyowner and/ or insured
Policyowner The person who is entitled to exercise the rights and privileges in the policy. This person may or may not be the insured
Premium A periodic payment to the insurance company to keep the policy in force
Primary Policy A basic, fundamental insurance policy which pays first with respect to other outstanding policies
Pro Rata Proportional distribution of shares of the loss for each insurance policy written on a piece of property
Producer A person who acts on the behalf of the insurer to sell, negotiate, or effect insurance contracts; also known as an agent
Proof of Loss A sworn statement that must usually be furnished by the insured to an insurer before any loss under a policy can be paid
Property Damage Liability Legal liability arising from physical damage to tangible property of others caused by the negligence of an insured
Proximate Cause An act or event that is the immediate or actual cause of loss
Pure Risk Situations that can only result in a loss or no change; a gain is never possible. Pure risk is the only type of insurance companies are willing to accept
Rebating Any inducement offered in the sale of insurance products that is not specified in the policy
Reciprocal Insurance resulting from an interchange of reciprocal agreements of indemnity among persons known as subscribers
Reduction Lessening the possibility or severity of a loss
Reinsurance A form of insurance whereby one insurance company (the reinsurer) in consideration of a premium paid to it, agrees to indemnify another insurance company (the ceding co)for part or all of its liabilities form insurance policies that it has issued
Replacement Cost The cost to replace damaged property with like kind & quality at current price, without any deduction for deprecation
Representations Statements made by the applicant on the insurance application that are believed to be true, but are not guaranteed to be true
Retention A method of dealing with risk by intentionally or unintentionally keeping a portion of it for the insured's account; the amount of responsibility assumed but not reinsured by the ins co
Retrospective Rating A self-rating plan under which the actual losses during the policy period determine the final premium (subject to a minimum & maximum premium)
Right of Salvage A provision in property insurance policy requiring that after payment of a total loss to insured property, the insured must transfer the title (or ownership) to the property to the insurer
Risk Uncertainty as to the outcome of an event when two or more possibilities exist
Risk, Pure The uncertainty or chance of a loss occurring in a situation that can only result in a loss or no charge
Risk, Speculative The uncertainty or chance or a loss occurring in a situation that involves the opportunity for either loss or gain
Robbery The taking of property from another by using violence or the threat of violance
Salvage The amount of money realized from the sale of damaged merchandise or property. A salvage clause is found in ocean marine ins & usually states that the rescuers of a ship are entitled to the salvage of the ship & cargo
Settlement The process by which an agreement is reached & a claim is resolved in liability insurance
Severability of Interest A provision that insurance applies separately to each insured in a policy, treating each individual as the only insured
Sharing A method of dealing with risk for a group of individual persons or businesses with the same or similar exposure to loss who share the losses that occur within that group
Specific Insurance A property insurance policy that covers a specific kind or unit of property for a specific amount of insurance
Speculative Risk The uncertainty or chance of a loss occurring in a situation that involves the opportunity for either loss or gain
Split Separately stated limits of liability for different coverage's, which may be stated on a per person, per occurrence, per policy period basis, or can be divided between bodily injury & property damage
Stated Amount An amount of insurance scheduled in a property policy which is not subject to any coinsurance requirements in the event of a covered loss
Statute Law The written law as enacted by legislative body (i.e. the laws of the state), which generally take precedence in cases where both common law & statute law apply
Stock Companies Companies owned by the stockholders whose investments provide the capital necessary to establish & operate the insurance company
Strict Liability A liability that refers to damage caused by defective products even though the manufacture's fault or negligence cannot be proven
Subrogation The acquisition by an insurer of an insured's rights against any third party for indemnification of loss or other payment, to the extent that the insurer pays the loss
Superintendent (Commissioner, Director) The head of the state department of insurance
Surety Bond A guarantee that debts and obligations will be carried out, and the benefits will be paid for losses caused by nonperformance
Surplus Lines Insurance for which there is no readily available, admitted market
Theft Any act of stealing or removing property from its rightful owner. Theft encompasses both burglary and robbery
Third-Part Provisions Insurance provisions that address the rights of someone other than the policyowner to have secured financial interest in the insured property
Tort A wrongful act or the violation of someone's rights that leads to legal liability. Torts are classified as intentional or unintentional (referred to as negligence)
Transfer A basic principle of insurance under which the risk of financial loss is assigned to another party
Twisting A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when it's to the insured's disadvantage
Umbrella Liability Policy Coverage that provides extra protection against liability & excess amount of insurance above the primary policy
Unauthorized Insurer An insurance company that has not applied, or has applied & been denied a Certificate of Authority
Underwriter A person who evaluates and classifies risks to accept or reject them on behalf of the insurer
Underwriting The process of reviewing, accepting or rejecting applications for insurance
Unilateral Contract A contract that legally binds only one party to contractual obligations after the premium is paid
Underinsured Motorist Coverage Coverage in an automobile insurance policy under which the insurer will pay costs up to specified limits for bodily injury, if the liable driver's policy limits exhausted and he/she cannot pay the full amt for which he/she is liable
Uninsured Motorist Coverage Covrg that allows the named insd,resident relative & pasngrs in a covrd auto to collect sums another driver would be legally liable to pay for bodily inj resulting from an auto accdnt,if caused by a uninsured motorist, hit/run
Unintentional Tort The result of acting without proper care, generally referred to as negligence
Unoccupied A property that has contents or furnishings in it, but is not being used or lived in
Utmost Good Faith The fair and equal bargaining by both parties in forming the contract, where the applicant must make full disclosure of risk to the co, and the insurance co must be fair in underwriting the risk
Vacant A property that has no contents, furnishings, or occupants
Valued Policy A policy used when it is difficult to establish the ACV of insd property after a loss occurs b/c of its rarity or uniqueness. This type policy makes pymnt of the full policy amt in the event of total loss w/o regard to actual value or depreciation
Vicarious Liability A type of liability in which one person is responsible for the acts of another. Ex...parents may be held responsible for the negligent acts of their kids, employers responsible for acts of employees
Waiting Period Time between the beginning of a disability and the start of disability insurance benefits
Waiver The voluntary abandonment of a known or legal right or advantage
Warranty A material stipulation in the policy that if breached may void coverage
Workers Compensation Benefits required by state law to be paid to an employee by an employer in the case of injury, disability, or death as the result of an on-the-job hazard
Created by: RebeccaKat
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