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Property & Casualty
Personal & Commercial Insurance
| Term | Definition |
|---|---|
| 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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