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P&C
| Term | Definition |
|---|---|
| Exclusions | A loss, exposure, or situation the policy explicitly does not cover. |
| Endorsements | A policy modification that adds, removes, or changes coverage. |
| Coverage Gap | An exposure that is uninsured due to exclusions, limits, or missing policies. |
| Occurrence Policy | Coverage is triggered by when the loss happens, regardless of when the claim is filed. |
| Claims-Made Policy | Coverage is triggered when the claim is made while the policy is active. |
| Retroactive Date | The earliest date a claims-made policy will cover losses. |
| Extended Reporting Period (Tail) | Allows claims to be reported after a claims-made policy expires. |
| Named Peril | Only losses caused by perils specifically listed in the policy are covered. |
| Open Peril (Special Form) | All causes of loss are covered unless specifically excluded. |
| Peril | The cause of a loss (fire, wind, theft, etc.) |
| Policy Limit | The maximum paid amount an insurer will pay in the event of any single occurrence of a covered loss |
| Aggregate Limit | The maximum the insurer will pay during the policy period. |
| Aggregate Exhaustion | When the aggregate limit is used up and no further coverage applies. |
| Defense Costs | Legal expenses paid to defend a claim (may erode limits). |
| Commercial Property Insurance | Covers buildings, business personal property, and income loss from covered property damage. |
| Business Personal Property (BPP) | Movable items owned by the business (equipment, furniture, inventory). |
| Replacement Cost Value (RCV) | Pays the cost to replace property with new items of like kind and quality. |
| Actual Cash Value (ACV) | Replacement cost minus depreciation |
| Business Interruption (Loss of Income) | Covers lost income and continuing expenses after a covered property loss |
| Extra Expense | Covers additional costs to continue operations after a loss. |
| Coinsurance Clause | Requires Property to be insured to a certain percentage of value or a penalty applies. |
| Ordinance or Law Coverage | Covers increased costs to rebuild due to updated building codes. |
| Flood Exclusion | Flood damage is excluded and requires a separate policy. |
| Property Insurance | Includes many coverages to handle the risk a person will suffer financial loss because a possession is damaged or destroyed. |
| Commercial General Liability (GL) | Covers third-party bodily injury, property damage, and personal/advertising injury. |
| Bodily Injury (BI) | Physical injury, sickness, or disease suffered by a third party. |
| Property Damage (PD) | Physical damage to or loss of use tangible property. |
| Personal & Advertising Injury | Non-physical harms like libel, slander, and limited copyright infringement. |
| Products & Completed Operations Aggregate | Separate aggregate for claims arising from products sold or completed work. |
| Additional Insured | A party added to the policy to receive liability protection. |
| Primary & Non‑Contributory | Requires the insured’s policy to respond before others. |
| Professional Liability (E&O) | Covers financial loss caused by professional errors or omissions. |
| Negligence | Failure to exercise reasonable professional care. |
| Defense Inside the Limits | Legal costs reduce the amount available to pay claims. |
| Defense Outside the Limits | Legal costs do not reduce claim limits. |
| Directors & Officers (D&O) | Covers management decisions made by company leadership. |
| Side A Coverage | Protects individual directors and officers personally. |
| Side B Coverage | Reimburses the company for indemnifying directors and officers. |
| Side C Coverage | Provides entity coverage for certain claims against the company. |
| Commercial Auto Insurance | Covers vehicles used for business purposes. |
| Collision Coverage | Covers vehicle damage from impact with another object. |
| Comprehensive Coverage | Covers non‑collision losses like theft, vandalism, and weather. |
| Hired Auto Liability | Covers rented or leased vehicles used for business. |
| Non‑Owned Auto Liability | Covers employee‑owned vehicles used for business purposes. |
| Uninsured / Underinsured Motorist | Covers injuries caused by drivers with insufficient insurance. |
| Umbrella Liability | Provides additional limits and sometimes broader coverage over underlying policies. |
| Excess Liability | Provides additional limits but follows the exact terms of underlying policies. |
| Drop‑Down Coverage | Umbrella coverage that fills certain gaps when underlying insurance does not respond. |
| Cyber Liability Insurance | Covers data breaches, cyber extortion, and cyber business interruption. |
| First‑Party Cyber Coverage | Covers the insured’s own losses from a cyber event. |
| Third‑Party Cyber Coverage | Covers liability to others resulting from a cyber event. |
| Inland Marine Insurance | Covers mobile property and equipment. |
| Crime Insurance | Covers theft, fraud, and dishonest acts. |
| Business Travel Accident (BTA) | Employer-paid AD&D policy for employees travelling on company business |
| Soft Market | Occurs when there is more supply (capacities) than demand, coverage limits are plentiful, underwriting standards loosen, premiums decrease |
| Hard Market | Occurs when there is less supply than demand, coverage limits become scarce, underwriting standards tighten, premiums increase |
| Uninsured Loss | Result of a company not purchasing insurance or not realizing they can cover the risk |
| Uninsurable Loss | Result of insurance not being available for the risk |
| Casualty Insurance | Includes a wide variety of coverages including Liability, Auto, Workers' Comp, Aviation, Crime, and Surety Bonds |
| Declarations | Blanket or specific insurance. Policy Term, Named Insured, Insured Locations, Limits of Insurance, Deductible |
| Conditions | Duties and rights of the insured and insurer. |
| Insurable Interest | Any actual, lawful, and substantial economic interest in the safety and preservation of the subject of the insurance from loss, destruction, financial damage, or impairment |
| Cost to Repair | Cost to repair damages, differing from the actual cash value |
| Nonaccidental losses (exclusion) | These are certainties, not risks |
| Losses controllable by the insured (exclusion) | Losses that, through extra effort, can be prevented by the insured |
| Extra-hazardous perils (exclusion) | Perils usually omitted from the policy, because the insured would most likely not want or need coverage due to the rare nuance of the peril and its significant effect on premium |
| Catastrophic loss (exclusion) | Broad-scope losses |
| Property covered in other policies (exclusion) | Includes any property covered in a separate insurance policy |
| Other Conditions | Coinsurance, Conditions for When Losses are Paid, Pair or Set conditions, Deductibles, Salvage and Abandonment, Subrogation, Appraisal and Arbitration, Reporting Forms, Liberalization, Assignment, No Benefit to Bailee... |
| Mutual Insurer | Insurance company owned by the policyholders |
| Stock Insurance Company | Corporation owned by the stockholders. Board of directors, cannot issue an assessable policy |
| Lloyd's of London | Worldwide insurance marketplace. Policies written by the syndicates that belong to Lloyd's. |
| Reciprocal Exchange | Unincorporated mutual insurer. Each member insures the other members and is then insured by them. Managed by attorney-in-fact |
| Error | Mistake that was made from performing a task incorrectly or simply by not following through on a task |
| Omission | Failure to perform a task that should have been done, by either neglecting it or forgetting about it |
| Pure Risk | Chance of loss, no chance of gain |
| Speculative Risk | Chance of loss or a chance of gain |
| Loss Exposure | A condition or situation that presents a possibility of financial loss |
| Personnel Loss | Losses of a business because of the death, retirement, disability, or resignation of its employees |
| Human Loss | The effect that a death, disability, or unemployment has on individuals and/or families |
| Property Policies Triggers | Insured Perils (Fire, Water Damage, Theft) |
| General Liability Triggers | Occurrences - Bodily Injury or Property Damage to Others |
| Personal Injury Triggers | Offenses - Slander, Defamation |
| Professional Liability Triggers | Errors, Omissions, or Wrongful Acts |
| ROE | Return on Equity |
| Underwriting Profit = | Premium - (Claims and Expenses) |
| Paid claims | Actual claims payments to policyholders on reported claims |
| Reserved claims | Estimated payment amounts on reported claims |
| Incurred but not reported claims (IBNR) | Expected future claims payments based on the projected historical loss pattern |
| Frequency | Rate of claims occurring |
| Severity | Scale of claims occurring |
| Class Rating | Rates that apply to a group of similar risks |
| Specific Rating | Rates that apply to unique risks that cannot be grouped with other locations |
| Basic Group 1 Perils Formula | Rate x Protection Class Multiplier x Territorial Multiplier x Coinsurance Factor x Relativity Factor = Net rate x $100s of Insurance = Premium |
| Basic Group 2 Perils Formula | Rate x Coinsurance Factor x Relativity Factor = Net Rate x $100s of insurance = Premium |
| Agreed Value Provision | Insurer and the insured agree in advance on the value of the covered property |
| Scheduled Limit Structure | Assigns a separate, fixed limit of insurance to each individual item, building, or location listed on the policy schedule |
| Blanket Limit Structure | One combined limit of insurance that applies across multiple properties, locations, or categories of property |
| Vacancy Provision | Policy condition that restricts or reduces coverage when a building has been vacant for a specified period (60+ days), prior to a loss |
| Protective Safeguards Provision | Condition of coverage requiring the insured to install, maintain, and keep operation specific safety or security systems |
| Cancellation Provision | Policy clause that sets out the rights, reasons, notice requirements, and premium return rules for terminating a policy before its expiration date |
| COPE | Construction, Occupancy, Protection and Exposure. Standard underwriting framework used in property insurance to evaluate risk of a building or location |
| Business Owner's Policy | A bundled commercial insurance policy designed for small to mid-sized businesses (usually <100EEs and <$5M revenue). Several essential coverages into one policy |
| Property not covered by Coverage A | Aircraft, autos, contraband, computers in vehicles, watercraft, land growing crops, outdoor fences/antennas, valuable papers |
Created by:
mpmcelwain