Term
| Umbrella liability policy |
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Definition
| A liability policy that provides excess coverage above underlying policies and may also provide coverage not available in the underlying policies, subject to a self-insured retention. |
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Term
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Definition
| Coverage that protects the insured from damages owed because of legal liability to another party. For auto policies, it protects insureds against liability arising out of the ownership or operation of automobiles. |
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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
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Term
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Definition
| Insurance that pays for extended medical care or custodial care received in a nursing home, hospital, or home. |
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Term
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Definition
| A type of life insurance policy or contract that makes periodic pay- ments to the recipient for a fixed period or for life in exchange for a specified premium. |
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Term
| Commercial Package Policy (CPP) |
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Definition
| Policy that covers two or more lines of business by combining ISO’s commercial lines coverage parts. |
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Term
| Businessowners policy (BOP) |
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Definition
| A package policy that combines most of the property and liability coverages needed by small and medium-sized businesses. |
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Term
| Commercial auto insurance |
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Definition
| Insurance that covers a business or a not-for-profit organization against loss exposures arising out of the ownership, maintenance, or use of automobiles. |
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Term
| Auto physical damage coverage |
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Definition
| Coverage for damage to or theft of a covered auto that can include both collision coverage and other than collision (comprehensive) coverage. |
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Term
| Commercial property insurance |
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Definition
| Insurance that covers commercial buildings and their contents against various types of property loss. |
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Term
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Definition
| Insurance that covers vessels and their cargoes, including various vessel-related liability exposures. |
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Term
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Definition
| Insurance that covers many different classes of property that typically involve an element of transportation. |
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Term
| Commercial crime insurance |
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Definition
| Insurance that covers (1) money and securities against numerous perils (not limited to crime perils) and (2) property other than money and securities against crime perils, such as employee theft, robbery, theft by outsiders, and extortion. |
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Term
| Commercial general liability (CGL) insurance |
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Definition
| Insurance that covers many of the common liability loss exposures faced by an organization, including its premises, operations, and prod- ucts. |
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Term
| Professional liability insurance |
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Definition
| Insurance that covers persons engaged in various occupations against liability resulting from their rendering or failing to render professional services. |
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Term
| Workers compensation insurance |
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Definition
| Insurance that provides coverage for benefits an employer is obligated to pay under workers compensation laws. |
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Term
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Definition
| A nongovernment insurance provider. |
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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
| 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. Members agree to mutually insure each other, and they share profits and losses in the same proportion as the amount of insurance purchased from the exchange by that member. |
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Term
| Captive insurer, or captive |
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Definition
| A subsidiary formed to insure the loss exposures of its parent company and the parent’s affiliates. |
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Term
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Definition
| The transfer of insurance risk from one insurer to another through a contractual agreement under which one insurer (the reinsurer) agrees, in return for a reinsurance premium, to indemnify another insurer (the primary insurer) for some or all of the financial consequences of certain loss exposures covered by the primary’s insurance policies. |
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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
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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
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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
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Definition
| A conscious act or decision not to act that reduces the frequency and/ or severity of losses or makes losses more predictable. |
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Term
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Definition
| Methodical examination of a policyholder’s operations, records, and books of account to determine the actual exposure units and premium for insurance coverages already provided. |
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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
| An insurer doing business in the jurisdiction in which it is incorporated. |
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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 domiciled in a country other than the United States. |
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Term
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Definition
| An insurer to which a state insurance department has granted a license to do business within that state. |
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Term
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Definition
| An insurer not authorized by the state insurance department to do business within that state. |
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Term
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Definition
| State laws that permit producers with a surplus lines license to write business for an acceptable “nonadmitted insurer when protection from admitted insurers is not available.” |
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Term
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Definition
| State law under which insurance rates are set by a state agency or rating bureau and all licensed insurers are required to use those rates. |
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Term
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Definition
| An insurance rating law in which the rates and supporting rules must be filed with and 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 in which the insurer must file rates and supporting rules with the state insurance department prior to their use, but the rates can then be used immediately without specific approval. |
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Term
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Definition
| An insurance rating law in which the rates must be filed with the state insurance department within a specified period after they are put into use. |
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Term
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Definition
| An insurance rating law under which prior approval is required only if the new rates exceed a certain percentage above (and sometimes below) the rates previously filed. |
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Term
| Open competition (no-file law) |
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Definition
| An insurance rating law that allows insurers to develop and use rates without having to file with or get approval from the state insurance department. |
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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
| Unfair trade practices law |
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Definition
| State law that specifies certain prohibited business practices. |
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Term
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Definition
| The process, conducted by state insurance regulators, 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
| National Association of Insurance Commissioners (NAIC) |
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Definition
| An association of insurance commissioners from the fifty U.S. states, the District of Columbia, and the five U.S. territories and possessions, whose purpose is to coordinate insurance regulation activities among the various state insurance departments. |
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Term
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Definition
| The primary financial statement prepared by insurers and required by every state insurance department. |
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Term
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Definition
| The amount the insurer estimates and sets aside to pay on an existing claim that has not been settled. |
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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
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Definition
| A state-established fund that provides a system for the payment of some of the unpaid claims of insolvent insurers licensed in that state, generally funded by assessments collected from all insurers licensed in the state. |
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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
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Definition
| Insurance obtained from nonadmitted insurers when protection is not available from admitted insurers. |
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Term
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Definition
| A nonadmitted insurer that is eligible to insure risks that have been exported by a surplus lines licensee in accordance with a surplus lines law. |
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Term
| Loss adjustment expense (LAE) |
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Definition
| The expense that an insurer incurs to investigate, defend, and settle claims according to the terms specified in the insurance policy. |
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Term
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Definition
| Losses that have been paid to, or on behalf of, insureds during a given period. |
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Term
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Definition
| The losses that have occurred during a specific period, no matter when claims resulting from the losses are paid. |
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Term
| Incurred but not reported (IBNR) losses |
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Definition
| Losses that have occurred but have not yet been reported to the insurer. |
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Term
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Definition
| The portion of an organization’s profits that is paid to shareholders. |
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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
| Assets meeting minimum standards of liquidity that an insurer is allowed to report on its balance sheet in accordance with statutory accounting principles. |
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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
| An estimate of the amount of money the insurer expects to pay in the future for losses that have already occurred and been reported, but are not yet settled. |
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Term
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Definition
| An insurer liability representing the amount of premiums received from policyholders that are not yet earned. |
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Term
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Definition
| Under statutory accounting principles (SAP), an insurer’s total admitted assets minus its total liabilities. |
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Term
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Definition
| A ratio that measures losses and loss adjustment expenses against earned premiums and that reflects the percentage of premiums being consumed by losses. |
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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
| A profitability ratio that indicates whether an insurer has made an underwriting loss or gain. |
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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
| Any of several kinds of insurance personnel who place insurance business with insurers and who represent either insurers or insureds, or both. |
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Term
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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
| A legal, consensual relationship that exists when one party, the agent, acts on behalf of another party, the principal. |
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Term
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Definition
| The party in an agency relationship that authorizes the agent to act on that party’s behalf. |
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Term
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Definition
| Authority (express or implied) conferred by the principal on an agent under an agency contract. |
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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
| 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
| An insurance agent’s authority to effect coverage on behalf of the insurer. |
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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
| An independent producer who represents insurance customers. |
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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
| Independent agency network |
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Definition
| A group of agencies that contractually link to share services, resources, and insurers to gain advantages normally available only to large regional and national brokers. |
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Term
| Managing general agent (MGA) |
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Definition
| An authorized agent of the primary insurer that manages all or part of the primary insurer’s insurance activities, usually in a specific geographic area. |
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Term
| Exclusive agency marketing system |
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Definition
| An insurance marketing system under which agents contract to sell insurance exclusively for one insurer (or for an associated group of insurers). |
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Term
| Direct writer marketing system |
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Definition
| An insurance marketing system that uses sales agents (or sales representatives) who are direct employees of the insurer. |
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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
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Definition
| Contacting a prospect without an appointment. |
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Term
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Definition
| A report detailing an insured’s history of claims that have occurred over a specific period, valued as of a specific date. |
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Term
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Definition
| A payment procedure in which a producer sends premium bills to the insured, collects the premium, and sends the premium to the insurer, less any applicable commission. |
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Term
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Definition
| A payment procedure in which the insurer assumes all responsibility for sending premium bills to the insured, collecting the premium, and sending any commission payable on the premium collected to the producer. |
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Term
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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
| Contingent commission agreement |
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Definition
| A contract provision in which an insurer agrees to make supple- mental payments to producers based on profitability alone or on a combination of profitability, volume, and growth in the agency’s book of business placed with that insurer. |
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Term
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Definition
| A group of policies with a common characteristic, such as territory or type of coverage, or all policies written by a particular insurer or agency. |
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Term
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Definition
| In general, the tendency for people with the greatest probability of loss to be the ones most likely to purchase insurance. |
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Term
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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
| Underwriting guidelines (underwriting guide) |
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Definition
| A written manual that communicates an insurer’s underwriting policy and that specifies the attributes of an account that an insurer is willing to insure. |
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Term
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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
| Underwriter who is primarily responsible for implementing the steps in the underwriting process. |
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Term
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Definition
| Underwriter who is usually located in the home office and who assists underwriting management with making and implementing underwriting policy. |
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Term
| Underwriting policy (underwriting philosophy) |
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Definition
| A guide to individual and aggregate policy selection that supports an insurer’s mission statement. |
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Term
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Definition
| An independent organization that works with and on behalf of insurers that purchase or subscribe to its services. |
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Term
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Definition
| Loss data that are modified by loss development, trending, and credibility processes, but without considerations for profit and expenses. |
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Term
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Definition
| The increase or decrease of incurred losses over time. |
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Term
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Definition
| A statistical technique for analyzing environmental changes and projecting such changes into the future. |
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Term
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Definition
| A reinsurance agreement that covers an entire class or portfolio of loss exposures and provides that the primary insurer’s individual loss exposures that fall within the treaty are automatically reinsured. |
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Term
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Definition
| Reinsurance of individual loss exposures in which the primary insurer chooses which loss exposures to submit to the reinsurer, and the rein- surer can accept or reject any loss exposures submitted. |
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Term
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Definition
| A review of underwriting files to ensure that individual underwriters are adhering to underwriting guidelines. |
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Term
| Expert systems, or 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
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Definition
| A condition that increases the frequency or severity of a loss. |
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Term
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Definition
| A tangible characteristic of property, persons, or operations that tends to increase the frequency or severity of loss. |
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Term
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Definition
| A condition that increases the likelihood that a person will intentionally cause or exaggerate a loss. |
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Term
| Morale hazard (attitudinal hazard) |
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Definition
| A condition of carelessness or indifference that increases the frequency or severity of loss. |
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Term
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Definition
| A condition of the legal environment that increases loss frequency or severity. |
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Term
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Definition
| The balance that underwriters must maintain between the hazards presented by the account and the information needed to underwrite it. |
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Term
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Definition
| Statistical and analytical techniques used to develop models that predict future events or behaviors. |
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Term
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Definition
| A process in which historical data based on behaviors and events are blended with multiple variables and used to construct models of anticipated future outcomes. |
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Term
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Definition
| A type of computer program that estimates losses from future potential catastrophic events. |
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Term
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Definition
| A proposal an offeree makes to an offeror that varies in some material way from the original offer, resulting in rejection of the original offer and constituting a new offer. |
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Term
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Definition
| A ratemaking technique that adjusts the insured’s premium for the upcoming policy period based on the insured’s experience for the current period. |
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Term
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Definition
| A rating plan that awards debits and credits based on specific categories, such as the care and condition of the premises or the training and selection of employees, to modify the final premium to reflect factors that the class rate does not include. |
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Term
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Definition
| A ratemaking technique that adjusts the insured’s premium for the current policy period based on the insured’s loss experience during the current period; paid losses or incurred losses may be used to determine loss experience. |
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Term
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Definition
| The distribution of individual policies that compose the book of business of a producer, territory, state, or region among the various lines and classifications. |
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Term
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Definition
| A temporary written or oral agreement to provide insurance coverage until a formal written policy is issued. |
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Term
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Definition
| A brief description of insurance coverage prepared by an insurer or its agent commonly used by policyholders to provide evidence of insurance. |
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Term
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Definition
| The price per exposure unit for insurance coverage. |
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Term
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Definition
| A resource for classifying accounts and developing premiums for given types of insurance; includes necessary rules, factors, and guidelines to apply those rates. |
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Term
| Exposure unit (unit of exposure) |
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Definition
| The unit of measure (for example, area, gross receipts, payroll) used to determine an insurance policy premium. |
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Term
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Definition
| The process insurers use to calculate insurance rates, which are a premium component. |
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Term
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Definition
| A person who uses mathematical methods to analyze loss data and develop insurance rates. |
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Term
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Definition
| The price per exposure unit determined by adjusting the prospective loss costs for expenses, profits, and contingencies. |
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Term
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Definition
| The portion of the rate that covers projected claim payments and loss adjusting expenses. |
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Term
| Insurance advisory organization |
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Definition
| An independent corporation that works with and on behalf of insurers that purchase or subscribe to their services, which include developing prospective loss costs and standard policy forms. |
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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) also increases. |
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Term
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Definition
| A provision in an insurance rate for losses that could not be anticipated in the loss data. |
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Term
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Definition
| A rating approach that uses rates reflecting the average probability of loss for businesses within large groups of similar risks; the predominant method used for rating commercial properties. |
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Term
| Individual rate, or specific rate |
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Definition
| A type of insurance rate that reflects the unique characteristics of an insured or the insured’s property. |
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Term
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Definition
| Rating used by underwriters to rate one-of-a-kind risks. |
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Term
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Definition
| The price per exposure unit determined by adjusting the prospective loss costs for expenses, profits, and contingencies. |
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Term
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Definition
| A demand by an insured person or organization seeking to recover from its insurer for a loss that its insurance policy may cover. |
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Term
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Definition
| A demand against an insured by a person or organization other than the insured or the insurer, seeking to recover damages that may be payable by the insured’s liability insurance. |
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Term
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Definition
| A party that makes a claim and that can be either a first-party claim- ant or a third-party claimant. |
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Term
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Definition
| A person responsible for investigating, evaluating, and settling claims. |
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Term
| Third-party administrator (TPA) |
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Definition
| An organization that provides administrative services associated with risk financing and insurance. |
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Term
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Definition
| An independent claim representative who handles claims for insurers for a fee. |
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Term
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Definition
| An outside organization or person hired by an insured to represent the insured in a claim in exchange for a fee. |
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Term
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Definition
| A signed agreement indicating that during the course of investigation, neither the insurer nor the insured waives rights under the policy. |
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Term
| Reservation of rights letter |
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Definition
| An insurer’s letter that specifies coverage issues and informs the insured that the insurer is handling a claim with the understanding that the insurer may later deny coverage should the facts warrant it. |
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Term
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Definition
| The process by which an insurer can, after it has paid a loss under the policy, recover the amount paid from any party (other than the insured) who caused the loss or is otherwise legally liable for the loss. |
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Term
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Definition
| An alternative dispute resolution (ADR) method by which disputing parties use a neutral outside party to examine the issues and develop a mutually agreeable settlement. |
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Term
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Definition
| An alternative dispute resolution (ADR) method by which disputing parties use a neutral outside party to examine the issues and develop a settlement, which can be final and binding. |
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Term
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Definition
| A method of resolving disputes between insurers and insureds over the amount owed on a covered loss. |
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Term
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Definition
| An alternative dispute resolution method by which a case undergoes an abbreviated version of a trial before a panel or an adviser who poses questions and offers opinions on the outcome of a trial, based on the evidence presented. |
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Term
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Definition
| An alternative dispute resolution method by which disputing parties participate in an abbreviated trial, presenting the evidence of a few witnesses to a panel of mock jurors who decide the case. |
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Term
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Definition
| An interest in the subject of an insurance policy that is not unduly remote and that would cause the interested party to suffer financial loss if an insured event occurred. |
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Term
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Definition
| Cost to replace property with new property of like kind and quality less depreciation. |
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Term
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Definition
| The reduction in value caused by the physical wear and tear or technological or economic obsolescence of property. |
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Term
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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
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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
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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
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Definition
| A loss that occurs when the cost to repair damaged property plus its remaining salvage value equals or exceeds the property’s pre-loss value. |
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Term
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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
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Definition
| A payment awarded by a court to reimburse a victim for actual harm. |
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Term
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Definition
| A form of compensatory damages that awards a sum of money for specific, identifiable expenses associated with the injured person’s loss, such as medical expenses or lost wages. |
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Term
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Definition
| A monetary award to compensate a victim for losses, such as pain and suffering, that do not involve specific measurable expenses. |
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Term
| Punitive damages (exemplary damages) |
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Definition
| A payment awarded by a court to punish a defendant for a reckless, malicious, or deceitful act to deter similar conduct; the award need not bear any relation to a party’s actual damages. |
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Term
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Definition
| A chance of loss or no loss, but no chance of gain. |
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Term
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Definition
| A chance of loss, no loss, or gain. |
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Term
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Definition
| A risk control technique that involves ceasing or never undertaking an activity so that the possibility of a future loss occurring from that activity is eliminated. |
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Term
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Definition
| A risk financing technique by which losses are retained by generating funds within the organization to pay for the losses. |
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Term
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Definition
| Any personal property affixed to real property in such a way as to become part of the real property. |
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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
| As defined in commercial general liability and auto forms, a land motor vehicle, trailer, or semitrailer designed for travel on public roads, including attached machinery or equipment; or any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law in the state where it is licensed or principally garaged. |
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Term
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Definition
| Various types of vehicles designed for use principally off public roads, such as bulldozers and cranes. |
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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
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Term
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Definition
| A lender in a mortgage arrangement, such as a bank or another financing institution. |
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Term
|
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
| The party temporarily possessing the personal property in a bailment. |
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Term
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Definition
| The legally enforceable obligation of a person or an organization to pay a sum of money (called damages) to 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
| A written law passed by a legislative body, at either the federal or state level. |
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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
| Laws that develop out of court decisions in particular cases and establish precedents for future cases. |
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Term
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Definition
| The branch of the law that imposes penalties for wrongs against society. |
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Term
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Definition
| A classification of law that applies to legal matters not governed by criminal law and that protects rights and provides remedies for breaches of duties owed to others. |
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Term
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Definition
| A wrongful act or an omission, other than a crime or a breach of con- tract, that invades a legally protected right. |
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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
| The failure to exercise the degree of care that a reasonable person in a similar situation would exercise to avoid harming others. |
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Term
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Definition
| A cause that, in a natural and continuous sequence unbroken by any new and independent cause, produces an event and without which the event would not have happened. |
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Term
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Definition
| A person or organization that has committed a tort. |
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Term
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Definition
| A legal responsibility that occurs when one party is held liable for the actions of a subordinate or associate because of the relationship between the two parties. |
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Term
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Definition
| A tort committed by a person who foresees (or should be able to fore- see) that his or her act will harm another person. |
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Term
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Definition
| The threat of force against another person that creates a well-founded fear of imminent harmful or offensive contact. |
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Term
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Definition
| Intentional harmful or offensive physical contact with another person without legal justification. |
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Definition
| A false written or oral statement that harms another’s reputation. |
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Term
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Definition
| A defamatory statement expressed by speech. |
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Term
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Definition
| A defamatory statement expressed in a writing. |
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Term
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Definition
| The seizure or forcible restraint of a person without legal authority. |
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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
| Liability imposed by a court or by a statute in the absence of fault when harm results from activities or conditions that are extremely dangerous, unnatural, ultrahazardous, extraordinary, abnormal, or inappropriate. |
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Term
| Hold-harmless agreement (or indemnity agreement) |
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Definition
| A contractual provision that obligates one of the parties to assume the legal liability of another party. |
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Term
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Definition
| A written or oral statement in a contract that certain facts are true. |
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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
| A condition that presents the possibility of loss caused by a person’s death, disability, retirement, or resignation that deprives an organiza- tion of the person’s special skill or knowledge that the organization cannot readily replace. |
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Term
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Definition
| An employee whose loss to a firm through death or disability before retirement would have economic effects on the company. |
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Term
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Definition
| The inability (because of impairment) of a person to meet his or her personal, social, or occupational demands; other activities of daily living; or statutory or other legal requirements. |
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Term
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Definition
| A contract that meets all of the requirements to be enforceable. |
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Term
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Definition
| Something of value or bargained for and exchanged by the parties to a contract. |
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Term
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Definition
| The principle that insurance policies should provide a benefit no greater than the loss suffered by an insured. |
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Term
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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
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Definition
| An intentional failure to disclose a material fact. |
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Term
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Definition
| A false statement of a material fact on which a party relies. |
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Term
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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
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Definition
| A contract that one or more parties must perform only under certain conditions. |
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Term
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Definition
| An insurance form that meets the needs of many policyholders and is therefore printed in bulk for future use. |
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Term
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Definition
| An insurance form that is drafted according to terms negotiated between a specific insured (or group of insureds) and an insurer. |
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Term
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Definition
| A component of a CPP or a monoline policy that contains the policy provisions relating to a particular line of business, such as commercial property or commercial general liability; consists of the coverage part’s declarations page, one or more coverage forms, applicable endorsements, and in some cases a general provisions form. |
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Term
| Declarations page (declarations, or dec.) |
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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
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Definition
| A document that amends an insurance policy. |
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Term
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Definition
| Any phrase or clause in an insurance policy that describes the policy’s coverages, exclusions, limits, conditions, or other features. |
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Term
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Definition
| Insurance for property specifically listed (scheduled) on a policy, with a limit of liability for each item. |
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Term
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Definition
| A statement in an insurance policy that the insurer will, under described circumstances, make a loss payment or provide a service. |
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Term
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Definition
| Any provision in an insurance policy that qualifies an otherwise enforceable promise of the insurer. |
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Term
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Definition
| A policy provision that eliminates coverage for specified exposures. |
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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 specific cause of loss listed and described in an insurance policy. Also used to describe policies containing named perils. |
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Term
| Special form, or 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
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Definition
| Coverage for direct and accidental loss or damage to a covered auto caused by collision with another object or by overturn. |
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Term
| Other than collision (OTC) coverage |
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Definition
| Coverage for physical damage to a covered auto resulting from any cause of loss except collision or a cause of loss specifically excluded. |
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Term
| Specified causes of loss coverage |
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Definition
| Coverage for direct and accidental loss caused by fire, lightning, explosion, theft, windstorm, hail, earthquake, flood, mischief, vandalism, or loss resulting from the sinking, burning, collision, or derailment of a conveyance transporting the covered auto. |
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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
| A loss that arises as a result of damage to property, other than the direct loss to the property. |
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Term
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Definition
| The difference between revenues (such as money received for goods or services) and expenses (such as money paid for merchandise, rent, and insurance). |
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Term
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Definition
| Expenses, in addition to ordinary expenses, that an organization incurs to mitigate the effects of a business interruption. |
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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
| A person, corporation, partnership, or other entity identified as an insured party in an insurance policy’s declarations page. |
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Term
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Definition
| A party entitled to share in whatever loss payment an insured receives. |
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Term
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Definition
| A portion of a covered loss that is not paid by the insurer. |
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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
| Physical injury to a person, including sickness, disease, and death. |
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Term
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Definition
| 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
| A legally binding contract between the parties to a dispute that embodies their agreement, obligates each to fulfill the agreement, and releases both parties from further obligation to one another that relates to the dispute. |
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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 that is triggered by the actual happening of bodily injury or property damage during the policy period. |
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Term
| Claims-made coverage form |
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Definition
| A coverage form that provides coverage for bodily injury or property damage that is claimed during the policy period. |
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Term
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Definition
| The date on or after which bodily injury or property damage must occur (or a personal and advertising injury offense must be committed) 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
| A single limit of liability for the combined total of bodily injury and property damage from any one accident or occurrence. |
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