Shared Flashcard Set

Details

INS21 ALL KEY WORDS
INS21 ALL KEY WORDS for Assignments 1-9
256
Insurance
Professional
06/04/2013

Additional Insurance Flashcards

 


 

Cards

Term
Umbrella liability policy
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.
Term
Liability coverage
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.
Term
Term life insurance
Definition
Life insurance that provides coverage for a specified period, such as ten or twenty years, with no cash value.
Term
Permanent life insurance
Definition
Coverage until death.
Term
Long-term care insurance
Definition
Insurance that pays for extended medical care or custodial care received in a nursing home, hospital, or home.
Term
Annuity
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.
Term
Commercial Package Policy (CPP)
Definition
Policy that covers two or more lines of business by combining ISO’s commercial lines coverage parts.
Term
Businessowners policy (BOP)
Definition
A package policy that combines most of the property and liability coverages needed by small and medium-sized businesses.
Term
Commercial auto insurance
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.
Term
Auto physical damage coverage
Definition
Coverage for damage to or theft of a covered auto that can include both collision coverage and other than collision (comprehensive) coverage.
Term
Commercial property insurance
Definition
Insurance that covers commercial buildings and their contents against various types of property loss.
Term
Ocean marine insurance
Definition
Insurance that covers vessels and their cargoes, including various vessel-related liability exposures.
Term
Inland marine insurance
Definition
Insurance that covers many different classes of property that typically involve an element of transportation.
Term
Commercial crime insurance
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.
Term
Commercial general liability (CGL) insurance
Definition
Insurance that covers many of the common liability loss exposures faced by an organization, including its premises, operations, and prod- ucts.
Term
Professional liability insurance
Definition
Insurance that covers persons engaged in various occupations against liability resulting from their rendering or failing to render professional services.
Term
Workers compensation insurance
Definition
Insurance that provides coverage for benefits an employer is obligated to pay under workers compensation laws.
Term
Private insurer
Definition
A nongovernment insurance provider.
Term
Stock insurer
Definition
An insurer that is owned by its stockholders and formed as a corporation for the purpose of earning a profit for the stockholders.
Term
Mutual insurer
Definition
An insurer that is owned by its policyholders and formed as a corporation for the purpose of providing insurance to them.
Term
Reciprocal insurance exchange (interinsurance exchange)
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.
Term
Captive insurer, or captive
Definition
A subsidiary formed to insure the loss exposures of its parent company and the parent’s affiliates.
Term
Reinsurance
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.
Term
Underwriting
Definition
The process of selecting insureds, pricing coverage, determining insurance policy terms and conditions, and then monitoring the underwriting decisions made.
Term
Underwriter
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.
Term
Claim
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.
Term
Risk control
Definition
A conscious act or decision not to act that reduces the frequency and/ or severity of losses or makes losses more predictable.
Term
Premium audit
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.
Term
Solvency
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.
Term
Domestic insurer
Definition
An insurer doing business in the jurisdiction in which it is incorporated.
Term
Foreign insurer
Definition
An insurer licensed to operate in a state but incorporated in another state.
Term
Alien insurer
Definition
An insurer domiciled in a country other than the United States.
Term
Admitted insurer
Definition
An insurer to which a state insurance department has granted a license to do business within that state.
Term
Nonadmitted insurer
Definition
An insurer not authorized by the state insurance department to do business within that state.
Term
Surplus lines laws
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.”
Term
Mandatory rate law
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.
Term
Prior-approval law
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.
Term
File-and-use law
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.
Term
Use-and-file law
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.
Term
Flex rating law
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.
Term
Open competition (no-file law)
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.
Term
Market conduct regulation
Definition
Regulation of the practices of insurers in regard to four areas of operation: sales practices, underwriting practices, claim practices, and bad-faith actions.
Term
Unfair trade practices law
Definition
State law that specifies certain prohibited business practices.
Term
Solvency surveillance
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.
Term
National Association of Insurance Commissioners (NAIC)
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.
Term
NAIC Annual Statement
Definition
The primary financial statement prepared by insurers and required by every state insurance department.
Term
Reserve
Definition
The amount the insurer estimates and sets aside to pay on an existing claim that has not been settled.
Term
Insurance Regulatory Information System (IRIS)
Definition
An information and early-warning system established and operated by the NAIC to monitor the financial soundness of insurers.
Term
Guaranty fund
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.
Term
Standard market
Definition
Collectively, insurers who voluntarily offer insurance coverages at rates designed for customers with average or better-than-average loss exposures.
Term
Surplus lines insurance
Definition
Insurance obtained from nonadmitted insurers when protection is not available from admitted insurers.
Term
Surplus lines insurer
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.
Term
Loss adjustment expense (LAE)
Definition
The expense that an insurer incurs to investigate, defend, and settle claims according to the terms specified in the insurance policy.
Term
Paid losses
Definition
Losses that have been paid to, or on behalf of, insureds during a given period.
Term
Incurred losses
Definition
The losses that have occurred during a specific period, no matter when claims resulting from the losses are paid.
Term
Incurred but not reported (IBNR) losses
Definition
Losses that have occurred but have not yet been reported to the insurer.
Term
Dividends
Definition
The portion of an organization’s profits that is paid to shareholders.
Term
Assets
Definition
Types of property, both tangible and intangible, owned by an entity.
Term
Admitted assets
Definition
Assets meeting minimum standards of liquidity that an insurer is allowed to report on its balance sheet in accordance with statutory accounting principles.
Term
Nonadmitted assets
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.
Term
Liabilities
Definition
Financial obligations, or debts, owed by a company to another entity, usually the policyholder in the case of an insurer.
Term
Loss reserve
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.
Term
Unearned premium reserve
Definition
An insurer liability representing the amount of premiums received from policyholders that are not yet earned.
Term
Policyholders’ surplus
Definition
Under statutory accounting principles (SAP), an insurer’s total admitted assets minus its total liabilities.
Term
Loss ratio
Definition
A ratio that measures losses and loss adjustment expenses against earned premiums and that reflects the percentage of premiums being consumed by losses.
Term
Expense ratio
Definition
An insurer’s incurred underwriting expenses for a given period divided by its written premiums for the same period.
Term
Combined ratio
Definition
A profitability ratio that indicates whether an insurer has made an underwriting loss or gain.
Term
Investment income ratio
Definition
Net investment income divided by earned premiums for a given period.
Term
Producer
Definition
Any of several kinds of insurance personnel who place insurance business with insurers and who represent either insurers or insureds, or both.
Term
Agent
Definition
In the agency relationship, the party that is authorized by the principal to act on the principal’s behalf.
Term
Agency
Definition
A legal, consensual relationship that exists when one party, the agent, acts on behalf of another party, the principal.
Term
Principal
Definition
The party in an agency relationship that authorizes the agent to act on that party’s behalf.
Term
Actual authority
Definition
Authority (express or implied) conferred by the principal on an agent under an agency contract.
Term
Express authority
Definition
The authority that the principal specifically grants to the agent.
Term
Implied authority
Definition
The authority implicitly conferred on an agent by custom, usage, or a principal’s conduct indicating intention to confer such authority.
Term
Binding authority
Definition
An insurance agent’s authority to effect coverage on behalf of the insurer.
Term
Apparent authority
Definition
A third party’s reasonable belief that an agent has authority to act on the principal’s behalf.
Term
Independent agency
Definition
A business, operated for the benefit of its owner (or owners) that sells insurance, usually as a representative of several unrelated insurers.
Term
Broker
Definition
An independent producer who represents insurance customers.
Term
Agency expiration list
Definition
The record of an insurance agency’s present policyholders and the dates their policies expire.
Term
Independent agency network
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.
Term
Managing general agent (MGA)
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.
Term
Exclusive agency marketing system
Definition
An insurance marketing system under which agents contract to sell insurance exclusively for one insurer (or for an associated group of insurers).
Term
Direct writer marketing system
Definition
An insurance marketing system that uses sales agents (or sales representatives) who are direct employees of the insurer.
Term
Mixed marketing system
Definition
An insurer’s use of more than one marketing system or distribution channel.
Term
Cold canvass
Definition
Contacting a prospect without an appointment.
Term
Loss run
Definition
A report detailing an insured’s history of claims that have occurred over a specific period, valued as of a specific date.
Term
Agency bill
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.
Term
Direct bill
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.
Term
Commission
Definition
A percentage of the premium that the insurer pays to the agency or producer for new policies sold or existing policies renewed.
Term
Contingent commission agreement
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.
Term
Book of business
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.
Term
Adverse selection
Definition
In general, the tendency for people with the greatest probability of loss to be the ones most likely to purchase insurance.
Term
Capacity
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.
Term
Underwriting guidelines (underwriting guide)
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.
Term
Underwriting authority
Definition
The scope of decisions that an underwriter can make without receiving approval from someone at a higher level.
Term
Line underwriter
Definition
Underwriter who is primarily responsible for implementing the steps in the underwriting process.
Term
Staff underwriter
Definition
Underwriter who is usually located in the home office and who assists underwriting management with making and implementing underwriting policy.
Term
Underwriting policy (underwriting philosophy)
Definition
A guide to individual and aggregate policy selection that supports an insurer’s mission statement.
Term
Advisory organization
Definition
An independent organization that works with and on behalf of insurers that purchase or subscribe to its services.
Term
Prospective loss costs
Definition
Loss data that are modified by loss development, trending, and credibility processes, but without considerations for profit and expenses.
Term
Loss development
Definition
The increase or decrease of incurred losses over time.
Term
Trending
Definition
A statistical technique for analyzing environmental changes and projecting such changes into the future.
Term
Treaty reinsurance
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.
Term
Facultative reinsurance
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.
Term
Underwriting audit
Definition
A review of underwriting files to ensure that individual underwriters are adhering to underwriting guidelines.
Term
Expert systems, or knowledge-based systems
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.
Term
Hazard
Definition
A condition that increases the frequency or severity of a loss.
Term
Physical hazard
Definition
A tangible characteristic of property, persons, or operations that tends to increase the frequency or severity of loss.
Term
Moral hazard
Definition
A condition that increases the likelihood that a person will intentionally cause or exaggerate a loss.
Term
Morale hazard (attitudinal hazard)
Definition
A condition of carelessness or indifference that increases the frequency or severity of loss.
Term
Legal hazard
Definition
A condition of the legal environment that increases loss frequency or severity.
Term
Information efficiency
Definition
The balance that underwriters must maintain between the hazards presented by the account and the information needed to underwrite it.
Term
Predictive analytics
Definition
Statistical and analytical techniques used to develop models that predict future events or behaviors.
Term
Predictive modeling
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.
Term
Catastrophe model
Definition
A type of computer program that estimates losses from future potential catastrophic events.
Term
Counteroffer
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.
Term
Experience rating
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.
Term
Schedule rating
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.
Term
Retrospective rating
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.
Term
Mix of business
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.
Term
Binder
Definition
A temporary written or oral agreement to provide insurance coverage until a formal written policy is issued.
Term
Certificate of insurance
Definition
A brief description of insurance coverage prepared by an insurer or its agent commonly used by policyholders to provide evidence of insurance.
Term
Rate
Definition
The price per exposure unit for insurance coverage.
Term
Rate manual
Definition
A resource for classifying accounts and developing premiums for given types of insurance; includes necessary rules, factors, and guidelines to apply those rates.
Term
Exposure unit (unit of exposure)
Definition
The unit of measure (for example, area, gross receipts, payroll) used to determine an insurance policy premium.
Term
Ratemaking
Definition
The process insurers use to calculate insurance rates, which are a premium component.
Term
Actuary
Definition
A person who uses mathematical methods to analyze loss data and develop insurance rates.
Term
Insurance rating system
Definition
The price per exposure unit determined by adjusting the prospective loss costs for expenses, profits, and contingencies.
Term
Loss costs
Definition
The portion of the rate that covers projected claim payments and loss adjusting expenses.
Term
Insurance advisory organization
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.
Term
Law of large numbers
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.
Term
Contingencies
Definition
A provision in an insurance rate for losses that could not be anticipated in the loss data.
Term
Class rating
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.
Term
Individual rate, or specific rate
Definition
A type of insurance rate that reflects the unique characteristics of an insured or the insured’s property.
Term
Judgment rating
Definition
Rating used by underwriters to rate one-of-a-kind risks.
Term
Final rate
Definition
The price per exposure unit determined by adjusting the prospective loss costs for expenses, profits, and contingencies.
Term
First-party claim
Definition
A demand by an insured person or organization seeking to recover from its insurer for a loss that its insurance policy may cover.
Term
Third-party claim
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.
Term
Claimant
Definition
A party that makes a claim and that can be either a first-party claim- ant or a third-party claimant.
Term
Claim representative
Definition
A person responsible for investigating, evaluating, and settling claims.
Term
Third-party administrator (TPA)
Definition
An organization that provides administrative services associated with risk financing and insurance.
Term
Independent adjuster
Definition
An independent claim representative who handles claims for insurers for a fee.
Term
Public adjuster
Definition
An outside organization or person hired by an insured to represent the insured in a claim in exchange for a fee.
Term
Nonwaiver agreement
Definition
A signed agreement indicating that during the course of investigation, neither the insurer nor the insured waives rights under the policy.
Term
Reservation of rights letter
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.
Term
Subrogation
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.
Term
Mediation
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.
Term
Arbitration
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.
Term
Appraisal
Definition
A method of resolving disputes between insurers and insureds over the amount owed on a covered loss.
Term
Mini-trial
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.
Term
Summary jury trial
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.
Term
Insurable interest
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.
Term
Actual cash value (ACV)
Definition
Cost to replace property with new property of like kind and quality less depreciation.
Term
Depreciation
Definition
The reduction in value caused by the physical wear and tear or technological or economic obsolescence of property.
Term
Replacement cost
Definition
The cost to repair or replace property using new materials of like kind and quality with no deduction for depreciation.
Term
Agreed value method
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.
Term
Salvage rights
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.
Term
Constructive total loss
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.
Term
Damages
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.
Term
Compensatory damages
Definition
A payment awarded by a court to reimburse a victim for actual harm.
Term
Special damages
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.
Term
General damages
Definition
A monetary award to compensate a victim for losses, such as pain and suffering, that do not involve specific measurable expenses.
Term
Punitive damages (exemplary damages)
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.
Term
Pure risk
Definition
A chance of loss or no loss, but no chance of gain.
Term
Speculative risk
Definition
A chance of loss, no loss, or gain.
Term
Avoidance
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.
Term
Retention
Definition
A risk financing technique by which losses are retained by generating funds within the organization to pay for the losses.
Term
Fixture
Definition
Any personal property affixed to real property in such a way as to become part of the real property.
Term
Money
Definition
Currency, coins, bank notes, and sometimes traveler’s checks, credit card slips, and money orders held for sale to the public.
Term
Securities
Definition
Written instruments representing either money or other property, such as stocks and bonds.
Term
Auto
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.
Term
Mobile equipment
Definition
Various types of vehicles designed for use principally off public roads, such as bulldozers and cranes.
Term
Recreational vehicle
Definition
A vehicle used for sports and recreational activities, such as a dune buggy, all-terrain vehicle, or dirt bike.
Term
Peril
Definition
The cause of a loss.
Term
Mortgagee
Definition
A lender in a mortgage arrangement, such as a bank or another financing institution.
Term
Mortgagor
Definition
The person or organization that borrows money from a mortgagee to finance the purchase of real property.
Term
Bailee
Definition
The party temporarily possessing the personal property in a bailment.
Term
Legal liability
Definition
The legally enforceable obligation of a person or an organization to pay a sum of money (called damages) to another person or organization.
Term
Constitutional law
Definition
The Constitution itself and all the decisions of the Supreme Court that involve the Constitution.
Term
Statute
Definition
A written law passed by a legislative body, at either the federal or state level.
Term
Statutory law
Definition
The formal laws, or statutes, enacted by federal, state, or local legislative bodies.
Term
Common law (case law)
Definition
Laws that develop out of court decisions in particular cases and establish precedents for future cases.
Term
Criminal law
Definition
The branch of the law that imposes penalties for wrongs against society.
Term
Civil law
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.
Term
Tort
Definition
A wrongful act or an omission, other than a crime or a breach of con- tract, that invades a legally protected right.
Term
Tort law
Definition
The branch of civil law that deals with civil wrongs other than breaches of contract.
Term
Negligence
Definition
The failure to exercise the degree of care that a reasonable person in a similar situation would exercise to avoid harming others.
Term
Proximate cause
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.
Term
Tortfeasor
Definition
A person or organization that has committed a tort.
Term
Vicarious liability
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.
Term
Intentional tort
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.
Term
Assault
Definition
The threat of force against another person that creates a well-founded fear of imminent harmful or offensive contact.
Term
Battery
Definition
Intentional harmful or offensive physical contact with another person without legal justification.
Term
Defamation
Definition
A false written or oral statement that harms another’s reputation.
Term
Slander
Definition
A defamatory statement expressed by speech.
Term
Libel
Definition
A defamatory statement expressed in a writing.
Term
False arrest
Definition
The seizure or forcible restraint of a person without legal authority.
Term
Invasion of privacy
Definition
An encroachment on another person’s right to be left alone.
Term
Strict liability (absolute liability)
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.
Term
Hold-harmless agreement (or indemnity agreement)
Definition
A contractual provision that obligates one of the parties to assume the legal liability of another party.
Term
Warranty
Definition
A written or oral statement in a contract that certain facts are true.
Term
Statutory liability
Definition
Legal liability imposed by a specific statute or law.
Term
Personnel loss exposure
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.
Term
Key employee
Definition
An employee whose loss to a firm through death or disability before retirement would have economic effects on the company.
Term
Disability
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.
Term
Valid contract
Definition
A contract that meets all of the requirements to be enforceable.
Term
Consideration
Definition
Something of value or bargained for and exchanged by the parties to a contract.
Term
Principle of indemnity
Definition
The principle that insurance policies should provide a benefit no greater than the loss suffered by an insured.
Term
Valued policy
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.
Term
Concealment
Definition
An intentional failure to disclose a material fact.
Term
Misrepresentation
Definition
A false statement of a material fact on which a party relies.
Term
Material fact
Definition
In insurance, a fact that would affect the insurer’s decision to provide or maintain insurance or to settle a claim.
Term
Conditional contract
Definition
A contract that one or more parties must perform only under certain conditions.
Term
Preprinted form
Definition
An insurance form that meets the needs of many policyholders and is therefore printed in bulk for future use.
Term
Manuscript form
Definition
An insurance form that is drafted according to terms negotiated between a specific insured (or group of insureds) and an insurer.
Term
Coverage part
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.
Term
Declarations page (declarations, or dec.)
Definition
An insurance policy information page or pages providing specific details about the insured and the subject of the insurance.
Term
Endorsement
Definition
A document that amends an insurance policy.
Term
Policy provisions
Definition
Any phrase or clause in an insurance policy that describes the policy’s coverages, exclusions, limits, conditions, or other features.
Term
Scheduled coverage
Definition
Insurance for property specifically listed (scheduled) on a policy, with a limit of liability for each item.
Term
Insuring agreement
Definition
A statement in an insurance policy that the insurer will, under described circumstances, make a loss payment or provide a service.
Term
Condition
Definition
Any provision in an insurance policy that qualifies an otherwise enforceable promise of the insurer.
Term
Exclusion
Definition
A policy provision that eliminates coverage for specified exposures.
Term
Floater
Definition
A policy designed to cover property that floats, or moves, from location to location.
Term
Named peril
Definition
A specific cause of loss listed and described in an insurance policy. Also used to describe policies containing named perils.
Term
Special form, or open perils policy
Definition
A policy that provides coverage for any direct loss to property unless the loss is caused by a peril specifically excluded.
Term
Collision coverage
Definition
Coverage for direct and accidental loss or damage to a covered auto caused by collision with another object or by overturn.
Term
Other than collision (OTC) coverage
Definition
Coverage for physical damage to a covered auto resulting from any cause of loss except collision or a cause of loss specifically excluded.
Term
Specified causes of loss coverage
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.
Term
Direct loss
Definition
A reduction in the value of property that results directly and often immediately from damage to that property.
Term
Time element loss (indirect loss)
Definition
A loss that arises as a result of damage to property, other than the direct loss to the property.
Term
Net income
Definition
The difference between revenues (such as money received for goods or services) and expenses (such as money paid for merchandise, rent, and insurance).
Term
Extra expenses
Definition
Expenses, in addition to ordinary expenses, that an organization incurs to mitigate the effects of a business interruption.
Term
Additional living expense
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.
Term
Named insured
Definition
A person, corporation, partnership, or other entity identified as an insured party in an insurance policy’s declarations page.
Term
Loss payee
Definition
A party entitled to share in whatever loss payment an insured receives.
Term
Deductible
Definition
A portion of a covered loss that is not paid by the insurer.
Term
Insurance-to-value provision
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.
Term
Coinsurance
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.
Term
Bodily injury
Definition
Physical injury to a person, including sickness, disease, and death.
Term
Property damage
Definition
Physical injury to, destruction of, or loss of use of tangible property.
Term
Personal injury
Definition
Injury, other than bodily injury, arising from intentional torts such as libel, slander, or invasion of privacy.
Term
Release
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.
Term
Supplementary payments
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.
Term
Prejudgment interest
Definition
Interest that may accrue on damages before a judgment has been rendered.
Term
Postjudgment interest
Definition
Interest that may accrue on damages after a judgment has been entered in a court and before the money is paid.
Term
Medical payments coverage
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.
Term
Occurrence basis coverage
Definition
Coverage that is triggered by the actual happening of bodily injury or property damage during the policy period.
Term
Claims-made coverage form
Definition
A coverage form that provides coverage for bodily injury or property damage that is claimed during the policy period.
Term
Retroactive date
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.
Term
Each person limit
Definition
The maximum amount an insurer will pay for injury to any one person for a covered loss.
Term
Each occurrence limit
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.
Term
Aggregate limit
Definition
The maximum amount an insurer will pay for all covered losses during the covered policy period.
Term
Split limits
Definition
Separate limits for bodily injury and property damage liability coverage.
Term
Single limit
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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