Term
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Definition
| Policy that covers liability claims in excess of the limits of an underlying policy or a stated retention amount. (p. 13.4) |
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Term
| Umbrella liability policy |
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Definition
| Policy that provides excess coverage over several primary policies (typically CGL, auto, and employers liability) and that may also provide drop-down coverage. (p. 13.4) |
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Term
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Definition
| Coverage provided by many umbrella liability policies for (1) claims that are not covered by an underlying policy only because the underlying policy's aggregate limits have been depleted and (2) claims not covered at all by the underlying policies. (p. 13.6) |
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Term
| Self-insured retention (SIR) |
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Definition
| An amount that is deducted from claims that are payable under an umbrella liability policy and that are not covered at all by any primary policy. (p. 13.7) |
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Term
| Maintenance of underlying insurance condition |
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Definition
| An umbrella liability policy condition that obligates the insured to maintain all required underlying coverages in full force and effect during the policy period. (p. 13.11) |
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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. (p. 13.12) |
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Term
| Management liability insurance |
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Definition
| Insurance that covers organizations and in some cases their directors, officers, and other employees against Liability claims for damages resulting from various wrongful acts that are not covered under other commercial liability policies; common examples are directors and officers liability insurance, employment practices liability insurance, employee benefits liability insurance, and fiduciary liability insurance. (p. 13.13) |
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Term
| Directors and officers (D&O) liability insurance |
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Definition
| Insurance that covers a corporation's directors and officers against liability for their "wrongful acts" that would not be covered under a CGL or auto policy and also covers the sums that the insured corporation is required or permitted by law to pay to the directors and officers as indemnification. (p. 13.20) |
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Term
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Definition
| Coverage extension of D&O liability policies for claims made directly against a corporation (the "entity") for wrongful acts. (p. 13.21) |
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Term
| Employment practices liability (EPL) insurance |
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Definition
| Insurance that covers an organization, its directors and officers, and its employees against claims alleging damages because of wrongful employment practices such as sexual harassment, wrongful termination, and unlawful discrimination (p. 13.22) |
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Term
| Employee benefits liability insurance |
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Definition
| Insurance that covers an employer against liability claims alleging improper advice or other errors or omissions committed while administering the employer's employee benefit plans. (p. 13.24) |
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Term
| Fiduciary liability insurance |
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Definition
| Insurance that covers the fiduciaries of an employee benefit plan against liability claims alleging breach of their fiduciary duties involving discretionary judgment. (p. 13.25) |
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Term
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Definition
| Insurance that covers liability due to the insured's ownership, maintenance, or use of aircraft; physical damage to aircraft owned or used by the insured; and other aircraft loss exposures. (p. 13.26) |
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Term
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Definition
| A written contract that expresses one party’s promise to answer for another party's failure to do something as promised. (p. 13.30) |
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Term
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Definition
| The party to a surety bond whose obligation or performance the surety guarantees. (p. 13.31) |
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Term
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Definition
| The party to a surety bond that receives the surety's guarantee that the principal will fulfill an obligation or perform as promised. (p. 13.31) |
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Term
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Definition
| The party (usually an insurer) to a surety bond that guarantees to the obligee that the principal will fulfill an obligation or perform as required by the underlying contract, permit, or law. (p. 13.31) |
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Term
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Definition
| A surety bond guaranteeing the fulfillment of obligations under construction contracts or other types of contracts. (p. 13.33) |
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Term
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Definition
| A contract bond guaranteeing that a contractor bidding on a construction or supply contract will enter into the contract and will provide a performance bond if the bid is accepted. (p. 13.33) |
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Term
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Definition
| A contract bond guaranteeing that a contractor's work will be completed according to plans and specifications. (p. 13.34) |
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Term
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Definition
| A contract bond guaranteeing that the project will be free of liens. (p. 13.34) |
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Term
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Definition
| A contract bond guaranteeing that the work will be free from defects in materials and workmanship for a specified period after the project is completed. (p. 13.34) |
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Term
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Definition
| Surety bonds that provide payment to the obligee (the state, city, or other public entity) for loss or damage resulting from violations of the duties and obligations imposed on the licensee or permit holder. (p. 13.34) |
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Term
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Definition
| A commercial surety bond guaranteeing that a public official will perform his or her duties faithfully and honestly. (p. 13.34) |
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Term
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Definition
| A statutory bond guaranteeing that a person or an organization will faithfully perform certain duties imposed by the court or the law, or will demonstrate financial responsibility for the benefit of another until the final outcome of a court's decision (p. 13.35) |
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Term
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Definition
| A bond posted by a plaintiff or a defendant (the principal) in a court case to protect the opposing party in the event that the principal does not prevail in the court action (p. 13.35) |
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Term
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Definition
| A court bond guaranteeing that a person appointed by a court to administer the property or interests of others will faithfully perform his or her duties. (p. 13.35) |
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Term
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Definition
| Any bond that does not fit well under the other primary categories of surety bonds formulated by the Surety and Fidelity Association of America. (p. 13.35) |
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Term
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Definition
| A bond that guarantees that the principal (owner of the lost security) will indemnify the obligee (the entity issuing the replacement security document) for any financial loss suffered due to the issuance of a duplicate security. (p. 13.36) |
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Term
| Credit enhancement financial guaranty bond |
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Definition
| A bond that guarantees to investors both the interest due and original value of the municipal bond when the bond matures. (p. 13.36) |
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