Arizona glossary Flashcards
Accident Insurance
Covers expenses associated with a covered accident and can extend to ambulance and emergency room expenses, intensive care, and hospital costs.
Accident insurance also provides for loss of income, and a death benefit if injuries prove fatal.
Accumulated Depreciation
The total decrease in an item’s value over a period of time.
Formula: (annual depreciation x number of years used).
Subtract this number from the item’s replacement cost to get its actual cash value (ACV).
Acreage Reporting Date
In crop insurance, the deadline for providing the insurer with an acreage report, which is used to determine the amount of coverage needed and the premium charged for a particular crop.
Actual Cash Value (ACV)
A valuation method used by insurers to reflect an item’s current market value right before being damaged or destroyed. Formula: (replacement cost - accumulated depreciation)
Actual Production History
A history of a farmer’s crop yields over a multi-year period, which is used to determine the normal production level of a farm.
Adhesion
Characteristic of an insurance contract. Means that one party (the insurer) sets the terms, and the other (the policyholder) can “take it or leave it.”
Adjusted Gross Revenue (Crop Insurance)
Narrowest (and least expensive) form of crop revenue insurance. Insures farm revenue as a whole instead of individual crops. Guarantees a percentage of the insured farm’s average revenue.
Adjuster
An agent who, for compensation, processes insurance claims. The adjuster investigates the damages, evaluates the claim, and makes a fair and equitable settlement based on the insurance contract. Can represent either the insured or the insurer.
Adjuster – Emergency
Adjusters who are temporarily licensed by the insurance commissioner to handle claims during catastrophes or emergencies that produce an overwhelming number of claims in a short period of time.
Adjuster – Independent
Self-employed adjusters who contract with multiple insurers at the same time. Paid on a commission or fee-plus-expenses basis for each claim. Also called: Fee Adjuster, Bureau Adjuster.
Adjuster – Public
An adjuster who is hired to represent the claimant and help determine a fair indemnification. Usually specializes in appraisals and negotiation. Paid commission, usually a percentage of final settlement.
Adjuster – Staff
Salaried employee of one insurance company who can work locally, regionally, or nationally. Also called: Company Adjuster.
Advance Payment Settlement
A settlement option that lets the insurer offer some financial relief to the claimant before the claim has been fully settled. The insurer makes advance payments to the claimant, which are then subtracted from the final settlement amount. Often used when a claimant suffers bodily injury and is unable to work.
Agency Authority
The agent’s authority to act on behalf of someone else (the principal), usually an insurer. This authority is derived from the agent’s contract with the principal.
It can be apparent, express, or implied.
Agency Authority – Apparent
Indirect authority that the agent can reasonably be assumed to have, based on appearances.
If an adjuster is equipped to represent an insurer (with the insurer’s permission), then an individual can assume that the adjuster has the authority to act on the insurer’s behalf.
Agency Authority – Express
Authority that is expressly given to the agent in writing. Allows the agent to act on behalf of the principal.
Agency Authority – Implied
Authority that an agent possesses by implication of her behavior, regardless of whether this authority is granted in writing.
For example, a person portraying herself as a representative for an insurance company, even though she is not employed by that company.
Agent (Insurance)
Someone who has received authority from an insurer to sell or service insurance policies.
Agreed Value
A valued policy in which the insurer and the insured agree to a specific value for an item, appraised at the inception of the policy. Often used to insure items whose value is difficult to quantify, such as antiques or fine art. Also called a Guaranteed Value policy.
Agreement
One of the four requirements of a legally binding contract. All parties involved must agree to the terms of the contract. Can also refer to a binder, which is the preliminary substance of a contract.
Agricultural Producer
A business that grows, harvests, and sells crops for profit.
Aleatory
A characteristic of an insurance contract. Means “depending on an unknown future event.” An insurance contract will only pay IF and WHEN covered damages occur. Neither party knows how much the contract will end up paying when they enter into the contract.
Answer - liability claims
In liability cases, the defendant’s response to a complaint. There are three possible answers:
1) accept complaint and pay for damages,
2) deny the complaint, or
3) accept the complaint with a right to insert evidence into the case.
Annual Depreciation
An item’s replacement cost divided by the number of years in its expected lifespan.
Annual Transit
An uncontrolled inland marine form that covers loss of goods in transit. It applies to all of the insured’s shipments during the year.
Appraisal
A dispute resolution method which allows the claimant and the insurer each to select an appraiser. The two appraisers in turn select an umpire. The appraisers then work together to determine a settlement amount. If they cannot agree, the umpire steps in. Agreement by any two of the three is binding.
Arbitration
A dispute resolution method in which the opposing parties each submit their evidence to a mutually-agreed-upon and neutral third party, called an arbitrator. The arbitrator reviews the positions of each opposing side and makes a final and legally binding decision.
Arbitrator
The mutually-agreed-upon and neutral third party in an arbitration who reviews the positions of each opposing side before making a final and legally binding decision.
Artificially Generated Current
Also called “artificial current.” A peril covered in some property insurance policies. It includes sudden and accidental damage from any electrical current, except currents that are naturally generated, such as lightning or static electricity.
Auto Policy
Insurance policy designed to protect the policyholder while owning, occupying, or operating a vehicle. Usually combines liability coverage and property coverage into one policy.
Automobile
In insurance policies, automobile generally means any vehicle designed for use on public roads.
Automobile No-Fault Laws
Laws in effect in some states that require any owner of a vehicle to purchase no-fault insurance; that is, insurance that indemnifies the insured, regardless of who was at fault in an accident. No-fault laws also restrict the insured’s right to sue the at-fault party.
Aviation
Aviation insurance combines hull insurance for the aircraft and liability insurance for any damage to others’ property or to people who are not passengers.
Average Weekly Wage (AWW)
The average amount of income that an employee earns each week while able to perform normal job duties. When an employee is injured on the job, his workers’ compensation income benefits will depend on his AWW before the injury.
Bailee
An individual or company that receives the property of someone else for a special purpose and returns the property after use.
Bailee Coverage
Reimburses a bailee’s customer for damage to the customer’s property while in the bailee’s control.
Binder
A temporary contract provided by an insurer, which ensures coverage until the complete, permanent policy is issued.
Black Lung Benefits Act
Federal program that provides monthly payments and medical treatments to coal miners who become totally disabled from black lung disease or pneumoconiosis.
Bodily Injury (BI)
Physical damage to someone’s person. Liability insurance covers bodily injury that the insured might cause to another person through negligence.
Boiler & Machinery
Insurance coverage designed to indemnify a business for damages to, and damages by, boilers, machinery, motors, generators, and a variety of other electrical devices and appliances.
Bond
A contract wherein one party guarantees the performance of a third party. Bonds involve three parties: (1) the surety agrees to pay the second party, (2) the obligee, if the third party, (3) the principal, neglects to carry out an obligation it has to the obligee.
Breach of Product Warranty
The failure or falsehood of a stated promise of a product stipulation.
Business Auto Policy (BAP)
Provides property damage and liability insurance for automobiles used by a business.
Business Floater
Inland marine coverage form designed for items that are excluded from most property contracts, such as accounts receivable records, manuscripts, blueprints, etc.
Business Interruption Coverage
Commercial insurance form designed to indemnify a business if a covered peril leads to lost profits or revenue. The most common type of Time Element Insurance.
Business Personal Property
Moveable property used for business.
Cancellation and Nonrenewal Condition
Establishes when and how the insurer or the insured can terminate an active insurance contract. The policyholder can cancel at any time by giving a written notice. Typically, the insurer may only cancel the policy for a few specific reasons, and it must give written notice of the cancellation or non-renewal anywhere between 10 and 60 days in advance.
Capitation - Health Insurance
An arrangement in which an insurer pays a certain healthcare provider up front, and in return, the healthcare provider agrees to treat all of that insurer’s members.
Catastrophe
An occurrence or a sequence of occurrences that causes enormous property losses. Catastrophes are normally uninsurable by private insurers.
Cause of Loss
Think Perils
A form included in a commercial package policy or a commercial property policy that lists the causes of loss against which the insured property is covered.
Certificate of Insurance
An official document that contains the details of an insurance policy.
It typically lists the insurance company, the named insured, what is covered, and the dates of the policy period, among other things. Policyholders may be required to present their certificate as proof that insurance coverage is in effect.
Commercial General Liability (CGL)
A policy that protects a business against damages and injuries it may cause to third parties.
Civil Law
Observes court cases of one citizen charging another citizen for damages caused by tort. Differs from criminal law.
Claim
The request for settlement that the policyholder files with an insurer after she experiences a loss.
Claims-Made Form
A liability policy in which the insurer covers claims that are filed during the policy period, no matter when the loss occurred. The opposite of an occurrence form.
Claims Management
The practice of the insurance adjuster of managing a claim by processing it in a prompt and effective manner from the time the claim is filed until a settlement is reached, while adhering to all local and federal laws.
Claimant
One who files a claim with an insurer for a loss.
Coarse Grains
A provision in crop insurance that covers reduction in crop quality, as well as crop-yield losses. Coarse grains are corn, grain sorghum, and soybeans.
Code of Ethics
A set of governing professional standards of conduct, usually created by regulatory bodies or government regulatory agencies. These standards may also be formally codified with statutes.
Coercion
The practice of forcing another party to behave in an involuntary manner (whether through action or inaction) by use of threats, intimidation, or some other form of pressure or force.
Coinsurance
A property insurance provision that requires the policyholder to carry adequate coverage (typically at least 80% of the property’s value). If a property does not meet this requirement (i.e. if it is underinsured), the insurer applies a penalty on claims for partial losses.
The penalty requires the policyholder to pay a percentage of the claim, depending on how underinsured the property is. To calculate: divide the actual coverage by the coinsurance requirement and then multiply that by the loss.
Coinsurance Payment (Health Insurance)
A percentage of the total health care expenses that the insured must pay.
Commerce
The exchange or transport of goods or property.
Commercial
Having to do with commerce or business activity in general.
Commercial Crime Insurance
Commercial insurance that covers employee dishonesty and theft by employees or others.
Commercial Lines
A variety of insurance coverages that protect those involved in the business of creating, selling, displaying, evaluating, or shipping, etc. Examples include: business owner’s policy (BOP); commercial property; commercial general liability (CGL); workers’ compensation (WC); professional liability, errors and omissions (E&O); and employment-related practices liability.
Commercial Property Floater
A means of protecting a business’ property that is not in one fixed location. Includes domestic shipments, instrumentalities of transportation and communication, and commercial property floater risks.
Common Crop Insurance Policy
A single uniform policy that combines crop revenue coverage, revenue assurance, income protection, and indexed income protection.
Common Law
Based on court decisions and customs when statutory law does not provide an answer; creates precedent.
Compensatory Damages
Money awarded in civil court for tangible and intangible damages caused by a policyholder. There are two types: general and special.
Compensatory Damages – General
Money awarded for the emotional losses of the plaintiff that will continue after the trial date. These are a subjective value and are determined by the court.
Compensatory Damages – Special
Money awarded for the exact value of the physical damage caused to the plaintiff up to the trial date. This is an objective value determined by receipts and medical bills.
Competence
One of the four qualifications of a legally binding contract. All parties must be competent, with the necessary legal and mental capacity.
Complaint
A complaint initiates a civil lawsuit by one person (the plaintiff) requesting financial relief from damages caused by someone else (the defendant).
Concealment
The act of withholding relevant material facts from an insurer.
Conditionally Renewable Policy
A policy that gives the insurer the option to cancel coverage only if certain stated conditions are met.
Conditions
The section of a policy that qualifies or limits an insurer’s promise to pay or perform.
Consideration
In relation to contracts
One of the four qualifications of a legally binding contract.
All parties must bring something of value to the contract.
Contract
An agreement entered into voluntarily by two parties or more with the intention of creating a legal obligation.
Contribution by Equal Shares
Each policy pays an equal share of the loss up to the lowest policy limit. If the loss is not fully covered, the process is repeated among the remaining insurers with available coverage. As each policy limit is reached, the remaining portion of the loss is split equally between the insurers with available coverage until the loss is either fully covered or all of the policy limits have been reached.
Controlled Line Floaters
Standardized forms provided by a bureau and filed with the state. These forms disclose the rates being charged and can be used as both general property floaters (such as “personal effects” or “personal property”) and specific property floaters that break down covered property by type.
Copayment
The amount a policyholder must pay each time she accesses the benefits of a health insurance policy.
Coverages
The amount and extent of protection provided by an insurance policy.
Crime
An offense against the state or federal government, or a breach of law, for which the offender must make satisfaction to the public.
Criminal
Someone who has been convicted of a criminal act in a court of law.
Crop Hail Insurance
A form of crop yield insurance that is usually provided by private insurers without government subsidy. It offers named-peril protection on an acreage basis.
Crop Insurance
Insurance coverage designed to protect a farmer’s financial investment in his crops. Covers losses to a crop’s profitability.
Crop Revenue Insurance
Crop insurance that combines crop-yield insurance and price insurance to protect against losses to crop value.
Crop Yield Insurance
Crop insurance that covers physical losses to actual crops.
Damages – General
Intangible losses, such as pain and suffering or mental anguish.
Damages – Special
Tangible, financial losses that can be documented.
Dangerous Instrumentality Doctrine
States that anyone involved in the use of inherently dangerous products or machines is held 100% liable for their own damages.
Declaratory Judgement Action
As an alternative dispute resolution before litigation, the court can clarify the legal relationship and the rights of both parties: the claimant and the principal. Does NOT decide how to resolve the case.
Declarations Page
Also called the Dec page. First page of a policy, which provides a summary of the contract; includes names of insured, addresses, coverage limits, policy period, etc.
Declined Coverage
Takes place when an insurance company rejects an application for coverage.
Deductible – Fixed
One specific, predetermined amount that a policyholder must pay out-of-pocket before his policy coverage kicks in.
Deductible – Fixed
One specific, predetermined amount that a policyholder must pay out-of-pocket before his policy coverage kicks in.
Deductible – Franchise
The policyholder only pays if the total damages come out to less than his deductible. If the cost of damages equals or exceeds the deductible, the insurer pays the full amount and the policyholder pays nothing.
Deductible – Percentage
A deductible that is calculated as a percentage of the value of the insured risk.
Defamation
Damage to another’s name or reputation, whether by libel (which is in print) or by slander (which is in speech).
Default Judgement
A judgment entered by the court against a party who fails to present his case or defense in a civil action. Most commonly, this applies when the defendant fails to show up and answer the claim brought against him, so the court decides in favor of the plaintiff.
Definitions
Page in policy that gives specific limited meaning to terms used in policy.
Depreciation
A decline in value of property caused by wear or loss of usefulness, usually measured by a specific formula.
Diligence and Dispatch
An adjuster should act with speed and care in completing the adjusting process. Failure to settle a claim in a timely manner can result in disciplinary action by the insurance commissioner, including a fine or loss of license.
Disclosure
An adjuster must disclose all financial interests in any direct or indirect aspect of an adjusting transaction.
For example, an adjuster cannot refer a claimant to his brother’s auto repair business without first telling the claimant that the business is owned by a relative.
Discoverable
Capable of being demanded and handed over as evidence in a court of law; during litigation proceedings, the adjuster’s claims file is discoverable.
DP-1
“Basic Form” of Dwelling Policy. Covers direct physical loss to property caused by only three perils: fire, lightning, and internal explosion
Coverage for other perils can be added by endorsement
Pays ACV
DP-2
“Broad Form” of Dwelling Policy. A named peril policy that covers everything on the DP- 1 Basic from, as well as 9 Extended Form perils and the Broad Form perils.
DP-3
“Special Form” of Dwelling Policy. Unlike DP-1 and DP-2, DP-3 offers open-peril coverage for the property’s structures (but named peril for personal property).
Dwelling Policy (DP)
Property coverage for people and businesses who are not eligible for homeowners insurance or do not need the extensive coverage of the homeowners policies.
Electronic Data Processing (EDP)
Endorsement
An endorsement that covers the loss of computer equipment, data systems, information storage media, and expenses or lost income related to EDP losses.
Eligibility
Eligibility Requirements are found in some insurance policies. They identify the conditions that must be met by the policyholder in order to qualify for coverage under a policy.
End of Insurance Date - Crop Insurance
The date that crop insurance coverage will end. It is the earliest of the following: total crop destruction, harvest of the crop, final adjustment of a loss, abandonment of a crop, or a date predesignated by crop type.
Endorsement(s)
An optional provision that can be added to a policy to increase, reduce, or modify coverage for specific property types or perils.
Errors and Omissions (E&O)
Liability insurance that indemnifies professionals for errors or oversights on the part of the insured that caused harm to their clients.
Estoppel
A legal principle that bars a party from asserting something contrary to what has been implied by his previous actions or statements.
This is a form of “implied waiver”; for example, if the insurer regularly accepts late payments, it waives its right to deny coverage due to late payment.
Ethical
Adhering to moral laws and to principles of fairness.
Equipment Floater
An uncontrolled form that covers heavy machinery and equipment needed to conduct business. Protection on this form includes loss by fire, landslide, theft, and other perils to equipment that is being stored, on its way to the job site, or at the job site itself. Coverage is available on an open peril or named peril basis for all equipment, whether rented, owned, or borrowed.
Evaluation
The process of determining the approximate value of damages relevant to a claim (i.e. total of medical bills, costs of repair & replacement of damaged property) and considering the financial provisions of the insurance policy to decide on a fair settlement amount.
Excess Policy
Pays for a loss only after the primary policy’s limits have been exhausted. See also: “Primary Policy.”
Exclusions
A section of an insurance policy that reduces coverage by listing specific individuals, property, or perils that the policy does NOT cover.
Exposure
The extent to which an item is open to damage or loss. More exposure means a loss is more likely, so this is a determining factor in an insurer’s underwriting decisions.
Fair Credit Reporting Act (FCRA)
This act regulates how companies collect, share, and use consumers’ personal and financial information. It is enforced by the US Federal Trade Commission and civil lawsuits.
False Advertising
Presenting something to the public in a deceptive or untrue manner; misrepresentations in advertisements.
Farm
Most basic definition
A property where a farmer or rancher both resides and conducts commercial business.
Farm Liability Coverage Form
A form added to a farm insurance policy that provides coverage for injury and damage to a third party.
Farm Property Coverage Form
A form added to a farm insurance policy that provides coverage for the dwelling, other structures, farm structures, and both household and farm personal property.
Farmer
What qualifies them for coverage?
Someone in the business of growing, harvesting, and selling crops for profit.
In farm insurance, a farmer must reside and do business on the same premises.
Federal Crop Insurance Act
Legislation passed by Congress that established the federal crop insurance program.
Federal Crop Insurance Corporation (FCIC)
A government-owned corporation that manages the federal crop insurance program.
Federal Emergency Management Agency (FEMA)
A branch of homeland security that coordinates relief programs when disaster strikes an entire community.
Federal Employees Compensation Act (FECA)
Federal program that provides insurance for civilian employees of the federal government. As a workers’ compensation program, FECA covers disability or death sustained while the employee is on the job. Pays medical expenses and two-thirds of normal monthly salary while the employee is unable to work. Additional payments may be made for permanent injuries or to dependents.
Federal Employers Liability Act (FELA)
Federal program enacted in 1908 before most state workers’ compensation laws. FELA protects only interstate railroad workers and their families, by allowing workers who are not covered by regular WC laws to sue their employer.
Fiduciary
One of the terms that describes the adjuster’s relationship with the principal (the insurer). As fiduciary agent, the adjuster acts for the benefit of the principal, rather than for his own benefit.
Fiduciary Duty
A legal relationship in which one party represents the best interests of another. As the insurer’s fiduciary agent, the adjuster makes financial decisions on behalf of the insurer and must uphold the insurer’s financial interests in all transactions,while ensuring that claims are settled fairly according to their insurance contracts. This means the adjuster must perform her job with honesty and “utmost good faith” at all times.
Final Planting Date
In crop insurance, the last day to plant crops in order to receive the full insurance yield and/or revenue guarantee selected.
First Named Insured
The first person or entity named as insured on the declarations page of a policy.
First Party Claim
A claim that a policyholder files with her own insurer (as opposed to a third party claim, which the claimant files with someone else’s insurer).
Floater
A term for inland marine policies that cover mobile property.
Flood
An overflow of inland or tidal waters; an unusual or rapid accumulation of runoff or surface waters from any source; mud flows; collapse or subsidence of land along the shore of a lake or other body of water.
Flood Insurance
What does it do?
Provides relief following flood damage to communities who participate in the NFIP floodplain management system; covers damages to the building and its contents
Floodplain Management
Maps out areas with high risk of flood, so that communities will avoid building in these areas
Fraternal Benefit Societies
Non-profit, mutual aid organizations that engage primarily in charitable or benevolent activities. They offer their members insurance against death, disease, and disability. Also known as Fraternal Associations.
Fraud – Hard
Deliberately faking or causing an incident in order to collect money.
Fraud – Soft
Inflating the gravity or the extent of claims in order to receive a higher indemnification.
Free on Board (FOB) Destination Point
A term used in Ocean Marine insurance. It means that the title to the property being shipped remains with the shipper until it arrives at the buyer’s destination and the buyer accepts the property.
