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.
Free on Board (FOB) Shipping Point
A term used in Ocean Marine insurance. It means that the title to the property being shipped transfers to the buyer as soon as the property leaves the shipping dock.
Full Release Settlement
A settlement option whereby the insurer pays all damages at once in an immediate “lump sum” and the claimant signs a “full release form” which releases the insurer from any further liability. This is the most common settlement option.
Good faith
Acting honestly and fairly, with good intentions and full disclosure.
Government Insurance
An insurance program where risks are transferred to a government agency. Also known as social insurance. Government insurance usually exists in situations where the exposure to loss is too high for private insurers to reliably insure risks.
Group Risk Income Protection - Farming
A form of Crop Revenue Insurance that protects a whole county or area instead of individual farmers. Automatically indemnifies if county income falls below a certain level.
Guaranteed Renewable Policy - Life insurance
A disability or life insurance policy that cannot be canceled by the insurer until the insured reaches a certain age. The insurer may increase the premiums over the life of the policy.
Guaranty Association
A non-profit association of insurers from similar markets that handle and pay claims for insurers that have been declared insolvent.
Hazard
An instance, behavior, or condition that increases the chance of incurring a loss, or increases the severity of the loss.
Hazard – Legal
Any legal action that increases the chance of a loss.
Hazard – Moral
Conscious and deliberate action on the part of the insured that increases the chance of a loss. All conscious acts committed with a hope to defraud the insurance company are moral hazards.
Hazard – Morale
Unconscious tendency of insured people to engage in riskier behavior.
Hazard – Physical
Any physical condition that increases the chance of a loss.
Health Insurance Portability and Accountability Act
HIPAA
A 1996 US law protecting consumer privacy, regulating collection, use and storage of private medical information. Deals mainly with the portability of health insurance and dictates that all employees must be eligible to participate in health insurance coverage when they join a new company, regardless of current health status.
Health Maintenance Organization (HMO)
A managed care organization that provides health insurance to individuals through a provider network. Provides a broad range of comprehensive medical care.
HO-2
The “broad” form of homeowners insurance; a basic, named-peril HO form that nevertheless is less limited than the HO-8.
H0-3
“Special form” of homeowners insurance; all-peril coverage for structures, named-peril coverage for contents.
H0-4
“Contents broad form”; named-peril renter’s policy covering only personal property and any structural improvements made at the tenant’s own expense.
H0-5
“Comprehensive form” of homeowners insurance; provides all-peril coverage for both structures and contents.
H0-6
“Condo” or “unit owner’s form”; named-peril homeowners policy covering personal property and the surface structure of a condominium.
H0-8
“Modified coverage form” of homeowners insurance; named-peril coverage for structures and contents, fewer perils covered.
Homeowners Policy
An insurance policy that combines property coverage with liability coverage for a person’s home.
Hospital Expense Insurance
Provides coverage for a variety of hospital expenses, including room and board, medical expenses, lab fees, and nursing care.
Hospital Indemnity Insurance
A supplemental coverage that provides a flat amount of indemnification per day for hospitalization.
Impaired Property
Property that is defective because the insured’s deficient or incomplete additions or work.
Income Protection (Crop Insurance)
A form of crop revenue insurance. Relatively inexpensive, it provides a fixed revenue guarantee based on early commodity prices for the crop type
Indemnification
Reimbursement for a loss, which leaves the claimant in the same financial position that she was in before the loss.
Indemnity Insurance
Insurance that indemnifies loss as opposed to liability
Inducements
Actions, items, or promises made to someone in order to motivate them to act in a certain way. Examples of inducements include kickbacks, gifts and bribes.
Inherent Vice
A characteristic in a thing itself that causes gradual deterioration or self-destruction. Losses or damage related to inherent vice are not insurable.
Inland Marine Insurance
Insurance that covers property being transported over land, or property that is involved in the transportation of goods.
Instrumentalities of Transportation and Communication
A term used in Inland Marine insurance that refers to property directly related to transportation and communication, including bridges, tunnels, roads, dams, piers and docks, oil pipelines, power transmission lines, and radio and TV towers.
Insurable acreage
All of the acreage of the insured crop, for which a premium rate is provided in the actuarial documents, in which the insured has a financial interest, and which is planted in the county listed on the application.
Insurance
A financial device that transfers the risk of unexpected, catastrophic losses from one party to another.
Insurance Commissioner
Most states have an insurance commissioner who is responsible for regulating many aspects of the insurance industry (especially those concerning the financial solvency of the insurers doing business in the state). The commissioner oversees the financial stability of insurers and regulates the rates that insurers charge.
Insurance Company
Company which sells insurance policies to individuals or to other companies.
Insurance Fraud
Using insurance to obtain money unlawfully. This can be done by a policyholder, or by an insurer or an insurer’s employees. There are two kinds of insurance fraud: soft fraud and hard fraud.
Insurance Information and Privacy Protection Act (IIPPA)
Regulates how an insurance company can use consumers’ private information. Deals specifically with how insurance companies collect, use and share personal information about their policyholders and gives the consumer the opportunity to prevent certain information from being shared. Requires that insurers tell consumers why insurance coverage was declined or why insurance claims were denied.
Insurance Policy
A contract wherein an insured pays premiums to an insurer in exchange for financial protection in the event of a covered loss.
Insurance Rating Systems
Methods of evaluating the risk involved in insuring a person, property, or a corporation. Insurers use rating systems to calculate premiums.
Insured
A person or entity who is covered under an insurance policy.
Insured crop
The crop in the county for which coverage is available as specified by the policy.
Insurer
The person or entity providing coverage to one or more insureds.
Insuring Agreement
A section of an insurance policy that summarizes the insurer’s promise to pay. Includes list of covered property and perils.
Interest
Direct financial interest in protecting a unit.
Intervening Cause
A separate occurrence that “intervenes” between a defendant’s actions and damage or loss to another person. An intervening cause may decrease the defendant’s liability, if the defendant can show that it was the intervening cause (rather than the defendant himself) that caused the damage or loss.
Joint Liability
Liability shared by two or more persons.
Jones Act (Merchant Marine Act)
Protects injured seamen by allowing them to sue for damages and to choose a jury trial. Seamen are covered by the Jones act instead of by workers’ compensation insurance.
Judgement
An official court ruling forming a final decision resolving a dispute or forming a final decree.
Kickbacks
Any sort of reward or remuneration for referrals or favors; for example, a body shop giving money to an adjuster for referring customers. This is unethical behavior.
Landlord
One who has leased property to a tenant.
Late Planting Period
25 days after the final planting date, during which the yield and/or revenue guarantee drops by one percent per day.
Law and Ordinance Coverage
Covers the repair or upgrade cost when new building codes, laws, or ordinances go into effect. A common endorsement in both residential and commercial policy packages. Also known as Code Upgrade Coverage.
Leased Worker
Worker hired through a labor leasing firm.
Legal Purpose
One of the four qualifications of a legally binding contract. The purpose of the contract must be legal (e.g. no contracts for illicit drug deals).
Liability
An obligation to do or not to do something; responsibility for an action.
Liability Insurance
Liability insurance indemnifies a third party for damages caused by the insured’s negligence.
Liability – Employer
Protects employers from claims not covered by workers’ compensation for damages and bodily injury caused to employees while performing under the scope of their employment.
Liability – Product
Protects a policyholder from legal liability for damages to third parties caused by the manufacturing, merchandising, distributing, or operation of a product.
Liability – Professional
Professional Liability Coverage protects professionals such as doctors, lawyers, engineers, architects, etc. It includes two types of coverage: malpractice insurance and errors and omissions insurance.
Liability – Public
Protects individuals and commercial venues from any property damage or personal injury they may cause to the general public
Libel
Damage to another’s name or reputation in print. See also: “Defamation.”
Liberalization
The liberalization clause in an insurance contract is a condition that states that the insurer can add or broaden coverage at any time without writing up a new contract. This clause guarantees that, in the case of legislative action that broadens insurance coverage without any increase in premiums, this additional coverage must take effect in existing policies as well as in new policies.
License
A document that shows that a person has been granted authority by the state to act as an insurance agent, broker, or adjuster.
Limit
The limits of an insurance policy represent the highest amount an insurer will pay. Any cost above the limits of insurance is the responsibility of the policyholder.
Limit – Aggregate
The total amount the insurer will pay for all losses during the policy period. Often appears preceded by an occurrence limit (e.g. 100,000/1,000,000). The first number indicates the maximum payout for covered losses in any single occurrence, and the second number indicates the total amount the insurer will pay for all covered occurrences during the policy term.
Limit – Single
Establishes 1 maximum limit for liability damages caused by the policyholder. Contrast with split limits.
Limit – Split
An insurance provision that specifies different coverage limits for different parts of a claim. The most common example is split limits in a personal auto policy, which includes 3 different limits of liability: (1) maximum limit for bodily injury for any one individual, (2) maximum limit for bodily injury to multiple people in any one accident or occurrence, and (3) maximum limit for property damage in any one accident or occurrence.
Litigation
An action brought in court. Litigation takes place when an insurer and a policyholder disagree about a settlement amount and cannot resolve their differences through any sort of negotiation.
Livestock Floater
Optional farm insurance coverage. Provides stand-alone protection for six kinds of domesticated animals on a scheduled or unscheduled basis. Includes coverage for animals while in transit.
Longshore And Harbor Workers’ Compensation Act
Federal program that provides compensation and medical care to employees who are injured while on the job on navigable waters of the United States.
Loss
Bodily injury, property damage, or damage caused by the insured’s negligent acts; loss is the the basis for an insurance claim. Loss can also mean the sum the insurer will have to pay.
Loss – Direct
Physical harm to tangible property caused by a peril.
Loss – Indirect
An economic loss that results from the direct, or physical, loss.
Mail Coverage
A controlled Inland Marine coverage form providing open peril coverage for property sent by registered mail. The shipper is responsible for reporting the value of property shipped with this coverage.
Major Medical Coverage
A health insurance plan that does not restrict the policyholder to a network, provides limited coverage but high medical coverage limits, and involves high deductibles and coinsurance rates.
Malpractice
Negligent or improper actions on the part of doctors, lawyers, and accountants etc., resulting in damage, injuries, or losses to the person receiving their services.
Marine Insurance
Covers items that are being transported, as well as the vehicles used for transportation.
Market Value
The price something will sell for in the open market, or “fair market value.”
McCarran-Ferguson Act
Think DOI
1945 US Law exempting insurance from most federal regulation, and placing it under the authority of the individual states.
Mediation
A method of negotiation that utilizes a neutral third party adviser to reach a mutually- agreeable solution. Mediation differs from Appraisal in that the decision is not binding to the opposing parties.
Misappropriating Salvaged Property
When an adjuster takes possession of salvaged property for his own use or the use of another. This is unethical behavior.
Misrepresentation
Any false or misleading statement.
Mobile Agricultural Machinery and Equipment Coverage Form
A commercial property form that provides coverage for farm machinery and equipment when it is the only exposure, or when coverage must be written separately.
Motor Truck Cargo
An uncontrolled inland marine coverage form that protects the carrier of shipped goods while the shipment is in transit.
Multi Peril Crop Insurance (MPCI)
A form of Crop Yield insurance that offers broad coverage for a multitude of perils. MPCI is subject to federal regulation because it is subsidized by the government. Coverage applies per unit.
Mutual Insurance Company
An insurance company that is owned by its policyholders who participate in dividends. These companies have no shareholders and are not traded publicly.
Named Peril Policy
A policy that names all perils that will be covered. Contrast with open-peril policies.
National Association of Insurance Commissioners (NAIC)
A non-profit coalition of state insurance agencies that works to protect consumers and harmonize state laws and regulations.
National Association of State Departments of Agricultural Research Foundation
A non-profit association of public officials representing the Commissioners, Secretaries, and Directors of Agriculture in the fifty states and four territories.
National Center for Agricultural Law Research and Information
Independent agricultural and food law research and information center created to address the complex legal issues affecting American agriculture.
National Crop Insurance Services (NCIS)
A non-profit international organization specializing in statistical data analysis and reporting related to crop insurance risk management.
National Flood Insurance Program (NFIP)
A program that provides insurance for communities that suffer flood damage and are willing to participate in the FEMA’s floodplain management system.
National Resources Conservation Service
A federal agency within the USDA that works with private landowners and operators to help them protect their natural resources.
Negligence
The failure to exercise a reasonable degree of care in a particular situation.
Negotiations
Negotiations take place when the insurer and the claimant do not agree about an indemnification amount. The insurance adjuster is often the one who will carry out the negotiations.
Non-Commercial Insurer’s
Think Lemonade
Non-Commercial insurers are not-for-profit insurance companies that return profits to policyholders by reducing premiums or expanding benefits.
Nonconcurrency
The situation in which 2 or more policies covering the same risk have different inception and expiration dates. Since the policies operate on different calendars, losses on the base policy may not count toward the limit which triggers the excess policy’s coverage.
Non-Waiver Agreement
An agreement that the insurer asks the claimant to sign which states that the insurer’s investigation of the loss can’t be used later on as proof that the loss is covered under the policy.
No Release Settlement
A settlement option whereby the insurer simply pays the bills submitted by the claimant, but the claimant does not sign a release form to verify the payment. Usually, the checks issued to indemnify the claimant act as a substitute for a release form. Also known as “Walk-away” Settlement.
Obligee
The party in a “surety bond” that wants a guarantee that the principal will perform as promised, and is the recipient of the contractual obligation.
Occurrence
An unexpected event or circumstance that causes injury or damage.
Occurrence Form Policy
A liability policy in which the insurer covers losses that occur during the policy period, no matter when the claim is filed. The opposite of a claims-made form.
Ocean Marine
Insurance designed to protect property being transported overseas.
Open Peril
An open perils policy covers all causes of loss except for those explicitly excluded. Also known as “All Peril.”
Optionally Renewable Policy
The insurer retains the option to continue coverage for the insured upon expiration of the current policy period. The insurer may renew coverage or cancel coverage for any reason.
Out-of-pocket Expenses
Usually refers to any deductibles, coinsurance, or copayments that the policyholder pays as part of a health insurance program.
Overinsurance
Overinsurance means having insurance on a risk for more than the risk is worth. If a policyholder is overinsured, the insurer will only indemnify a loss up to the insurable value. If the insured purposefully overinsured the risk with the intent to commit insurance fraud, the insurer is not bound by the policy to pay anything.
Partial Release Payment
A settlement option whereby the insurer pays a part of the claim before settling the entire claim. This kind of settlement is common when one part of a claim is still being negotiated or where the full amount of damages is as yet unknown (in the case of bodily injury, for example).
Peril
The actual cause of loss or damage, such as lightning, fire, or theft.
Personal Articles Floater (PAF)
Type of coverage?
Where does it apply?
What’s the ded?
Coverage for several types of property combined into a single policy; intended for property that does not have a sufficient coverage limit in a homeowners policy.
This form will specify the coverage and premium amounts of each type of property listed. Personal Articles Floaters always provide open peril coverage, their coverage applies anywhere in the world, and they do not have deductibles.
Personal Auto Policy (PAP)
A package policy that combines property damage and liability insurance for motor vehicles.
Personal Injury
Damages to a third party’s character, reputation, or standing in the community
Personal Lines Insurance
Protects the personal and real property of an individual. A personal auto policy and a homeowners policy are examples of personal lines of insurance, as opposed to commercial lines
Personal Injury Protection (PIP)
A form of no-fault auto insurance utilized in some states.
Personal Property Floater
Protects property owners from damage or losses to personal articles while in the process of transport
Plaintiff
The person who brings a case against another person in court.
Point of Service (POS) - Medical
A type of group health insurance plan that combines characteristics of the HMO and the PPO plans. Allows the insured to choose his own primary physician within the network and that physician becomes the insured’s “point of service.”
Policy Period
The beginning and end dates of coverage. Found on the Declarations Page.
Policyholder
Also called the “insured”, a policyholder is a person who has purchased an insurance policy—or contract—from an insurer.
Pollutant Cleanup and Removal Coverage
Provides coverage in cases of accidental pollutant damage that results from a covered loss.
Power to Bind
One manifestation of the authority given to insurance agents by the principal. The principal is bound by, or must adhere to, the guarantees and statements made by its agent.
Preferred Provider Organization (PPO)
Like an HMO, this group insurance plan provides insurance by contracting a network of physicians, hospitals and medical care providers. Differs from an HMO in that members have more freedom to go outside of the network to choose their own physician.
Premium
A scheduled and affordable fee, paid by the policyholder to the insurer, in return for coverage.
Preponderance of Evidence
A preponderance of evidence is enough evidence to make it more likely that an argument is true than that it is false. In a civil trial, the plaintiff needs to provide a preponderance of evidence in order to win her case.
Primary Insurance
Primary insurance pays first, before other policies that apply to the same loss. See also: “Excess Insurance.”
Principal
The principal refers to an agent’s employer (usually an insurance company, but it could also mean anyone who contracts the agent to work on their behalf and gives her the authority to do so). In a surety bond or suretyship, the principal (obligor) is the party that first agrees to fulfill an obligation, and is the one who purchases the bond.
Principle of Indemnity
The principle behind all insurance contracts. It states that, when a loss occurs, the insured should be restored to his or her financial condition before the loss occurred, no better, no worse. The insured cannot profit from a loss.
Privacy
In insurance, the right of consumers to have their personal information protected.
Private Insurance
Private insurance is the term for any insurance other than social insurance. Social insurance programs are run by the government instead of by private individuals.
Private Crop Insurance
Crop insurance that does not fall under the Federal Crop Insurance Program and is provided directly to farmers by private insurers.
Proof of Loss
The form or statement that the policyholder is required to submit to the insurer before she can be indemnified for a loss.
Property Damage (PD)
Damage or loss of use of personal property.
Pro Rata Apportionment
When a loss is covered by more than one policy, the policies split the loss, based on the percentage of coverage each policy provided. For example, if a couple has 2 dwelling policies, one for $100,000 and the other for $50,000, and a loss occurs, the first policy will pay 2/3 of the loss, and the other policy will pay 1/3.
Proximate Cause
The original occurrence, the source, of all the subsequent damages.
Punitive Damages
Intangible damages awarded to the plaintiff when the defendant’s actions show
intentional heinous, antisocial behavior or extreme indifference to harm.
These damages are determined by the court and the adjuster cannot negotiate them.
Pure Claims-Made Form
A type of claims-made policy where the insured must inform the insurer of a claim as quickly as possible, but not necessarily within the policy period.
Rating System
A risk management technique by which insurers identify hazards, assign risks to different classes, and set premiums accordingly. There are also rating systems whereby agencies rate different insurers’ financial well-being, to educate the public and try to prevent insurer insolvency.
Rebate
Refunding part of a premium, due to the creation of a new contract or change to an existing
Reciprocal Insurer
An unincorporated organization of subscribers that operates through an attorney-in-fact to provide insurance benefits for its members.
Reinsurers
Companies which sell insurance to insurers to reduce the insurer’s exposure to loss.
Replacement Cost (RC)
A method of valuation based on the cost of replacing an item at current market prices, regardless of depreciation.
Reporting
As in adjuster’s duty
One of the adjuster’s duties is to report to the principal (insured). The adjuster must give the principal frequent updates of her progress on any given claim.
Reservation of Rights
A notification that an insurer might give to an insured, informing him that a reported loss might not be covered under his insurance policy.
Residual Market
State run, or state subsidized, program that provides insurance coverage to high-risk individuals. Residual market programs collect and maintain large premium pools made of required contributions from other insurers. Also known as “Shared Markets” or “Involuntary Markets.”
Retroactive date
Date preceding a policy period before which the policy will not cover occurrences.
Revenue Protection (Crop Insurance)
This MPCI policy insures against losses caused by low yield, low prices, or a combination of both. This coverage is broader than yield protection, since it can account for falling prices as well as poor production. The revenue guarantee is based on the higher of: harvest-market price or early market price. Previously called Crop Revenue Coverage (CRC).
Revenue Assurance (Crop Insurance) Protection Guarantee
A form of crop revenue insurance that provides a fixed revenue guarantee based on average county prices.
Risk
In the insurance industry, risk can have two meanings: 1) the potential for financial loss; being exposed or open to damage, and 2) an insured item.
Risk – Pure
Risk that does not entail the possibility of gain; the only possible outcomes are a loss or no loss. Insurable (as opposed to speculative risk which is uninsurable).
Risk – Speculative
Risk that might result in gain, loss, or no change in circumstance (as opposed to pure risk, which does not include the possibility of gain). Uninsurable.
Risk Avoidance
Insurers’ practice of denying insurance applications that they believe would involve an inordinate amount of risk.
Risk Management
Measures taken by an insurance company to ensure that their exposure is not too high and to control the effect of a loss; for example, an insurer might charge higher premiums to drivers who have received speeding tickets.
Risk Management Agency
Think farming
A federal agency under the USDA that administers the Federal Crop Insurance Program.
Risk Purchasing Groups
Groups of people with similar insurance needs who form an organization to buy insurance as a group.
Risk Reduction
An insurer practices risk reduction when it takes precautions in order to reduce its exposure; for example, requiring that all homes insured by a homeowners policy have fire alarms installed.
Risk Retention
An insurer practices risk retention when it chooses to insure a risk instead of denying coverage.
Risk Retention Group (RRG)
A group in which the members insure each other, using their own capital to write insurance policies.
Sales Closing Date
Think farming
The last date on which an insurance application for a particular crop can be completed and signed.
Salvage
Salvage is damaged property that has cash value. In homeowners insurance, the policyholder has the option of keeping the salvage and accepting a smaller settlement from the insurer. The insurer has the option of keeping the salvage if they have fully indemnified the insured.
Scheduled Payment Release
Sometimes called “open-ended release” or “rehabilitation settlement.” The insurer agrees to pay all of the special damages and general damages that have accumulated so far, and agrees to pay special damages in the future.
Settlement
A resolution of a dispute, or an agreement. Settlement allows an insurer and a claimant to resolve a case before it reaches a court of law.
Settlement Padding
Increasing the settlement amount dishonestly in order to increase one’s commission. This is unethical and criminal behavior.
Severability of Interests
An insurance provision that states that coverage applies to each insured separately, as if no other insured existed. Each individual insured is protected as a separate entity, even against other insureds (if one insured were to file a claim against another insured), but the limits of the policy still apply to all insureds collectively. Also known as “Separation of Insureds.”
Slander
Damage to another’s name or reputation in speech. See also: “Defamation.”
Small Grains
In crop insurance, a provision that covers reduction in crop quality, as well as crop-yield losses. Small grains are wheat, barley, and oats. See also: “Coarse Grains”
Standard Fire Policy
The basic foundation for all homeowners and commercial property policies issued today. Developed in 1918 to provide insurance protection for both homeowners and commercial property owners, it was typically a named peril policy, but it only protected against losses from fire and lightning on an Actual Cash Value basis.
Stated Value
A valuation method in which the insured simply assigns the risk a value at the outset of the policy. The insurer will pay this amount in case of a total covered loss.
Statute of Limitations
A statute based on the common law legal system that specifies the maximum period of time, after damages occur, that legal proceedings based on those damages may be initiated.
Statutory Law
Based on laws set forth by a governing authority; i.e. state legislature
Stipulation
A stipulation is something specifically agreed to in a contract, such as an insurance contract.
Stock Insurance Company
A Stock Insurance Company is owned by stockholders, as opposed to its own policyholders (as is the case with Mutual Insurance Companies).
Strict Liability
Holds a party 100% liable for damages when the activity or instrument they are performing is inherently dangerous.
Structured Settlement
A settlement option whereby the insurer indemnifies the claimant in a series of smaller payments over a set period of time, instead of paying all at once. Typically reserved for claims involving a very large settlement amount, and the insurer often has to pay some of the amount in a lump sum up front.
Subrogation
The transfer of rights that occurs when an insurer indemnifies a claimant for a loss. The claimant transfers to the insurer his right to collect the amount of the indemnity from the guilty party.
Sudden and Accidental Tearing Apart
A peril covered in some property insurance policies. It refers to damage caused by rupture, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire sprinkler system, or an appliance for heating water. Unlike accidental discharge, this peril includes coverage for the system or appliance itself.
Supplementary Payments
Coverage provided in liability policies to help with a variety of expenses that the insured may incur at the request of the insurer in the event of a claim or lawsuit, such as lost wages, bail bonds, and records filing fees. It is separate from, and not restricted by, the liability limits of the policy.
Surety Bonds
An arrangement where one party promises to perform for another party, and a third party guarantees this promise. Then, if the party making the promise does not perform, the third-party steps in to fulfill the obligation. This is not insurance because it involves three parties instead of two.
Surety (Guarantor)
With regard to a surety bond, the surety is the party (often an insurance or bonding company) that guarantees the obligee that the principal will fulfill its contractual obligations. If the principal fails to perform, the surety will pay the bond amount to the obligee and then go after the principal to recover their losses.
Surgical Expense Insurance
Provides indemnification for physician costs associated with surgical procedures.
Third Party Administrator (TPA)
A licensed organization that collects premiums and processes claims for an insurer; basically, a company doing another company’s outsourced administrative tasks. The risk of loss remains with the insurer, not the TPA.
Third Party Claim
A claim filed against an insurance policy by a third party not named on that policy. Used for liability claims.
Time Element Coverage
Provides coverage for an indirect loss that occurs as the result of a direct loss, when covered property can’t be used and therefore causes an indirect loss. Usually an endorsement within a commercial package policy.
Tort
Any civil wrongdoing, whether intentional or unintentional, resulting in a court action to remedy.
Tort – Intentional
A premeditated wrongful act that causes intentional damages to another party.
Tort – Negligent
When a negligent act causes unintentional damages to another party.
Tort law
The body of law that addresses and provides remedies for any civil wrongdoing performed on another party.
Tortfeasor
The defendant in a court case who committed the tort; also known as the defendant.
Transitional yield
County 10-year yield average as determined by the National Agricultural Statistical Service. Used when issuing a crop insurance policy to a farmer who lacks four years of yield records on which to base coverage and premium amounts.
Transportations Form
An Inland Marine form designed to cover businesses that ship or receive merchandise, as well as cargo while in transit. This can include travel by truck, train, ship, mail, or plane.
Trigger
An event that “triggers” the coverage provided under a Commercial general liability (CGL) policy: in claims-made, it is a claim, in occurrence form, it is the “occurrence.”
Trip Transit
An uncontrolled Inland Marine coverage form which insures a single shipment. Coverage applies from the trip origination point to its destination.
Trustworthiness
The virtue of carrying out responsibilities reliably, worthy of being trusted. A necessary attribute of insurance adjusters.
Umbrella Liability Policy
An umbrella policy provides liability coverage over and above the normal or base limits of liability in a policy. An umbrella policy is a type of Excess Liability.
Uncontrolled Line Floaters
As opposed to controlled line floaters, which are standard forms, uncontrolled line floaters are non-standard forms tailored to meet the needs of the insured. They are not filed with state departments of insurance. They cover movable property and are typically used in Inland Marine insurance.
Underinsured
Not sufficiently insured against particular losses. For example, any home insured at less than 80% of its value is considered underinsured.
Unfair Claim Settlement Practices
Dishonest or unfair behavior related to settling insurance claims which is specifically proscribed by state law.
Unilateral
A characteristic of insurance contracts. It means that only one of the parties (the insurer) makes a promise to perform. The insurer is obligated to fulfill this promise, whereas the insured is free to void the contract at any time.
Uninsurable
Risks are said to be uninsurable when they do not meet certain qualifications. For example, an insurable risk cannot involve a loss that the insured deliberately causes. Certain perils are too catastrophic to be insurable (like war or nuclear events).
Unscheduled
Unscheduled property is property covered under an insurance contract that is not listed item by item (as “Scheduled” property would be listed).
U.S. Environmental Protection Agency
Federal agency primarily responsible for the implementation of most federal laws designed to protect, enhance, and conserve the nation’s natural resources.
Utmost Good Faith
A characteristic of insurance contracts: ‘utmost’ meaning the ‘highest degree’ and ‘good faith’ meaning, “act with honesty, fair dealing and full disclosure.” All parties to an insurance contract must act with utmost good faith. It also applies to a fiduciary agent’s responsibility towards the principal.
Valuable Papers Business Coverage
Provides indemnification when a business experiences a loss of vital business records.
Valuation
The process of estimating what an item is worth. Methods of valuation include “Actual Cash Value,” “Replacement Cost,” “Stated Value,” and “Agreed Value.”
Value
The estimated or appraised worth of an item, used to determine the replacement cost or indemnification amount.
Valued policy
A policy in which the insurer and the insured agree to a specific value prior to the start of the policy. If the item is lost or destroyed, the insurer pays the amount agreed upon.
Vicarious Liability
When an act of negligence is transferred from one party to another, such as from employee to employer or from child to parent.
Waiver
A waiver is a voluntary act of relinquishing a known right, claim or privilege. Either an insured or an insurer may waive rights. There are two types: express and implied.
Waiver – Express
An explicit relinquishment of a right.
Waiver – Implied
An implicit relinquishment of a right through behavior that seems to assume that the right does not exist.
Waiver of Sovereign Immunity
Sovereign Immunity disallows an individual to sue a governmental entity; the waiver of sovereign immunity allows individuals to sue governmental entities under specific circumstances.
Warranty
An ongoing assurance made by the insured that certain conditions in an insurance contract will be met (for example, that the insured will maintain functional fire alarms).
Workers’ Compensation (WC)
A form of insurance that covers medical costs and lost wages in the event of a work- related injury, disease, or disability sustained by an employee. Purchased by employers as an “exclusive remedy” to ensure that employees will not sue the employer.
Wrongful Death Act
Allows the individuals who are associated with a deceased person who was killed because of a negligent act to sue the responsible party.
Yield Protection (Crop Insurance)
See Revenue Protection (Crop Insurance). Determined by Average Crop Yield, this Multi-Peril Crop Insurance (MPCI) policy protects a farmer from losses caused by low crop yield.
Contingent liability
Exposures exist when the insured is held liable for the actions or failure of actions of others.
Timeframe of a Binder
60 days max or when the policy is issued
What’s on a Binder
Name of insured
amount and type of insurance
perils insured against
How many days before a policy ends must the insurer let the insured know if there are changes in coverage, deductible, or premium increase?
30 days
AZ Auto Limits
25/50/15
Non-renewal of an AZ commercial policy. How many days in advance to they have to tell the insured?
45 days
Cancellation of an AZ commercial policy due to no payment. How many days in advance do they have to tell the insured?
10 days
