Definitions Flashcards
What is something that increases the chance of loss from a peril?
A Hazard
What is “to make whole again”?
Indemnify
What is the potential for financial loss associated with damage or destruction of property?
Insurable Interest
What is the means of reducing risk by combining a sufficient number of exposure units to make their collective losses individually predictable?
Insurance
What is the person who purchases insurance called?
The Insured
What is the mathematical principle on which insurance is based that says that the more exposure units in the mix, the easier it becomes to predict the group’s losses?
Law of Large Numbers
What is the loss of money or things worth money?
Loss
What is a cause of loss, such as fire or theft known as?
A Peril
What is the consideration paid by the insured in exchange for the insurer’s promise to indemnify?
Premium
What is the chance of an economic of monetary loss known as?
Risk
What is traditionally referred to as the first standard property policy? Its provisions are incorporated into many state statutes regarding minimum coverage that must be provided.
1943 New York Standard Fire Policy
What encompasses three general areas: liability, personal, and property.
Casualty Insurance–originally the term “casualty” meant insurance against losses from accidents (casualties)
What traditionally provides protection for property in transit over land; and today, to collections, personal property and other coverages for movable property?
Inland Marine
What is insurance that covers property that is in some way related to transportation?
Marine Insurance
What lists what may and may not be written as marine insurance?
Nationwide Marine Definition
What is the failure to exercise the degree of care that a reasonable and prudent person would use under similar circumstances?
Negligence
What provides protection for waterborne property?
Ocean Marine
What is insurance that covers property at a fixed location?
Property Insurance
What clause provides protection for cargo from the time it leaves the first warehouse until it reaches its final destination point?
Warehouse to Warehouse Clause
What is a government program that offers property and crime insurance in the inner cities?
FAIR Plan–stands for “Fair Access to Insurance Requirements”
What is an area defined as being subject to flooding?
Flood Plain
Who offers coverage only to members of a particular group?
Fraternal Insurers
This is an association of independent underwriters, each of whom personally guarantees to indemnify an insured for a certain percentage of the policy amount
Lloyd’s of London
What is an insurance company “owned” by its policyholders known as?
A mutual Company
What is a group of individuals or firms who combine to pay each other’s losses called?
Reciprocal Insurers
What is it called when a company pays for its own losses? Preferred term for “self-insurance”
Retention
What is a minimum level of protection provided by the government? Participation is mandatory.
Social Insurance
What is an insurance company publicly traded and owned by shareholders?
A stock company
What is an insurance company that provides voluntary insurance coverage known as?
Voluntary Insurers
What is a government program in coastal states that provides windstorm coverage?
Wind Pool
What is it when private insurers offer flood insurance that is re-insured by the Federal government?
Write Your Own (WYO)
What is a contract in which the amounts exchanged are not equal?
Aleatory Contract
What is one of the obligations of either the insured or the insurer imposed in the insurance contract known as?
Conditions
What is a policy provision that says the policy follows a state’s law if the law and policy language are in conflict?
Conformity to Statute
What is a contract drawn by one party and offered to another on a “take it or leave it” basis?
Contract of Adhesion
What tells who is being insured, the time period, and the premium?
The Declarations Page
What is the immediate consequence of the action of an insured peril? Actual physical damage that results directly from an insured peril.
Direct loss
What are the policy attachments that add, delete, explain, or define coverage?
Endorsements
What tells which losses are not covered by a policy?
Exclusions
What is to make whole again financially? It means to put the insured back into the same financial position he or she was in before a loss occurred.
Indemnify
What arises after direct losses, such as the income a business loses after a fire destroys its premises?
Indirect losses
What is the indemnity contract between an insured and an insurer?
The Insurance Policy
What is the insurer’s promise to provide the insurance in exchange for payment of the premium?
Insuring Agreement
Who is the party or parties specifically named in an insurance contract, and shown in the declarations?
The named insured
What covers all losses except those specifically excluded?
Open Perils Policy
Who are those to whom the policy extends protection?
Other Insured Persons
What is a potential cause of loss?
A peril
What is a policy provision that allows an insurer to recover paid losses from others who are responsible for the loss?
Subrogation
What is anything a principal authorizes the agent to do?
Actual Authority
What is a legally recognized relationship between two parties in which on one party - the principal - contracts with another - the agent - to act on the principal’s behalf?
Agency
What is an individual who has a contract with an insurer (the principal) to sell its products; is usually compensated by commission. Under the law of an agency, this person acts on behalf of the principal with the knowledge and consent of the principal.
The Agent
What is the authority that a reasonable third party believes to exist in an agent of a principal?
Apparent Authority
Who places business with several insurers, but does not have contracts with them? This person serves as a conduit between insured and insurance company, directly by the insurer.
The Broker
What is a system for selling insurance that use licensed, salaried personnel, rather than traditional agents? In this system, insurance is marketed via phone, direct mail, and the Internet.
Direct Response
Who is an agent that is an employee of an insurer, rather than as an independent, holding contracts with an insurer (or insurers)?
Direct Writer Agent
What means that the agent must account for any money entrusted to him by the principal?
Duty of Accounting
What is owed by an agent to the principal? The agent must not do anything to harm the principal.
Duty of Loyalty
What means that the agent must obey all lawful instructions from the principal?
Duty of Obedience
What means that the agent must exercise the same degree of care as a reasonable and prudent person?
Duty of Reasonable Care
What means that the agency must keep the principal informed about any factors that affect the principal-agent relationship?
Duty to Give Information
What is an agent that has a contract with only on insurer? This person may or may not be an employee of the insurance company he represents.
Exclusive agent
What is an agent that has contracts with several insurers? The agent has the right to place his or her customers with any insurer he or she wishes. “Owns” the expirations.
Independent Agent
Who is the individual or entity that is represented by an agent? In the American insurance industry, the insurance company is this and the individual who represents the insurance company in the sales transaction is the agent.
Principal
Who is anyone that “produces” business for an insurer, such as an agent or broker?
Producer
Who is an employee of an agent with usually two functions; to sell insurance and to service existing accounts?
The solicitor
Who is a specialized broker who finds markets for risks that have trouble getting insurance?
Surplus lines broker
What is it called when some insurers give their agents the authority to settle small, first-party claims?
Agent as Adjuster
What is an insurance company that is organized under the laws of a foreign company?
Alien Insurer
What are the steps followed in the adjusting of a claim known as?
The Claims Process
What is an insurance company that is organized under the laws of a state other than the state where it is seeking to be licensed?
Foreign Insurer
What is an insurance company that is organized under the laws of the state where it is also seeking to be licensed. It’s “home state”.
Domestic Insurer
What is an adjuster who works for several companies on a contract basis?
Independent Adjuster
Who serves as the “middleman” between insurers and their agents?
Marketing Representative
What arises out of the dishonesty of an insured?
Moral Hazard
What is characterized by an indifference to loss on the part of the insured?
Morale Hazard
What is the organization that is made up of the various states’ insurance commissioners. It works through these members to attempt to make the regulation of insurance more uniform from state to state.
National Association of Insurance Commissioners
What is an objective characteristic that increases the chance of loss?
Physical Hazard
What is a sworn statement by an insured giving all necessary information about a loss?
Proof of loss
Who represents the insured in disputes with insurers over property claims?
Public Adjuster
Who is an employee of an insurer who adjusts claims only for that company?
Staff Adjuster
Who selects which applications to accept and which to decline? He or she decides for which applicants an insurer should put its assets at risk.
Underwriter
What is coverage for indirect losses that would not otherwise be covered by the CP policy known as?
Additional coverages
What is the principal contract for insuring the building and business personal property exposures for the commercial insureds? It is generally referred to as the “CP Policy”.
Building and personal property coverage form
What is personal property owned and used in the business of the named insured, including personal property of others in the care, custody or control of the named insured called?
Business Personal Property
What is damage directly caused by a covered cause of loss?
Direct damage
What is damage that arises as a result of a direct loss - such as loss of income when a business must shut down due to a fire?
Indirect or consequential damage
What is a common industry term, which no longer appears in the policy, for an insurable event?
Peril
What is a piece of property that is set up for use and intended to remain in the same place without fundamental change?
Permanently installed
What is a broader term than building for anything that is constructed?
Structure
What is the optional coverage that provides a predetermined amount in case of a total loss?
Agreed Value
What is additional insurance for things already covered under the CP policy?
Coverage Extensions
What is coverage for the expense of removing debris of covered property that has been damaged by a covered cause of loss?
Debris removal
What is coverage for the additional costs of complying with enforcement of an ordinance or law regulating the construction or repair of buildings after a loss?
Increased cost of construction
What is a provision by which the limits of coverage are increased on a regular basis by a designated percentage in order to offset increasing building costs associated with inflation?
Inflation guard
What are items usually worn or carried on a person?
Personal effects
What is all property other than real estate?
Personal property
What is an “abrupt falling down or caving in”? This falling down or caving in may be of a building or any part of a building.
Collapse
What holds that losses are covered if caused jointly by an excluded peril, such as flooding or earth movement, and some other peril not excluded by the policy, such as negligent construction?
Concurrent causation docturine
What is a specific list of covered causes of loss, such as fire, lightning, or wind, contrasted to open perils, which provides coverage for any damage not otherwise excluded?
Named perils
What is a hole in the ground created when water wears upon limestone or dolomite?
Sinkhole
What is the willful and malicious damage to or destruction of covered property?
Vandalism
What are the exclusions added to modern property policies in response to litigation activity involving the concurrent causation doctrine? They are designed to avoid unintended insurance recovery in situations that involve damage that can be said to be caused by both an excluded peril and a non-excluded peril. This is a legal theory finding coverage for loss or damage to property if such loss or damage is caused by more than one peril, one of which is excluded under the terms of the policy and one of which is not excluded.
Concurrent Causation Exclusions
What are the indirect losses that are the result of a covered loss, such as a restaurant’s loss of customers and the attendant revenue, while rebuilding after a fire?
Delay, loss of use, loss of market
What is property coverage that applies to “risks of loss” on a general basis, in contrast with policies that cover for specifically identified perils. Formerly it was known as “all risks” coverage.
Open Perils
Who is the person that is charged with the care of the property of another? For example, a garage is this of a customer’s car…a jeweler is this of a customer’s jewelry while in for repair or appraisal.
Bailee
What is the broadening of coverage without an added charge to the insured?
Liberalization
What is the insured’s right, after payment of a loss, to collect from the ultimate wrongdoer (the party causing the loss)?
Subrogation
What is the indirect loss arising out of direct damage to property, such as spoilage of food following lightning damage to a freezer unit?
Consequential loss
What is an attachment to a basic policy that becomes part of the policy and modifies coverage? These can add, delete, or modify provisions in the basic policy
Endorsements
What is an alternative valuation method that provides for the replacement of a scheduled building with similar property that performs the same function but is less costly?
Functional Valuation
What are the various categories of business personal property (stock, machinery and equipment, furniture, fixtures, tenant’s improvements and betterment) may be assigned individual limits of insurance through the use of this endorsement?
Separation of Coverage
What is an unauthorized code into a computer?
A computer virus
What is property that cannot be seen or felt, such as customer records, patents, and trademarks?
Intangible property
What is the damage that is covered by property insurance policies?
Physical damage
What is the insurance policy that pays for offensive litigation against a patent infringer?
Prosecution or abatement policies
What is protected by new e-policies?
Revenue stream
What is the method used to place a value on damaged property? Helps determine what is the value of e-property and intellectual property?
Valuation
What is a commercial general liability form that applies to claims for injury or damage that are first made during the policy period?
Claims-made form
What is the first coverage in Section 1 of the CGL policy?This consists of 2 sections; BI and PD. The BI and PD section deals with BI to others and damage to property of others for which the insured is liable.
Coverage A
What is the second coverage in Section 1 of the CGL policy? The personal and advertising liability section deals with injuries that arise out of named offenses, such as libel, slander, or false arrest.
Coverage B
What is the third coverage in Section 1 of the CGL policy? The medical payments section pays medical expense without regard to liability.
Coverage C
What is a person employed by the named insured; this includes leased workers, but not temporary workers. They have insured status in certain circumstances.
Employee
What defines what contracts are covered by the policy as contractual liability coverage?
Insured Contract
Who is a person leased by the named insured from a labor-leasing firm?
Leased worker
What is a commercial liability form that covers injury or damage that occurs during the policy period, regardless of when the claim is brought?
Occurrence form
What is short-term substitute employee, other than a leased employee?
Temporary worker
What is a physical injury, sickness, or disease?
Bodily Injury
What is part of the insuring agreement of many policies where the insurer has the duty to defend the insured in event of an allegation of covered loss?
Duty to defend
What is an event that triggers coverage under the CGL policy, including continuous or repeated exposure to substantially the same general, harmful conditions?
Occurrence
What is physical injury to, destruction of, or loss of use of tangible property of others?
Property Damage
What is an action for damages that does not flow directly and immediately from the act of a party, but only from the consequences or results of an act. This action may be brought by the spouse, child, parents, or sibling of a co-workers injured by another co-worker.
Consequential damage actions
What is a person employed by the named insured? This includes leased workers but not temporary workers.
Employee
Who is a person holding any of the officer positions created by the charter, constitution, by laws or similar governing document of the name insured organization known as?
Executive officer
Who is the legal representative that has all of the insured’s rights and duties under the coverage form in the case of the death of the named insured?
The legal representative
What is it called when two or more policies cover the same interests for the same exposures? Each policy is said to represent other insurance to the other.Most insurance policies contain clauses that specify how or if claims will be paid if other insurance exists for the same exposures.
Other Insurance
What is the value of losses that have been estimated and set up for future payment?
Reserves
What is a period of time allowing for the reporting of claims after expiration of a claims-made policy. This is provided at no charge and allows coverage to extend five years for claims reported to the insurer during the policy period or 60 days after the expiration
Basic extended reporting period
What is the event that brings coverage into play?
Coverage trigger
What is coverage designed to be in excess over one or more primary coverages and which does not pay a loss until primary limits are exceeded or the loss amount exceeds a specific sum?
Excess Coverage
What is a designated length of time after the expiration of a claims-made policy when claims may be reported. Periods beyond this period may be arranged by endorsement to the CGL coverage form.
Extended reporting period
What is the basic insurance coverage that applies first to a claim or loss? This contrasts with excess insurance.
Primary Coverage
What is the date that defines the extent of coverage in time under claims-made liability policies? Claims resulting from occurrences prior to the policy’s state retroactive date are excluded.
Retroactive date
What is available for an additional premium and begins when the basic period ends?
Supplemental extended reporting period
What is the term for an extended reporting period?
Tail coverage
What is the liability that may be imposed on an employer outside the provisions of a workers compensation law? In general, the CGL coverage form does not cover liability arising out of injuries to an employee of the insured.
Employers Liability
What are provisions in an insurance policy that restrict or eliminate coverage?
Exclusions
What is tangible property which cannot be used or has become less useful because it incorporates the insured’s product or work which is defective or inadequate or because the insured has breached a contractual obligation, if such property can be restored to use by the repair?
Impaired property
What defines what type of contractual liability is covered by the CGL form
Insured Contract
What are classes of land vehicles specifically described on the CGL form?
Mobile Equipment
What is bodily injury and property damage occurring away from the named insured’s premises and arising out of the named insured’s product or work called?
Product - completed operations hazard
What is property that is material and can be touched?
Tangible property
What is the named insured’s goods or products, other than real property called?
Your Product
What is the named insured’s work or operations performed by the named insured?
Your Work
What is the failure to perform a promise that is part of a contract?
Breach of contract
What is the violation of private rights and remedies for that violation?
Civil wrong
What is a violation relating to a crime?
Criminal wrong
What is any solid, liquid, gaseous, or thermal irritant or contaminant?
Pollutants
What is the responsibility for injuries and damages as established by law?
Legal liability
What are medical expenses due to an accident that the insurer will pay regardless of fault?
Medical payments
What is the legal obligation established by a contract?
Contractual liability
What are the reasonable attorney fees and necessary litigation expenses incurred by the insured and paid by the insurer?
Defense cost coverage
What is the right of use over the property of another?
Easement or license agreement
What is coverage for liability arising form damage by fire to premises rented to the named insured?
Fire damage liability coverage
What is it called when one party agrees to hold another party harmless in case a claim is made for injuries or damages by a third party?
Hold harmless agreement
What does it mean to restore the victim of a loss in whole or in part by payment, repair, or replacement, to put the insured back into the same financial position he or she was in before a loss occurred?
Indemnify
What is an agreement for exclusive possession of premises?
Lease of Premises
What is an agreement between business and railroad pertaining to the railroad building a track onto the business’s property and the railroad being held harmless?
Sidetrack agreement
What are expenses paid by the insurer in addition to the limits of insurance?
Supplementary payments
What are expenses paid to clean up a pollution spill?
Cleanup costs
What is a fire that is not confined to the place intended or one that is not started intentionally?
Hostile fire
What are liability risks facing the insured for injury or damage off the insured’s premises?
Off-premises exposure
What is a law requiring certain activity?
Statutory requirement
What is an exclusion applying to property damage to premises that the named insured sells, gives away or abandons?
Alienated premises exclusion
What is an exclusion that applies to property that must be restored, repaired, or replaced due to the named insured’s work being incorrectly performed on it?
Faulty workmanship exclusion
What is all property other than real estate?
Personal property
What do we call land and generally whatever is erected or affixed to land?
Real property
What are the nine numerical symbols used on the BAP to designate a covered auto?
Designation symbol
What are autos that the named insured leases, hires, rents, or borrows?
Hired autos
What are autos that the named insured does not own, lease, hire, rent, or borrow that are used in connection with the named insured’s business?
Non-owned autos
What is a four-wheel auto of the private passenger or station wagon type, including a pickup, panel truck, or van not used for business?
Private passenger auto
What is an auto not owned by the named insured while sued as a temporary substitute for a covered auto owned by the named insured that is out of service?
Temporary substitute auto
What is an unforeseen and unplanned even on the part of the insured?
An accident
What is any cost or expense arising out of any request, demand, or order, demanding that he insured cleanup or respond to the effects of pollutants?
Covered pollution cost or expense
What sets out certain circumstances under which liability coverage is precluded?
Exclusion
What is any person or organization qualifying as an insured in the who is an insured clause of the BAP?
Insured
What is most the insured will pay for the total of all damages and covered pollution cost or expense combined called?
Limit of insurance
What are payments made by the insurer in addition to the limit of insurance?
Supplementary payments
What is the covered auto’s collision with another object or its overturn?
Collision
What is any cause of loss except collision?
Comprehensive coverage
What is the amount that the insured is responsible for in the event of a loss?
Deductible
What is the loss of value for a damaged auto after that vehicle has been repaired?
Diminution in value
What is the direct and accidental loss or damage to a covered auto?
Loss
What are the expenses incurred by the insured to rent or borrow a car because the covered auto has been stolen?
Temporary transportation expenses
What is the process by which the amount of physical damage loss on a covered auto decided?
Appraisal
What are actions on the party of the insured that allow the insurer to void coverage?
Concealment, misrepresentation or fraud
What is the U.S, its territories and possessions, Puerto Rico, and Canada
Coverage territory
What are the list of steps the insured must take after a claim or loss to assist the insurer in settling the claim or loss?
Duties of the insured
What is auto physical damage loss that does not include loss of use of the auto?
Direct loss
What is a person leased to the named insured by a labor leasing firm?
Leased worker
Who is a certain person or organization scheduled as an insured on an endorsement for liability coverage?
Designated insured
What is an individual or company hired by an auto dealer to drive cars from point A to point B?
Drive-away contractors
What is a vehicle used as a mobile snack bar or lunch van, bringing products to customers?
Rolling Store
What is a land motor vehicle that is designed for use on ice and snow and mainly off public roads?
Snowmobile
What is determining the state in which to file a workers compensation claim by comparing the quality of benefits mandated by two or more states in which the claim could legally be filed?
Forum Shopping
What is are the obligations imposed by law for injury to employees in the course of employment that are not compensable under the workers compensation section…
Employers Liability
What provides workers compensation and employers liability coverage in states that are not listed on the information page and reimburses the insured if the insurer is not permitted to pay benefits required by the applicable workers compensation law directly to persons entitled to them.
Other States Insurance
What are duties that are imposed through state or federal laws?
Statutorily
What entitles the insurer to recover its workers compensation payments from a party that can be shown to be actually liable for an employee’s injuries?
Subrogation Clause
What is a system in which injured employees lose the right to sue employers for employment-related injuries in return for a statutorily imposed mechanism that provides specific scheduled benefits?
Workers Compensation
What is the overall limit of liability coverage (as opposed to the amount available for a single incident)?
Aggregate limit
What is an explanation to prevent misinterpretation?
Caveat
What does it mean to bring about by force or threat?
Coercion
What is the legal right of one spouse to the company, affection and assistance of and to sexual relations with the other?
Consortion
What does it mean to harm the reputation of by libel or slander?
Defamation
What are the monopolistic states?
North Dakota, Ohio, Washington, West Virginia, and Wyoming
What are the actions that arise when an injured employee sues a negligent third-party who in turn sues the employer for contributory negligence?
Third-Party-Over Actions
What is the mathematical comparison between a company’s workers compensation losses and those of other businesses engaged in similar types of work that may increase or decrease the premium?
Experience Rating Factor
What is the right to inspect the workplace ‘at any time’?
Inspections Clause
With is the workers compensation policy written for longer than one year and sixteen days? Such policies are considered to be “newly written” on each annual anniversary date.
Long Term Policy
What is the transfer of the insured’s rights or duties under an insurance policy to another party?
Transfer of rights
What is a condition of the policy that prevents the insured from transferring his or her rights or duties to another party without the written consent of the insurer?
Transfer of Rights Clause
What is the termination of an insurance contract, whether by the insurer or the insured?
Cancellation
This is designed to provide liability insurance for an employer in monopolistic states in which the state only offers workers compensation coverage.
Stop Gap Coverage
