Definitions Flashcards
What is a property policy provision that stipulates that the insurer need not accept any damaged property that the insured chooses to relinquish? This also means the insured cannot abandon damaged property to the insurer and demand to be reimbursed for its full value.
Abandonment Condition
What is the performance of an act so dangerous as to be sufficient to trigger liability regardless of the degree of negligence?
Absolute liability
What is an unforeseen, unintended, and unexpected event, which occurs suddenly and at a definite place?
An accident
What is a filed Commercial Inland Marine form that pays for the cost of reconstructing accounts receivable records that have been damaged or destroyed by a covered peril?
Accounts receivable insurance
What is a method for placing value on property at the time of its loss or damage?
Actual Cash Value (ACV)
What are supplemental insurance coverages that apply only in certain circumstances, have reduced or separate limits of liability or require the insured to meet certain requirements before they are applicable?
Additional Coverages
One who qualifies as “insured” under the terms of a policy even though not named as insured is called _____________.
Additional insured
This coverage, found in homeowners forms, provides payment for extra expenses made necessary by the insured’s inability to reside in the insured dwelling because of a covered loss. For example, restaurant meals and hotel bills. The amount payable is the difference between normal household expenses and the increase.
Additional living expense insurance
A standardized set of agreements offered by one (usually the stronger) party to another on a “take it or leave it” basis. And insurance policy is an example of such a contract. The insurer offers a personal auto policy, fro example, that an individual may “adhere to” (or not) but in any case the individual may not change any of its terms. Because it has the stronger position, the insurance company has the burden to spell out its terms precisely. Such contracts are interpreted strictly against the author of the contract.
Adhesion contract
A person who may act either on behalf of the insurance company or the insured in settling a claim.
Adjuster
An insurance company that is licensed (admitted) to conduct business within a given state. Also know as an authorized insurer.
Admitted Insurer
The tendency of poorer than average risks to buy and maintain insurance. This occurs when insureds select only those coverages that are most likely to have losses.
Adverse selection
Claim arising out of slander, libel, copyright infringement, or misappropriation of advertising ideas. Coverage is provided as part of Coverage B of the commercial general liability policy.
Advertising Injury
Principles governing the authority of any agent that represents a principal.
Agency
One who solicits, negotiates or effects contracts of insurance on behalf of an insurer.
Agent
Insurance obtained by the insurance agent to guard against loss caused by an unintentional failure to properly insure (or recommend insurance to) a client.
Agents errors and omissions insurance
A certificate of authority from the state that permits the agent to conduct business.
Agent’s license
Type of policy limit found in Liability policies that limits coverage to a specified total amount for all losses within one policy period.
Aggregate limit
Condition found in some Property insurance policies that stipulates a certain value that will meet the coinsurance requirement. If the policy limit equals or exceeds this amount, the insured will not be assessed a coinsurance penalty. Also called Stated Amount Condition
Agreed Value Condition
A contract that is contingent on an uncertain event (a loss). Insurance contracts are of this type.
Aleatory Contract
Organization that rates the financial stability of insurance companies doing business in the US
A.M Best Company
Non-filed Commercial Inland Marine transportation form that insures a property owner’s incoming or outgoing shipments of goods during a year.
Annual Transit Policy
A legal doctrine that states that an agent has whatever authority a reasonable person would assume he or she has. It is the perceived ability of an agent to bind an insurance contract to an insurance company. If an agent or agency holds themselves out as representing a particular company, it is reasonable for the public to assume that such authority is established contractually, even if it is not.
Apparent Authority
Questionnaire filled out by an agent and the prospect who is seeking insurance. This form contains information used to underwrite and rate the policy.
Application
Policy condition that outlines a procedure for when the insured and insurer disagree on the amount of a loss.
Appraisal Condition
Another structure on the same premises as the principal structure, like a detached garage on a dwelling premises
Appurtenant structures
Policy condition that is similar to the Appraisal condition. The clause spells out how disagreements over a claim are settled.
Arbitration condition
Mutual insurance company that charges members a pro-rata share of losses at the end of each policy period.
Assessment Mutual Company
Condition in insurance policies that specifies that the policy cannot be transferred to another unless the company consents to the transfer in writing.
Assignment Condition
Defense against liability based on the common law principle that a person who knowingly exposes himself or herself to danger or injury assumes the risk of loss and cannot hold another person responsible for the loss.
Assumption of Risk
An individual who is given authority to execute legal documents, including bonds; or the manager of a reciprocal exchange, which is an insurance arrangement whereby risk is transferred to other members.
Attorney-in-fact
Company that meets a state insurance department’s standards and is authorized to do business in that state. Also called an Admitted Insurer
Authorized Insurer
A program set up by various states to ensure that everyone with a valid driver’s license will be able to purchase auto insurance.
Auto Insurance Plan
Insurance applying to the medical, hospital, or funeral expenses of anyone injured while on or in an insured automobile. The coverage is not dependent on liability, being triggered simply by an accident, it may be included in either the Business Auto Policy or the personal Auto Policy.
Automobile Medical Payments
Insurance in which the insurer agrees to pay all sums for which the insured is legally obligated because of bodily injury or property damage arising form the ownership, maintenance, or use of an auto.
Automobile liability insurance
Insurance on the vehicle, itself. This usually is broken down into collision and other than collision coverages.
Auto physical damage insurance
Insurance that provides coverage for physical damage to aircraft.
Aviation Hull Insurance
Insurance provided for owners of aircraft that covers liability for bodily injury, injury to passengers and property damages. Also provides Medical Payments Coverage
Aviation Liability Insurance
One who is charged with the care of the property of another.
Bailee
A non-filed Commercial Inland Marine form designed to reimburse a bailee’s customers for loss without regard to liability.
Bailee’s Customer Policy
The act of delivering property in trust to another for a limited time and specific purpose.
Bailment
The person delivering property to another in trust.
Bailor
Illegal acts committed willfully by a ship’s master or crew for the purpose of damaging the ship or cargo. Includes hijacking, abandonment and embezzlement. This peril is covered in Ocean Marine insurance.
Barratry
Organization that rates the financial stability of insurance company’s doing business in the US
Best’s
Type of Surety Bond that guarantees an owner, the “obligee”, that the accepted contractor will actually undertake the work and that the contractor will furnish performance, payment, and perhaps, maintenance bonds–or that the contractor will pay the owner the difference between the amount of the contractor’s accepted bid and the bid of another contractor who has to be called in to complete the project.
Bid bond
Standardized contract of carriage issued by common carriers to the business for which it is shipping goods.
Bill of Lading
An oral or written statement that provides immediate insurance protection for a specified period. Designed to provide temporary coverage until a policy is issued or denied.
Binder
The authority extended to an agent by an insurer to provide insurance, usually on a temporary basis, until a policy can be written.
Binding Authority
Type of insurance covering multiple items of property as a group. Covered property may be at one location or several.
Blanket Insurance
Fidelity bond that covers losses arising from the dishonesty of one or more employees acting separately or in collusion. Provides a single limit of liability applicable to each employee involved in a loss.
Blanket Position Bond
A term that refers to physical injury, sickness, or disease, or death resulting therefrom. In some jurisdictions includes emotional injury
Bodily Injury
Legal obligation that flows from the injury or death of another person. This insurance is commonly limited to bodily injury liability derived by way of negligence, but coverage of liability by way of contract (holding another harmless) is also possible.
Bodily injury liability
Insurance that covers the insured for losses arising out of the use of steam boilers or other machinery or equipment. May be included in the commercial package policy
boiler & machinery insurance
A document for expressing surety. It engages 3 entities; the “surety” (bonding company) sells the bond to the “principal” for the purpose of paying the amount the principal will owe to the “obligee” upon failure of the “principal” to perform some act or provide some service under agreed terms
Bond
A bond that guarantees the principal’s honesty
Fidelity Bond
A named peril policy that extends beyond the basic named perils
broad form perils
The financial assumption of responsibility by one or more persons for fulfilling another’s obligations.
Surety Bond
Dwelling policy endorsement that covers theft, attempted theft and vandalism and malicious mischief resulting from theft.
Broad Theft Coverage Endorsement
One who represents the insured in arranging insurance. He or she may also serve as the agent of an insurance company.
Broker
One of the Commercial Property Coverage forms specifically applicable to construction projects. It is commonly written in an amount to cover the value of the structure when completed. The premium charge takes into account that values at risk increase gradually over the term of the policy
Builders Risk Coverage Form
Optional form used with the Commercial Property Builders Risk coverage form that allows the insured to purchase a smaller amount of insurance that gradually increases as the value of the building under construction increases
Builders Risk Reporting Form
The taking of property by a person unlawfully entering or leaving the premises as evidenced by visible signs of forced entry or exit
Burglary
One of the Commercial Auto Coverage forms that covers a business’s owned, non-owned and hired autos against liability and physical damage losses
Business Auto Coverage Form
One of the Commercial Auto Coverage forms that covers a business’s owned or hired autos for physical damage only.
Business Auto Physical Damage Coverage Form
Commercial Property Coverage forms that pay for loss of income that the insured sustains due to a direct physical loss from a covered peril that forces the insured to suspend operations until the property can be repaired, rebuilt or replaced with reasonable speed. Available with or without Extra Expense coverage
Business Income Coverage Form
Commercial Property Coverage form designed for insureds whose business income is dependent on the ongoing operations of other businesses they do not own. It covers loss to an insured when the operations of a key supplier, customer, or “leader property” on which the insured’s operations are dependent, is shut down by a covered peril. Also referred to as “contingent business income”.
Business Income from Dependent Properties – Broad Form
Liability that arises out of the conduct of a business
Business Liability
A term relating to “contents” of a commercial enterprise. It may include furniture, fixtures, machinery and equipment as well as stock, all other chattels owned by the insured, and even use interest in building improvements and betterments
Business personal property
Homeowners policy endorsement that provides Liability coverage for a business conducted away from the residence premises
Business Pursuits Endorsement
A package of property and liability insurance for small and medium size businesses. Eligibility requirements are stricter than the CPPs
Businessowners policy (BOP)
Filed Commercial Inland Marine form written to cover camera and musical instrument dealers. It covers the insured’s stock as well as customers property in the insured’s care, custody or control
Camera and Musical Instruments Dealers Coverage Form
Termination of an insurance policy by the insured or the insurance company during the policy period
Cancellation
The accumulated permanent resources a company gets from owners and customers. The value of the portion of assets that a company owns and that are not restricted by obligations to creditors.
Capital
An expression common to liability insurance contracts. It refers to an exclusion in the policy eliminating coverage for damage to property of others that is in the insured’s care, custody, or control”. The insured has a bailee relationship to the property, in other words, making the insured liable for the care of the property beyond damage caused by negligence. A bailee’s floater is often used to cover the insured’s obligation for the care of such property.
Care, custody, or control
Type of Ocean Marine insurance that covers goods while they are in transit over water.
Cargo Insurance
Line of insurance that includes a wide variety of unrelated coverages, including Liability, Auto, Workers Compensation, Aviation, Crime and Surety Bonds.
Casualty insurance
Separate form used with the Commercial Property Coverage part of the commercial package policy that lists covered perils and exclusions. Several different versions provide increasingly broader coverage from basic to broad to special.
Causes of Loss forms
A written description of insurance in effect as of the date and time of the certificate. It does not ordinarily confer any rights on the holder, i.e, the issuing insurer does not promise to inform the holder of change in or cancellation of coverage.
Certificate of Insurance
Person employed by or acting on behalf of an insurance company to evaluate and settle insurance claims. The adjuster must determine the cause of loss, whether the loss is covered by the policy, the value of the loss, and the amount of loss payable by the policy.
Claim Adjuster
Commercial General Liability coverage form that pays for BI or PD for which a claim was first made against the insured during the policy period.
Claims-Made form
Policy condition the requires an insured to pay part of a loss if the amount of insurance carried on property is less than a specified percentage of the value of the property at the time of loss
Coinsurance
The amount not paid by the insurance company because the insured failed to comply with the coinsurance condition
Coinsurance Penalty
A type of physical damage insurance available for automobiles. Coverage is triggered when damage is caused by striking another object. may also include upset or overturn of the insured auto.
Collision Coverage
The sum of an insurance company’s loss ratio and expense ratio used as an indicator of profitability for insurance companies. A ratio of 100% is the break-even point. A ratio below 100% is the break-even point. A ratio below 100% indicates an underwriting profit; a ratio above 100% indicates a loss.
Combined ratio
Filed Commercial Inland Marine form that covers photographic equipment or musical instruments used commercially.
Commercial Articles Coverage Form
A part of the Commercial Package policy that provides Liability and Physical Damage coverage for a business’s autos, including garage, trucking and motor carrier businesses
Commercial Auto Coverage Part
Type of Fidelity bond that covers the named insured against employee dishonesty. A single coverage amount applies to any one loss, regardless of the number of employees involved.
Commercial Blanket Bond
A part of the Commercial Package policy that covers various crime exposures of businesses
Commercial Crime Coverage Part
Insurance designed for businesses, institutions, or organizations
Commercial lines
Package policy for businesses developed by ISO. Insureds can select 2 or more of the following coverage to include in the policy: Commercial General Liability, Commercial Property, Commercial Inland marine, Commercial Crime, Boiler and machinery, Farm, and Commercial Auto.
Commercial Package Policy
A part of the Commercial Package Policy that provides insurance for a business’s real and business personal property
Commercial Property Coverage part
Category of the Nationwide Definition that includes a number of Commercial Inland Marine forms, such as Bailee’s Customer forms, Equipment forms, Business floaters, and Dealer’s policies
Commercial Property Floater Risks
The official in a state (or territory) responsible for administering insurance regulation. Sometimes called the Superintendent or Director of Insurance
Commissioner of Insurance
Form that must be included in the Commercial Package Policy that contains conditions that apply to all coverage issued under the CPP
Common Policy Conditions
For that must be included in the Commercial package policy that contains information about the insured that applies to all coverage issued under the CPP
Common Policy Declarations
A variation of contributory negligence, in which the comparative degree of negligence for each party to an accident is taken into account when awarding damages.
Comparative negligence
The award, usually monetary, that is intended to compensate the claimant for injury sustained.
Compensatory Damages
One of the requirements of a legal contract. States that for a contract to be valid, it must be made between parties who are considered competent under the law.
Competent Parties
Method of providing Workers Compensation coverage in some states. Employers may either purchase insurance form a private insurance company or from a state fund
Competitive State Fund
A bond that guarantees a lending institution or other mortgages that a building or other construction that they have lent money on will be completed on time so it can be used as collateral on the loan
Completion Bond
Traditional name for physical damage coverage for losses except collision and those perils or property that are specifically excluded
Comprehensive Coverage
Provides individuals and family members with protection from legal liability for most accidents caused by them in their personal lives. Note that any legal liability claims submitted while in the course of business activities are not recovered
Comprehensive personal liability insurance
The withholding of a material fact involved in the contract on which the insurer relies
Concealment
When two perils contribute concurrently to a property loss, one excluded and the other not, the effect of the exclusion tends to be voided in a policy covering on an open perils basis
Concurrent Causation
A contract that contains a number of conditions that both parties must comply with
Conditional Contract
Portion of an insurance policy that describes the rights and duties of the insured and the insurance company under the policy
Conditions
A characteristic of a legal contract. The thing of value exchanged for the performance promised in the contract
Consideration
Insurance professional, who, for a fee, offers advice on the benefits, advantages and disadvantages of various insurance policies
Consultant
A legal agreement between two competent parties that promises a certain performance in exchange for a certain consideration
Contract
Category of Surety bonds that guarantee the fulfillment of contractual obligations. Includes Bid bonds, Labor and Materials bonds, Performance bonds, Payment bonds, Supply bonds, and Completion bonds.
Contract Bonds
Non-filed Commercial Inland Marine form designed for the special needs of contractors to insure their heavy machinery, equipment and tools a contract uses in business
Contractors Equipment Floater
Liability that does not arise by way of negligence but by assumption under contract. For example, in certain leases, a tenant may assume a landlord’s liability to others for unsafe conditions on the premises.
Contractual Liability
A common law defense against negligence that states if an individual contributes to his or her own loss in any way, then someone else cannot be held liable for the loss.
Contributory negligence
An authorized signature of agent or company representative on an insurance policy. Usually pertains to policies sold by an agent of the insurer located in another state
Countersignature
Type of Surety bond used to settle legal arguments that do not involve monetary damages
Court Bond
Document that contains insuring agreements, coverages, exclusions and conditions. Must be attached to a policy jacket o make a complete policy.
Coverage Form
Combination of forms and endorsements used to provide a particular commercial coverage. The forms and endorsements are available under each coverage part can be used to issue a policy covering a single line of insurance or combined to provide a Commercial Package Policy.
Coverage Part
Event that activates coverage under a Commercial General liability coverage for.
Coverage Trigger
A broad category covering loss of property through criminal activity – from employee dishonesty to burglary and robbery, computer fraud, and forgery
Crime Insurance
Insurance covering growing crops against hail, wind, and fire. Protection against a broader range of perils can often be arranged as well
Crop Insurance
As defined in the Crime Insurance forms, an insured, partner, or employee who has care and custody of insured property within the premises. Does not apply to watchpersons or janitors
Custodian
Monetary compensation awarded by a court to an injured party
Damages
That part of a property or liability insurance policy that discloses information pertinent to the coverage promised including names, addresses, limits, locations, term, premium, forms and so on.
Declarations
The part of the loss that is to be paid by the insured. The insurance company pays the remainder of each covered loss, up to the policy limits.
Deductible
Legal expenses incurred by the insurer to defend suits brought against insureds.
Defense Costs
Section of an insurance policy that clarifies the meaning of certain terms used in the policy
Definitions
Extent of legal duty owned by one person to another.
Degree of Care
When the price of insurance is tied to fluctuating values or costs that cannot be known until the end of the policy period, inventory or payroll are two common examples, a deposit or provisional premium or estimated premium may be charged at the outset of a policy with final adjustment to come at the end of the term.
Deposit premium
As property ages and becomes worn it often loses value. That loss of value must be taken into account in any adjustment of property insurance that covers loss of actual cash value
Depreciation
Type of Commercial Property policy that covers most insurable perils but excludes basic fire and extended coverage perils. Insurance is usually obtained through the excess and surplus lines market to supplement and expand on the property coverage available through admitted markets.
Difference in Conditions Insurance
An actual or perceived loss of an auto’s resale or market value that results from a direct, accidental loss
Diminution of Value
A financial loss resulting directly from a loss to property.
Direct loss
A form of errors and omissions insurance covering the directors and officers of corporations against suits alleging they committed wrongful acts.
Directors and Officers Liability Insurance
Line of insurance that protects the insured against loss of income resulting from injury or sickness
Disability Insurance
Commercial Crime form that covers losses that are sustained at any time and discovered either during the policy period or up to 60 days after the policy expires.
Discovery Form
Legal principle that provides that an insurance policy includes coverages that an average person would reasonably think it to include, regardless of what the policy actually provides
Doctrine of Reasonable Expectations
Category of the Nationwide Marine Definition that includes coverage for cargo in transit over land
Domestic Shipments
Policy that provides Property coverage to individuals and families.
Dwelling Policy
Dwelling policy endorsement used to provide provisional limits of liability for dwellings under construction. The limits of liability increase as construction of the building progresses
Dwelling Under Construction Endorsement
Portion of a premium for which the insurer has already provided protection
Earned premium
Non-filed Commercial Inland Marine policy that provides open peril coverage for computer hardware, computer software and data that is owned by the insured or in the insured’s care, custody or control. Breakdown coverage, extra expense, and business interruption coverage may also be included
Electronic Data Processing Equipment Floater
Endorsement used with the Business Auto coverage form that covers employees while they are using an auto not owned, hired, or borrowed by the business in the business or personal affairs of the named insured
Employee As Additional Insureds Endorsement
Coverage against all allegations of wrongful termination, discrimination, sexual harassment of employees and so on
Employment Practices Liability Insurance
An amendment to a policy form
Endorsement
Title of ISO coverage form used to write what is traditionally called Boiler and Machinery insurance
Equipment Breakdown Protection Coverage form
Filed Commercial Inland Marine Coverage form that covers mobile equipment and construction equipment dealers. It covers the insured’s stock as well as customer property in the insured care, custody or control
Equipment Dealers Coverage Form
A type of professional liability insurance protecting the insured against liability for committing an error or omission in the performance of professional duties
Errors and Omissions Insurance
Principal that states that if one intentionally or unintentionally creates the impression that a certain fact exists, an an innocent party relies on that impression and is injured as a result, the guilty party may be legally prohibited from asserting that the fact does not exist.
Estoppel
Coverage that applies on top of underlying insurance that is primary, i.e, the primary insurance pays until its coverage limit is exhausted at which point the excess coverage takes over
Excess insurance
Agent licensed by the state to handle the placement of business with non-admitted insurers
Excess lines agent
Section of an insurance policy that lists property, perils, persons or situations that are not covered under the policy
Exclusions
One of the precepts upon which the Workers Compensation system was founded. It stipulates that the only means available to employees to receive compensation from employers for injuries covered by Workers Compensation laws is through the benefits mandated by those laws
Exclusive Remedy Doctrine
In experience rating, the factor applied to raise or lower premiums under terms of an experience-rating plan
Experience Modification Factor
A type of merit rating plan that uses past experience to establish current rates
Experience Rating
Category of the Nationwide Marine Definition that includes risks eligible for Ocean Marine insurance
Exports
An extended coverage peril and currently a covered peril in nearly every policy of property insurance. The peril remains distinct from steam boiler explosion, which is covered by boiler & machinery insurance
Explosion
Legal doctrine that states that an agent has the authority specifically given to the agent, either orally or in writing, by the principal
Express Authority
A personal auto policy endorsement that provides broader liability coverage for specifically named individuals
Extended non-owned coverage for named individual endorsement
Endorsement used with the Commercial Crime policy that covers loss of money, securities and other property when surrendered away from the premises as result of a threat to do bodily harm to the insured, an employee or a relative of either who is being held captive
Extortion
Public Law 91-508 requires that an insurer tell an applicant if a consumer report may be requested. The applicant must also be told the scope of the possible investigation. Should the application be declined because of information contained in the report, the applicant must be given the name and address of the reporting agency. The insurer may not reveal the contents of the report. Only the agency that compiled the report may release its contents
Fair Credit Reporting Act
An acronym for Fair Access to Insurance Requirements, these plans have been established in many states to make fire and extended coverage (and homeowners in some states) available in areas otherwise not addressed by the voluntary market
FAIR plan
An amount payable to an insured homeowner for loss of rental income due to damage that makes the premises uninhabitable
Fair Rental Value
Part of the Commercial Package program that provides property and liability insurance to farmers for both their personal and business exposures
Farm Coverage part
Common law defense against liability that allowed employers to escape liability for injury to an employee if another employee’s carelessness had contributed to the loss
Fellow Servant Rule
Class of bonds that guarantees an employee’s honest discharge of duty
Fidelity bond
A generic term for persons or legal entities such as executors, trustees, and guardians appointed by the court, under a will, or by a trust to manage, control, or dispose of the property of others. The person stands in a special relationship of trust to another person.
Fiduciary
Type of Surety bond that guarantees that a fiduciary will fulfill its obligations set forth by law
Fiduciary Bond
Selection of clients by the agent in accordance with company standards
Field Underwriting
State laws that permit the use of new rates by an insurance company without first obtaining the approval of that state’s insurance department. The department eventually reviews the filing and officially accepts or rejects it
File and use
Standardized Inland Marine form that can be written under the Commercial Inland Marine coverage part of the Commercial Package policy
Filed form
State mandated funds collected from licensed insurers and maintained as backup protection for policyholders of bankrupt insurers
Guarantee funds
Something that increases the possibility of loss
Hazard
Line of insurance that protects the insured against financial loss due to medical bills
Health Insurance
Businessowners policy endorsement used to cover hired or non-owned autos used by the business
Hired and Non-Owned Auto Liability Endorsement
A contractual assumption by one party of the liability exposure of another. lease agreements, for example, commonly require the tenant to hold the landlord harmless for bodily injury or property damage experienced by others on the premises
Hold Harmless Agreement
Part of the CGL, this covers the incidental serving of alcohol by an insured who is not in the business of serving alcohol
Host Liquor Liability
Ocean marine insurance covering physical damage to the ship or vessel insured. Usually, written on a “all-risks” basis
Hull insurance
Authority given by the principal to the agent that is not formally expressed or communicated
Implied Authority
In Ocean Marine insurance, warranties that are not written into the policy, but have become a part of the policy by custom
Implied Warranties
A business conducted in a dwelling used primarily as a residence with no other businesses operating on the same premises.
Incidental Occupancy
One of the components used to calculate the loss ratio. It includes paid losses and certain expenses associated with claim handling
Incurred losses
Principle of insurance that provides that when a loss occurs, the insured should be restored to the approximate financial condition he or she occupied before the loss occurred, no better or not worse
Indemnity
Claim handler who works independently instead of for a particular insurer
Independent Adjuster
A loss resulting form a peril, but not directly caused by that peril.
Indirect Loss
Agent who represents many insurance companies, rather than a single company.
Independent agent
An association of insurance agents who are independent contractors and represent one or more insurers
Independent Insurance Agents of America
A loss resulting from a peril, but not directly caused by that peril.
Indirect loss
A Commercial Auto endorsement that provides coverage similar to that provided under the Personal Auto policy to family members of the named insured while using any auto
Individual Named Insured Endorsement
An endorsement attached to an insurance policy whereby the limits of liability on a piece of property are increased on a regular basis by a certain percentage in order to offset increasing building costs associated with inflation
Inflation guard endorsement
A flaw in an item of property that will, in time, reveal itself and show the property as damaged
inherent vice
Form of insurance originally designed as an extension of Ocean Marine coverage to insure transportation of goods over land. Today it covers a variety of portable property, in addition to goods in transit. It is available as personal or commercial insurance.
Inland Marine Insurance
Non-filed Commercial inland Marine policy that covers loss to machinery, equipment, building materials and supplies in transit or being used with or during the course of installation, testing, building, renovating or repair
Installation policy
Category of the Nationwide marine Definition that includes a variety of forms closely related to transportation or communication, such as bridges, pipelines, and television towers
Instrumentalities of Transportation and Communication
A report prepared for an insurer by an outside organization. It provides information about an applicant or insured’s physical, financial, and moral attributes
Inspection report
The potential for financial loss associated with damage or destruction of property
Insurable interest
The exposure to significant, measurable accidental loss from identifiable perils. The exposure, while not catastrophic, must be shared by a sufficient number of potential insureds so that the cost of loss for one can be measured and affordably shared throughout the market
Insurable risk
A mechanism whereby risk of financial loss is transferred from an individual, company, organization, or other entity to an insurance company that agrees, in exchange for a premium, to pay for losses through an accumulation of premiums
Insurance
Head official of a state insurance department. May also be called Insurance Director or Insurance Superintendent
Insurance Department
State funds created by law that pay claims of insurers domiciled in that become insolvent. The funds are generated by making assessments against other insurers operating in the state
Insurance Guaranty Association
The concept of purchasing sufficient insurance coverage so as to closely approximate the value of the property being insured
Insurance to value
The party or parties whose interests are covered in an insurance contract
Insured
Term used in the CGL and Businessowners Liability forms to describe contracts for which contractual liability coverage is available under the policy, such as leases, sidetrack agreements and elevator maintenance agreements.
Insured Contract
In an insurance contract, the insurer’s promise to pay. It describes what is covered and the perils the policy insures against
Insuring agreement
Commercial endorsements that apply, or could apply, to more than one coverage as part of a package policy
Interline Endorsement
An independent action that breaks the chain of causation and sets in motion a new chain of events. When this occurs, the intervening cause becomes the proximate cause. Can serve as a common law defense against liability
Intervening Cause
A person invited onto premises for some purpose involving potential benefit to the property owner
Invitee
The voluntary act of throwing overboard part of a vessel’s cargo or hull in hopes of saving a ship from sinking
Jettison
A filed commercial inland marine form especially designed for jewelers, it offers a combination of coverage protecting against risks of physical loss to property at the jeweler’s premises, property in transit, or customers’ property in the insured’s care
Jewelers Block Coverage Form
Personal Auto policy endorsement that allows the policy to be issued to two or more person who live in the same household or two or more individuals who are related in another way besides husband or wife if a vehicle is titled in the names of the individuals
Joint Ownership Coverage Endorsement
Federal law that allows members of ships’ crews to sue their employer/shipowner at common law for injuries caused by the employer’s/shipowner’s negligence
Jones Act
Method of rating that establishes premiums based on careful evaluation of each individual risk, without the use of manuals or tables
Judgment rating
Two types of Surety bonds available to guarantee faithful performance of court appointed duties. Fiduciary bonds guarantee the faithful performance of persons entrusted by the courts in the management, conservation, and disposition of property. Litigation bonds (or “court bonds”) are required in court actions. Bail bonds and appeals bonds are litigation bonds; where the bond amount is forfeited if the bonded person disappears or the appeal is lost
Judicial bonds
Termination of a policy because of failure to pay the premium
Lapse
The unlawful taking of personal property of another
Larceny
A hidden flaw that will, in time, cause property damage that is uninsurable. Such damage is uninsurable because the element of chance is no longer present.
Latent defect
An underlying principle of insurance; the larger the number of participants in a given arrangement, the more accurate the rate is to the exposure
Law of Large Numbers
Liability imposed by law; this includes liability based on negligence, strict liability, or contractual liability
Legal Liability
Commercial Property coverage form that covers the insured for liability arising out of negligent damage to the property of others while it is in the insured’s care, custody, or control.
Legal Liability Coverage Form
One of the characteristics of a legal contract. Contracts are only enforceable if they are not obviously illegal, immoral or against the public good
Legal purpose
Type of insurance that protects an insured from financial loss arising out of liability claims by transferring the burden of financial loss from the insured to the insurance company
Liability Insurance
Written defamation of another’s reputation
Libel
A feature of property policies that promises that any future change in the company’s form that would broaden coverage with no change in premium will automatically apply under the policy currently in force
Liberalization Condition
Type of Surety Bond guaranteeing that the principal will abide by the rules and obligations imposed by licensing laws or ordinances
License and Permit bond
Person on the premises with the property owner’s consent, but for the sole benefit of the visitor
Licensee
Policy language that eliminates or reduces coverage under certain circumstances or when specified conditions apply
Limitations
Liability coverage for owners and operators of establishments selling or serving alcoholic beverages
Liquor Liability Coverage
An exclusion in automobile liability policies applying to the use of autos to carry persons for hire as in a taxi service
Livery use
A voluntary association of individuals or groups of individuals who agree to share in insurance contracts. Each individual or “syndicate” is individually responsible for the amounts of insurance they write
Lloyd’s Associate
A feature of commercial general liability (CGL) policies intended to separate that coverage from the automobile exposure. The CGL coverage ends at the point where an item is picked up for loading onto an auto and resumes at the point where the item is deposited upon unloading
Loading and unloading exclusion
Refers to liability under policies written on an occurrence basis. Claims stemming from injury or damage occurring years earlier can be presented for coverage long after the policy has expired.
Long Tail
Endorsement used with Workers Compensation and Employers Liability policy that covers the additional benefits required by federal law for maritime workers injured while working on navigable waters or shore-site areas
Longshore and Harbor Worker’s Compensation Act Coverage Endorsement
An unintentional decline or disappearance in value arising from an event
Loss
Payments by an insurer for the investigation and settling of claims. They include the cost of defending a lawsuit in court
Loss Adjustment Expenses
Insurance responding to property or liability loss of a property owners association that are not covered by the association’s master policy
Loss Assessment Coverage
Actions to reduce the frequency or severity of losses. Installing locks, burglar or fire alarms and sprinkler systems are techniques
Loss Control
Factor used in figuring insurance rates that represents how much an insurance company needs to collect to cover expected losses
Loss Cost
General term used to describe policy conditions that specify what the insured and insurer must do after a loss
Loss Provisions
Refers to engineering or inspection activities carried out to prevent losses in the workplace
Loss prevention
The ratio of incurred losses including loss adjustment expenses to earned premiums. Used to determine an insurance company’s success in covering current losses out of current premium income
Loss ratio
Commercial Crime form that covers losses that are sustained during the policy period and discovered either during the policy period or up to one year after the policy expires
Loss Sustained Form
A means whereby an insured may cancel a policy by signing a statement to the effect that, since his or her policy has been lost, he cannot return it to the insurer to effect cancellation, but still wishes to cancel the policy
Lost Policy Release
Filed Commercial Inland Marine form that covers property in transport by registered mail, first class mail, certifies mail or express mail
mail coverage form
A type of Surety Bond that guarantees that faulty work or defective materials charged to the bond principals will be corrected or replaced
Maintenance Bond
Method of premium determination that uses rates based on collected statistics. The rates, which apply per unity of insurance, are published in manuals
Manual Rating
The amount of property could be sold for at the time of loss. May be used to determine the amount of reimbursement for a loss
Market Value
A fact that would cause an insurer to decline a risk, charge a different premium or change the provisions of the policy that was issued
Material Fact
A coverage found in an auto and liability policies that pays medical expenses to injured persons without regard to limit
Medical payments insurance
A form of auto rating in which an insured’s past experience as well as anticipated experience is taken into account when arriving at a rate
Merit rating
As defined in Crime insurance forms, an insured, partner or employee who has care and custody of insured property outside the premises
Messenger
An insurer’s lowest charge for an insurance policy
Minimum premium
A Personal Auto policy endorsement that provides coverage for vehicles that are usually excluded by the policy, such as motorcycles, motor homes, golf cars, mopeds and other recreational vehicles
Miscellaneous Type Vehicle Endorsement
Written or verbal misstatement of material facts made on an application for insurance. May also be misstatement of coverage made by an agent to an insured
Misrepresentation
Included for coverage under the commercial general liability form, this term relates to land vehicles used in ways that take them out of an explicit “automobile liability” exposure (e.g., vehicles used only on the insured premises, to carry certain permanently attached equipment, that are not required to be registered, or are designed for solely for off-road use)
Mobile equipment
An insurance company that writes a single line of coverage
Monoline company
An insurance policy covering one subject of insurance, as opposed to a combination or multi-line policy
Monoline policy
What are the 5 Monopolistic states?
North Dakota, Ohio, Washington, West Virginia, and Wyoming
Five states have their own system for providing reparations to injured employees eligible under the state’s workers compensation act. Private insurance companies may no compete.
Monopolistic state fund
As “physical hazard” relates to susceptibility to fire or wind, the term “moral hazard” relates to susceptibility to loss through moral lapse of the owner (e.g., “burn the house down and collect from the insurance company before losing it in a foreclosure to the finance company”)
Moral hazard
A standard property policy provision that creates elements of a separate contract between a mortgage company and an insurance company. Any loss to building or structures will be paid to the mortgage company and insured jointly and any act of the insured voiding coverage will not affect the mortgage holder without it first being given an opportunity to comply with the insurer’s needs.
Mortgage Condition
Rights granted to a mortgagee under a Property contract issued to a mortgagor by virtue of the mortgagees’ financial interest in the property
Mortgage Rights
A federal law that de-regulated the United States trucking industry and transferred the enforcement of financial responsibility requirements for truckers to the Bureau of Motor Carrier Safety, U.S Department of Transportation. Insurance is one method of complying with the financial responsibility requirements
Motor Carrier Act of 1980
A Commercial Auto coverage form that is an alternate to the Truckers Coverage form. It can be used to cover anyone who transports property by auto in a commercial enterprise
Motor Carrier Coverage form
Two forms of inland marine coverage are associated with this title, one for carriers and one for owners. As a carrier, the insured is protected for legal liability relating to property of others in the course of transport. As an owner, the insured is protected for in-transit damage to its own property
Motor Truck Cargo Policy
An official record of a driver’s accidents and traffic-violations kept by the licensing state(s). Often used to determine eligibility and/or premiums for auto insurance
MVRs or Motor Vehicle Records
A cooperative insurance company organized and owned by its policyholders. The policy holders share in profits made by the company through dividends or reductions in future premiums
Mutual Company
Vanishing of property with no explanation. It is a named peril in some forms.
Mysterious disappearance
Type of Fidelity Bond that covers loss only from named employees
Named Schedule Bond
The party or parties specifically named as insured in the insurance contract. Others may have a claim on the coverage of a policy by way of internal provisions, but any such right is by way of the agreement between the named insured and the insurance company
Named insured
Personal Auto Policy endorsement issued to someone who does not own an automobile, but who drives borrowed or rented autos
Named Non-owner Coverage Endorsement
A formal and specific listing of perils covered in a policy providing property insurance.
Named Peril Policy
Organization made up of individual state insurance commissioners whose purpose is to promote uniformity in regulation by drafting model laws and regulations
National Association of Insurance Commissioners
National association that collects, tabulates, and provides data used in formulating rates for workers compensation insurance
National Council on Compensation Insurance
A federal program through which persons with property located in predefined flood plains can obtain flood coverage at subsidized rates. Includes coverage for both buildings and personal property
National Flood Insurance Program
A document published by the National Association of Insurance Commissioners that was rooted in an older (1933) definition of “…Insuring Powers or Marine and Transportation Underwriters”. In general, the “definition” specifies property that may be insured under marine contracts such as property in inland transport and property regularly or routinely in transit, e.g., contractors equipment
Nationwide Definition of Marine Insurance
Action or failure to act that is outside the realm of what would be considered appropriate by ordinary, reasonably prudent persons
Negligence
A clause in inland marine forms that prevents a person in the possession of property of others from benefiting from any insurance the owner has on the property
No Benefit to Bailee Condition
A few states have laws that partially exempt drivers from legal liability for auto accidents. In these states, car owners buy insurance to protect themselves and their passengers from the economic and medical effects of auto accidents in addition to liability insurance at whatever limit the statute decrees.
No-Fault Auto Insurance
Company that is not authorized to do business in a particular state.
Non-Admitted Insurer
Situation that exists when the same property is covered by more than one policy, but the policies are not identical as to the extent of coverage provided
Non-concurrency
This term signifies an auto that is neither owned, hired, nor borrowed by the insured under a commercial auto policy. Employees’ cars used in company business are commonly classified this way.
Non-owned auto
Type of Commercial Inland Marine form that is not standardized and cannot be included in the Commercial Inland Marine coverage part of the Commercial Package policy
Non-filed form
An agent who does not reside in the state in which he or she is licensed
Nonresident agent
Decision made by an insured or insurance company to not continue coverage for another policy period after the current policy period expires
Non-renewal
A type of insurance policy for which a flat premium is charged every time the policy is renewed
Non-reporting policy
Notice the insured provides to the insurer that a loss has occurred
Notice of Loss
A term used in surety bonds to refer to the individual or firm that is to benefit from the bond’s protection
Obligee
A term used in surety bonds to refer to the individual or firm bound by an obligation. Also known as the “principal”
Obligor
In general, it is an event that triggers coverage under any policy. Specifically, it is an event that triggers coverage under an occurrence-based liability policy. Such a policy covers injury or damage that occurs during the policy period even if claim is brought months or even years after the policy has expired
Occurrence
One of the elements of a legal contract. It means that a contract must involve 2 parties; one who makes an offer and another who accepts the offer.
Offer and Acceptance
Property coverage that applies to risks of loss on a general basis, in contrast with policies that cover for specifically identified perils. It covers all perils that are not specifically excluded
Open Peril policy
Insurance against physical damage to boats
Outboard Motor and Boat Insurance
Commercial General Liability coverage that provides coverage for claims caused by the negligence of a contractor or subcontractor hired by the insured
Owners and Contractors Protective Liability coverage form
A policy that includes more than one type of insurance coverage. Homeowners, businessowners, and garage policies are examples
Package Policy
The losses that have been paid for a claim
Paid losses
A clause the stipulates that partial loss to a pair or set of items will be valued in terms of the lost item, not on the basis of reduced value of the pair or set
Pair or set condition
A non-filed Commercial Inland Marine policy that covers mail sent by parcel post
Parcel Post Policy
A property loss that is less than a total loss
Partial loss
In Ocean Marine insurance, any partial loss that does not arise from a general sacrifice of property (jettison)
Particular Average Loss
Sometimes also called a “labor and materials bond”, this bond guarantees that bills owed by the contractor will be paid as they come due
Payment bond
Instead of buying insurance amounts reflecting values at the height of inventory, some enterprises are able to forecast times when values will be at their peak and use this endorsement to increase the amount of insurance during that specific interval
Peak Season Endorsement
A bond that guarantees the property owner (the “obligee”) that the contractor with the winning bid on a job will perform as promised and on time
Performance Bond
Perils to which property in transit by water is exposed. Somewhat akin to open perils on land, the term refers to any potential cause of loss derived from shipment on a seagoing vessel. It includes unusual action of wind or waves, stranding, lightning, collision and sinking
Perils of the sea
A homeowners policy endorsement that covers the insured’s business activities conducted on the residence premises
Permitted Incidental Occupancies Endorsement
A personal inland marine form that covers and insured’s personal belongings, such as baggage, while traveling
Personal Effects form
A homeowners policy endorsement that modifies the definition of bodily injury to include personal injury
Personal Injury Endorsement
The section of an auto policy in a no-fault state that responds to physical injury, loss of income, etc., of the insured regardless of fault
Persona Injury Protection
Insurance for individuals or members of a household offering protection against claims by third parties (outsiders) alleging bodily injury or property damage due to negligence.
Personal Liability Insurance
Personal inland marine form that provides open peril coverage for personal property
Personal Property form
A category of the Nationwide Marine Definition that includes risks eligible for Personal Inland Marine insurance
Personal Property Floater Risks
A homeowners policy endorsement that adds replacement cost coverage for personal property
Personal Property Replacement Cost Endorsement
A type of personal watercraft policy written for large pleasure boats
Personal Yacht Insurance
A hazard that arises from the material, structural, or operational features of the risk itself apart from the persons owning or managing it
Physical Hazard
The maximum amount the insurance company will pay for a particular loss, or for losses sustained during a period of time
Policy limit
The place where coverage under a policy applies
Policy Territory
A fidelity bond that covers specifically named positions in the company, rather than the individuals who hold these positions
Position Schedule Bond
Interest accruing on a judgment after an award has been made, but before payment is made by the insurance company. It is usually covered as a supplementary payment in Liability policies
Postjudgement Interest
