Definitions Flashcards
Surrogate
The transfer to the insurance company of the insureds right to collect damages from another party.
Actual cash value (ACV)
Cost to replace an item of property at the time of loss, less an allowance for depreciation.
Adhesion contract
A contract where one party has more power than the other party in drafting the contract. An insurance policy is an Adhesion contract because the insurer is the one with more power.
Adverse selection
The tendency of insureds with a greater than average chance of loss to purchase insurance.
Aleatory contract
The contract which one party’s performance is contingent on an uncertain event.
Insurance policies are aleatory contract because the insurance company is required to the fulfill it’s promise to pay, only if a loss occurs.
Apparent authority
By having the insurance companies name on their shirt or cards etc.
Legal doctrine that states that an agent has specific authority a reasonable person would assume he or she has based on appearances, for example, the use of the principles logo on the agents business premises and stationary.
Appurtenant structures
Buildings of lesser value that are on the same premises as the main building under a property policy.
They are usually covered by the policy.
Binder
Oral or written statement that provides immediate insurance protection for a specified period.
Designed to provide temporary coverage until the policy is issued or denied.
Blanket insurance
Typically car dealerships will have this coverage because they can cover vehicles without specifying the exact number of cars.
A type of insurance policy that covers more than one item of property at a single location or one or more items of property at multiple locations.
Business Owners policy (BOP)
Package policy designed to provide broad property and liability coverages for small businesses.
Casualty insurance
Line of insurance that includes a wide variety of unrelated coverages -
including liability, auto, Worker’s Comp. Aviation, crime, etc.
Certificate of insurance
Written form that verifies that a policy has been written.
Provides a summary of the coverage.
Coinsurance
Policy condition that requires an insured to pay part of the 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. Usually 80% rule.
Coinsurance penalty
The amount not paid by the insurance company because the insured failed to comply with the coinsurance condition.
Commercial package policy (CPP)
Package policy for businesses developed by ISO.
Most commercial risks are eligible for CPP.
Comprehensive coverage
Referred to as other than collision coverage.
In auto insurance, a broad physical damage coverage that covers all property losses except collision and those perils or property there specifically excluded.
Collision coverage
Physical damage coverage that covers loss that occurs when the insureds auto strikes another object or vehicle.
May also include upset or overturn of the insured auto.
Concealment
The withholding of a material fact involved in the contract on which the insurer relies.
Consultant
Sells advice, not insurance.
Contract
The legal agreement between two competent parties.
Coverage trigger
An event that activates (triggers) coverage under a commercial general liability coverage form.
Declarations
The section of an insurance contract that shows who is insured, what property or risk is covered, when and where the coverage is effective and how much coverage applies applies.
Definitions
Section of the insurance policy that clarifies the meaning of certain terms used in the policy.
Dwelling policy
Policy that provides property coverage to individuals and families.
The unendorsed policy does not provide liability coverage.
Doctrine of reasonable expectations
What people would assume is covered in an insurance policy.
Legal principle that provides that an insurance policy includes coverage is that an average person would reasonably expect it to include, regardless of what the app policy actually provides.
