Glossary

Question 1

a condition often contained in property insurance policies that states that the insured cannot abandon damaged property to the insurer and demand to be reimbursed for its full value

Answer 1

Abandonment Condition

Question 2

type of liability imposed by law on those participating in certain activities that are considered especially hazardous; a person involved in such operations may be held liable for the damages of another even though the individual was not negligent

Answer 2

Absolute Liability

Question 3

a loss that occurs at a specific time and place

Answer 3

Accident

Question 4

filed commercial inland marine form that insures against loss the insured suffers because of an inability to collect from customers when accounts receivable records are damaged or destroyed

Answer 4

Accounts Receivable Insurance

Question 5

the cost to replace an item of property at the time of loss, less an allowance for depreciation; often used to determine the amount of reimbursement for a loss

Answer 5

Actual Cash Value (ACV)

Question 6

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; also called covered extensions, other coverages, and extended coverages

Answer 6

Additional Coverages

Question 7

an individual or company, in addition to the insured, who is listed in the declarations; an example is a mortgage company that has an insurable interest in the property insured

Answer 7

Additional Insured

Question 8

commercial auto endorsement used to make leased vehicles considered owned vehicles for coverage purposes

Answer 8

Additional Insured - Lessor Endorsement

Question 9

a contract where one party has more power than the other party in drafting the contract; an insurance policy is an adhesion contract - the insurer is the one with more power

Answer 9

Adhesion Contract

Question 10

(Authorized Insurer) company that meets a state insurance department’s standards and is authorized to do business in that state

Answer 10

Admitted Insurer

Question 11

the tendency of insureds with a greater-than-average chance of loss to purchase insurance

Answer 11

Adverse Selection

Question 12

principles governing the authority of any agent that represents a principal

Answer 12

Agency

Question 13

an individual or organization that legally represents another; a state-licensed professional who represents the insurance company in the sale and servicing of insurance; the direct link between the insurance company and the policyholder

Answer 13

Agent

Question 14

type of policy limit found in liability policies that limits coverage to a specified total amount for all losses occurring within the policy period

Answer 14

Aggregate Limit

Question 15

(valued policy) policy written for a specified amount that lists the value of the insured property as agreed to by both the insured and the insurer; this amount is used to value losses

Answer 15

Agreed Amount Policy

Question 16

(stated amount condition) 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

Answer 16

Agreed Value Condition

Question 17

one of the elements of a legal contract; means that a contract must involve two parties: one who makes an offer and another who accepts the offer

Answer 17

Agreement

Question 18

a contract that is contingent on an uncertain event (a loss)

Answer 18

Aleatory Contract

Question 19

an insurance company incorporated in a country other than the US that is doing business in the US

Answer 19

Alien Company

Question 20

(open peril policy) insurance policy that protects the insured from losses caused by any peril that is not specifically excluded by the policy

Answer 20

All Risk Policy

Question 21

organization that rates the financial stability of insurance companies doing business in the US

Answer 21

A.M. Best Company

Question 22

legal doctrine that states that an agent has whatever authority a reasonable person would assume they have

Answer 22

Apparent Authority

Question 23

questionnaire filled out b an agent and the prospect who is seeking insurance; the form contains information used to underwrite and rate the policy

Answer 23

Application

Question 24

policy condition that outlines a procedure for when the insured and insurer disagree on the amount of a loss - the insured and the insurer each select an appraiser; the two appraisers select an umpire; if the appraisers cannot agree on the amount of loss, the umpire is consulted; the amount agree to by any two of the three parties is the amount paid for the loss

Answer 24

Appraisal Condition

Question 25

buildings of lesser value that are on the same premises as the main building insured under a property policy; they are usually covered by the policy

Answer 25

Appurtenant Structures

Question 26

policy condition that is similar to the appraisal condition; may be used to resolve other areas of disagreement besides those regarding the value of a loss

Answer 26

Arbitration Condition

Question 27

mutual insurance company that charges members a pro-rata share of losses at the end of each policy period (mutual company)

Answer 27

Assessment Mutual Company

Question 28

a state-sponsored plan that provides automobile insurance to those who are uninsurable under standard auto insurance policies (Automobile Insurance plan)

Answer 28

Assigned Risk Plan

Question 29

condition in insurance policies that specifies that the policy cannot be transferred to another unless the company consents to the transfer in writing

Answer 29

Assignment Condition

Question 30

defense against liability based on the common law principle that a person who knowingly exposes himself to danger or injury assumes the risk of loss and cannot hold another person responsible for the loss

Answer 30

Assumption of Risk

Question 31

company that meets a state insurance department's standards and is authorized to do business in that state (admitted insurer)

Answer 31

Authorized Insurer

Question 32

dwelling policy endorsement that provides an annual increase in the Coverage A amount of 4%, 6% or 8%

Answer 32

Automatic Increase in Insurance Endorsement

Question 33

a state-sponsored plan that provides automobile insurance to those who are uninsurable under standard auto-insurance policies

Answer 33

Automobile Insurance Plan

Question 34

organization that rates the financial stability of insurance companies doing business in the US

Answer 34

Best's

Question 35

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

Answer 35

Binder

Question 36

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

Answer 36

Blanket Insurance

Question 37

package policy that provides property, liability, and medical payments coverage for losses arising out of the ownership, maintenance, or use of watercraft (Watercraft package policy)

Answer 37

Boat Owners Policy

Question 38

defined in most policies to include injury, sickness, disease, and death resulting from any of these at any time

Answer 38

Bodily Injury (BI)

Question 39

dwelling policy endorsement that covers theft, attempted theft and vandalism, and malicious mischief resulting from theft; property is covered while it is one or off the premises

Answer 39

Broad Theft Coverage Endorsement

Question 40

individual who represents the prospect, instead of the insurance company, in the insurance transaction

Answer 40

Broker

Question 41

homeowners policy endorsement that provides liability coverage for a business conducted away from the residence premises

Answer 41

Business Pursuits Endorsement

Question 42

termination of an insurance policy by the insured or the insurance company during the policy period

Answer 42

Cancellation

Question 43

an agent who markets insurance for a single company (exclusive agent)

Answer 43

Captive Agent

Question 44

line of insurance that includes wide variety of unrelated coverages, including liability, auto, workers' compensation, aviation, crime, and surety bonds

Answer 44

Casualty Insurance

Question 45

written form that verifies a policy has been written; provides a summary of the coverage provided under the policy

Answer 45

Certificate of Insurance

Question 46

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

Answer 46

Claim Adjuster

Question 47

commercial general liability coverage form that pays for BI or PD losses for which a claim was first made against the insured during the policy period

Answer 47

Claims-Made form

Question 48

method of premium determination that uses rates based n collected statistics. the rates, which apply per unit of insurance, are published in manuals (manual rating)

Answer 48

Class Rating

Question 49

policy condition that 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

Answer 49

Coinsurance