Master Insurance Glossary Flashcards
Insurance Policy
A contract between the insured party and an insurance carrier.
An Insurance Policy consists of what elements?
Hint: 6 Elements
- Declarations Page
- Forms
- Endorsements
- Optional Coverages
- Common Policy Conditions
- Glossaries
A Declarations Page….
Describes the contract
A Declarations Page lists…..
Hint: 9 subjects
- Issuing Company
- Named Insured and Address
- Policy Number
- Policy Period
- Policy Premium
- Type of Policy
- Amounts and Limits
- Optional Coverages
- Forms and Endorsements
On the Declarations Page, the limit under Section 1 applies to:
Coverage for sudden accidental loss of the
insured party’s own property.
On the Declarations Page, the limit under Section 2 applies to:
Liability coverages.
Insurance Forms define:
Hint: 3 Subjects plus note
- Who or what is covered
- Covered causes of loss
- Qualifications to coverage.
Note: There will always be some forms in a policy that are unique to the state involved because
the insurance industry is state-regulated.
Endorsements are….
Short insurance forms that can be included
in a policy in order to add to the coverage—
or subtract from it.
Optional Coverages are….
Provisions within a form or endorsement that
only apply if noted on the declarations page.
Multiple options usually appear in the longer
forms.
Common Policy Conditions:
The basic provisions that apply to all
insurance coverages in the policy.
examples: conditions for premium payment,
renewal, cancellation
May appear in a longer form or a separate
endorsement.
Glossaries:
Section of a form that defines key terms and
concepts used.
Glossaries are important because the policy
may define a word more narrowly than its
common usage.
A narrow definition is a way for the carrier to
restrict coverage.
Advertising Injury (AI)
Liability for injury to reputation.
Due to libel, defamation, invasion of privacy,
or similar injuries, in written or published
form.
Aggregate Limit
The maximum amount that the carrier will
pay out during the term of the policy.
Common in liability policies.
Agreed Amount
An endorsement which waives the coinsurance clause (see) in property insurance.
Auditable Policies
Carrier sets a provisional premium based on
the insured’s expected exposure.
When the coverage year is over the carrier
audits the insured’s accounts to determine
the actual exposure.
Less than expected, insured receives refund.
More than expected, insured pays the
difference.
example: workers’ compensation.
Bailee Coverage
Also known as receiving room coverage.
Insurance coverage for a party who has
temporary custody of the property of
another.
example: Staff holds deliveries in the office
or at the lobby desk for residents until they
pick them up.
Basic Form
In commercial property insurance, the
insuring agreement that covers fire,
lightning, riot, explosion, vehicles, smoke,
hail, aircraft, wind, vandalism, and malicious
mischief.
The exposures covered may vary slightly by
carrier.
Not as inclusive as special form.
Binding Proposal
A proposal where the carrier has given the agent authority to commit the carrier to insuring the stated risk for the stated premium—if the association accepts the proposal.
Blanket Coverage
In property insurance, one limit and one
deductible apply to all the buildings or units
as a whole—rather than each building or unit
having its own limit and its own deductible.
In fidelity insurance, all employees are
covered as a category—rather than
specifically named individuals or positions.
Bodily Injury (BI)
Liability for physical injury sickness, or
disease.
Broad Form
In commercial property insurance, the insuring agreement that covers the exposures in basic form plus some damage from water escape from plumbing systems and certain damage from collapse. The exposures covered may vary slightly by carrier Not as inclusive as special form.
Carrier’s Financial Size
An insurance carrier’s financial size is an
indicator of its relative capacity to absorb
losses. This capacity is affected by the
geographic regions and types of exposure it
insures.
example: A carrier’s capacity to absorb
losses will be affected if it insures for
hurricane damage in the Southeast.
Carrier’s Rating
An insurance carrier’s rating is an indicator
of its ability to pay claims.
Its rating is also an indicator of how
aggressively the carrier will respond to its
coverage exposures and claim exposures
with your association.
A rating is also a predictor of the carrier’s
future rate stability and coverage
availability.
Claims Made Basis for Coverage
A liability policy will cover a loss that is
discovered and reported during the period
the policy is in effect. The event need not
occur during that period.
This is preferred coverage for directors’ and
officers’ insurance and fidelity insurance for
community associations.
Coinsurance
A provision in some property policies that
penalizes an insured for not maintaining a
high limit of property coverage— often 80%
to 100% of the total value.
Commercial General Liability (CGL)
A part of the commercial package policy (see) that provides insurance coverage for
legal claims arising from bodily injury,
property damage, personal injury, and
advertising injury.
Commercial Package Policy (CPP)
A policy that contains property. and liability coverages and possibly other coverages—
hence the name “package policy.”
Modifications to the “package’ are made by
means of endorsements or options (see).
Common Policy Conditions
The basic provisions that apply to all
insurance coverages in the policy.
examples: conditions for premium payment,
renewal, cancellation
May appear in a longer form or a separate
endorsement.
Condominium Endorsement
Special policy conditions that have become
Endorsement standard for condominium insurance.
Meet the needs of other types of community
associations with similar property insurance
requirements.
Special policy conditions include:
-Waiver of rights of recovery
-Recognition of an insurance trustee
- “No control” provision
-“Other insurance” provision
-Standard mortgage clause
-“Cross liability” clause
Contingent Liability
A form of ordinance or building law coverage
that pays for the value of any undamaged
portion of a building when codes require a
building damaged by a covered loss to be
demolished.
Often purchased with increased cost of
demolition (see).
Cost of Loss Adjustment
A coverage which reimburses for costs
associated with presenting a claim.
If included in coverage at all, often limited to
a nominal amount.
Coverage Trigger
In liability insurance, the trigger is either the
occurrence of an event or the making of a
claim.
“Cross Liability” Clause
Permits one party insured under the policy to
bring a claim against another party insured
under the policy.
Section 1 Limit on a Declarations Page applies to….
The Coverage for sudden accidental loss of the insured party’s own property.
Section 2 Limit on a Declarations Page applies to….
Liability Coverages
Deductible
The amount that the insured must pay on
each loss before the carrier will make
payment.
Defense Outside Limits
Provision that the limit of liability coverage
will not be reduced by the attorney’s fees
related to defense of a claim.
Directors and Officers Liability (D&O)
Liability and insurance coverage for wrongful
acts (see) by the association, the board,
officers, and certain other volunteers.
