A thru D
RPM was established over a century ago with the idea
that buying insurance doesn't have to be frustrating,
complicated or expensive.
Below is a glossary of insurance terms to help you
navigate some of the insurance jargon.
The information presented may not apply or may not included in your specific
insurance policy. Please contact us or your insurance carrier to verify coverage
provided on your specific insurance policy or policies you are contemplating
Judgment) Rates - Rates that are based on
the judgment of the underwriter on an individual
risk basis and not supported by loss experience.
A term that applies to property and signifies both
a relinquishing of it and the letting go of all
legal rights to it, as well, with the intent to
claim a total loss. Abandonment of property to
an insurance company is something insureds are
expressly prohibited from doing in most property
clause - A property policy provision that
stipulates that the insurer need not accept any
damaged property that the insured chooses to
liability - The performance of an act so
dangerous as to be sufficient to trigger liability
regardless of the degree of negligence. Triggering
explosives is often used as an example. Sending
workers aloft for construction or repair at elevated
heights is another. ``Strict liability'' is another
term that is sometimes used.
An unforeseen, unintended, and unexpected event,
which occurs suddenly and at a definite place.
frequency - The rate of occurrence of accidents.
Along with accident severity, it is taken into
account in ratemaking.
severity - The measure of the seriousness
of a claim, measured in, for example, dollars.
Along with frequency, it is taken into account
year experience - Measures premiums and losses
relating to accidents which occurred during a
line - Normally unacceptable risks that are
written as an ``accommodation'' to an agent or
broker who has an overall profitable relationship
with the insurer. For example: a personal auto
risk with a teenage driver of a sports car might
be written if the other lines of insurance which
it carries for the customer were profitable;
or if the agency has had a good and profitable
relationship with the insurer.
current - A monthly statement provided by
an insurer detailing an agent's premiums, commissions,
cancellations, and endorsements.
selling - Account selling is trying to handle
all of a client's insurance needs, rather than
providing for only a portion of those needs.
receivable insurance - Pays for the cost
of reconstructing accounts receivable records
that have been damaged or destroyed by a covered
peril. Even more important, it covers any payments
that cannot be collected because records cannot
cost - The expense undertaken to acquire
new business. The concept applies to both agents
and companies. The largest portion of an insurer's
acquisition cost is agent's or sales representative's
commission or bonus.
of God - Acts of nature ? the term was once
widely used to distinguish between man-made events,
i.e., fire, collision, and nature's rampages
in wind and flood.
malfunction - In products insurance, a defect
or malfunction in a product that damages the
property of the user.
cash value (ACV) - A method for placing value
on property as of the time of its loss or damage.
ACV may be determined as replacement cost, new,
less depreciation. The market value of an item
may be used to help determine actual cash value.
Contrast with replacement cost.
cash value appraisal - An appraisal to determine
the actual cash value of a building and related
A person highly trained in mathematics and statistics
who calculates rates and dividends, and provides
other statistical information for an insurance
insured - One who qualifies as ``insured''
under the terms of a policy even though not named
as insured. Officers of a corporation may be
included as insureds under the terms of a policy
written in the name of the corporation.
living expense insurance - 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.
contract - A standardized set of agreements
offered by one (usually the stronger) party to
another on a ``take it or leave it'' basis. An
insurance policy is an example of such a contract.
The insurer offers a personal auto policy, for
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. Not to be confused with aleatory
A person who may act either on behalf of the insurance
company or the insured in settling a claim. Employee
adjusters work for an insurer; independent adjusters
represent the insurance company on a fee basis;
and public adjusters represent the insured on a
assets - The highly liquid assets of an insurer
permitted by the state to be taken into account
when reporting financial condition.
company - An insurance company that is licensed
(admitted) to conduct business within a given
market - The range of insurance available
through admitted companies.
premium - Also called ``deposit premium,''
an advance premium is a downpayment on what will
be the final premium, in policies where the final
premium is subject to audit.
selection - The tendency of poorer than average
risks to buy and maintain insurance. Adverse
selection occurs when insureds select only those
coverages that are most likely to have losses.
underwriting decision - Any decision made
by an underwriter that is not favorable to the
insured. Such decisions involve termination,
declination, higher rates, or reduction in coverage.
Another example is the placing of a risk in a
residual market or with an unauthorized insurer.
injury - 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
marketing - Targeting marketing efforts toward
one group or category of client. Examples include:
grocery stores; all the employees of one company;
or employees in one industry. Group business
is a type of affinity marketing.
company - An insurance company that produces
business through an agency network. See direct
contract - The legal agreement between an
insurance agency and the insurer detailing the
terms of representation.
plant - The total force of agents representing
One who solicits, negotiates or effects contracts
of insurance on behalf of an insurer. His right
to exercise various functions, his authority, and
his obligations and the obligations of the insurer
to the agent are subject to the terms of the agency
contract with the insurer, to statutory law, and
to common law.
appointment - The act by an insurer that
grants an agent the authority to act as an agent
for the insurer. In most states, agents must
be licensed and appointed, prior to being allowed
to sell insurance.
authority - The authority of an insurance
agent to act on behalf of the insurer he or she
represents. There are several types including:
express authority (authority to act on specific
instructions only); implied authority (actions
taken in accordance with prevailing custom);
or apparent authority (actions based on appearances
created by the agent and acquiesced to by the
errors and omissions insurance - Insurance
obtained by the insurance agent to guard against
loss caused by an unintentional failure to properly
insure (or recommend insurance to) a client.
license - A certificate of authority from
the state that permits the agent to conduct business.
deductible - A deductible provision in some
property insurance contracts where all covered
losses during a year are figured together and
an insurer pays only when the aggregate deductible
amount is exceeded.
excess reinsurance - A type of excess reinsurance
treaty that sometimes is called stop loss or
excess of loss ratio reinsurance. The retention
in this type of agreement is calculated based
on all losses over the period of time that is
stated in the treaty. The reinsurer is responsible
for the amount of losses between the retention
and the limit on the treaty.
limit - The maximum amount an insurer will
pay under a policy in any one policy period.
amount clause - An agreement between underwriter
and insured whereby, in exchange for the purchase
of coverage in an amount specified by the underwriter,
the insured is protected from a coinsurance penalty.
Agreed value clause - Though rare, some policies
cover for a value agreed upon at the time of
writing; if the property is lost because of an
insured peril, the amount stated in the policy
will be paid. Fine arts insured under a personal
articles floater or homeowners scheduled personal
property endorsement are examples.
coverages - Though aircraft have long been
an important element in the lives of most Americans,
insurance of aircraft exposures has remained
outside the mainstream of property and liability
insurance markets. Aircraft hull and liability
insurance is the counterpart of personal or commercial
auto policies coverage. Aircraft products insurance
is the counterpart of products liability coverage.
Air cargo insurance is mirrored in motor truck
cargo. Hangarkeepers liability is akin to garagekeepers
coverage. As with any specialty line of insurance,
the absence of standardized forms limits practice
to specialists in the line.
Beverage Control (ABC) laws, see Dram shop
contract - A contract in which the number
of dollars to be given up by each party is not
equal. Insurance contracts are of this type,
as the policyholder pays a premium and may collect
nothing from the insurer or may collect a great
deal more than the amount of the premium if a
loss occurs. Not to be confused with contract
insurer - An insurance company formed under
the laws of a country other than the one it is
doing business in.
premises - Property that has been sold by
risks - A property policy expression now
out of fashion. It was used to designate contracts
that promised coverage against "all risks
of direct physical loss" in contrast to
forms that covered for specific, named perils.
The word "all" came to be perceived
as open to broader interpretation than insurers
intended and it was dropped in favor of the promise
to cover "risks of physical loss." See
Named perils and also Open perils.
lines - Lines of insurance that cover for
perils other than fire, that are usually sold
with fire insurance, e.g., "fire and allied
dispute resolution (ADR) - Methods other
than lawsuits that are designed to resolve legal
disputes. Examples are arbitration and mediation.
A standard policy provision that proves to be ambiguous
may be interpreted in the light most favorable
to the insured.
Agency System - The system of selling insurance
through agents who receive omissions in lieu
Association of Insurance Services (AAIS) -
An association of insurance companies providing
filing and various technical services on behalf
of its member companies.
with Disabilities Act (ADA) - Passed by Congress
in 1990, this act requires that "reasonable
accommodation" be made in public accommodations,
including the workplace, for those with physical
or mental disability.
College, The - An educational institute conferring
the Chartered Life Underwriter (CLU) designation.
Lloyds - Unincorporated associations of individual
underwriters who assume specified portions of
liability under each policy issued. There is
no connection with Lloyds of London.
date - The anniversary of the original date
of issue of a policy as shown in the declarations.
aggregate deductible - A deductible applied
annually to the total amount paid in claims during
a policy period. Claims are generally subject
to a per-occurrence deductible; the aggregate
is the limit beyond which no further deductibles
laws - Usually contained in a section of
the state code entitled "Unfair Trade Practices," these
provisions define the use of coercion as an unfair
practice and, hence, a violation of the state
laws - Laws found in all but two states which
prohibit an agents refunding part of a
commission to an applicant as an inducement for
placing insurance through the agent. California
and Florida allow rebating of commissions on
a limited basis.
authority - 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. Apportionment - The method of dividing
a loss between multiple insurers that cover the
A determination of the value of property for the
purposes of determining the proper amount of insurance
to be bought or in adjusting a loss.
structure - Another structure on the same
premises as the principal structure. A detached
garage on a dwelling premises is "appurtenant" to
the dwelling. Older homeowners forms refer to
the "other structures" protected under
the HO Coverage B as "appurtenant structures."
clause - The clause in an insurance policy
that spells out how disagreements over a claim
The intentional setting afire of property.
risk - A risk not be generally acceptable
to any insurance company but for which the law
says that insurance must be acquired. Personal
auto liability is one such necessary coverage.
Insurance companies doing personal auto business
in a state can be required to accept assignment
of a portion of the states unacceptable
drivers as insureds.
risk plan, see Auto insurance plan.
captive - A captive insurer owned by the
members of a sponsoring organization or group,
such as a trade association.
liability - Liability assumed under contract
or agreement. More commonly known as contractual
A party who is a potential beneficiary of an insurance
contract. The synonym "insured" is more
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. The attorney-in-fact need not be a lawyer.
nuisance - Condition that can attract and
injure children. The occupants of land on which
such a condition exists are liable for injuries
to children. Examples of attractive nuisance:
swimming pools; earth moving equipment; playground
Some policies (such as workers compensation) are
written subject to an audit. Since workers compensation
premium is based on the insureds payroll,
the insurer is entitled to audit the insureds
records at the end of the policy to verify that
it has collected an adequate premium for the amount
of payroll to which it was exposed.
insurer - An insurer granted permission by
a state to sell specific lines of insurance within
insurance plan - Program set up by various
states to ensure that everyone with a valid drivers
license will be able to purchase auto insurance.
All auto insurers operating within a state are
assigned insureds in proportion to the amount
of auto premium written.
liability insurance - 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 from the ownership,
maintenance, or use of an auto.
medical payments - 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. See also Premises medical payments.
physical damage insurance - Insurance on
the vehicle, itself. This usually is broken down
into collision and other than collision coverages.
shared market - A program in which all automobile
insurers in each state make coverage available
to car owners who are unable to obtain auto insurance
in the voluntary market.
One who has is charged with the care of the property
of another. For example, a garage is bailee of
a customers ("bailors") car
(the "bailment") and a jeweler is a bailee
of customers jewelry while in for repair
customers insurance - Insurance designed
to reimburse a bailees customers for loss
without regard to liability.
floater - An inland marine form that covers on
an open perils basis a bailees interest
in personal property of others.
liability insurance - Insurance covering
damage negligently caused by a bailee or employee
to goods left in their care.
The act of delivering property in trust to another
for a limited time and specific purpose.
The person delivering property to another in trust.
blanket bond - A bond designed to indemnify
for loss of money, securities, etc., caused by:
dishonesty of employees; robbery or theft from
the premises; or robbery or theft while the insured
property is in transit.
causes of loss - The perils of fire, lightning,
and removal of property from premises endangered
by those perils as shown in the standard 1943
New York fire policy.
named perils - Covered perils in a property
insurance contract: fire, lightning, windstorm,
civil commotion, smoke, hail, aircraft, vehicles,
explosion and riot.
plans - Sometimes known as windstorm plans
or pools, these are plans devised by coastal
states to insure the windstorm exposure of coastal
properties. The plans operate in a manner similar
to a joint underwriting association, with participation
by all insurers operating within a state.
error - A mistake in the production process
of a product that causes a loss. Such losses
are usually covered.
A term used to express the difference in the value
of property before loss and after restoration.
If a 20-year roof is damaged by an insured peril
and it has to be replaced in its 15th year and
the restoration renews the 20-year life expectancy,
the owner has obtained a 15-year betterment in
the roof. Without replacement cost insurance on
the roof, the owner is expected to reimburse the
insurance company for the "betterment" entailed
in the restoration. Also see Improvements and betterments.
A shorthand expression for "bodily injury."
bond - 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 contractors accepted bid and the bid
of another contractor who has to be called in
to complete the project.
An insurers agreement, by way of an agent,
to provide non-life insurance on the spot, pending
issuance of the policy contract.
authority - The authority extended to an
agent by an insurer to provide insurance, usually
on a temporary basis, until a policy can be written.
bond - An employee dishonesty or fidelity
bond covering all persons of a group or class;
as opposed to bonds naming specific individuals
(name schedule) or positions (position schedule).
coverage - A means of insuring various items
of property under one limit of liability.
insurance - Insurance covering multiple items
of property as a group. Covered property may
be at one location or several.
A trucking term that means the driving of the tractor
portion of a semi after the trailer has been delivered
and removed. A special trucking endorsement, Truckers
Insurance for Non-Trucking Use, may be necessary
injury - A term that refers to physical injury,
sickness, or disease, or death resulting therefrom.
In some jurisdictions "bodily injury" includes
injury liability - 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.
Boiler & machinery
insurance - Fired vessels, steam generators,
mechanical and or electrical objects and turbines,
are all examples of "objects" that
might be listed for coverage under a boiler and
machinery policy. Coverage is for damage to covered
property caused by an accident to an object identified
in the policys schedule. Coverage includes
extra expense, automatic 90-day coverage at new
locations, defense against liability claims,
and supplementary payments like those provided
under public liability policies.
A document for expressing surety. A bond engages
three 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.
fidelity - A bond that guarantees the principals
surety - A surety bond is the financial assumption
of responsibility by one or more persons for
fulfilling anothers obligations.
of business - The accounts written by an
agent or company. It can be expressed in a number
of ways such as "total book" of business, "book
of auto business," "homeowners business," etc.
(Businessowners policy), see Businessowners
- A written schedule of insureds, premiums, and
losses submitted to reinsurers under certain types
of reinsurance agreements.
Another practice defined as "unfair" under
most states codes. Such a practice which
occurs when someone in the insurance business refuses
to do business with someone else until that person
complies with certain conditions or concessions.
form perils - A property insurance designation
for coverage that extends beyond the basic named
form property damage endorsement - A commercial
general liability endorsement that removes the
care, custody, or control exclusion relating
to the property of others and replaces it with
a less stringent one.
One who represents the insured in arranging insurance.
A broker may also serve as the agent of an insurance
company. Typically, a broker does not have binding
risk insurance - A variation of property
coverage specifically applicable to construction
projects. It is commonly written in an amount
to cover the value of the structure when completed.
The premium charged takes into account that values
at risk increase gradually over the term of the
A form of coverage similar to an umbrella, having
to do with ocean marine risks.
Auto Policy (BAP) - A standardized contract
for writing liability and property coverage on
income coverage - Insurance protecting the
income derived from an insureds business
activities when curtailed by a covered peril.
Coverage includes reasonable extra expense the
insured undertakes to expedite return to business
income, dependent properties - Covering loss
to an insured when the operations of a key supplier,
customer, or "leader property" on which
the insureds operations are dependent,
is shut down by a covered peril. Also referred
to as "contingent business income."
personal property - 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
policy (BOP) - A package of property and
liability insurance for small and medium size
businesses, the BOP owes its origin to the success
of the homeowners policy.
"Buy-Back" deductible -
A deductible that may be eliminated for an additional
premium in order to provide "first-dollar" coverage.
year experience - Underwriting result based
on earned premiums and booked incurred losses
for the same calendar year reporting period,
regardless of the dates of the loss events. Booked
incurred losses include paid losses, beginning
of year to end of year changes in case reserves,
flat, pro rata, or short rate - In a flat
cancellation the full premium is returned to
the insured. A pro rata cancellation means the
insurer has charged for the time the coverage
was in force. Short rate cancellation entails
a penalty in excess of pro rata for early termination.
An insurers (or reinsurers) top limit
on the amount of coverage it has available. The
term may also refer to the total available in the
respective insurance or reinsurance market.
agent - A representative of a single insurer.
In the case of captive agents, the insurer owns
and controls expiration dates and policy records.
A captive agent is a member of what may be called
an exclusive agency system.
insurer - An enterprise with all the authority
to perform as an insurance company, but is organized
by a parent company for the express purpose of
providing the parent companys insurance.
custody, or control - 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
insureds "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 bailees floater is often used
to cover the insureds obligation for the
care of such property.
insurance - An inland marine or ocean marine
policy covering cargo in the care, custody, or
control of the carrier.
underwriting - Name given to an insurers
practice of "nonselectively" writing
business in order to generate greater amounts
of cash for investment purposes.
insurance - The type of insurance concerned
with legal liability for losses caused by bodily
injury to others or physical damage to property
(excess) cover - Another term for catastrophe
reinsurance, wherein the ceding company is indemnified
by the reinsurer after a specified loss amount
is reached, for losses caused by catastrophes.
Causes of loss forms - The reference is commonly
to property insurance contracts and the form
in question details those perils to which the
coverage will respond. Though any property insurance
contract must name the perils it intends to cover,
e.g., crop hail, earthquake, perils of transit,
and so on, the most commonly used general forms
are the basic and broad named perils forms and
the special form. In contrast to the named perils
forms, that list specific perils for coverage,
the special form contract covers simply risk
of direct physical loss, relying on exclusions
to delimit and define the coverage.
The transfer of all or part of a risk written by
an insurer to a reinsurer.
A ceding insurer or reinsurer. Ceding means to
contractually transfer a portion of a risk or risks
to a reinsurer.
commission - The cedants acquisition
costs and overhead expenses, taxes, licenses
and fees, plus a fee representing a share of
expected profits, which often is expressed as
a percentage of the gross reinsurance premium.
of insurance - A written description of insurance
in effect as of the date and time of the certificate.
The certificate 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.
(Commercial General Liability) see Commercial
Certified Insurance Counselor.
A designation Chartered Life Underwriter conferred
upon successful completers of a series of studies
of life insurance and related disciplines designed
by The American College.
A designation Chartered Property Casualty
Underwriter conferred upon successful completion
of a series of 10 exams on insurance and related
disciplines designed by the American Institute
of Chartered Property Casualty Underwriters.
commotion - One of the extended coverage
perils, paired with the peril "riot," which
refers to a less widespread or generalized event
than "riot" might be thought to encompass.
Expense - The expense of adjusting a claim,
such as investigation and attorneys fees.
It does not include the cost of the claim itself.
coverage - A type of public liability insurance
that responds only to claims for injury or damage
that are brought (to the insurer) during the
policy period (or during a designated extended
reporting period beyond expiration). This development
was in response to "long tail" claims,
such as those related to asbestosis injury, carrying
over many years and multiple layers of coverage
limits. However, most public liability policies
are written on an "occurrence" basis,
covering injury or damage occurring during the
policy period even if a claim is brought months
or even years later.
cover - A type of catastrophe reinsurance
for casualty insurance. The retention is equal
to the highest limit of any one insurance policy
covered by the agreement. Clash cover is written
to cover all losses from one source, such as
a construction site.
rates - When property or people share a certain
number of characteristics relevant to the cost
of providing them with insurance (such as a male
driver under the age of 25 without an accident)
underwriters can develop insurance rates that
reflect the exposures represented by the "class" and
offer insurance based on a class rate rather
than by computing individual rates for each member.
A provision or condition affecting the terms of
a contract. Coinsurance, cancellation, and subrogation
clauses are typical insurance contract clauses.
costs - Generally, those costs associated
with the clean up of pollution.
or closely held corporation - A corporation
that is owned by a small number of individuals
who are related. A close corporation fills its
Another act defined by most states as an "unfair
trade practice." This one occurs when someone
in the insurance business uses physical or mental
force to persuade another to transact insurance.
clause - "Coinsurance" refers to
the bargain between commercial property owners
and the insurance industry. This clause in property
policies encourages the property owner to gauge
coverage needs by possible, not probable, maximum
loss. With $1 million at risk but a probable
maximum loss of $100,000, for example, the property
owner would probably buy $100,000 insurance and
bank on avoiding the larger disaster. The bargain
offered by the insurance industry is a reduced
rate per $100 of coverage if the owner agrees
to buy coverage at a specified relation (80%
commonly) to value (to possible maximum loss
in other words). If the insured accepts the bargain
but events prove the amount of insurance is inadequate
to the stated coinsurance percentage, the insured
becomes "coinsurer" in the same ratio
as the amount of insurance bears to the amount
that should have been carried.
A property insurance peril, subject to its own
specific agreement in property policies, which
otherwise insure on an open perils basis.
damage waiver - When paired with an auto
rental agreement, the rental car company agrees
to waive the renters responsibility for
any physical damage to the rental car in exchange
for an additional payment. Sometimes called a "loss
insurance - A type of physical damage insurance
available for automobiles. Coverage is triggered
when damage is caused by striking against another
ratio - The sum of an insurance companys
loss ratio and expense ratio; used as an indicator
of profitability for insurance companies.
Single Limit (CSL) - Liability policies commonly
offer separate limits that apply to bodily injury
claims and to claims for property damage. "50/100/25" is
shorthand under such a policy for $50,000 per
person/$100,000 per accident for bodily injury
claims and $25,000 for property damage. A combined
single limits policy might cover for $100,000
per covered occurrence whether bodily injury
or property damage, one person or many.
blanket bond - A 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.
General Liability (CGL) - The CGL policy
is an ISO form, widely used to provide commercial
enterprises with premises and operations liability
coverage, products and completed operations insurance
and personal injury coverage. Premises medical
payments coverage is often included as well.
lines - A distinction marking property and
liability coverage written for business or entrepreneurial
interests as opposed to personal lines.
of Insurance - The official in a state (or
territory) responsible for administering insurance
regulation; sometimes called the Superintendent
or Director of Insurance.
area - The part of a building or premises
either owned by or used by all tenants or tenant-owners
of the building (e.g. the swimming pool at a
negligence - 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.
damages - The award, usually monetary, that
is intended to compensate the claimant for injury
operations insurance, see Products and completed
bond - A bond that guarantees a lending institution
or other mortgagee that a building or other construction
that they have lent money on will be completed
on time so it can used as collateral on the loan.
personal liability insurance - 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 covered.
physical damage (automobile) - Traditional
name for physical damage coverage for losses
by fire, theft, vandalism, falling objects, and
various other perils. On Personal Auto Policies,
this is now called "other than collision" coverage.
On commercial forms, it continues to be called "comprehensive" coverage.
causation - 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. A concurrent causation exclusion is found
in current forms.
One of the obligations of either the insured or
the insurer imposed in the insurance contract.
Type of dwelling where the structure is owned jointly
while spaces within the structure are owned individually.
Special property and liability forms cover the
interests of the condominium association and of
association coverage - A policy that provides
coverage for the building, elements of the building,
and liability needs for those who collectively
own a piece of property.
unit owners form - A policy that provides
coverage for the personal property, owned elements
of a unit, and liability for the individual unit
loss - An indirect consequence of direct
loss to property. Business income may be lost
when a store burns down, or frozen goods may
spoil when windstorm causes an interruption of
power. Consequential or indirect loss is not
generally insured by policies covering direct
damage (i.e., by fire or wind as in these examples),
but insurance is readily obtainable separately
for most such consequential exposures business
income coverage being among the most common.
bond - A bond that guarantees the owner of
a building under construction that it will be
completed. If the contractor cannot finish the
work, the insurer is obligated to see that the
work is performed.
total loss - This condition is said to exist
when the cost of repairs exceeds the actual cash
value of damaged property.
business income, see Business income, dependent
liability - Liability imposed on a business
entity (individual, partnership, or corporation)
for acts of a third party for which the business
entity is responsible.
of adhesion, see Adhesion contract.
equipment floater - Coverage designed for
the special needs of contractors to insure their
machinery and other equipment.
liability - Liability that does not arise
by way of negligence but by assumption under
contract. For example, in certain leases, a tenant
may assume a landlords liability to others
for unsafe conditions on the premises. Some such
assumptions are covered automatically under the
Commercial General Liability form.
negligence - A defense to a negligence action
in which it is asserted that the claimant failed
to meet the standard required for his or her
own protection, and that that failure contributed
to the loss.
business - The amount of insurance countersigned,
issued or sold by a producer covering that producers
interests, immediate family, or employees. Many
states limit the amount of controlled business
that may be written, by placing a maximum percentage
of all business that may be "controlled."
(or Statement) blank - The uniform annual
financial statement that must be filed by all
insurers, as prescribed by the National Association
of Insurance Commissioners. The convention blank
must be filed annually in an insurers home
state and every state in which it is licensed
to do business.
A business whose articles of incorporation have
been approved in some state. For insurance purposes,
the type of business structure helps to determine
who is insured on the policy.
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
bonds, see Judicial bonds.
trigger - In liability insurance, the "trigger" is
the event that brings coverage into play. It
may be either an occurrence of bodily injury
or property damage; or, in a form with a claims-made
trigger, the formal making of a claim.
loss - An accident, including accidental
damage by forces of nature, that brings a contract
of insurance into play.
card forgery - A criminal act involving the
illegitimate use of credit cards to obtain goods
or money. Limited coverage for such losses is
automatically provided in most homeowners policies.
insurance - A broad category covering loss
of property through criminal activity from
employee dishonesty to burglary and robbery,
computer fraud, and forgery.
insurance - Insurance covering growing crops
against hail, wind, and fire. Protection against
a broader range of perils can often be arranged
The documentnow more commonly found in electronic
than in paper form that provides insurer
and agent with a quick reference to all pertinent
information relative to a contract of insurance:
insureds identification, location, coverage,
term, premium, and so on. Sometimes referred to
as a "daily report."
processing insurance - Coverage for electronic
media, computers, and other electronic data processing
A trucking term that means the driving of a tractor-trailer
that is empty, usually on the return trip from
delivering goods. A special trucking endorsement,
Truckers Insurance for Non-Trucking Use, may be
necessary when deadheading.
removal clause - A consequential coverage
commonly included in direct loss policies. For
example, fire policies provide limited recovery
for the insureds cost of removing the debris
after a covered fire. Not to be confused with
page - 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. The same information, perhaps in a shorthand
version, is contained as well in the daily.
The part of the loss that is to be borne by the
insurance - When a building is damaged beyond
a certain point, say 50% destroyed, local building
codes may direct that the structure be razed.
Insurance to cover this exposure (and the lost
value of the undamaged but newly razed part)
can and clearly should be arranged whenever it
exists. Increased cost of construction coverage
to meet current building codes should be provided
properties, see Business income, dependent
premium - 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
forgery insurance - Coverage against loss
due to forged checks, notes, etc. Limited coverage
is automatically included in homeowners contracts.
Commercial establishments can purchase crime
coverage with this feature.
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.
In Conditions (DIC) - Property insurance
obtained through the excess and surplus lines
market to supplement and expand on the property
coverage available through admitted markets.
DIC has been called the "property umbrella" policy.
damage - Physical damage caused to property
by a peril such as fire or lightning.
loss - The immediate consequence of the action
of an insured peril. A fire-damaged structure
is a "direct loss" by fire. In contrast,
see Consequential loss.
premiums - Premiums collected from policyholders
before premiums for reinsurance are paid.
writer - An insurer that sells coverage directly
via its own employees. Contrast with independent
and officers liability insurance - A form
of errors and omissions insurance covering the
directors and officers of corporations against
suits alleging they committed wrongful act(s).
period - The period of time, commonly one
year, after the termination of a surety bond
during which covered loss may be discovered,
reported, and covered.
Disappearance, and Destruction ("3-D")
policy - The name once applied to a form
used for comprehensive crime coverage. Now known
as ISO Form C.
shop laws - State laws pertaining to selling
and serving alcoholic beverages and the public
liability these activities may entail. Also called
alcoholic beverage control (ABC) laws.
shop liability insurance, see Liquor liability
Other Car (DOC) endorsement - A business
auto or garage policy endorsement providing coverage
for named individuals while driving nonowned
autos in situations unrelated to the business
of the insured.
liability insurance - A form of professional
liability insurance for druggists.
to defend - Part of the insuring agreement
of many policies. The insurer has the duty to
defend the insured in event of a covered loss.
forms - Forms for coverage of dwellings and
personal property that are not eligible for homeowners
coverage. Tenant occupied rental properties are
commonly insured under these forms.