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Acts of God: Perils that cannot
reasonably be guarded against, such as floods and earthquakes.
Actual cash value (ACV): The replacement cost of
property less allowance for depreciation.
Additional insureds: Persons who have an insurable
interest in the property/person covered in a policy and who are covered against the losses
outlined in the policy. They may receive less coverage than the primary named insured.
Aggregate limits: A yearly limit, rather than a
"per occurrence" limit. Once an insurance company has paid up to the limit, it
will pay no more during that year.
All-risk agreement: A property or liability
insurance contract in which all risks of loss are covered except those specifically
excluded.
Attractive nuisance doctrine: A legal doctrine that
increases the degree of care owed to a child; greater than ordinary care is required to a
child who is a trespasser.
Blanket coverage: Property at several locations or
all property at a given location is insured under a single item.
Boiler and machinery insurance: Coverage for
explosions caused by steam boilers, compressors, engines, electrical equipment, flywheels,
air tanks, and furnaces. Prevention of loss is emphasized even more than indemnification
of loss.
Burglary: The unlawful taking of property from
within premises, entry to which has been obtained by force, leaving visible marks of
entry.
Cash value: The savings element that accumulates
with some life insurance policies.
Claims-made policy: A policy wherein the insurer
pays for claims made during the year. The event giving rise to the claim may or may not
occur in a prior year.
Coinsurance: A clause that requires the insured to
insure to value or share the loss with to insurance company.
Collision: Upset of the covered auto and non-owned
auto and/or its impact with another vehicle or object. Coverage applies no matter who
causes the accident.
Commercial general liability (CGL): A business
liability policy designed for a wide variety of business uses, covering premises
operations, product liability, completed operations, and operations of independent
contractors.
Completed operations liability: The liability of a
contractor for completed work that the owner has accepted or for work abandoned by the
contractor.
Comprehensive: coverage on an auto policy that pays
for damage to or loss of your car, less any applicable deductible resulting from perils
such as fire, theft, vandalism & glass loss.
Concealment: The failure of an applicant to reveal,
before the insurance contract is made, a fact that is material to the risk.
Conditions: Circumstances under which an insurance
contract is in force. Breach of the conditions is grounds for refusal to pay the loss.
Consequential losses: Losses other than property
damage that occur as a result of physical loss to a business-for example, the cost of
maintaining key employees to help reorganize after a fire.
Consideration: In an insurance contract, the
specified premium and agreement to the provisions and stipulations that follow.
Contributory negligence: Partial guilt or
negligence in a civil lawsuit where both parties are to blame.
Declarations: The section of an insurance policy,
usually the first page, that provides information such as the policy number, the insured's
name and address, the agent's name, etc.
Deductible: A definite dollar amount to be borne by
the insured before the insurer becomes liable for payment under the policy
Dwelling: The structure on the residence premises
shown in the declarations, used principally as a private residence, including attached
structures.
Dwelling policy: Covers dwellings that are not
owner occupied, have up to five rooms for boarders, and are ineligible for a homeowners'
policy.
Endorsement: An addition made to an insurance
policy. It usually adds coverage and an additional premium may be charged.
Exclusions: Restrictions of the coverage provided
by an insurance policy.
Fair claim settlement laws: Laws establishing
minimum standards for insurers in handling loss claims.
Floater policy: An inland marine insurance policy
that covers property subject to movement from on location to another.
Flood: (1) An overflow of inland or tidal waves,
(2) unusual and rapid accumulation of runoff of surface waters, (3) mudslides, (4)
excessive erosion along the shore of a lake or any other body of water, or (5) erosion or
undermining exceeding its anticipated cyclical levels.
Frequency: How often a loss occurs or is likely to
occur.
Guaranteed replacement cost: Insurer agrees to pay
for replacing property without policy limit. Used in homeowners' program.
Insuring agreement: The part of an insurance
contract that states what the insurer agrees to do and the conditions under which it so
agrees.
Invitees: Individuals, such as retail store
customers, who are invited onto the insured's premises for their own benefit and that of
the insured.
McCarran-Ferguson Act: A federal law giving states
the right to regulate insurance, subject to certain limitations. This act allows insurance
companies to work together to collect loss and expense data and gives insurers limited
antitrust protection.
Moral hazard: A hazard resulting from the
indifferent or dishonest attitude of an individual in relation to insured property.
Morale hazard: A hazard resulting from the mental
attitude of a careless or accident-prone person.
Mortgagee clause: A clause in insurance contracts
that gives first right of recovery to the mortgagor of property that is covered.
Named insured: An individual in whose name the
insurance contract is issued and who is specifically identified as the person being
covered.
Negligence: The failure to exercise the degree of
care required by law.
Occurrence policy: A clause in liability insurance
policies under which covered acts must satisfy certain conditions; the results must be
accidental and unintended, but the occurrence itself can be a deliberate act of an
insured.
Peril: A specific contingency that may cause a
loss.
Personal property: Anything that is subject to
ownership other than real property.
Personal umbrella: A liability insurance policy
that broadens coverage for comprehensive personal liability and personal auto liability.
Provides limits of liability of $1 million or more.
Physical hazard: A condition stemming from the
material characteristics of an object, e.g., icy street (increasing chance of car
collision) and earth faults (hazard for earthquakes).
Policyholder: The insured in an insurance policy.
Premium: The total cost of insurance, found by
multiplying the rate by the number of units covered.
Rebating: A practice, usually prohibited under
state law, in which a sales agent in insurance returns part of the commission to the
purchaser.
Rental value: Consequential coverage that insures
the loss of rents in the event of the destruction of the insured property.
Replacement cost: Property insurance that pays for
the current replacement cost of property without deduction for depreciation.
Risk: Uncertainty as to economic loss.
Risk transfer: A risk management technique whereby
one party (transferor) pays another (transferee) to assume a risk that the transferor
desires to escape.
Scheduled coverage: Insurance in which property at
two or more locations is listed and specifically insured.
Severity: The extent of a loss; how serious it is.
Underinsured motorists endorsement: Coverage that
will pay damages when the other party's limits are lower than the insured's and the other
party is at fault.
Underwriting: All activities carried out to select
risks acceptable to insurers in order that general company objectives are met.
Uninsured motorist insurance: Pays for your bodily
injures that result from an accident with another vehicle if the other driver is negligent
and does not have any insurance (or has insurance less than that required by law).
Utmost good faith: A legal doctrine in which a
higher standard of honesty is imposed on parties to an insurance agreement than is imposed
through ordinary commercial contracts. |
