Risk
Is uncertainty of loss
Insurance
Transfer of risk from the insured to the insurer
Pure risk
Means there is no chance of gain. Is insurable can only result in a loss
Speculative risks
Means there is a chance of loss or a gain . Not insurable
Hazard
A circumstances that increases the likelihood of a loss. Something that increases risk
Indemnity
Compensation to the insured that restores them to the same financial position prior to loss
Insurable interest
Any interest an insured may have in property that is the subject of insurance ..must exist on a casualty policy at the time of loss in order to provide coverage
Law of large numbers
Used to predict the likelihood of loss..the larger the number of people with a similar exposure to loss the more predictable actual loss will be
Actual cash value ACV
The required amount to pay damages for property loss which is calculated based on the property's current replacement value minus depreciation
Negligence
The failure to use the care that a reasonable prudent person would under the same or similar circumstances
Occurrence
A broader definition of loss which differs from accident in that it includes losses caused by continuous or repeated exposure to conditions resulting in injury to person or damage to property that is neither I tended nor expected
Binder
A temporary contract that puts an insurance policy into force before the premium has been paid. Can be oral or written provides coverage until the policy is issued
warranty
A material stipulation in the policy that if breached may void coverage.
Representation
Statement made by the applicant on the insurance application that are believed to be true but are not guaranteed to be true
Concealment
The withholding of known facts which, if material, can void a contract.
Subrogation
The acquisition by an insurer of an insured's rights against any third party for indemnification of loss or other payment, to the extent that the insurer pays the loss.
Four parts of a policy
Declarations, Insuring Agreement, Conditions, Exclusions 1. Name,policy, premium, limits of liability 2. Coverage provided 3. Obligations of both parties Cancellation provisions 4. Perils not covered
Arbitration
Method of claim settlement used when the insured and insurer cannot agree upon the amount of the loss
pro rata
proportional distribution of shares of the loss for each insurance policy written on a piece of property
Federal regulations
- Fair Credit Reporting Act- gramm-leach-Bailey act - Terrorism Risk Insurance Act
Gram-Leach-Bliley Act
Requiere that the customer be given out a privacy notice at the time the customer relationship is initially established and thereafter annually
Terrorism Risk Insurance Act of 2002
...
Fair Credit Reporting Act
Protects consumers against the circulation of inaccurate or obsolete personal or financial information.
commisioner
The chief executive and administrative officer of a state insurance department.-head of the Kansas department of insurance- has broad powers in order to protect the insurance buying-is elected by the people of Kansas every 4 years -administers and enforces insurance laws but does not write them- authority to investigate unfair trade -can hold hearings subpoena witnesses and examin books or records -can suspend or revoke a producers license
Personal line-- Dwelling policy
DP do not cover personal liability. Can be added with endorsement " personal liability supplement" -DP1 is a named or specified peril policy-exclusions to war, nuclear hazard and flood but not WIND -Do not cover breakage of glass after 60 days vacancy.or freezing plumbing unless heat was left on. - land on which house sits is not insurable .-inflation guard can be added -A loss from rain or dust would only cover if an opening in the dwelling roof or wall was first created by wind or another covered cause -when a dwelling is covered by more then one policy losses are shared pro rata.-PD1 the extended coverage endorsement is added to the standard fire policy to create DP1, does not cover trees shrubs plants or lawn - A DP2 broad form policy is named perils on both dwelling and contents, building structures are written with 80% coinsurance requirement On A and B, Coverage B other structures is in addition to other coverage limits -DP3 same coverage as 2 content broad for personal property -DP 2 & 3 cover trees shrubs plants or lawn
Personal Lines-- Homeowners Policy
-all Ho are packages policies combining an liability coverages.-the limit of liability , the most policy will pay under liability section -HO exclude flood landslides or mudslides or theft of animals - land in not insurable on Ho -Section II liability provides additional coverage for damages to the property of others up to 1000 per occurrence -does not cover property of boarder renter but will cover the property of a guest or resident employee-HO under construction will not cover theft -bankruptcy of an insurer does not relive the insurer from their obligations
Types of property policies
Coverage A- Dwellingcoverage B- Other StructuresCoverage C- personal PropertyCoverage D- Fair Rental ValueCoverage E- ALE not included in basic form
Dwelling policies
-up to 4 residential units/ up to 5 roomers -owner or tenant occupied-can insure dwelling under construction
DP-1 Basic Form
Vandalism or malicious mischief coverage is not covered under basic form -wharves windstorm, hail, aircraft, vehicle, riot, civil commotion, volcanic eruption, explosion smoke
DP2 (Broad Form)
1. The perils that are covered by the Broad Form are those included under the DP-1 with the ECE and optional VMM endorsement attached, plus: damage by burglars; falling objects; weight of snow, ice, and sleet; accidental discharge or overflow of water or steam; sudden and accidental tearing apart, cracking, burning or bulging of a steam or hot water heating system, or an air conditioning or automatic fire protective sprinkler system, or an appliance for heating water; freezing of a plumbing, heating, air conditioning, or automatic fire protective sprinkler system, or of a household appliance; and sudden and accidental damage from artificially generated electrical current.2. The burglary damage peril includes damage to the covered property caused by the burglars, but not theft of property. The vehicle peril does not include loss to a fence, driveway, or walk caused by a vehicle owned or operated by the insured. The smoke peril does not include loss caused by smoke from agricultural smudging or industrial operations.3. Losses to the dwelling and other structures are paid on a replacement cost basis, and losses to contents are paid on an actual cash value basis to the insured.
DP Additional Coverages
lawn, trees, shrubs and plants 500or max 5% of dwellingglass breakage not covered if vacant over 60 days broad theft coverage only added by endorsement and must be owner occupied. covers personal property of insurance
Homeowners Policies
HO-2 (Broad Form) HO-3 (Special Form)HO-4 (Contents Broad Form)HO-5 (Comprehensive Form) HO-6 (Unit-Owners Form) HO-8 (Modified Coverage Form)
HO2
Broad Form, Named peril form. Owner Occupied - --contains more named peril than HO1 and is very similar to DP2 except that theft is included.
HO3
Special Form, owner occupied open peril-on Coverage A & B, Named peril on Coverage C This special form homeowner's hazard insurance policy offers the most coverage for the most reasonable price, and is the preferred policy on primary residences. It covers both real and personal property.
HO4
Renters or tenants Form/ tenant occupied/ named peril-This renter's insurance policy is similar to the homeowner's insurance policy carried on primary residences, but doesn't include coverage on real property owned by someone else. coverage to losses caused by a covered peril to improvements alterations and additions made to the described location at the tenants expense
HO5
Comprehensive Form, Open peril coverage for dwelling, other structures, and personal property
HO6
Condominium form, condo unit, Owner Occupied, named Peril -This form of a hazard insurance policy is designed for condominiums and can be customized to comply with the condo association's bylaws.
HO7
Manufactured Home or Mobile Home policy
HO-8
Modified form , historic (older homes)owner occupied, named peril, insured on market value basis
Additional HO Coverages
- removal of property to protect from peril: 30days- lawn, plants, trees, shrubs, up to 55 or no more then 500 per tree- fire Dept: up to 500 no deductible- Credit Cards: up top 500- Loss assessment up to 1000
Liability Coverage
COVERAGE E bodily injury and property damage; cost of defense does not reduce limitCOVERAGE F Medical payment to others; coverage regardless of fault within 3 years of accident
Commercial Package Policy (CPP)
-interline endorsement-monoline
Commercial Lines
Type of insurance that pertains to business, mercantile or manufacturing establishments.
Commercial Coverage parts
-Inland Marine- Commercial Auto- farm- General Liability - Equipment breakdown- crime-Commercial Property
Interline Endorsement
A written amendment designed to eliminate redundancy and minimize the number of endorsements in the policy.
Monoline Policy
A policy written separately as a single coverage.
Equipment Breakdown
-property insured on replacement cost basis -Most business and industrial risk: must be in use or connected and ready_ Property owned by insured up to 25000 negotiable for expediting expenses for temporary or permanent repairs, consequential loss data and media hazardous substance cleanup ammonia, contamination, water damage-sudden or accidental breakdown resulting in physical damage to the object .
farm policy coverages
Can be considered under CPP ; Basic/ Broad/Special Coverage H- bodily injury and PD arising from farming operations and personal acts of insuredCoverage I - Personal and advertising injury liability for insureds farm related products and servicesCoverage J- reasonable medical expenses regardless of fault within 3 years *LIVESTOCK COVERAGE names peril coverage*MOBILE AGRICULTURAL MACHINERY AND EQUIEPMENT - open peril/ may be written as a stand alone coverage
Comercial General Liability (CGL)
-occurrence limits apply separately for each claim but the aggregate limit applies to all claims -contains 3 coverage sections liability personal injury and advertising injurymedical payments to others no deductible on any -provides liability anywhere in the world-policy territory is United States, Puerto Rico and Canada -liability applies after product is out of teh control of teh insured-does not cover recall cost 60days up to 5 years
Inland Marine
endorsement is used to insure personal property with high values such as fur, antiques and jewelry -Published by the National Association of Insurance Commissioners NAIC -DATA PROCESSING floaters to insure computer equipment-fine arts floater for newly acquired fine art for 90 days
Personal Auto Policy (PAP)
automobile insurance policy introduced in 1977. -auto assigned risk plan all insurers must participate -supplementary payments under a pap do not cover the insured loss of earnings will provide coverage for radio or tape decks if they are permanently installed-pays medical and funeral expenses caused by an accident and sustained by the insured-will not pay for loss wages-protects the insured and passengers in the car on a PAP an at fault drivers injuries would be covered by medical -coverage d is called coverage for damages to an insured car and is optional; written on an ACV basis and has a deductible - Collision coverage- colliding with another object, rollover, and upset.towing and labor is an optional coverage at extra cost -flood is covered under PAP
Underinsured Motorist Coverage
Coverage in an automobile insurance policy under which the insurer will pay costs up to specified limits for bodily injury, if the liable driver's policy limits are exhausted and he/she cannot pay the full amount for which he or she is liable.
uninsured motorist coverage
protection against hit-and-run drivers or drivers without insurance money to pay claims
PAP exclusions
does not provide coverage- in Mexico- an insured's property in transit-not cover motorcycles, dump trucks or farm implements driven in the highway - covers passenger's but not pedestrians -covers small pick up tucks not cover autos use as taxis or delivery but will cover carpools -covers wear and tear freezing and mechanical breakdown
Commercial Auto Insurance
Commercial vehicle insurance, like your personal auto policy, provides similar coveragessuch as liability, collision, comprehensive, medical payments (or personal injury protection) anduninsured motorist coverage.-does not cover an employee injured while driving a company car-damages caused by a falling object would be cover under comprehensive coverage - the employer needs to add hire and nonowner auto coverage if employee wants to drive his own car -garage liability covers products liability but does not cover the cost of a recall - on a garage insurance, car dealer who have fluctuating inventories should utilize reporting forms-GARAGE COVERAGE FORMS was created for auto dealers repair shops, service stations, parking garages, and similar risks-
Workers Compensation
benefit required by state law to be paid to an employee by an employer in the case of injury, disability, or death as the result of an on the job hazard
Workers' Compensation Insurance
must be purchased form a state fund known as MONOPOLISTIC- purchased from an authorized insured is known as COMPETITIVE-coverage set by the State-covers both occupational injury or disease-can not be added to a package always stands alone-PERMANENT PARTIAL DISABILITY refers to the inability to perform job related functions as a result of injury or disease- covers medical expenses on an unlimited basis -TOTALY DISABLED employee who cannot return to work-if policy does not comply with state requirements they must pay the mandated coverage in the even of a claim-upon work related death benefits go to spouse and children-premiums are based on payroll
Licensing
no person may solicit or sell insurance or receive commission unless they are licensed- licensed issued for 2 years- must be at least 18 years old -if u fail exam 3 times you must wait 6 months -underwriters are exempt from licensing-must state the licensees name address and line of authority-temporary licenses may be issued for up to 180 days - must notify the commissioner of a changes within 30 days -12 continuing education in 2 years-license cannot be suspended or revoked without a hearing-a minimum of one appointment
Abandonment
the abdication of insured property into the hands of another or into the possession of one in particular
Absolute liability
A type of liability that occurs due to extremely dangerous operations, such as the use of explosives or working at extreme heights.
Accident
an unfortunate incident that happens unexpectedly and unintentionally, typically resulting in damage or injury.
Additional Coverage
A provision in an insurance policy that allows for more coverage for specific loss expense without increase in premium.
Additional insureds
Individuals or business that are not named as insured on the declaration page, but are protected by the policy, usually in regard to a specific interest.
Adhesion
A contract offer in a take it or leave it basis by an insurer in which the insured only option is to accept or reject the contract. Any ambiguities in the contract will be settled in favor of the insured
Admitted Insurer
An insurance company authorized and licensed to transact business in a particular state.
Adverse Selection
The tendency of risks with higher probability of loss to purchase and maintain insurance more often than the risks who present lower probability.
agent
An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of an insurer.
Aggregated Limit
the maximum limit of coverage available under a liability policy during a policy year regardless of the number of claims that may be made or the number of accidents that may occur
Agreed Value
A property policy with a provision agreed upon by the insurer and insured as to the amount of insurance that represents a fair valuation for the property at the time the insurance is written.
Aleatory
A contract in which participating parties exchange unequal amounts. Insurance contracts are aleatory in that the amount the insured will pay in premiums is unequal to the amount the insurer will pay in the event of a loss.
Alien Insurer
An insurance company that is incorporated outside the United States.
Apparent Authority
The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.
Appraisal
An assessment of property to determine either the correct amount of insurance to be written or the amount of loss to be paid.
Assignment
The transfer of a legal right or interest in an insurance policy. In property and casualty insurance, assignments of policies are usually valid only with the prior written consent of the insurer.
Authorized Insurer
An insurance company that has qualified and received a Certificate of Authority from the Department of Insurance to transact insurance in the state.
Auto
A land motor vehicle, trailer or semi-trailer designed for use on public roads, including attached machinery or equipment; auto does not include mobile equipment.
Avoidance
A method of dealing with risk by deliberately keeping away from it (e.g. if a person wanted to avoid the risk of being killed in an airplane crash, he/she might choose never to fly in a plane).
Bailee
A person or entity that has possession of personal property entrusted to him/her by the owner. For example, a television repair person that has possession of a customer's television would be a bailee.
Beneficiary
person who receives benefits
Blanket Bond
A type of bond that covers losses caused by dishonest employees.
Blanket Insurance
A single property insurance policy that provides coverage for multiple classes of property at one location, or provides coverage for one or more classes of property at multiple locations.
bodily injury liability
Legal liability arising from death or physical trauma to a person as a result of a negligent or purposeful act and omissions by an insured.
Boycott
An unfair trade practice in which one person refuses to do business with another until he or she agrees to certain conditions.
Builders Risk Coverage Form
A commercial property form that covers buildings under construction.
Building and Personal Property Coverage Form
A commercial property form that covers buildings, and/or their contents.
burglary
The forced entry into another's premises with felonious intent.
Cancellation
The termination of an in-force insurance policy by either the insured or the insurer prior to the expiration date shown in the policy.
Casualty Insurance
A type of insurance that covers losses caused by injury to persons or damage to the property of others.
Cease and Desist Order
A demand of a person to stop committing an action that is in violation of a provision.
Certificate Authority (CA)
A document that authorizes a company to start conducting business and specifies the kind of insurance a company can transact
Certificate of Insurance
A legal document that indicates that an insurance policy has been issued, and that states both the amounts and types of insurance provided.
Claim
a demand made by the insured to cover a loss protected by the insurance policy
Class Rating
The practice of computing a price per unit of insurance that applies to all applicants possessing a given set of characteristics.
Coercion
An unfair trade practice in which an insurer uses physical or mental force to persuade an applicant to buy insurance.
Coinsurance
An agreement between an insurer and insured in which both parties are expected to pay a certain portion of the potential loss and other expenses.
Combine Single
a single dollar limit of liability applying to the total of damages for bodily injury and property damage combined resulting from one accident of occurrence
comissioner
The head of the state department of insurance.
Common Law
an unwritten law made by a judge that has developed over centuries from those generally accepted ideas of right and wrong that have gained judicial recognition
Complaint
A written statement of a liability claim given by the claimant; a reason for a lawsuit.
Components
factors that determine rates, including loss reserves, loss adjusting expenses, operating expenses and profits
comprehensive coverage
Also known as Other Than Collision coverage, it covers losses by fire, theft, vandalism, falling objects, etc.
Conditional Contract
A type of an agreement in which both parties must perform certain duties and follow rules of conduct to make the contract enforceable.
Conditions
The section of an insurance policy that indicates the general rules or procedures that the insurer and insured agree to follow under the terms of the policy.
Consideration
The binding force in a contract that requires something of value to be exchanged for the transfer of risk. The consideration on the part of the insured is the representations made in the application and the payment of premium; the consideration on the part of the insurer is the promise to pay in the event of loss.
Consultant
A person who, for a fee, offers any advice, counsel, opinion, or service regarding the benefits, advantages, or disadvantages promised under a policy of insurance.
Consumer Reports
Written and /or oral statements regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources.
Contract
an agreement between two or more parties that can be enforced by law
Controlled Business
An entity that obtains and possesses a license solely for the purpose of writing business on the owner, immediate family, relatives, employer and employees.
Concurrent Causation
multiple events leading to one loss
Death Benefit
The amount payable upon the death of the person whose life is insured.
Declarations
The section of an insurance policy containing the basic underwriting information, such as the insured's name, address, amount of coverage and premiums, and a description of insured locations, as well as any supplemental representations by the insured.
Deductible
The portion of the loss that is to be paid by the insured before any claim benefits may be paid by the insurer.
Defamation
An unfair trade practice in which one agent or insurer makes an injurious statement about another with the intent of harming the person's or company's reputation.
Deposit Premium Audit
A condition that allows the insurer to audit the insured's books or records at the end of the policy term to make sure adequate premium has been collected for the exposure.
Depreciation
A decrease or loss in value
Direct Loss
Physical damage to buildings and/or personal property as a result of direct consequence of a particular peril.
Director (Commissioner, Superintendent)
The head of the state department of insurance.
Disability
any lost, absent, or impaired physical or mental function
disclosure
An act of identifying the name of the producer, representative or firm, limited insurance representative, or temporary insurance producer on any policy solicitation.
Domestic Insurer
An insurance company that is incorporated in the state.
Domicile of Insurer
Insurer's location of incorporation and the legal ability to write business in a state.
economic loss
The estimated total cost (both insured and uninsured) of an accident.
endorsement
A printed addendum to a contract that is used to change the policy's original terms, conditions, or coverages.
Estoppel
A legal impediment to denying a fact or restoring a right that has been previously waived.
Excess Policy
A policy that only pays for loss after the primary policy has paid its limit.
Exclusions
Causes of loss, exposures, conditions, etc. listed in the policy for which the benefits will not be paid.
Exclusive or Captive Agent
An agent who represents only one company and is compensated by commissions.
Experience Rating
Method of determining the premium based on the insured's own past loss experience.
exposure
A unit of measurement used to determine rates charged for insurance coverage.
Express Authority
The authority granted to an agent by means of the agent's written contract.
Extensions of Coverage
A provision in some property policies which allows the extension of a major coverage to certain types of loss to property not specifically insured.
Fair Plan
Fair Access to Insurance Requirements plan is a state-run program that makes insurance obtainable to those in high risk areas who have been unable to acquire insurance through other channels.
Fiduciary
An agent/broker who handles insurer's funds in a trust capacity.
First Named Insured
The individual whose name appears first on the policy's declaration
flood
a general and temporary condition of partial or complete inundation of normally dry land of surface water from any source
Foreign insurer
An insurance company that is incorporated in another state.
Fraternal Benefit Society
A life or health insurance company formed to provide insurance for members of an affiliated lodge, religious, or fraternal organization with a representative form of government.
fraud
Intentional misrepresentation or deceit with the intent to induce a person to part with something of value.
Functional Replacement Cost
The cost to replace damaged property with less expensive and more modern construction or equipment.
Gross Negligence
Reckless behavior that shows disregard for the safety or lives of others.
Hazard, Moral
The effect of a person's reputation, character, living habits, etc. on his/her insurability.
hazard Morale
The effect a person's indifference concerning loss has on the risk to be insured.
hazard Physical
A type of hazard that arises from the physical characteristics of an individual, such as a physical disability due to either current circumstance or a condition present at birth.
Implied authority
Authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal.
Independent Agents
Agents that sell the insurance products of several companies and work for themselves or other agents.
Indirect Losses
Losses resulting from a peril, but not directly caused by it. Indirect losses may include business disruption, rent insurance, extra expenses, and other consequences that occur over time.
Inflation Guard
a coverage extension that automatically increases amounts of insurance on buildings by an agreed upon percentage annually
insurance
The transfer of the possibility of a loss (risk) to an insurance company, which in turn spreads the costs of unexpected losses to many individuals.
Insurance Policy
a written contract between the insured and an insurance company that promises to pay for all or part of a loss
insured
A person covered by an insurance policy
Insured Contract
A definition on liability forms that describes the types of contracts in which liability is assumed by the insured and included for coverage in the policy. Examples of insured contracts are leases of premises, elevator maintenance agreements, easement agreements, and other agreements related to the insured's business.
insurer
insurance company
Insuring Agreement
The section of an insurance policy containing the insurer's promise to pay, the description of coverage provided and perils insured against.
Judgment Rating
an approach used when credible statistics are lacking or when the exposure units are so varied that it is impossible to construct a class
Legal Liability
A liability under the law that occurs when a person is responsible for injuries or damages to another due to negligence.
liability
responsibility under the law
Liberalization
A property insurance clause that extends broader legislated or regulated coverage to current policies, as long as it does not result in a higher premium.
Lien
a charge, security, or encumbrance on property
limit of Liability
The maximum amount for which an insurer is liable.
Lloyd's Association
Organizations that provide support facilities for underwriters or groups of individuals that accept insurance risk.
loss
The reduction, decrease, or disappearance of value of the person or property insured in a policy, by a peril insured against.
Loss Payable Clause
A provision in property insurance that is used to cover the interest of a secured lender in personal property.
Loss Ratio
A calculation used by insurance companies to relate income from loss expenses: loss ratio = (incurred losses + loss adjusting expense) / earned premium.
Loss Valuation
A factor in determining the premium charged and the amount of insurance required.
Market Value
A seldom used method of valuing a loss based upon the amount a willing buyer would pay to a willing seller for the property prior to the loss.
Misrepresentation
A false statement or lie that can render the contract void.
Mutual Assessment insurer
A mutual insurance company with the right to assess policyholder's additional amounts of premium to meet operational needs.
Mutual Companies
Insurance organizations that have no capital stock, but are owned by the policyholders.
Mysterious Disappearance
A disappearance of property that cannot be explained as to the location, time or the manner of property loss.
Named Insured
The individual(s) whose name appears on the policy's declaration.
Named Peril
The cause of loss specifically covered by the insurance policy. No coverage is provided for unlisted perils.
No Benefit to Bailee
A provision that excludes any assignment or granting of any policy provision to any person or organization holding, storing, repairing, or moving insured property for a fee.
Nonadmitted Insurer
An insurance company that has not applied, or has applied and been denied a Certificate of Authority and may not transact insurance.
Nonconcurrency
A situation in which other insurance is written on the same risk, but not on the same coverage basis.
nonrenewal
A termination of a policy by an insurer on the anniversary or renewal date.
Notice of Claim
A provision that spells out an insured's duty to provide the insurer with reasonable notice in the event of a loss.
Open peril
Term used in property insurance to describe the breadth of coverage provided under an insurance policy form that insures against "any risk of loss" that is not specifically excluded.
Pair and Set Clause
A clause included in many property and inland marine policies, which provides that the insurer is not obligated to pay for the total value of a set of items if only one item has been lost, damaged or destroyed.
partnership
a legal entity in which 2 or more persons agree to share profits and losses of the business
passive
a description of an anti-theft device or system for autos which is activated automatically when the driver turns the ignition key to the off position and the key is removed
peril
cause of loss
Personal Injury Liability
Legal responsibility for an injury to the character of another person caused by libel, slander, false arrest, invasion of privacy and other acts.
personal Lines insurance
Type of coverage available to individuals and families for non-business risks.
Policy limits
The maximum amount an insured may collect, or for which an insured is protected under the terms of the policy.
Policy Period
A period of time a policy is in effect (also known as Policy Term).
Policyholder
the person in possession of an insurance policy may or may not be the policy owner
Policyowner
the person entitled to exercise the rights and privileges in the policy may or may not be the insured
Premium
A periodic payment to the insurance company to keep the policy in force.
primary Policy
A basic, fundamental insurance policy which pays first with respect to other outstanding policies.
Producer
a person who acts on behalf of the insurer to sell negotiate or effect insurance contracts agent
Proof of Loss
a sworn statement that must usually be furnished by the insured to an insurer before any loss under a policy can be paid
Property damage Liability
Legal liability arising from physical damage to tangible property of others caused by the negligence of an insured.
Proximate cause
An act or event that is the immediate or actual cause of a loss.
Pure Risk
a situation that can only result in a loss or no change
rebating
Any inducement offered in the sale of insurance products that is not specified in the policy.
reciprocal
Insurance resulting from an interchange of reciprocal agreements of indemnity among persons known as subscribers.
Reinsurance
A form of insurance whereby one insurance company (the reinsurer) in consideration of a premium paid to it, agrees to indemnify another insurance company (the ceding company) for part or all of its liabilities from insurance policies it has issued.
Replacement Cost
The cost to repair or replace property with like kind and quality at current price without any deductions for depreciation
retention
A method of dealing with risk by intentionally or unintentionally keeping a portion of it for the insured's account; the amount of responsibility assumed but not reinsured by the insurance company.
retrospective rating
A self-rating plan under which the actual losses during the policy period determine the final premium (subject to a minimum and maximum premium).
Right of Salvage
A provision in property insurance policy requiring that after payment of a total loss to insured property, the insured must transfer the title (or ownership) to the property to the insurer.
Robbery
the taking of property from a person's possession by using violence or the threat of violence
Salvage
the amount of money realized from the sale of damage merchandise or property.
Settlement
the process by which an agreement is reached and a claim is resolved in liability insurance
Severability of interests
A provision that insurance applies separately to each insured in a policy, treating each individual as the only insured.
Sharing
A method of dealing with risk for a group of individual persons or businesses with the same or similar exposure to loss who share the losses that occur within that group.
Specific insurance
A property insurance policy that covers a specific kind or unit of property for a specific amount of insurance.
Speculative Risk
The uncertainty or chance of a loss occurring in a situation that involves the opportunity for either loss or gain.
Split
separately stated limits of liability for different coverages, which may be stated on a per person, per occurrence, per policy period basis, or can be divided between bodily injury and property damage
Stated Amount
An amount of insurance scheduled in a property policy which is not subject to any coinsurance requirements in the event of a covered loss.
Statue Law
The written law as enacted by a legislative body which generally takes precedence in cases where both common law and statue law apply
Stock Companies
Companies owned by the stockholders whose investments provide the capital necessary to establish and operate the insurance company.
Strict Liability
A liability that refers to damages caused by defective products even though the manufacturer's fault or negligence cannot be proven.
Surety Bond
A guarantee that debts and obligations will be carried out, and the benefits will be paid for losses caused by nonperformance.
Surplus Lines
Insurance for which there is no readily available, admitted market.
Theft
Any act of stealing or removing property from its rightful owner. Theft encompasses both burglary and robbery.
Tort
a wrongful act or the violation of someone's right that leads to legal liability are classified as intentional or unintentional
Transfer
A basic principle of insurance under which the risk of financial loss is assigned to another party.
Twisting
A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when it's to the insured's disadvantage.
Umbrella Liability Policy
Coverage that provides extra protection against liability, and excess amount of insurance above the primary policy.
Unauthorized Insurer
An insurance company that has not applied, or has applied and been denied a Certificate of Authority.
Underwriter
A person who evaluates and classifies risks to accept or reject them on behalf of the insurer.
underwriting
the process of reviewing , accepting or rejecting applications for insurance
Unilateral Contract
A contract that legally binds only one party to contractual obligations after the premium is paid.
Unintentional Torts (Negligence)
the result of acting witout proper care, generaly referred to as negligence
unoccupied
A property that has contents or furnishings in it, but is not being used or lived in.
Utmost Good Faith
The fair and equal bargaining by both parties in forming the contract, where the applicant must make full disclosure of risk to the company, and the insurance company must be fair in underwriting the risk.
Vacant
Empty; unoccupied
Valued Policy
A policy used when it is difficult to establish the actual cash value of insured property after a loss occurs because of its rarity uniqueness. a valued policy provides for payment of the full policy amount in the event of a total loss without regards to actual Cash value or depreciation
Vicarious Liability
a type of liability in which one person is responsible for the acts of another parent and child or employer and employee
Waiting period
Time between the beginning of a disability and the start of disability insurance benefits.
Waiver
The voluntary abandonment of a known or legal right or advantage.
Coverage Forms
basic broadspecial
implied warranty
a legal term meaning that a product is suitable for its intended purpose and that it fits an ordinary buyer's expectations
obsolescence
depreciation in the value of a property due to becoming outdated
Insurable Interest
something of value that, if lost, would cause you financial harm3 elements financial family business
Special Damages
out-of-pocket expenses for medical, miscellaneous expenses, or loss of wages
General Damages
Compensate individuals for the non monetary aspects of the harm suffered, such as pain and suffering
Punitive Damages
punishment for external behavior, gross negligence or willful intent
Know this
Hazards-conditions and actionsperils-cause of loss loss-reduction of value/ basis for claiminsurance- transfer of loss/ protection a risk is a chance that a loss will occur a hazard increases the probability a peril is the cause of loss