Abandonment Condition
condition contained in property insurance policies that states that the insured cannot abandon damaged property to the insurer and demand to be reimbursed for its full value
Absolute Liability
the legal responsibility for damages, or injury, even if the person found strictly liable was not at fault or negligent
Accident
a loss that occurs a specific time or place
Accounts Receivable Insurance
-protects a company against loss on receivables, including default, bankruptcy or simply slow payment.
-can also protect a company that is unable to collect receivables due to loss of the underlying records (for example, in a fire).
Actual Cash Value (ACV)
to determine the amount to be paid to a policyholder after loss or damage to the insured property
Ex: insurance companys pay the actual cash value of the vehicle after determining its replacement cost and subtracting factors such as depreciation and wear
Additional Coverages
Supplemental insurance coverage that only apply in certain circumstances, have reduced or separate limits of liability, or require the insured to meet certain requirements before they are applicable (extended coverage)
Additional Insured
a person or organization that enjoys the benefits of being insured under an insurance policy, in addition to whoever originally purchased the insurance policy
Ex: in vehicle insurance a typical Personal Auto Policy will cover not only the original named i
Additional Insured - Lessor Endorsement
commercial auto endorsement used to make leased vehicles considered owned vehicles for coverage purposes
Adhesion Contract
contract where one party had more power than the other part in drafting the contract
Admitted Insurer
A company that has received a license in a U.S. state to sell insurance in that state.
Adverse Selection
a situation where an individual's demand for insurance (the propensity to buy insurance and the quantity purchased) is positively correlated with the individual's risk of loss (higher risks buy more insurance), and the insurer cannot allow for this additi
Agency
A relationship between an agent and a principal in which the agent acts for and represents the principal on the basis of the principal's instructions.
Agent
A person who acts on behalf of an organization or another person
Ex: Brokers or Attorneys
Aggregate Limit
The maximum amount that an insurance policy will provide over a given period of time or over the life of the policy
Agreed Amount Policy
An insurance policy that pays a specified amount in the event of a loss, regardless of the value of the loss.
Ex: a life insurance policy may pay $100,000 upon the death of the insured, regardless of when or how the death occurs.
Agreed Value Condition (Stated Amount Condition)
found in some property insurance policies that stipulates a certain value that will meet the coinsurance requirement; if the policy limit equal or exceeds this amt, the insured will not be assessed a coinsurance penalty
Agreement
An arrangement between parties, usually resulting from a discussion, regarding a course of action.
Aleatory Contract
a contract whose performance by one party depends on the occurrence of an uncertain [contingent] event (but if it is contingent on the outcome of a wager it is not enforceable)
Alien Company
an insurance company incorporated in a country other than the U.S, but is doing business in the U.S
All Risk Policy (open peril policy)
Open perils coverage will insure a home and property against damage or lose caused to the home. An open peril policy does not list the perils that are covered in the policy. Instead, an open peril policy covers all perils
A.M. Best Company
Organization that rates the financial stability of insurance companies doing business in the U.S
Annual Transit Policy
This is a type of transportation insurance that insures the property owner for goods in transit. The insurance can cover all domestic shipments made during the year covering various modes of transportation. The mode(s) of transportation will be indicated
Apparent Authority
doctrines of the law of agency that refers to a situation where a reasonable person would understand that an agent had authority to act
Application
A REQUEST for a loan that includes the information about the potential borrower, the property and the requested loan that the solicited lender needs to make a decision.
Appraisal Condition
policy condition that outlines a procedure for when the insured and insurer disagree on the amt of a loss
Appurtenant Structure
Any building on a piece of real estate other than the main building. Most insurance policies covering the main building on a piece of property also cover appurtenant structures.
Ex: a house may have a detached apartment on the same piece of property.
Arbitration Condition
policy condition similar to appraisal condition; may resolve other areas of disagreement besides those regarding the value of loss
Assessment Mutual Company
mutual insurance company that charges members a pro-rata share of losses at the end of each policy pd
Assigned Risk Plan
In workers' compensation, an insurance plan for workers who perform labor considered so hazardous that an insurance company ordinarily would not insure the worker's place of employment.
As with automobiles, states assign uninsurable workers to insurance c
Assignment Condition
condition in insurance policies that specifies that the policy cant be transferred to another unless the company consents to the transfer in writing
Assumption of Risk
Defense against liability based on the common law principle that a person who knowingly exposed himself to danger or injury assumes the risk of loss and cannot hold another person responsible for the loss
Audit
the process of reviewing activities to identify inefficiencies, reduce costs, and otherwise achieve organizational objectives. Audits may investigate potential theft or fraud and ensure compliance with applicable regulations and policies. They also help e
Authorized Insurer
A company that has received a license in a U.S. state to sell insurance in that state. Because each state has its own insurance regulations, each has the ability to set standards for authorized insurers. An insurance company operating in multiple states m
Automatic Increase in Insurance Endorsement
dwelling policy endorsement that provides an annual increase in the Coverage A amt of 4%, 6%, OR 8%
Automobile Insurance Plan
state-sponsored plan that provides automobile insurance to those who are uninsurable under standard auto insurance policies
Aviation Hull Insurance
insurance providing coverage for PHYSICAL DAMAGES to aircraft
Aviation Liability Insurance
insurance providing coverage to OWNERS of aircraft covering liability for BODILY INJURY, INJURY to PASSENGERS, and PROPERTY DAMAGE; also provides medical payments coverage
Bailee
person or organization that has temp. possession of someone else's personal property
Bailee's Customer Policy
Insurance coverage for legal liability resulting from damage or destruction of a bailor's property while temporarily under the care or custody of a bailee.
Bailment
A legal relationship is which a person (bailor) surrenders control of personal property to another (bailee), but with the agreement that the goods will be returned or accounted for upon request.
Bailees are not insurers of goods and are responsible only f
Barratry
In maritime commerce, an illegal act in which the captain or crew of a ship damages the transaction.
Ex: stealing cargo or throwing it overboard.
Best's
Organization that rates the financial stability of insurance companies doing business in the U.S
Bid Bond
A bond that a bidder to a construction project buys to guarantee that it has the means to complete the project should it be awarded the contract.
The amount of a bid bond is a certain percentage of the price of the contract. It exists to reassure the comp
Bill of Lading
A contract between an exporter and a transportation company in which the latter agrees to transport the goods under specified conditions that limit its liability.
It is the exporter's receipt for the goods as well as proof that goods have been or will be
Binder
oral or written statement that provides immediate insurance protection for a specified pd; designated to provide temp. coverage until a policy is issued or denied
Blanket Insurance
An insurance policy that covers two or more properties or the same property at two or more locations.
Ex: a blanket insurance policy may provide coverage for both a house and the furniture inside it.
Alternatively, a policy may cover a person's furniture
Blanket Position Bond
A Fidelity bond, or insurance policy covering a company in the event it loses money as the result of employee theft or fraud.
Boat Owners Policy
Most common Watercraft Package Policy.
This policy combines property, liability, medical payments, and uninsured boat owners coverage.
It fills the coverage gap found in most homeowners policies, particularly with regard to property coverage.
Bodily Injury
Injury, sickness, disease, and death resulting from any of these at any time
Boiler and Machinery Insurance
An insurance policy that covers loss from industrial equipment such as steam boilers.
May be included in the commercial package policy
Broad Theft Coverage Endorsement
A form attached to a dwelling policy that provides theft coverage for a named insured who is an owner occupant. Provides coverage for loss by theft, including attempted theft, and vandalism and malicious mischief as a result of theft or attempted theft.
Broker
A person or firm that conducts transactions on behalf of a client.
Builders Risk Coverage form
An insurance policy that covers residential and commercial structures while they are under construction or being remodeled or renovated.
Builders Risk reporting form
optional form used with the commercial property builders risk coverage form; allows insured to purchase a smaller amount of insurance that gradually increases as the value of the building under construction increases
building and personal property coverage form
The document that details the provisions of a type of business insurance policy designed to cover direct physical damage or loss to a covered commercial property and many of its contents.
Covers buildings, the insured's business personal property, and the
Burglary
taking of property unlawfully entering of leaving the premises as evidenced by visible signs of forced entry or exit
Business Auto Coverage Form
An insurance policy providing coverage for damage caused to an automobile owned by a business, the damage the automobile itself causes, and/or theft of the automobile. One pays premiums to the insurance company in exchange for this coverage.
Business auto physical damage coverage form
1 of the commercial auto coverage forms; covers a businesses owned or hired business autos for physical damage only
Business Income Coverage Forms
An insurance policy that covers a company's loss of income due to a slowdown or temporary suspension of its normal operations stemming from damage to its physical property.
Business Income From Dependent Properties
Insureds joined in a mutually beneficial (or even exclusively beneficial) relationship with another business entity rely on the continued operational viability of that non-related entity.
Their dependence on the goods, services and/or mere presence of the
Business Liability
liability that arises out of the conduct of a business
Business Pursuits Endorsements
homeowners policy endorsement that provides liability coverage for a business conducted away from the residence premises
Business owners Policy
An insurance policy that provides coverage in case some event causes a business to relocate or temporarily close.
It also provides coverage for damage to the property owned by the business.
Ex: if an office floods and becomes unusable, a business owners p
Camera and Musical Instruments dealers Coverage Form
filed commercial inland marine form written to cover camera and musical instruments dealers; covers the insured's stock in trade as well as customer property in the insured's care, custody, or control
Cancellation
termination of an insurance policy by the insured or the insurance company during the policy pd
Capital
accumulated, permanent resources a company gets from owners and customers; the value of the portion of assets that a company owns and that are not restricted by obligations to creditors
Captive Agent
An insurance agent who only works for one insurance company. A captive agent is paid by that one company either with a combination of salary and commissions or with just commissions.
Cargo Insurance
An insurance policy that protects the buyer of a good from the loss of that good while it is being transported.
Most of the time, when a good is being shipped, either the buyer or the seller is required to purchase cargo insurance (or at least to assume t
Casualty Insurance
A category of insurance that covers unforeseen events on a stated asset or assets.
Ex: Car insurance, workers compensation insurance, and elevator insurance
Causes of Loss Form
These are separate forms providing causes of loss (a substitute term for perils of insurance) on property risks written on the Building and Personal Property Forms and Personal Lines Property Forms.
The Basic form includes: fire, lightning, explosion, win
Certificate of Insurance
A document issued by an insurance company to certify the extent and limits of coverage. Usually required by landlords as evidence a tenant is in compliance with lease requirements to maintain certain minimum levels of property and liability insurance
Claim Adjuster
person employed by or acting on behalf of an insurance company to evaluate and settle insurance claims; the adjuster must determine the cause of loss, whether the loss is covered by the policy, the value of the loss, and the amt of loss payable by the pol
Claims-Made Form
commercial general liability coverage form that pays for BI or PD losses for which a claim was first made against the insured during the policy period
Class Rating (Manual rate)
an insurance rate based on the experience of a probable class of risks and published in a manual
Coinsurance
a structure in which the policyholder and the insurer split the responsibility for paying for covered items.
Coinsurance Penalty
A penalty taken out of the figure the policyholder is given by the insurance company for a property loss. This penalty is assessed due to the insurance company failing to carry enough coverage, as detailed in the coinsurance clause.
Collision Coverage
Insurance designed to pay for the repair or replacement of the policy owner's car in the event of an accident, no matter who caused the accident.
Collision coverage usually requires the payment of a deductible when a claim is made and may be required to s
Combined Ratio
A measure of profitability used by an insurance company to indicate how well it is performing in its daily operations.
The combined ratio is calculated by taking the sum of incurred losses and expenses and then dividing them by earned premium.
Combined Single Limit
A provision of an insurance policy that limits the coverage for all components of a claim to one dollar amount.
A combined single limit policy would state that the insurer will pay up to x dollars for a single claim;
it doesn't matter whether all componen
Commercial Articles Coverage Form
filed commercial inland marine form that covers photographic equipment or musical instruments used commercially
Commercial Auto Coverage Part
part of commercial package policy that provides liability and physical damage coverage for a business's autos, including garage, trucking, and motor carrier businesses
Commercial Blanket Bond
A type of liability coverage for employers who want to protect themselves against losses resulting from dishonest employees.
Commercial blanket bonds provide blanket coverage for all of an employer's employees.
Commercial Crime Coverage Part
part of the commercial package policy that covers various crime exposures of businesses
Commercial General Liability Coverage Part
part of commercial package policy that provides liability coverage for businesses
Commercial Inland Marine Insurance
policy designed to address the mobile nature of property and the unique hazards to which it is exposed.
Since the property to be insured is of a mobile nature, the commercial inland marine policy covers the property regardless of its location, provided th
Commercial Lines
insurance designed for businesses, institutions, or organizations
Commercial Package Policy
An insurance policy that combines coverage for multiple perils, such as liability and property risk.
A commercial package policy, or CPP, allows a business to take a flexible approach to obtaining insurance coverage, and may allow the business to pay out
Commercial Property Coverage
part of the commercial package policy that provides insurance for a businesses real and business personal property
Commercial Property floater risks
# of commercial inland marine forms, such as Bailee's customer forms, equipment forms, business floaters, and dealers policies
Commercial Umbrella Policy
An insurance policy that covers the policyholder for all claims that his/her other insurance policies do not cover.
Common Policy Conditions
contains conditions that apply to all coverage's issued under the Commercial Package Policy (CPP)
Common Policy Declarations
contains info about the insured that applies to all coverage under the CPP (Commercial Package Policy)
Comparative Negligence
law that allows injured party to collect from another party for a loss, even when the injured party contributed to her own loss
Compensatory Damages
damages that reimburse an injured party for losses that were actually sustained
Competent Parties
Persons legally capable of entering a contract. Persons who are under age, mentally insane, or under the influence are not competent parties.
Competitive State Fund
a state-owned and operated fund that provides workers compensation insurance to employers who operate within that state.
Completion Bond
A financial contract that insures a given project will be completed even if the producer runs out of money, or any measure of financial or other impediment occurs during the production of the project.
Comprehensive Coverage
A type of automobile insurance that covers damage to your car from causes other than a collision.
No collisions
Concealment
withholding of a material fact involved in the contract on which the insurer relies
Concurrent Causation
An insurance theory stating that if loss or damages occur as a result of more than one cause, one of which is covered (insured) while the other is not, the damages are likely to still be compensated for by the insurer
Conditional Contract
a contract whose performance depends on a fact or event that affects legal relations
Conditions
A future and uncertain event that determines whether or not there will be a contractual obligation or liability
Condominium Association Coverage Form
commercial property coverage form that covers the buildings in a condo complex; does not cover the condo owner's personal property
Condominium Commercial unit-owners Coverage Form
commercial property coverage form that may only be purchased by owners of commercial condos; covers the condo contents, including business personal property and the personal property of others
Consequential Loss
The amount of loss incurred as a result of being unable to use business property or equipment.
If the property/equipment is damaged through a natural disaster or accident, only certain types of insurance can cover the owner for lost business income.
Consideration
thing of value exchanged for the performance in the contract; with insurance contracts
Consultant
One who gives expert or professional advice, for a fee, on insurance policies
Contract
A legal agreement between two parties in which each agrees to do, make, buy, or sell a good or service, or in which one party grants a right or undertakes an obligation, often in exchange for a fee.
A contract is less commonly called a binding agreement
Contract Bonds
category of surety bonds; guarantees fulfillment of contractual obligations
Contractors Equipment Floater
non-filed commercial inland marine form that covers the heavy machinery, equipment, and tools a contractor uses in business
Contribution by Equal Shares
all insurers contribute equally up to the limit of the policy having the smallest limit, whereupon that company stops paying; the other companies share in the remainder of the loss until the loss is paid in full or all policy limits are exhausted
Contributory Negligence
A legal theory of negligence followed in some states.
Under this theory, if someone was guilty of negligence that caused injury to another person, but the injured person was also negligent in any manner at all that contributed to his or her injuries,then
Countersignature
An additional signature on a document that has already been signed. The countersignature is provided as confirmation or authentication
done to certify that the action or provisions in the document have been approved by both the signer and the other pertin
Court Bond
surety bond used to settle legal arguments that don't involve monetary damages
Coverage Extensions
Insurance coverage that provides funds for expenses above what the policyholder was paying before a claim was made.
Coverage Form (Policy Form)
contains insuring agreement, coverage, exclusions, and conditions; must be attached to a policy jacket to make a complete policy
Coverage Part
combo of forms and endorsements used to provide a particular commercial coverage; the forms and endorsements available under each coverage part can be used to issue a policy covering a single line of insurance or combined to provide a commercial package p
Coverage Trigger
mechanism that determines whether a policy covers a particular claim for loss.
Ex: the difference between the coverage triggers of liability "occurrence" forms and "claims made" forms is that loss must occur during the policy period in the first case and
Custodian
Either (1) a bank, agent, trust company, or other organization responsible for safeguarding financial assets, or (2) the individual who oversees the mutual fund assets of a minor's custodial account.
Damages
Money a jury gives to a party in a lawsuit to compensate for some injury.
Declarations
section of insurance contract that shows who is insured, what property or risk is covered, when or where the coverage is effective, and how much coverage applies
Deductible
a deductible is the amount of money the insured pays out-of-pocket before the insurance company pays for the loss. Deductibles are one way insurance companies lower their premium rates.
By lowering their loss reimbursement costs, they can charge less for
Defense Costs
legal expenses incurred by the insurer to defend suits brought against insureds; defense costs are paid in addition to payments for BI(bodily injury) or PD(personal damage) claims
Definitions
section of insurance policy that clarifies the meaning of certain terms used in the policy
Degree of Care
extent of legal duty owed by one person to another also called standard of care
Deposit Premium
A deposit premium is a type of insurance premium where the insured deposits money with the insurer to obtain perpetual insurance against the risk of a loss.
Deposit premiums are unique from regular insurance premiums, because they are refundable should ei
Difference in Conditions Insurance
An insurance policy that provides expanded coverage for some perils that are not covered by standard insurance policies.
Difference in conditions (DIC) insurance is designed to fill in gaps in insurance coverage, and is most frequently used by larger orga
Diminution of Value
actual or perceived loss of an auto's resale or market value that results from a direct accidental loss
Direct Loss
Damage that directly occurs as a result of a particular hazard; for example, flood damage.
Direct Response System
insurance companies that sell insurance through the mail or over the phone; no agents are involved
Direct Writer
insurance marketing system where the company's agents are also employees of the company
Directors and Officers Liability Insurance
Directors and officers (D&0) liability insurance is insurance coverage intended to protect individuals from personal losses if they are sued as a result of serving as a director or an officer of a business or other type of organization.
It can also cover
Disability Insurance
a form of insurance that insures the beneficiary's earned income against the risk that a disability creates a barrier for a worker to complete the core functions of their work.
Ex: the inability to focus or maintain composure as with psychological disorde
Discovery Form
covers losses that are sustained at any time and discovered either during the policy period of up to 60 days after the policy expires; the discovery pd for losses related to employee benefit plans extends for up to one year after policy expiration
Doctrine of Reasonable Expectations
the provisions of a contract are to be interpreted according to what a reasonable person (who is not trained in the law) would interpret them.
favors the objectively reasonable expectations of the weaker party (borrower or insured) although the language o
Domestic Company
insurance company doing business in the state in which it is incorporated
Domestic Shipments
category of the nationwide definition that includes coverage for cargo in transit over land
Drive other Car - Broadened Coverage for Named Individuals Endorsement
commercial auto endorsement that extends the definition of a covered auto to include autos the named insured does not own,hire, or borrow while being used b the person named in the endowment
"This is an endorsement to a Business Auto Policy or Garage Poli
Duties Following Loss
condition found in property casualty policies that explain the insureds responsibilities after a loss occurs
Dwelling Policy
provides coverage to individuals and families; covers dwellings, other structures, personal property, and fair rental value; some also cover additional living expense
Dwelling Under Construction Endorsement
dwelling policy endorsement used to provide provisional limits of liability for dwellings under construction; the limit of liability increase as construction of the building progresses
Earned Premium
The amount of total premiums collected by an insurance company over a period that have been earned based on the ratio of the time passed on the policies to their effective life.
This pro-rated amount of "paid in advance" premiums have been earned and now
Earthquake Insurance
An insurance policy protecting the policyholder in the event an earthquake damages or destroys his/her home or other property.
In general, the insurance pays to repair or rebuild the property.
Deductibles on earthquake insurance tend to be quite high comp
Electronic Data Processing Equipment Floater
non-filed commercial inland marine policy that provides open peril coverage for computer hardware, software, and data that is owned by the insured or in the insureds care, custody, or control.
Breakdown coverage, extra expense, and business interrupted co
Employees as Additional Insureds Endorsement
endorsements used with the business auto coverage form that covers employees while they are using an auto not owned, hired, or borrowed by the business in the business or personal affairs of the named insured
Employers Liability Coverage
Coverage against the employer's common law liability for injuries to an employee, separate from the employer's liability under workers compensation law.
This is known as coverage part B under standard workers compensation policies
Employment Practices Liability Insurance
deals with wrongful termination, sexual harassment, discrimination, invasion of privacy, false imprisonment, breach of contract, emotional distress, and wage and hour law violations
Endorsement
An attachment to a document that amends or adds to it. Typically, it is an added provision to an insurance policy
Equipment Breakdown Protection Coverage Form
title of ISO coverage form used to write what is traditionally called boiler and machinery insurance.
Equipment Dealers Coverage Form
filed commercial inland marine coverage form that covers mobile equipment and construction equipment dealers; covers the insured's stock in trade as well as customer property in the insured's care, custody, or control
Errors and Omissions Insurance (E&O)
A professional liability insurance that protects companies and individuals against claims made by clients for inadequate work or negligent actions.
Errors and omissions insurance often covers both court costs and any settlements up to the amount specified
Estimated Premium
A projected premium amount that is later adjusted
Estoppel
A legal defense tool used when someone reneges on or contradicts a previous agreement or claim.
Estoppel prevents someone from arguing something contrary to a claim made or act performed by that person previously.
Conceptually, estoppel is meant to preven
Excess Electronic Equipment Endorsement
personal auto policy endorsement that allows an insured to add coverage for tapes, records, and disks, used with electronic media and to increase the limit of insurance for electronic equipment that is permanently installed in an area of the auto not norm
Excess Insurance
when 2 of more policies or coverage apply to the same loss, the one that applies only after the limits of the primary coverage have been exhausted
Ex: if one's homeowners insurance has a $500,000 benefit but it would only take $150,000 to rebuild one's ho
Excess Lines Agent
agent licensed by the state to handle the placement of business with non-admitted insurers
Exclusions
A loss or risk that a policy does not cover.
Exclusive Agent
agent who markets insurance for a single company
Exclusive Remedy Doctrine
the only means available to employees to receive compensation from employers for injuries covered by works comp. laws is thru the benefits mandated by those laws
Exemplary Damages
Compensation in excess of actual damages, used to punish the offender.
Expense Ratio
A measure of what it costs an investment company to operate a mutual fund.
An expense ratio is determined through an annual calculation, where a fund's operating expenses are divided by the average dollar value of its assets under management.
Operating ex
Experience Modification Factor
factor applied to reduce the premium when loss experience is better than expected
Experience Rating
The amount of loss that an insured party experiences compared to the amount of loss that similar insureds experience.
Experience rating is most commonly associated with workers' compensation insurance.
It is used to calculate the experience modification f
Exports
Goods or services sold to parties in foreign countries.
Exposure
condition or situation that presents a possibility of loss
Express Authority
Authority granted to the agent by the insurer, by way of the agency agreement.
Extended Coverages
Insurance that covers specific risks not covered in a normal policy.
Extended Nonowned Coverage - Vehicles Furnished or Available for Regular Use Endorsement
extends your liability coverage from your personal automobile policy to the company vehicle you and your family may use personally should the business auto policy decline the claim.
Extended Reporting Period (ERP)
extends the time period during which the policyholder may report claims to the insurer.
Extortion- Commercial entities Endorsement
used with commercial crime policy that covers loss of money, securities, and other property when surrendered away from the premises as result of a threat to do bodily harm to the insured, an employee or a relative to either who is being held captive
Extra Expense Coverage Form
A form that covers added costs to a business that needs to remain open after a property loss.
Fair Credit Reporting Act
allows consumers who are denied insurance because of information contained in a credit report to be notifies and allowed to obtain the info used in the report from the reporting agency
Fair Access to Insurance Requirements (FAIR)
program established by law that makes property insurance available to insureds who might otherwise be uninsurable in the standard market
Farm Coverage
offers protection for your home, personal property, barns, outbuildings, farm equipment and tack, including personal equine liability
Federal Employers Liability Act (FELA)
United States federal law that protects and compensates railroaders injured on the job.
Fellow Servant Rule
A former defense used in lawsuits whereby an employer claimed he/she was not responsible for an employee's work-related injury because another employee caused it. Workers compensation laws have replaced the fellow servant rule.
Fidelity Bond
A form of business insurance that offers an employer protection against losses - either monetary or physical - caused by its employees' fraudulent or dishonest actions.
Fiduciary
A person legally appointed and authorized to hold assets in trust for another person.
The fiduciary manages the assets for the benefit of the other person rather than for his or her own profit
Fiduciary Bond (probate bond)
A bond that the executor of an estate posts to ensure he/she performs his/her duties properly.
Among these duties is preparing an inventory and disposing it according to the terms of the will of the deceased.
The executor forfeits the bond if a probate co
Fiduciary Liability Policy
insurance that protects people who manage private pension and employee benefit plans against liability for violation of the federal ERISA law
Field Underwriting
selection of clients by the agent in accordance with company standards
File and Use
method of rate and form ratification used by some state insurance departments that allows a company to begin using forms or rates as soon as they are filed by the department;
the department eventually reviews the filing and officially accepts or rejects i
Filed Form
standardized inland marine form that can be written under the commercial inland marine coverage part of the commercial package policy
Film Coverage Form
for those engaged in the production of commercial films or in commercial recording of magnetic or video tapes
Financial Responsibility Laws
A law which requires an individual to prove that he or she is ABLE TO PAY for damages resulting from an accident.
A financial responsibility law does not specifically require the individual to have insurance coverage;
instead, the law requires the individ
First-Named Insured
The first person listed on a commercial insurance policy.
First Party Loss
property insurance loss
Flat Cancellation
A policy cancelled on the effective date. Usually, no premiums have been paid.
Floater
insurance policy that covers property wherever it is located
A floater is generally advantageous when interest rates are rising
Flood Insurance
A financial instrument that protects real property owners from water damage to the structure and/or contents of their property
Floor Plan Coverage Form
filed commercial inland marine form that covers stock that is subject to a floor plan arrangement, where a dealer borrows money from a lender with which to pay for merchandise
Foreign Company
A corporation conducting business in another country from the one it is chartered in and that abides by the laws of another country.
Fraternal Benefit Society
not for profit (without capitol stock) membership organizations that have a representative form of government and are organized through a lodge system to carry out social, intellectual, educational, charitable, benevolent, moral, fraternal, patriotic or r
Fraud
Deception carried out for the purpose of achieving personal gain while causing injury to another party
Freight Insurance
type of ocean marine insurance that protects the insured against the loss of shipping costs
Functional Replacement Cost
determine reimbursement for some losses, particularly those to antique, ornate, or custom construction;
the damaged property is repaired or replaced with less expensive, but functionally equivalent, materials
Garage Coverage Form
provides liability, garage keepers, and physical damage coverages for vehicle dealers, including dealers that have repair operations on the business premises
Garage Keepers Insurance
covers a garage risks legal liability for customers autos in the care, custody, or control of the garage, at the insureds option and for an additional premium, can also apply without regard to fault
General Average Loss
A term usually used in marine insurance to describe a PARTIAL LOSS that was sustained in order to avoid irreparable damage to the entire undertaking
General Conditions Form
separate form that lists the conditions that apply to a policy
General Damages
Compensation to a party in a lawsuit to compensate for some injury.
Hazard
something that increases the chances of loss
Health Insurance
A type of insurance coverage that pays for medical and surgical expenses that are incurred by the insured.
Health insurance can either reimburse the insured for expenses incurred from illness or injury or pay the care provider directly.
Hired and Nonowned Auto Liability Endorsement
Business owners policy endorsement used to cover hired or non-owned autos used by the business
Hold Harmless Agreement
A statement in a legal contract stating that an individual or organization is not liable for any injuries or damages caused to the individual signing the contract.
Ex: An individual may be asked to sign a hold harmless agreement when undertaking an activi
Home Day Care Coverage Endorsement
homeowners policy endorsement used to provide coverage for home day care businesses
Homeowners Policy
personal multi-line policy for homeowners that includes both property and liability coverage;
there are dif. forms that provide varying degrees of property coverage;
liability coverage is the same in all forms
Hull Insurance
ocean marine insurance that provides coverage for physical damage to the ship
Implied Authority
An agent with the jurisdiction to perform acts which are reasonably necessary to accomplish the purpose of an organization.
Under contract law, implied authority figures have the ability to make a legally binding contract on behalf of another person or co
Implied Warranties
not written into policy, but have become part of policy by custom
Imports
A good or service brought into one country from another.
Imputed Liability (Vicarious Liability)
Attachment of responsibility to a person for harm or damages caused by another person in either a negligence lawsuit or criminal prosecution.
Incidental Contract (Insured Contract)
term used in CGL and business-owners liability forms to describe contracts for which contractual liability coverage is available under the policy, such as leases, sidetrack agreements, and elevator maintenance agreements
Incidental Occupancy
business conducted in a dwelling used primarily as a residence with no other businesses operating on the same premises;
individual insurers have specific guidelines about the types of incidental businesses permitted
EX: business or professional offices an
Incurred Losses
1 component used to calculate the loss ratio;
includes paid losses and certain expenses associated with claim handling
Indemnity
An expressed or implied contract to compensate an individual for loss or damage;
Ex: an insurance policy.
Independent Adjuster
claim handler that works independently instead of for a particular insurer
Independent Agent
An insurance agent who sells policies on behalf of several different companies.
That is, an independent agent is self-employed and keeps commissions from whatever company for which he/she sells policies.
Theoretically, an independent agent can offer objec
Indirect Loss
loss that is a result or consequence of a direct loss (consequential loss)
Individual Named Insured Endorsement
commercial auto endorsement that provides coverage similar to that provided under the personal auto policy to family members of the named insured while using any auto
Inland Marine Insurance
loss to movable or specialized types property, developed as an outgrowth of ocean marine insurance - insure transportation of goods over land.
NOW this category of insurance includes property coverage for construction equipment, medical diagnostic equipme
Installation Policy
non filed commercial inland marine policy that covers loss to machinery, equipment, building materials, and supplies in transit to or being used with or during the course of installation, testing, building, renovating, or repair
Instrumentality of Transportation and Communication
category of nationwide definition that includes a variety of forms closely related to transportation or communication, such as bridges, pipelines, and television towers
Insurable Interest
An economic stake in an event for which an insurance policy is purchased to mitigate risk of loss.
An insurable interest is a basic requirement for an insurance company to issue a policy.
Entities not subject to financial loss from an event do not have an
Insurance
the equitable transfer of the risk of a loss, from one entity to another in exchange for payment.
It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.
An insurer, or insurance carrier, is a company sell
Insurance Commissioner
head official of a state insurance department - also called Insurance Director or Insurance Superintendent
Insurance Department
state department charged with controlling insurance matters within the state
Insurance Guaranty Association
An organization that protects policyholders and claimants in the case of an insurance company's impairment or insolvency.
Insurance guarantee associations are legal entities whose members make guarantees and provide a mechanism to resolve claims.
Insurance Services Office (ISO)
organization established for the benefit of its member insurance companies;
ISO gathers stats, provides loss costs, drafts policy forms and coverage provisions, and conducts inspections for rate-making purposes
Insuring Agreement
section of an insurance policy that describes what is covered and the perils the policy insures against
Interline Endorsement
endorsement that modifies two or more lines of insurance
Intervening Cause
an independent action that breaks the chain of causation and sets in motion a new chain of events;
when this occurs, the intervening cause becomes the proximate cause;
can serve as a common law defense against liability
Invitee
a person who is invited to land by the possessor of the land as a member of the public or one who is invited to the land for the purpose of business dealings with the possessor of the land.
Jettison
To throw or eject from a ship, aircraft or vehicle; or discard or abandon.
A covered peril in ocean marine policies
Jewelers Block Coverage Form
filed commercial inland marine form for jewelers that covers the insureds stock in trade and the property of others while it is on or off the premises
Joint Ownership Coverage Endorsement
This form is sometimes attached to a policy to insure vehicles not owned, leased or financed by an individual or married couple.
Typically, it's used for an unmarried couple living together or related individuals who live in separate homes.
Jones Act
Legislation that REGULATES MARITIME COMMERCE between U.S. cities.
The Jones Act is found in Section 27 of the Merchant Marine Act of 1920.
The act required that goods and passengers transported by water between U.S. ports be done in U.S.-made ships, owned
Judgement Rating
the method of rate-making for which each exposure is individually evaluated and the rate is determined largely by the underwriter's judgment.
These rates are not backed up by loss experience statistics. They are primarily based on the judgment of the unde
Judicial Bond
Surety deposited by a party to a lawsuit to indemnify the opposing judicial or governmental body party from any loss arising from delay or deprivation caused by the legal proceedings.
In general, all bonds required in judicial proceedings are called judic
Labor and Materials Bond (Payment Bond)
A form of security purchased from an insurance company, which provides a guarantee that the contractor will pay the complete costs of labor, materials, and other services related to the project for which he is responsible under the contract for constructi
Law of Large Numbers
a large entity which is growing rapidly cannot maintain that growth pace forever.
Legal Liability Coverage Form
covers the insured's legal liability for loss or damage to real and personal property of others in the insured's care, custody, or control
Legal Purpose
characteristic of a legal contract.
Means that contracts are only enforceable if they are not obviously illegal, immoral, or against the public good
Liability Insurance
Insurance which protects the insured against liability on account of injury to the person or property of another.
Liberalization Condition
found in property insurance contracts that provides that if the insurer broadens coverage under a policy form or endorsement without requiring an additional premium, then all existing similar policies of endorsements will be construed to contain the broad
License and Permit Bond
This type of surety bond protects the obligee against losses resulting from the principal's failure to meet the obligation.
Licensee
An individual who is allowed to enter a piece of property by permission of the owner.
For the purpose of this definition, there cannot be any kind of reciprocal profit motive between the licensee and the property owner.
Ex: Someone who is allowed to hunt
Life Insurance
A protection against the loss of income that would result if the insured passed away.
The named beneficiary receives the proceeds and is thereby safeguarded from the financial impact of the death of the insured.
Limitations
Limits and exceptions to the coverage provided in the contract, for example, the limit of liability stated in the contract.
Liquor Liability Coverage Form
provides coverage for bodily injury or property damage for which you may be held liable by reason of:manufacturing, distributing, selling, serving, or furnishing alcoholic beverages
Livestock Coverage Form
farm coverage form used to provide separate coverage for livestock
LLoyd's Association
voluntary association of individuals or groups of individuals who agree to share in insurance contracts; each individual or syndicate is individually responsible for the amts of insurance they write
Longshore and Harbor Workers Compensation Act Coverage Endorsement
endorsement used with the workers comp and employers liability policy that covers the additional benefits required by federal law for maritime workers injured while working on navigable waters or shore-site areas
Loss Cost
factor used in figuring insurance rates that represents how much an insurance company needs to collect to cover expected losses
Loss Provisions
general term used to describe policy conditions that specify what the insured and insurer must do after a loss
Loss Ratio
the total losses paid by an insurance company in the form of claims.
Loss Sustained During Prior Insurance Condition
conditional found in loss sustained version of the commercial crime forms that allows losses that occurred during a prior policy period to be covered under the current policy if certain conditions are met
Loss sustained Form
commercial crime form that covers losses that are sustained during the policy period and discovered either during the policy period or up to one year after the policy expires
Mail Coverage Form
filed commercial inland marine form that covers property in transport by registered mail, first class mail, certified mail, or express mail
Malpractice Insurance
insurance purchased by physicians and hospitals to cover the cost of being sued for malpractice;
"obstetricians have to pay high rates for malpractice insurance
Manual Rating
method of premium determination that uses rates based on collected stats.
The rates, which apply per unit of insurance, are published in manuals; also called class rating
Market Value
amt property could be sold for at the time of loss. may be used to determine the amt of reimbursement of a loss
Material Fact
For insurance purposes, this is a fact deemed so important that It would change the decision made by an insurer if it were kept hidden. Misrepresentation of a material fact can void a policy.
MCS-90 Endorsement
An endorsement that must be attached to the auto liability policy of certain regulated motor carriers to ensure that federally mandated coverage (e.g., required liability limits and environmental restitution coverage) is in place.
Only gives reimbursement
Merit Rating
A rating plan most often used in personal automobile insurance. Under this plan, the insured's premium amount is dictated by the insured's loss record.
Messenger
as defined in crime insurance forms, an insured, partner, or employee who has care and custody of insured property outside the premises
Miscellaneous Type Vehicle Endorsement
personal auto policy endorsement that provides coverage for vehicles that are usually excluded by the policy, such as motorcycles, motor homes, golf carts, mopeds, and other recreational vehicles
Misrepresentation
A false statement of fact made by one party which affects the other party's decision in agreeing to a contract.
If the misrepresentation is discovered, the contract can be later declared void and the situation remedied if the party who relied on the misre
Mobile Agricultural Machinery and Equipment Coverage Form
farm coverage form that provides separate coverage for a farmer's mobile agricultural machinery and equipment
Mobile Equipment Endorsement
commercial auto endorsement that makes mobile equipment considered a covered auto for coverage purposes
Mobile Home Insurance
coverage that protects both a mobile home structure and its contents
Monoline Company
insurance company that writes a single line of insurance
Monoline Policy
insurance policy that provides one type of insurance coverage
Monopolistic State Fund
A government owned and operated fund that is set up to provide a mandatory insurance service in certain states and territories.
Workers compensation insurance is the most common type of insurance provided by monopolistic funds.
Employers must purchase the
Moral Hazard
The risk that a party to a transaction has not entered into the contract in good faith, has provided misleading information about its assets, liabilities or credit capacity, or has an incentive to take unusual risks in a desperate attempt to earn a profit
Morale Hazard
Morale hazard is an insurance term used to describe an insured person's attitude about his belongings.
It arises when the person does not care about his possessions because he knows he is insured.
Mortgage Condition
condition found in property insurance policies that specifies the rights and duties of the mortgagee under the policy; also called loss payable condition
Mortgagee Rights
rights granted to a mortgagee under a property contract issued to a mortgagor by virtue of the mortgagees financial interest in the property
Motor Carrier Act of 1980
federal regulation that requires truckers and other commercial carriers to certify they are able to meet financial obligations if they become liable for injuy or damage arising from their trucking operations
Motor Carrier Coverage Form
commercial auto coverage form that is an alternate to the truckers coverage form; it can be used to cover anyone who transports property by auto in a commercial enterprise
Motor Truck Cargo Policy
non-filed commercial inland marine policy that protects a carrier against its liability for damage to domestic shipments
Multiline Company
insurance company that writes more than one line of insurance
Mutual Company
insurance company owned by its policyholders; the policyholders share in profits made by the company through dividends or reductions in future premiums
Mysterious Disappearance
vanishing of property with no explanations
Name Schedule Bond
A fidelity bond covering two or more employees named on the bond.
A fidelity bond compensates a company in the event it loses money as the result of employee theft or fraud.
A name schedule bond limits this coverage to the employees named in it.
Named Insured
The insured listed in the policy, whether a person or entity.- People not named in the policy - may still be protected in certain circumstances.
Ex: if they are passengers in an insured car and are harmed in an accident, certain kinds of policies may cove
Named Non-owner Coverage Endorsement
personal auto policy endorsement that provides coverage for the use of non-owned autos to individuals who do not own a car
Named Peril Policy
A homeowner's insurance policy that only provides coverage for events named in the policy.
For example, a named perils policy may cover tornadoes and fires, but not hurricanes and burglaries.
National Association of Insurance Commissioners (NAIC)
A nationwide organization whose main responsibility is to protect the interests of insurance consumers.
Some of the main objectives of the NAIC are to:
provide support to insurance regulators across the country by promoting competitive markets, the improv
National Flood Insurance Program
A federal program allowing people to purchase flood insurance.
It is administered by the Federal Insurance Administration (FIA),which is a branch of the Federal Emergency Management Agency (FEMA).
Nationwide Definition
document that categorizes and classifies risks that are eligible for ocean or inland marine insurance
Negligence
A lack of such reasonable care and caution as would be expected of a prudent person.
A penalty may be assessed if any part of an underpayment of tax is due to negligent or intentional disregard of rules and regulations.
No Benefit to Bailee Condition
A provision in an inland marine form that states that any insurance a person has on property in the possession of a bailee will not be for the direct or indirect benefit of any carrier or other bailee for hire.
No-Fault Insurance
form of automobile insurance where each insurance company pays the damages of its own insureds, regardless of who was at fault for the accident; no-fault insurance has been enacted in several states
Non-admitted Insurer (Unauthorized Insurer)
company that is not authorized to do business in a particular state
Nonconcurrency
A situation in which two insurance policies covering the same thing have different start and end dates.
This can be problematic for umbrella insurance because some losses from one's regular insurance may not count toward the limit at which the umbrella po
Non-filed Form
type of commercial inland form that is not standardized and cannot be included in the commercial inland marine coverage part of the commercial package policy
Nonrenewal
decision made by an insured or insurance company to not continue coverage for another policy period after the current policy period expires
Non-reporting Policy
type of insurance policy for which a flat premium is charged every time the policy is renewed
Obligee
The party to an agreement to whom an obligation is owed. An obligation is a requirement, especially a legal one.
For example, an investor may have a legal obligation to disclose his/her investments to the SEC. In this circumstance, the obligee is the SEC
Occurrence
An incident that causes an insured loss.
This is considered different than an accident, because an occurrence does not have to be sudden and unexpected.
An occurrence can also be the result of repeated exposure to a certain condition, as long as it is not
Occurrence Form
Commercial general liability coverage for that covers bodily injury or property damage that occurs during the policy period, regardless of when the claim is made
Ocean Marine Insurance
insurance designed to provide broad coverage for cargo and ships in transit over sea; includes cargo insurance, hull insurance, freight insurance, and protection and indemnity insurance
Offer and Acceptance
one of the elements of a legal contract; means that a contract must involve two parties: one who makes an offer and another who accepts it
Open Competition
method of rate and form regulation used by some state insurance departments that allows insurance companies to compete openly with the forms and rates they select, subject only to requirements of adequacy and nondiscrimination
Open Peril Policy (all risk and special coverage)
insurance policy that protects the insured from losses caused by any peril that is not specifically excluded by the policy
Optional Limits Transportation Expenses Coverage Endorsement
The temporary transportation expense associated with the loss of an auto
Ordinance or Law Coverage Endorsement
Coverage for loss caused by enforcement of ordinances or laws regulating construction and repair of damaged buildings.
Outboard Motor and Boat Insurance
covers you in the event of a loss or damage to your boat. It covers most watercraft with motors, including fishing boats, pontoon boats, paddle boats, leisure crafts and yachts.
Owners and Contractors Protective Liability Coverage Form
A stand-alone policy that covers the named insured's liability for bodily injury (BI) and property damage (PD) caused, in whole or in part, by an independent contractor's work for the insured.
Package Policy
An insurance policy that combines coverage for multiple perils, such as liability and property risk.
Pair or Set Condition
Provision found in homeowners and commercial property forms dealing with losses involving part of a set or one of a pair. In this case, the insurer can either (1) repair or replace any part to restore the pair or set to its value prior to the loss, or (2)
Parcel Post Policy
provided by either a private company or the United States Post Office, for items or parcels under the care of the United States Postal Service. These items are usually insured against damage or loss.
Particular Average Loss
In ocean marine insurance, a partial loss sustained by a specified cargo or vessel. Ocean marine policies do not necessarily cover partial loss
Peak Season Endorsement
This endorsement offers more coverage on the insured inventory during peak seasons. The dates this increased coverage applies are listed in the endorsement.
Performance Bond
a bond issued by a bank or other financial institution, guaranteeing the fulfillment of a particular contract.
Peril
The cause of loss
Perils of the Sea
fortuitous accidents or casualties, peculiar to transportation on a navigable water, such as stranding, sinking, collision of the vessel, striking a submerged object, or encountering heavy weather or other unusual forces of nature.
Permitted Incidental Occupancies Endorsement
This endorsement will provide coverage on an 'other structure' which is used for business purposes. The structure must be described and located on the residence premise.
Personal Articles Form
A personal lines inland marine policy that is used to cover scheduled personal property on an all risks basis.
Personal Auto Policy
A standard form promulgated by Insurance Services Office, Inc. (ISO), for insuring private-passenger-type autos owned by individuals.
Personal Effects Form
Insurance designed for tourists who desire worldwide coverage on their personal effects, which refers to transportable property of the type carried by tourists or travelers.
Personal Injury
under general liability coverage, a category of insurable offenses that produce harm other than bodily injury (BI).
Personal Injury Endorsement
Expands the liability coverage of a HO policy by adding the definition of personal injury and then adding coverage for personal injury
Personal Liability and Medical Payments to Others Endorsement
covers medical payments incurred by others (not insured or regular household residents) within 3 years of an injury.
Personal Lines
Insurance purchased by an individual (as opposed to an organization) to protect against personal risks.
Personal Property Replacement Cost Endorsement
An endorsement to protect the insured if there is a large emplacement cost if their personal property is damaged.
Personal Yacht Insurance
An insurance policy that provides indemnity liability coverage on pleasure boats.
Physical Hazard
The material, structural, or operational features of a business that may create or increase the opportunity for injury or damage.
Physicians and Surgeons Equipment Form
An insurance form which covers the property (equipment, office furniture, etc.) of a doctor or a dentist.
Policy
An insurance contract
Policy Jacket
A preprinted brochure which contains all policy language except that contained in the Declarations Page and Endorsements.
Policy Limit
the monetary amount that an insurance company will pay out in relation to a specific insurance policy claim.
Policy Period
The term of duration of the policy.
Policy Territory
Specifies the geographic area in which the property must be damaged (inland marine policies) or where injury or damage must occur (liability policies) for coverage to apply.
Pollution Liability Coverage Extension Endorsement
An endorsement that negates portions of the pollution exclusion.
Pollution Liability Coverage Form
A commercial form that covers clean-up costs associated with pollution.
Pollution Liability - Limited Coverage Form
A commercial form that offers pollution liability coverage if a claim is made, but does not offer coverage of clean-up expenses.
Position Schedule Bond
a Fidelity Bond which insures an employer for loss caused by the dishonest act of employees. Individual positions are listed in a schedule attached to the bond.
Post-Judgement Interest
Interest on any judgment against the insured that accrues from the time the judgment is entered by the court to the time the actual payment is made. Post-judgment interest, when awarded as part of a judgment against the insured, is covered by the suppleme
Prejudgmenet Interest
Interest accruing on the amount of a legal award from the time of the injury or damage to the time the judgment is entered by the court.
Premises and Operation
One of the categories of hazards ordinarily insured by a general liability policy. Composed of liability for injury or damage arising out of the insured's premises or out of the insured's business operations while such operations are in progress.
Premium Audit
An audit of the exposure basis for an insurance policy (i.e., payroll, sales, or vehicle count) after the end of a policy period to determine the actual (audited) exposure for the purpose of making a final calculation of the premium and premium taxes.
Primary Insurance
Property or liability insurance policy that covers up to the policy's limit (usually after deductibles) whether or not other policies cover the same risk.
Prior Approval
a process used by some health insurance companies in the United States to determine if they will cover a prescribed procedure, service, or medication.
Producer
A term commonly used for an agent, broker, or other insurance representative who has responsibility for selling insurance.
Products and Completed Operations
A subline of general liability coverage for manufacturers, and to a lesser degree, contractors.
Professional Liability
A type of liability coverage designed to protect traditional professionals and quasi-professionals against liability incurred as a result of errors and omissions in performing their professional services.
Professional Liability Policy
a form of liability insurance that helps protect professional advice- and service-providing individuals and companies from bearing the full cost of defending
Proof of Loss
a policyholder's statement of the amount of money being requested, signed to and sworn to by the policyholder with documentation to support the amount requested.
Property Damage
injury to real or personal property through another's negligence, willful destruction or by some act of nature.
Property Insurance
is a policy that provides financial reimbursement to the owner or renter of a structure and its contents, in the event of damage or theft.
Pro Rata Other Insurance
means that claims are only paid out in proportion to the insurance interest in the asset; this is also known as the first condition of average
Protection and Indemnity
is liability coverage for watercraft. It protects the insured from liabilities, from bodily injury, or property damage arising out of the use, or ownership of declared vessels.
Protective Safeguards Endorsement
states that insurance will be suspended if the insured fails to provide immediate notice to the insurer when it becomes aware of any lapse or impairment of any protective safeguard device identified in the policy.
Proximate Cause
is an event sufficiently related to a legally recognizable injury to be held to be the cause of that injury.
Public Official Bonds
type of surety bond that allows a number of public officials to show that they can be trusted for their services.
Punitive Damages
damages exceeding simple compensation and awarded to punish the defendant.
Pure Risk
a category of risk in which loss is the only possible outcome, which is the opposite of speculative risk
Principal
In a surety bond, the entity whose performance is being guaranteed�that is, the obligor.