P&c Glossary

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Absolute Liability

Back 1

Liability that arises from an extremely dangerous situation. Absolute Liability is often found in cases involving explosives. Also known as “strict” liability. For example, you are absolutely liable if you keep a wild animal as a pet.

Hint 1

Liability that is often found in cases involving explosives. Also known as "strict" liability.

Front 2

Accident

Back 2

A sudden and unexpected event, occurring at a specific time and place.

Front 3

Actual Cash Value (ACV)

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The cost to replace an item of property at the time of loss, less an allowance for depreciation. Often used to determine amount of reimbursement for a loss (Replacement Cost minus Depreciation).

The cost to replace an item of property at the time of loss, less an allowance for depreciation. Often used to determine amount of reimbursement for a loss (Replacement Cost minus Depreciation).

Front 4

Additional Insured

Back 4

A person, firm, or corporation other than the Named Insured on a policy, or a lender named in a mortgage clause, who is protected against loss by the terms of the policy.

Front 5

Additional Living Expenses

Back 5

A coverage designed to reimburse the insured for an increase in living expenses necessitated by loss to the dwelling. This Indirect Loss must be the result of Direct Loss by a covered Peril.

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Adjuster

Back 6

A coverage designed to reimburse the insured for an increase in living expenses necessitated by loss to the dwelling. This Indirect Loss must be the result of Direct Loss by a covered Peril.

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Admitted Company

Back 7

A company that meets the state insurance department's standards and is authorized by the Director to do business in the state.

Front 8

Agent / Producer

Back 8

An individual appointed by an insurance company to solicit, negotiate, effect, or countersign insurance contracts on its behalf.

Front 9

Aggregate Limit

Back 9

A type of policy limit found in Liability policies that limits coverage to a specified total amount for all losses occurring within the policy period.

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Alien Company

Back 10

An insurance company incorporated in a country other than the United States.

Front 11

Allied Lines

Back 11

Property coverages that are closely associated with and frequently sold with fire insurance: Dwelling Building and Contents form, Earthquake insurance, Sprinkler Leakage, etc.

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All-Risk Insurance

Back 12

Insurance protecting the insured from loss arising from any peril other than those specifically excluded by name. This contrasts with named peril insurance, which names the peril or perils insured against.

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Application

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A questionnaire that is filled out by an agent and the prospect seeking insurance. The form contains rating and underwriting information. The applicant is expected to make representations by answering questions to the best of his or her knowledge (truthfully).

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Appraisal

Back 14

If the insured and insurer cannot agree on the amount of loss, either may demand an appraisal. Each party will pay its own appraiser and share equally the expenses of the appraisal, as well as an umpire selected by the appraisers, if needed. Agreement by any two of the three will be binding.

Front 15

Appurtenant Structures

Back 15

A structure belonging to the insured structure, such as a tool shed. Appurtenant structures are provided for in the Homeowners policy and other Dwelling policies. This coverage is often called Other Structures or Out Buildings.

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Assigned Risk

Back 16

There are some applicants that underwriters do not care to insure, but because of state law or otherwise, must be provided protection. To become authorized, a Casualty company must agree to participate in the Assigned Risk Pool and take its turn providing Auto insurance to high- risk drivers. Also known as the auto insurance “plan.”

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Audit

Back 17

A survey of the financial records of the insured conducted to determine exposures, limits, etc., which are needed to calculate the premium. The initial premium is only a deposit.

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Bailee

Back 18

A person who has temporary custody of property belonging to another person. An example of a bailee: the dry cleaners.

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Bailee's Customer Policy

Back 19

Insurance obtained by a bailee, to cover loss or damage to customers' property in the bailee's custody, without regard to liability.

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Binders

Back 20

Binders and other temporary insurance contracts may be made orally or in writing. Each binder is deemed to include all usual terms of the policy for which it was given, plus endorsements. Life or Disability insurance utilizes conditional receipts instead of binders.

Front 21

Blanket Position Bond

Back 21

Fidelity bond that specifies a single limit of Liability applicable to each employee involved in a loss.

Front 22

Bodily Injury

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Usually defined to include bodily harm, sickness, disease, including required care, loss of services and resulting death.

Front 23

Boiler & Machinery Policy

Back 23

Insurance that covers the insured against loss (Liability and Physical Damage) arising out of the use of steam boilers or other machinery. May be written as a separate policy or as part of a Commercial Package Policy.