Personal Lines Insurance Glossary

Front 1

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.

Front 2

Accident

Back 2

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

Front 3

Actual Cash Value (ACV)

Back 3

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.

Front 6

Adjuster

Back 6

Represents the insurance company and acts for the company in working on agreements as to the amount of a loss and the liability of the company.

Front 7

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.

Front 10

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.

Front 12

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.

Front 13

Application

Back 13

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 knowledge (truthfully).

Front 14

Appraisal

Back 14

If the insur

ed and insurer cannot agree on the amount of loss, either may demand an

appraisal. If demanded, each will select an appraiser, who jointly will select an umpire. The appraisers

will appraise the loss and either agree or submit differences to the umpire.

Agreement by any two of the

three will be binding. Each party will pay its own appraiser and share equally the expenses of the

appraisal and the umpire.

Front 15

Appurtenant Structure

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.

Front 16

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."

Front 17

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.

Front 18

Bailee

Back 18

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.

Front 19

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.

Front 20

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

Back 22

Usually defined to include bodily harm, sickness, disease, including required care, loss of

services and resulting death.

Front 23

Bond

Back 23

An obligation of the insurance company to protect one against financial loss caused by the acts of others.

Front 24

Broker

Back 24

One who represents an insured in the solicitation, negotiation, or procurement of contracts of

insurance, and who may render services incidental to those functions. Brokers may also be licensed as

agents.

Front 25

Burglary

Back 25

As it is defined in Crime insurance policies, the unlawful taking of property by forced entry

into the premises, or exit from the premises, while the premises are closed for business. There must be

visible evidence of forced entry or exit

Front 26

Cancellation

Back 26

Termination of contract of insurance in force mid - term (rather than at the renewal date) by voluntary act of the insurance company or insured, effected in accord ance with provisions in the contract or by mutual agreement.

Front 27

Casualty Insurance

Back 27

A type of insurance that is primarily concerned with losses caused by injury to persons and legal liability imposed upon the insured for such injury or damage to property of others.

Front 28

Coinsurance

Back 28

In Property insurance, a clause under which the insured is required to carry a certain

percentage of the replacement cost of the property in order to have replacement cost coverage and partial losses paid in full. Coinsurance on personal lines policies is 80%. The coinsurance clause is also called the 80% clause.

Front 29

Coinsurance Penalty

Back 29

In Property insurance, a clause under which the insured shares in losses to the extent that she is underinsured at the time of the loss.

Front 30

Comparative Negligence

Back 30

Doctrine that a defendant is liable only for the amount of damages allocated to that defendant in direct proportion to the defendant's percentage of fault (if not 51% or more at fault, defendant is not held liable).

Front 31

Competitive State Fund

Back 31

A state fund writing Workers' Compensation insurance in competition with private insurers.

Front 32

Comprehensive Personal Liability

Back 32

Nonbusiness Liability exposure of individuals who are insured under this policy. The most common Personal Liability exposures

arise out of the residence premises and

activities of individuals and family members. Comprehensive Personal Liability coverage first became available as a separate policy. Eventually it was incorporated into Homeowners policies

Front 33

Compulsory Insurance

Back 33

Any form of insurance which is required by law. In many states, for example, automobile bodily injury liability insurance is compulsory for all owners of automobiles

Front 34

Concealment

Back 34

The withholding of material facts by an applicant for insurance, which materially affects an insurance risk or loss. May void the policy.

Front 35

Conditions

Back 35

The portion of an insurance contract that sets forth the rights and duties of the Insured and

the insurance company.

Front 36

Consequential Loss

Back 36

Indirect losses that occur as a "consequence" of a direct loss. Includes Time-Element coverages, such as coverage for rental value.

Front 37

Consideration

Back 37

A characteristic of a legal contract: the thing of value exchanged for the performance promised in the contract. In insurance, the applicant's answers and the policy premium paid constitute the consideration.

Front 38

Contingent Liability

Back 38

Liability that an insured person or business incurs because of the actions of others

(family or employees). Also called Vicarious Liability.

Front 39

Contract

Back 39

A legal agreement between two parties promising a certain performance in exchange for a

certain consideration.To hold up in court, contracts must contain four required elements: Consideration, Offer, Acceptance and Legal Purpose (remember the acronym COAL). Parties to the contract must also have Legal Capacity.

Front 40

Countersignature

Back 40

The signature of a licensed agent, which, in most states, must appear on the policy to validate the contract.

Front 41

Debris Removal

Back 41

A coverage provided in many Property contracts that reimburses the insured for expenses involved in removing debris produced by a loss from a Peril insured against.

Front 42

Declaration Page (Dec Sheet)

Back 42

A portion of the insurance contract that contains information such as the name and address of the insured, the property insured, its location and description, the policy period, the amount of insurance coverage, applicable premiums, and supplemental representations by the insured.

Front 43

Deductible

Back 43

Usually, a dollar amountor percentage

the insured must pay on each loss to

which the deductible applies. The insurance company pays the remainder of each covered loss up to the policy limits.

Front 44

Depreciation

Back 44

Decrease in the value of property over a period of time due to use, wear and tear, and obsolescence.

Front 45

Direct Loss

Back 45

Loss that is a direct result of a Peril, such as fire.

Front 46

Direct Writer

Back 46

An insurance company that sells its policies through licensed agents who represent the

insurer exclusively, rather than through independent local agents, who represent several insurance companies. Direct writing producers are also called “Exclusive” or “captive” producers.

Front 47

Dividend

Back 47

The return of part of the premium paid for a participating policy.

Front 48

Domestic Insurance Company

Back 48

An insurance company formed under the laws of the state in which the insurance is written.

Front 49

Earned Premium

Back 49

That portion of the premium for which policy protection has already been given during the now - expired portion of the policy term.

Front 50

Effective Date

Back 50

The date on which an insurance policy or bond goes into effect and from which protection is furnished.

Front 51

Endorsement

Back 51

A document, agreed to by both parties, that is attached to the policy and modifies or changes the original policy in some way. No change to a policy may become effective until approved by a company officer.

Front 52

Errors and Omissions

Back 52

A Professional Liability coverage that protects the insured against liability for committing an error or omission in performance of professional duties.

Front 53

Exclusions

Back 53

Causes, conditions, or property listed in the policy that are not covered and for which no benefits are payable.

Front 54

Experience

Back 54

The loss record of an insured, a class of coverage, or an insurance company.

Front 55

Extended Coverage Endorsement (ECE)

Back 55

A specific endorsement, attached to a standard Fire policy, usually providing coverage for windstorm, hail, explosion, riot, civil commotion, aircraft, vehicular damage, volcanic eruption and smoke damage.

Front 56

Fair Plan

Back 56

Fair Access to Insurance Requirements. A program established by lawthat makes Property

insurance available and affordable to insureds who might otherwise be uninsurable because of

"environmental hazards."

Front 57

Fidelity Bond

Back 57

A class of bonds that guarantees an employee's honest discharge of duty

Front 58

Fiduciary

Back 58

A person who occupies a position of special trust and confidence. For example, one handling

or supervising the affairs or funds of another.

Insurance producers are considered to be fiduciaries.

Front 59

Financial Responsibility Laws

Back 59

State laws that require owners or operators of autos to provide evidence that they have the funds to pay for automobile losses for which they might become liable. Insurance is the usual method for providing this evidence to the state.

Front 60

Fire

Back 60

Combustion, sufficient to produce a spark, flame, or glow, that is hostile (not in a place where it is intended to be). An example of a

friendly fire is a fire in your fireplace or the flame on your gas stove.

Front 61

Fire Insurance

Back 61

1) Contract that indemnifies an insured for loss caused by the destruction of the insured

property resulting from fire. 2) The field of insurance that provides policies on the insured property for a variety of Perils, including Fire.

Front 62

Floater Policy

Back 62

Protection that follows moveable property, covering it wherever it may be, rather than

applying only at a fixed location, such as a Personal Articles Floater (PAF).

Front 63

Flood Insurance

Back 63

Insurance designed to reimburse property owners for loss due to flood or to flood - related erosion. Administered through the Federal Insurance Administration, but marketed through

independent agents.

Front 64

Fraud

Back 64

An intentional misrepresentation or false statement intended to deceive the insurer and induce it to part with something of value or to surrender a legal right. May void a policy.

Front 65

General Agent

Back 65

An individual appointed by an insurer to administer its business in a given territory. A GA is responsible for building the agency and service force. Compensation is on a commission basis, although there may be additional expense allowances. Often called a Managing General

Agent (MGA).

Front 66

Hazard

Back 66

Anything that increases the seriousness of a loss or increases the likelihood that a loss will

occur (risk) due to a Peril. A hazard is something that increases the risk. Risk is defined as the chance of loss. For example: improperly stored combustible materials, worn tires, intentional abuse to insured property, unsafe structural changes.

Front 67

Hull Insurance

Back 67

In Ocean Marine and Aviation insurance, insurance against physical damage to plane or

ship.

Front 68

Imports and Exports

Back 68

A category of the Inland and Ocean Marine Nationwide Definition, which is made up of risks eligible for Marine insurance.

Front 69

Improvements and Betterments

Back 69

Additions or changes made by an insured to a building that may or may not be owned by hi

m. Cost arising from these changes may enhance values and thereby require special insurance consideration.

Front 70

Indemnity

Back 70

Insurance is designed to restore the policyholder to the same financial condition enjoyed prior to a loss. The intent is to cover the amount of the actual loss only and to avoid paying amounts that allow someone to profit from a loss situation. This is known as the Principle of Indemnity.

Front 71

Indirect Loss

Back 71

Loss that is a result or consequence of a Direct Loss.

Front 72

Inherent Vice

Back 72

A condition or defect that exists within property from the beginning. A tendency of the property itself. An example of inherent vice is the tendency of milk to sour. Insurance policies usually

exclude inherent vice.

Front 73

Inland Marine Insurance

Back 73

A form of insurance originally designed as an extension of Marine coverage to insure transportation of goods over land. Today, it covers, in addition to goods in transit, a variety of portable property.

Front 74

Instrumentalities of Transportation and Communication

Back 74

A category of the Nationwide Definition that includes several different classes of Inland Marine, including bridges, tunnels, pipelines, etc.

Front 75

Insurability

Back 75

Acceptability of an applicant for insurance to the insurance company.

Front 76

Insurance

Back 76

A social device that protects people against certain types of financial losses by transferring

pure risk from individuals to an insurer, who agrees, for a consideration, to indemnify or pay a specified amount for losses suffered by the insured. Insurance involves the pooling

of a large number of individual risks. Funds to cover individual losses are raised by collecting small amounts of money (premiums) from

a broad base of buyers.

Front 77

Insurance Commisioner

Back 77

Common title for head of state department of insurance (called “Director” in some states).

Insurance is regulated by state law. The Commissioner’s job is to protect the insurance buying public by administering state insurance laws and regulations. The Commissioner does not make the laws, he/she enforces them.

Front 78

Insurance Policy

Back 78

A contract, a legal document, which establishes the terms of agreement between the insurer and insured.

Front 79

Insured

Back 79

The party to an insurance arrangement to whom, or on behalf of whom, the insurance company agrees to indemnify for losses, provide

benefits, or render service.

Front 80

Insurer

Back 80

The insurance company assuming risk and agreeing to pay claims or provide services.

Front 81

Insuring Agreement

Back 81

The section of an insurance policy that states which losses will be indemnified, what property is covered, which perils are insured against.

Also known as the Insuring Clause.

Front 82

ISO (Insurance Services Office)

Back 82

An organization, made up of member companies, that analyzes statistics collected from members and then establishes and files standard rates for many lines of insurance. Also develops and files standardized policy forms on behalf of members.

Front 83

Jettison

Back 83

A voluntary action to rid the ship of cargo in order to prevent further damage or peril.

Front 84

Law of Large Numbers

Back 84

An insurance company bases its rates o

n a homogeneous group. Risks are not

usually considered insurable unless the insurer has a large enough base of previous loss experience to be able to accurately project future losses. It is the Law of Large Numbers that makes accurate predictions of similar

risks possible.

Front 85

Liability

Back 85

Broadly, any legally enforceable obligation. The term is most commonly used in a pecuniary

(money-related) sense.

Front 86

Liability Insurance

Back 86

Insures the individual for financial losses that may arise out of the person's responsibilities to others imposed by law or contract.

Front 87

Limits of Liability

Back 87

The maximum amount of money the insurance company will pay for a particular loss, or for loss during a period of time.

Front 88

Lloyds Association

Back 88

A voluntary association of individuals, or

groups of individuals, who agree to share

in insurance contracts. Each individual or "

syndicate" is individually responsible for the amounts of insurance it writes. Also known as "Surplus Lines."

Front 89

Loss

Back 89

An unpredictable reduction in the quality, quantity, or value of something. For example: bodily

injury, disease, property damage, physical disappearance of property, incurred expenses, death, etc.

Front 90

Loss Ratio

Back 90

The percentage of losses to premiums, usually losses incurred to premiums earned

Front 91

Marine Insurance

Back 91

A form of insurance primarily designed to cover property in transport over land or sea.

Front 92

Material Fact

Back 92

A fact that, had the company known it, would have caused it to decline the risk or include

entirely different provisions than those currently

included.

Front 93

Misrepresentation

Back 93

The use of written or oral statements of the insured or insurance company misrepresenting the risk, terms, coverages, benefits, privileges, or estimated future dividends of any policy.

Front 94

Moral Hazard

Back 94

A condition of morals or habits that increases the probability of a loss from a peril. Generally, a Moral Hazard is presented by a dishonest person.

Front 95

Morale Hazard

Back 95

Hazard created by an individual's tendency to contribute to a loss through his or her own irresponsible actions or carelessness.

Front 96

Mortgagee Rights

Back 96

Rights granted to a mortgagee (lender), under a property contract issued to a mortgagor, by virtue of the mortgagee's financial interest in the property.

Front 97

Multi-Peril Policy

Back 97

Technically, an insurance policy that insures

against more than one Peril. More commonly, an insurance policy that provides coverage against both Property and Casualty perils.

Front 98

Mutual Insurance Company (Insurer)

Back 98

An incorporated insurance company, without capital stock, whose governing body is elected by the policyholders. The policyholders own the company and they might share in the success of the company through dividends.

Front 99

Mysterious Disappearance

Back 99

Vanishing of property with no known explanation.

Front 100

Named Insured

Back 100

Any person, firm, or corporation, or any member thereof, specifically designated by name as insured(s) in a policy, as distinguished from the others who, though unnamed, are protected

under some circumstances.

Front 101

Named Peril Policies

Back 101

Policies that insure against only the Perils named, contrary to All-Risk policies.

Sometimes called Specified Peril policies.

Front 102

National Flood Insurance Program

Back 102

The federal government's program to provide Flood insurance at subsidized rates.

Front 103

Nationwide Definition

Back 103

A document designed to categorize and c

lassify risks eligible for Ocean or Inland Marine insurance.

Front 104

Negligence

Back 104

Failure to use that degree of care that an ordinary person of reasonable prudence would use under the same given circumstances. Negligence may be constituted by acts of either omission or

commission or both.

Front 105

No-Fault Insurance

Back 105

A form of Automobile insurance mandated by law in many states whereby an insurance company reimburses its insured for auto losses, regardless of fault, and without resort to subrogation.

Front 106

Nonowners Automobile Liability Insurance

Back 106

Protection for the policyholder against claims for bodily injury and property damage liability caused by his/her employees or others using autos not owned or hired by the insured while conducting business. A Named Nonowner policy protects an individual who drives only borrowed or rented cars.

Front 107

Nonresident Agent

Back 107

An agent licensed in a state in which she is not a resident.

Front 108

Occupancy

Back 108

Type and character of the use of property in question.

Front 109

Ocean Marine Insurance

Back 109

Marine insurance designed to provide broad coverage for cargo and ships in transit over sea.

Includes Cargo insurance, Hull insurance, and Liability coverage (Protection and Indemnity).

Front 110

Other Insurance

Back 110

The existence of another contract covering the same interest and Perils. Sometimes called Pro

- Rata Liability, because the insurers pay claims according to the proportion of premiums paid to

each. (Remember, you can't collect in total more than you lost.)

Front 111

Owners and Contractors Protective Liability

Back 111

Part of a Commercial General Liability policy that

protects an owner or general contractor against liability arising out of the acts of contractors or

subcontractors. It is also known as Independent Contractors Liability coverage.

Front 112

Pair and Set Clause

Back 112

A clause found in various Property insurance contracts that states that when part of a set is damaged or destroyed, the insured is not entitled to reimbursement for the entire set. Policies provide various methods for determining the amount of reimbursement. Fine Arts floaters do not contain this clause.

Front 113

Partial Loss

Back 113

A loss that does not either 1) completely destroy or render worthless the insured property,

or 2) exhaust the insurance applying thereto.

Front 114

Peril

Back 114

Cause of a potential loss. An insurance policy may name the perils insured against, or it may be an All-Risk form: one that insures against all Perils not specifically excluded in the policy.

Front 115

Personal Articles Floater

Back 115

Personal Inland Marine insurance that provides All-Risk coverage on nine optional classes of personal property: jewelry, furs, cameras, musical instruments, silverware, golf equipment, fine arts, stamp collections and coin collections.

Front 116

Personal Auto Policy

Back 116

Easy-to-read auto policy that provides broad coverage for both owned and non-owned autos that are used, maintained, and/or operated by the insured and family.

Front 117

Personal Injury Coverage

Back 117

Liability coverage for third-party claims for damages that are other than physical, such as libel, slander, false arrest, wrongful eviction, invasion of privacy, etc.

Front 118

Personal Lines

Back 118

Insurance coverages intended to protect individuals and their families.

Front 119

Personal Property Floater

Back 119

Personal Inland Marine floater that provides All

-Risk coverage on unscheduled personal property.

Front 120

Personal Yacht Insurance

Back 120

A form of Ocean Marine insurance available to individuals who own large boats. Provides both Hull and Protection and Indemnity insurance.

Front 121

Physical Damage

Back 121

InAuto insurance, damage or loss to the inured's own autos or autos in the insured's care, custody, or control.

Front 122

Physical Hazard

Back 122

The material, structural, or operational features of the risk itself, apart from the morale or moral hazards of persons owning or managing it.

Front 123

Policy

Back 123

The written contract effecting insurance or the certificate thereof by whatever name called, and

papers attached thereto and made a part thereof.

Front 124

Premium

Back 124

1) Consideration for the insurance. 2) Periodic payment made to keep a policy in force.

Front 125

Principle of Indemnity

Back 125

See Indemnity.

Front 126

Private Passanger Autos

Back 126

Ordinary cars, station wagons and jeeps, utility autos (pickups, panel trucks, and delivery vans not used commercially), and utility trailers designed to be pulled by a private passenger

auto.

Front 127

Proof of Loss

Back 127

A formal statement by the insured to the insurance company regarding a loss. The purpose is to place before the company sufficient information concerning the loss to enable it to determine its liability under the policy.

Front 128

Property Damage

Back 128

A type of loss covered under many Liability contracts. Includes the insured's liability for damage to property of others or loss of use of other's property.

Front 129

Property Insurance

Back 129

Insurance that indemnifies a person with an

interest in property for its loss.

Front 130

Pro-Rata Cancellation

Back 130

The termination of a contract with premium charge being adjusted in proportion to the exact time theprotection has been in force. When it is the insurer who cancels, refunds of unearned premium are always calculated on a pro-rata basis. When it is the insured who requests cancellation, refunds of unearned premium are calculated on a short rate basis, with a percentage penalty to the insured.

Front 131

Pro-Rata Liability Clause

Back 131

Clause in a Fire Policy that provides a method of sharing loss when more than one policy is applicable. Each company covers no more than its share. Also known as the Other Insurance Clause.

Front 132

Protection and Indemnity

Back 132

In Ocean Marine insurance, a form of Liability insurance.

Front 133

Pure Risk

Back 133

A risk in which there is no chance of gain, only loss.

Front 134

Rate

Back 134

The per-unit cost of insurance.

Front 135

Setting Rates and Premiums

Back 135

The chance of loss for risk is a combination of the probable frequency of loss and the probable severity of loss, based on accumulated data for similar risks. In the absence of reasonably accurate projections of potential losses, insurance companies would have no basis for setting

rates and premiums.

Front 136

Rebating

Back 136

Rebating is illegal in most states. Rebating is a practice that involves the payment of something (usually part of the commission) or covert return of money or other value not stated in the policy, to an applicant in order to induce a sale. You can take your client to lunch, but you cannot say “I will pay for lunch

if you buy this policy from me.” Dividends are not considered to be rebates since it is stated in the policy that a dividend might be payable.

Front 137

Reciprocal Company

Back 137

An unincorporated group of subscribers that exchange insurance responsibilities with othe

r members, managed by an attorney-in-fact.

Front 138

Removal

Back 138

Process of removing property for the purpose of preserving it from a Peril insured against.

Property contracts provide coverage for loss to property during removal. (For example, during a fire, you remove your furniture from your dwelling, exposing it to other risks.)

Front 139

Renewal

Back 139

The continuation in full force and effect of a policy that is about to expire.

Front 140

Rental Value

Back 140

An indirect Property coverage available under the Dwelling and Homeowners policies, also available with certain Commercial contracts, that reimburses the insured for rents lost when rented property is damaged by a Peril insured against.

Front 141

Replacement Cost (R/C)

Back 141

The cost of replacing property without deduction for depreciation.

Front 142

Representation

Back 142

Facts that the applicant represents as true and accurate to the best of her knowledge

and belief.

Front 143

Retention Limits

Back 143

In an Umbrella Liability policy, the amount the insured must pay for a loss not covered

by an underlying policy, before the

Umbrella will begin to cover losses.

Front 144

Risk

Back 144

The uncertainty of loss that exists whenever more than one outcome is possible. (In the area of Life insurance, death is certain, but time of death is uncertain). Also known as the “chance of loss.” Remember, only “pure” risk is insurable. Pure risk is the chance of loss without any chance for gain.

Front 145

Robbery

Back 145

In Crime insurance, the forcible and felonious taking of property by violence or threat of

violence from a messenger or custodian.

Front 146

Salvage

Back 146

Property taken over by an insurance company to reduce its loss. The company may dispose of

salvage property as it wishes, but on request and proper reimbursement, may return it to the insured.

Front 147

Short Rate

Back 147

A percentage penalty charged on insurance, canceled by the insured, before the end of the

policy period. Return premium is calculated on a Short-Rate basis, meaning the insurance company keeps a portion of the unearned premium to cover expenses.

Front 148

Solicitor

Back 148

A representative who helps an agent or broker solicit insurance and collect premiums. A solicitor may neither bind nor countersign policies.

Front 149

Specified-Peril

Back 149

Policies that insure against only the Perils named, contrary to All-Risk policies which

cover all perils except those that are excluded

. Sometimes called Named Peril policies.

Front 150

Speculative Risk

Back 150

A risk that may result in a loss or gain. Gambling is a speculative risk. Insurance companies insure pure risk, not speculative risk.

Front 151

Stated-Value Policy

Back 151

Insurance contract written to insure an item of property for a specific amount of insurance. Used in insuring hard-to-value items, such as fine arts.

Front 152

Stock Insurance Company

Back 152

An incorporated insurance company with capital divided into shares and owned by the shareholders. Profits are shared by the stockholders. Policyholders are NOT entitled to share in company profits.

Front 153

Subrogation

Back 153

The transfer to the insurance company of the insured's right to collect for damages. After paying a claim, the company stands in the place of the insured in suing the negligent party, thus

preventing the insured from collecting twice.

Front 154

Supplementary Payments

Back 154

Found in most Liability contracts. Supplementary Payments provide "extra" coverage over and above the insured's Limit of Liability. Included are first aid, bond premiums, accrued interest on judgments, etc.

Front 155

Theft

Back 155

Any act of stealing. Theft includes larceny, burglary, and robbery.

Front 156

Time-Element Coverage

Back 156

Provides protection for Indirect Loss that occurs when, following a Direct property loss, there is a time lapse before the property can be used again. Additional Living Expenses and

Fair Rental Value are types of time-element coverages on personal lines policies.

Front 157

Trip Transit Policy

Back 157

An Inland Marine transportation policy, similar to the Annual Transit policy, but designed to cover a specific shipment.

Front 158

Underinsured Motorist Coverage (UIM)

Back 158

Coverage on an Auto policy that stacks coverage for an insured onto inadequate coverage of an individual who negligently caused injury to that insured.

Front 159

Umbrella Liability Policy

Back 159

Provides broad coverage for an insured's liability over and above liability covered by underlying contracts or retention limits.

Front 160

Underwriting

Back 160

The process of evaluating a risk for the purpose of issuing insurance coverage on it.

Also known as risk “classification.” The underwriter’s job is to select business that fits into the rate structure of the insurer, allowing the insurer to not only pay claims and expenses, but to make an underwriting profit.

Front 161

Uninsured Motorist Coverage (UM)

Back 161

Automobile Coverage designed to provide Bodily Injury protection for the insured should she be involved in an accident in which the driver at fault has no insurance to cover the loss.

Front 162

Unoccupancy

Back 162

The absence of person, return expected. Property coverage on a building is sometimes

restricted when there are long periods of vacancy, but not unoccupancy.

Front 163

Utmost Good Faith

Back 163

A principle of insurance which states that the insurance company must be able to rely on the honesty and cooperation of the insured, and the insured must rely on the company to fulfill its

obligations in good faith.

Front 164

Vacancy

Back 164

The absence of people and personal property from a building, not expected to return. Property

coverage is often restricted when there are long periods of vacancy, especially for the Perils of Vandalism and Glass Breakage.

Front 165

Vandalism and Malicious Mischief (VMM)

Back 165

Protects property against damage caused by vandals. May be added by Endorsement to the DP-1 Basic Form; included coverage in many other Property forms.

Front 166

Vicarious Liability

Back 166

Imposed in some states upon a person even though he is not a party to the particular

occurrence, e.g., the owner of a motor vehicle might be vicariously responsible for injuries even though he is not driving the car at the time of the occurrence.

Front 167

Warranty

Back 167

1) A statement that is guaranteed to be true in all respects. Statements on insurance

applications are, in the absence of fraud,

not warranties, but representations (statements true to the best of the applicant's knowledge). 2) A sworn statement by the insured attesting to the presence of certain

safeguards, such as a sprinkler or burglar alarm system. Breach of this type of warranty may void coverage.