A clause often contained in property insurance policies stating that the insured cannot abandon damaged property to the insurer and later demand to be reimbursed for its full value.

A sudden and unexpected event, which occurs at a specific time and place. In easy-to-read policies, an accident is also defined as a loss, which occurs over a period of time.

Covers the cost of reconstructing accounts receivable records that have been damaged or destroyed by a covered peril. Also covers any payments that cannot be collected because records cannot be reconstructed.

An event of nature over which humans have little or no control, such as earthquake, lightning, flood, landslide, tornado, etc. Liability policies usually exclude Acts of God.

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-Depreciation).

An individual trained in mathematics, statistics and accounting specialties. In an insurance company, an Actuary is responsible for rate determinations and reserve & dividend calculations.

A property coverage included in Dwelling and Older Homeowner contracts, 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.

A vehicle replacement part manufactured by a company other than the vehicle maker. These parts are less expensive than the original equipment manufacture (OEM) part. There is ongoing controversy as to whether aftermarket parts are equal to or inferior to OEM parts. Individual states have various rules and regulations regarding the use of aftermarket parts.

The state-licensed professional who represents the insurance company in the sale and servicing of insurance. The direct link between the insurance company and the policyholder.

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

An optional coverage written with property insurance policies. It waives the Coinsurance clause and requires the insured to carry insurance equal to at least 80% of a signed statement of values filed with the company.

A characteristic of insurance contracts, meaning a contract in which equal value is not given by both parties to the contract.

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

Property coverages which are closely associated with and frequently sold with fire insurance such as Dwelling insurance or Earthquake insurance.

'All-risks' property policies, also called 'special' or 'open-perils' policies, cover any loss unless it is caused by an excluded peril described in the policy. In an 'all-risks' policy the burden of proof is on the insurer. All losses are covered unless the insurance company can prove that the loss was caused by an excluded peril. Compare specified perils.

A questionnaire which is filled out by both an agent and the prospect seeking insurance. The form contains rating and underwriting information.

A method for determining how much will be contributed by each company toward a loss covered under more than one policy. A typical apportionment clause provides that the company will pay no more than the same proportion of the loss that its policy limit bears to the total amount of insurance.

Clause which provides an appraisal procedure when the insured and the insurer are in disagreement regarding the amount of a loss. Insured and insurer each choose an appraiser. If they fail to agree, then they agree to select an umpire. Agreement of any two of the three will be decisive.

Clause which provides a means for settling disputes between the insured and the insurer.

A defense against liability based on the common law principle that a person who has been made aware of dangers beforehand assumes the risk and can not attribute the loss to another.

A dangerous place or instrumentality attractive to children like a swimming pool without a fence. The owner of an attractive nuisance has the legal duty of taking unusual care to guard children from it.

See medical payments coverage (auto).

See physical damage coverage (auto).

Surety bonds that guarantee that the principal person will appear in a criminal proceeding. See Court bond.

One who has temporary custody of property belonging to another. (Example: dry cleaners.)

Illegal acts committed willfully by a ship’s master or crew for the purpose of damaging the ship or cargo. This Ocean Marine peril includes hijacking, abandonment and embezzlement.

A reduction in an insurance claim payment arising out of the replacement of a partial worn part with a new part. An insurer applies betterment when a damaged vehicle part that has finite life span, such as a tire, is replaced by a new part. For example, if a new tire replaces a tire with 50% wear, the insurer will reduce the amount paid for the new tire by 50%.

An insurance agent is usually authorized by the insurance company to bind coverage, stating that certain specified coverage is in force with a specific insurance company as of a particular date and time (or immediately). A binder is a statement that coverage is in force. Its purpose is to provide temporary coverage until an actual insurance policy can be issued. A binder need not be in writing.

An oral or written statement providing immediate insurance protection, valid for a specified period. Designed to provide temporary coverage until a policy can be issued or denied.

Insurance where a single amount of insurance applies to two or more coverage items. Contrast Specific insurance. Also, a type of Employee Dishonesty coverage that covers loss caused by an employee. Contrast Name Schedule coverage and Position Schedule coverage.

Usually defined to include physical harm, sickness, disease, or death resulting from any of these.

Insurance which covers the insured against losses, liability and physical damage, arising out of the use of a monoline policy or as part of the Commercial Package policy.

A personal insurance policy providing residential property coverage on buildings, personal property, and loss of use against loss by sixteen named perils, as well as medical payments and personal liability coverage.

An individual who represents the prospect, instead of the insurance company, in the insurance transaction. Frequently involved in the placement of very large or unusual risks.

Property insurance providing coverage for buildings, personal property, or both at the location or locations described in the policy.

Generally, the party who affirmatively alleges a fact must prove evidence to support it. In tort cases, the burden of proving liability and damages rests with the plaintiff.

Coverage designed to help a business survive an interruption in its earnings. Indemnifies a business for its loss in profits caused by the interruption and also pays the business expenses that continue during the interruption. Makes up for what would have been earned during the period when a business is temporarily inactive because business property has been damaged by a covered peril.

An insurance company owned and operated by the corporation or corporations it insures. (Note: Direct writers and exclusive agents are sometimes called captive agents.)

Protects against legal liability for loss or damage to cargo or baggage. May be part of an Ocean Marine or Aviation policy.

A line of insurance, which historically has included a wide variety of unrelated coverages. One important coverage in the casualty line is liability. Casualty also includes Aviation, Auto, Boiler and Machinery, Crime, Workers Comp and Surety bonds.

A form which is a part of the Commercial Property Coverage Part of the Commercial Package policy. It specifies what perils are insured against and lists exclusions. Several different versions provide increasingly broad coverage from basic to broad to special. An earthquake form is also available. Causes of Loss forms take the place of “perils insured against” provisions.

Liability involving actions brought by persons against others for money damages or other relief such as injunctions, accounts and specific performance.

A demand by a person or business that is seeking to recover for a loss. A claim may be made against an individual or against an insurance company.

Anyone who presents a claim that might be covered by insurance. For a liability insurance loss, the claimant is a person or business that has suffered a loss and seeks to collect for that loss from an insured. For a property insurance loss, the claimant is the insured who wants the insurance company to pay for repairing or replacing his or her damaged property.

A clause that requires an insured to pay part of a loss if the coverage provide under the policy limits is less than a specified percentage of the value of the property at the time of loss.

The rule of tort law which provides that the plaintiff’s award for damages will not be reduced because the plaintiff received indemnification of loss from other sources. Based on the concept that the wrongdoer should not benefit from payments form such collateral sources.

A type of physical damage insurance which covers loss due to the insured object striking another object. Collision may also include upset of the insured object.

Having to do with business of commerce

Commercial insurance covers businesses or institutions such as schools, hospitals, and governments.

Services to restaurants, hospitals, uniform rental included.

Insurance designed for businesses, institutions or organizations.

A simplified, easy-to-read commercial package policy introduced by ISO. Includes Commercial General Liability, Commercial Property, Commercial Inland Marine, Commercial Crime, Boiler and Machinery and Commercial Auto. Forms may be used in the package policy or may be used to issue monoline policies.

Provides 'excess' coverage in the event of a liability claim that is big enough to exhaust the limits of a business's general liability or auto liability policy.

A body of principles and rules of action arising from usage’s and customs or from judgments of courts that recognize, affirm and enforce custom. Common law is unwritten in that it has never been enacted into statute law.

A rule whereby a plaintiff’s damages are reduced to the extent of the plaintiff’s degree of negligence. Plaintiff’s negligence does not altogether bar a suit.

Monetary awards which compensate an injured party only for losses that were actually sustained. Compensatory damages include special damages and general damages.

Pays when the insured is liable for bodily injury or property damage caused by work that the insured has completed-such as repair work to customers' property.

Also called 'other than collision,' covers auto physical damage losses by nonexcluded perils other than collision. Comprehensive coverage is not truly comprehensive in scope; to cover all insurable auto physical damage perils, one must purchase both comprehensive and collision coverages.

In automobile insurance, a broad physical damage coverage which covers all property losses except collision and those perils or property which are specifically excluded. Comprehensive Coverage covers such items as theft, vandalism, and storm damage.

An early liability coverage form which, when attached to the General Liability policy jacket, provides coverage for the premises and operations, independent contractors, and products and completed operations exposures in a single contract.

The withholding of a material fact from the insurance company. May void the policy.

Occurs when two or more perils cause a loss. When one of these perils was covered by an insurance contract, but the other peril was not, courts generally ruled that the entire loss would be covered, even the part of the loss attributable to the peril not covered. Many insurance policies have been reworded to clarify that only loss attributable to a covered peril will be covered.

The portion of an insurance contract which sets forth the rights and duties of the insured and the insurance company.

Indirect loss which occur as a “Consequence” of a direct loss. Includes Time Element coverages.

A characteristic of a legal contract: The thing of value exchanged for the performance promised in the contract. In insurance, the policy premium is the consideration.

Either new building or renovation.

In Ocean Marine insurance, a loss which occurs when property is not completely destroyed but the cost to salvage or repair the property would exceed its value.

Liability which an insured or business incurs because of the actions of others (i.e., family or employees). Also called vicarious liability.

A common law defense against negligence which states that if an individual contributes to his or her own loss, then someone else cannot be held liable for the loss. Contributory negligence encompasses the lack of ordinary care on the part of the person’s injured, which combined with the defendant’s negligence, contributed to the injury as a proximate cause.

A category of Surety bonds required for most types of court litigation: civil suits, criminal actions, appeals, bail bonds, and etc. Also, called Judiciary Bonds. Includes Fiduciary Bonds, Bail Bonds, and Litigation Bonds.

Liability that is purely a product of statutory law. The action is generally brought by society and the punishment may include denial of freedom to the defendant.

In Crime insurance, a custodian is the insured or is a regular employee or partner of the insured who has care or control of property within the premises. Does not include watchman, porter or janitor.

A coverage provided in many property contracts which reimburses the insured for expenses involved in removing debris produced by a loss form a peril insured against.

The section of an insurance contract which clarifies who is insured, what property or risk is covered, when and where coverage is effective and how much coverage applies.

Usually, a dollar amount 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.

Extent of duty owed by one person to another.

A decrease or loss in value because of wear, age, or other cause. In accounting, an allowance made for this loss.

Loss which is a direct result of a peril. Also includes loss due to efforts to end the peril or to unavoidable exposure following a peril.

Line of insurance which includes coverages that are designed to protect the insured against a loss of income resulting form injury or sickness.

The degree of care that is required to protect others from unreasonable chance of harm; the standard of conduct a “reasonably prudent” person would observe in a given situation.

Policy designed to provide property coverage to individuals and families. Covers dwellings, other structures, personal property and fair rental value. Does not require owner-occupancy for eligibility.

A document used to amend the coverage in an otherwise complete policy.

A Professional Liability coverage which protects the insured against liability for committing an error or omission in performance of professional duties. An insurance agent would carry such coverage.

An equitable principal to the effect that if one intentionally or unintentionally creates the impression that a certain fact exists, and an innocent party relies on that impression and is damaged as a result, the guilty party may be legally prohibited from asserting that fact does not exist. For example, if an insurance company accepts coverage and makes an offer to settle and later decides that it was unwise, the insurance company may be stopped from denying the claim at that point.

Coverage which applies only after the limits of the primary insurance have been exhausted. See Primary Insurance.

The section of the insurance policy which lists property, perils, persons, or situations which are not covered under the policy

A workers compensation premium adjustment factor based on the loss experience of the insured employer.

The total amount or principal amount of insurance provided by an insurance policy. The term derives from the fact that the amount of insurance is usually indicated on the first page or “face” of the policy.

A doctrine under which the owner of an auto is held liable for damages resulting from its negligent operation by members of his or her family. (An extension of respondeat superior)

See employee dishonesty coverage

A surety bond commonly used to bond fiduciaries: guardians, administrators, trustees and executors, or persons appointed by a court to manage the properties of others. See Court Bonds.

Each state has its own laws which 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. Each state it’s own minimum requirements.

Cancellation of an insurance policy before it becomes effective. This might occur if one’s down payment check bounced.

An insurance contract that applies to property wherever it is moved, rather than applying only at a fixed location.

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

Fire which is contained in the place intended for it, such as a fireplace. (Excluded by fire polices)

Part of the Commercial Auto Coverage Part of the Commercial Package Policy (CPP). It is designed for garage businesses, (dealers, service stations, garages, parking lots, and etc.). Includes coverage for liability (both auto and garage operations), physical damage and garage keepers losses arising out of owned, non-owned and hired autos.

Damages which are awarded in an attempt to compensate for such things as pain, suffering, humiliation, embarrassment and disfigurement.

Covers some of the major liability exposures of a business, including liability related to the premises, operations in progress, products, and completed operations.

Conduct which fails to meet even the minimum standard of care that persons with common sense would take for their own safety and that of their property. Conduct showing total disregard for the safety of others reckless, wanton and willful misconduct.

A system to pay the claims of insolvent property and liability insurers. Generally, the money in guaranty funds is provided by charges assessed against all insurers in the state.

The time period during an insurance cycle during which insurers become more selective, making it more difficult to get insurance, even at higher prices.

Something that increases the chance of loss. For instance, faulty wiring is a hazard because it increases the chance of a fire loss.

A category of insurance that provides two major types of benefits: payment of medical costs (hospital bills, doctors' fees, etc.) and disability income (monthly income to disabled workers during their disability).

Hearsay evidence is generally inadmissible since the court and jury cannot judge the demeanor of the person making the statement, the statement is not made under oath, and the person making the statement is not subject to cross examination.

A personal multiple line contract incorporating both property and liability coverages. Six different policies provide varying degrees of protection.

A fire which has spread beyond its intended place or is in a place not intended for it.

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

Warranties that are not written into the policy, but have become part of policy by custom.

Negligence of one person for which another person is made legally responsible due to the legal relationship of the two persons. The person to whom the negligence is “imputed” is said to be vicariously negligent. This concept applies in agency relationships, such as employer-employee.

Losses or claims which the insurance company has paid or for which it has become liable; or paid losses plus reserves for a certain period, minus unpaid reserves at the end of the previous period.

A principal of insurance which provides that when a loss occurs, the insured should be restored to the approximate financial condition occupied before the loss occurred, no better, no worse. An insurance company can indemnify an individual through the replacement, or repair or payment of value of a loss. Not to be confused with legal damages, which frequently go beyond indemnity.

One who adjusts losses on behalf of insurance companies but is not on their payroll. The independent adjuster is paid by fee for each loss adjusted, as distinguished from a company claims representative who is paid a regular salary by one company.

Loss of earnings or extra expenses taking place over a period of days, weeks, or months following a direct loss. Increases with the passage of time.

A condition or defect which 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.

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.

A group formed for the purpose of supplying its members favorable access to competitive insurance rates through group purchasing.

A loss control representative, sometimes called a safety engineer, performs loss control surveys (also called inspections) and prepares written loss control reports. (See loss control report.)

Any actual, lawful, and substantial economic interest in the safety or preservation of the subject of the insurance from loss, destruction or pecuniary damage or impairment. Relationship or condition such that loss or destruction of life or property would cause a financial loss. A claim may be paid only when an insurable interest exists.

A contract or device for transferring risk from a person, business or organization to an insurance company that agrees, in exchange for a premium, to pay for losses through an accumulation of premiums.

Also known as an insurer, an organization that sells insurance policies that protect insureds against financial hardship caused by financial loss.

A system to pay the claims of insolvent property and liability insurers. Generally, the money in guaranty funds is provided by charges assessed against all insurers in the state.

A contract that states the rights and duties of the insurance company and the insured.

A periodic payment by the insured to the insurance company in exchange for insurance coverage. A periodic payment is one that must be made at certain time intervals. Also, the price of insurance for each unit of exposure. The rate is multiplied by the number of exposure units to arrive at a premium.

A person, business, or organization that is covered by an insurance policy.

Also known as an insurance company, an organization that sells insurance policies that protect insureds against financial hardship caused by financial loss.

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

A person who comes onto one’s property with express or implied permission in order to further the purposes of the landholder. Property-holders are liable to injured invitees if they know or should know of danger and fail to warn of it or correct it.

A nonprofit organization established for the benefit of its member insurance companies and other subscriber companies. ISO gathers statistics, provides loss costs, drafts policy forms and coverage provisions, and conducts inspections for rate-making purposes.

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

The power of the court to recognize certain facts without proof actually being offered.

See Court Bonds

A valid counter-defense to contributory negligence when the defendant had the “last clear chance” to avoid injury or the defendant could have prevented the injury, but failed to do so.

A principal which states that the more examples used to develop any statistic, the more reliable the statistic will be.

Insurance companies that hold an A.M. Best rating of A VIII or better.

A form which belongs to the Commercial Property Coverage Part of the Commercial Package Policy (CPP). It covers a tenant for certain losses following damage to the premises from a covered peril, such as tenant’s loss of a favorable lease or loss of remaining value of improvements or betterments made by a tenant.

The traditional low principal that the law of the place of damage determines a plaintiff’s right of action. This is in opposition to a newer approach which provides that the choice of tort law is determined by the state’s having “dominant contracts,” or the closest relationship to the transaction. Lex loci delicti provides that the law of the place of the wrong determines all questions of substantive law in tort suits unless that law is contrary to a strong public policy.

As a legal concept, liability means that a person, organization, or group of people is legally responsible, or liable, for the injury or damage suffered by another person, organization, or group of people.

Auto liability coverage will apply if an insured person or business is responsible for hurting someone else or damaging someone else's auto or other property as a result of an auto accident. This is an example of liability insurance.

Liability insurance covers accidental losses resulting from injury to the body or damage to the property of someone else for which the insured is legally responsible (legally liable). If the loss is covered by the insurance policy, the payment is made directly to the party that suffered the loss.

A policy condition found in many standard policies which states that if the insurer adopts a revision that would broaden coverage without additional premium within some period of time prior to the policy period or during the policy period, the insured receives the benefit of such broadened coverage.

A person on one’s property with stated or implied permission, but not to further the business interest or purposes of the landholder. The degree of care owed to licensees is less than that owed to invitees.

A type of insurance designed to pay funds to ease the financial problems that arise from uncertainty regarding the timing of death.

Limits, also called limits of insurance, limits of liability, or policy limits, indicate in an application how much insurance is requested. Once the policy is issued, the limits in the policy set the maximum dollar amount the insurance company will pay.

A type of surety bond used to provide a variety of guarantees that a person will be able to pay damages, court costs and the consequences of attachments or seizures of property. See Court Bonds.

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 they write.

In insurance, the term means the amount the insurer is required to pay because of a happening against which it has insured. Also, a happening that causes the company to pay. Also refers to the overall financial result of some operation, as opposed to “profit.” The basis for a claim for indemnity or damage under the terms of an insurance policy. Any diminution of quality, quantity or value of property.

Written by a loss control representative, a loss control report provides a firsthand picture of the applicant for the underwriter, describing the operations and hazards of the applicant's business as they relate to the type of insurance the applicant is requesting. The report also describes safety programs and other measures to control the hazards. The report not only describes strengths and weaknesses but also makes recommendations for improvement. The content of the loss control report varies according to the type of insurance.

A category of Surety Bonds issued in situations where a person loses valuable securities or other papers and requests issuance of duplicates. Should the lost instruments turn up and be redeemed by the holder, the issuer of the instrument would be reimbursed. Also called Securities Bond.

Involves actions to recover for injury to familial relationships, especially when negligently inflicted. A husband may have a monetary claim for Loss of Consortium after an accident involving his wife for the period of time when the wife is disabled and/or unable to provide him with physical comforts including sexual relations.

Under the Homeowners contract, covers the insured's increase cost of living after loss and rental value of any portion of the dwelling which is rented out.

A form of Professional Liability Insurance used to insure professionals including physicians, dentists and druggists against their liability for professional misconduct or lack of ordinary skill.

The amount that a seller may expect to obtain for merchandise, services or securities in the open market. An insurance company may pay you the Market Value of your automobile if it was declared a total loss from a covered peril.

To make written or verbal statements that are untrue or misleading, either intentionally or unintentionally. For instance, if you exclude a resident driver of your household on the application of insurance, this may be grounds for invalidating the insurance contract since the insurance company did not have the opportunity to rate this driver when determining the amount of premiums to charge.

Covers the medical expenses of a covered person injured in an auto accident. The coverage applies regardless of fault.

Pays for injuries to customers and other members of the public who are injured on the business premises, regardless of whether the business is legally responsible for the injury.

Provides coverage for the medical expenses of others (not insureds) who are injured because of the insured's premises, activities, or pets. Motor vehicle record, motor vehicle report Also known as an MVR, lists the moving violations (such as speeding) and serious accidents that a driver has had in the past several years.

A plaintiff is responsible for any loss which occurs as a result of his or her own lack of care following an accident. An individual must do his or her best to mitigate (lessen) the damages resulting from an accident.

The hazard present in an insuring situation if the insured purposely creates a loss to later collect from the insurance company.

The hazard present in an insuring situation if the insured, through carelessness or as a result of his or her own irresponsible action, creates a loss.

A method of determining whether or not a passenger qualifies as a guest. If the passenger's presence furthers the business interest of the driver or owner or is for the mutual benefit of the passenger and driver, then the passenger is not a guest.

Insurance company owned by its policyholders. Policyholders share in profits made by the company through dividends or reductions in future premiums.

Disappearance of property from a known place or location during a known period of time under unknown or baffling circumstances for which there is not reasonable or logical explanation.

An endorsement that can be added to the Personal Auto policy to provide coverage for a named individual who does not own an auto while the insured is operating autos owned by others.

Insurance contract which insures only against perils named in the policy.

Flood insurance, which may be sold by any licensed insurance agent, is available through a program developed by the federal government but often sold through private insurers.

Failure to do what a reasonably prudent individual would ordinarily do under the circumstances of a particular case, or doing what a prudent person would not have done. The failure to exercise that degree of care that the law requires to protect others from an unreasonable risk of harm. Negligence may involve acts of omission, commission, or both. Lack of due care. Breach of duty owed.

Negligence which is self-evident. Negligence per se is sometimes established by statute: e.g., violation of a motor law may in itself indicate negligence.

A rule of common law whereby the owner of a vehicle may be held liable for direct and primary negligence if he or she knowingly permits someone who is intoxicated, reckless, or otherwise incapable of operating a vehicle safely, to use the vehicle, and damage results.

Loosely, no-fault insurance means that each policyholder has a right to recover financial losses from his or her own insurance company, regardless of whose fault caused the accident. Strictly, no-fault auto insurance applies only to accidents under a state no-fault law that (1) requires insurance companies to pay policyholders regardless of fault and (2) restricts the ability of accident victims to sue others for their injuries.

When an insurer decides not to renew a policy at the end of a policy period, this is not a cancellation but a nonrenewal. The insurer "nonrenews" the policy.

In bonds, the party to whom the principal makes the promise, and for whose protection the bond is being written.

Coverage on an “occurrence” basis is generally considered to differ from coverage on an “accident” basis in that “occurrence” connotes gradual or accumulative damages without regard to exact time or place, whereas “accident” refers to instantaneous damage, identifiable as to time and place. In other words, “occurrence” may be defined as an event, or repeated exposure to conditions, which unexpectedly causes injury during the policy period.

A Commercial General Liability coverage form with a coverage trigger that states that coverage applies only to bodily injury or property damage which occur during the policy period, regardless of when claim is made.

Insurance on ships and their cargoes.

See All-Risk

An insurance policy combining coverages from two or more individual property and liability policies into a single insurance policy. The premium for a package policy might be lower than the premium for the same coverages purchased separately. This premium reduction is considered a package discount.

A clause found in various property insurance contracts which 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.

States that evidence is not admissible to change or modify the terms of a written contract insofar as that contract clearly reflects the intention of the parties involved. The purpose of the parol evidence rule is to avoid attacks on agreements which are clearly and precisely stated.

Property insurance providing different limits of insurance during different periods of the year, to reflect expected seasonal changes in property values.

A cause of property losses. Fire is one example of a peril. Personal articles floater, personal articles floater policy Also available as a scheduled personal property endorsement to homeowners policies, provides broad coverage for specified items such as jewelry, furs, silverware, and guns.

Personal Inland Marine insurance which 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.

A specific standard auto policy designed to meet the auto insurance needs of a typical person or family.

No-fault coverage that applies to auto-related injuries.

Insurance coverages purchased by individuals and families to cover nonbusiness exposures.

The general (non-auto-related) liability exposures that accompany a person's non-business activities.

Everything except land and buildings and other structures attached to the land. Examples include merchandise, furniture, supplies, stock, and inventory. Sometimes called contents, although most insurance policies covering personal property cover not only property contained in a building but also property near the building.

Also called material damage appraiser, a person who estimates auto repair costs based on auto parts prices and labor costs.

A contract that states the rights and duties of the insurance company and the insured.

Limits, also called limits of insurance, limits of liability, or policy limits, indicate in an application how much insurance is requested. Once the policy is issued, the limits in the policy set the maximum dollar amount the insurance company will pay.

The dates during which an insurance policy is in force.

Any statement in an insurance policy.

A person, business, or organization that has purchased insurance.

The written instrument by which the authority of one person to act in the place and stead of another as his or her attorney in fact is set forth. Authority given a person or corporation, called an attorney in fact, to act for the obligate another to a specific extent.

See insurance premium.

A person who examines policyholders' records at the end of the policy period to determine the final, audited premium.

A payment plan that may allow the insured to pay part of the premium when coverage takes effect and pay the rest during the policy period. Products and completed operations liability coverage Pays for loss resulting from liability (legal responsibility) for bodily injury or property damage that takes place away from the insured's premises and is caused by a product sold by the insured or a service completed by the insured.

When two or more coverages or polices apply to the same loss, the one which pays first, up to its limits of liability or the amount of the loss, whichever is less. See Excess Insurance.

Evidence good and sufficient on its face; such evidence as, in the judgment of the law, is sufficient to establish a given fact.

In bonds, the party who promises to do (or not to do) a specific thing. In agency law, the person or company being represented.

Pays for loss resulting from liability (legal responsibility) for bodily injury or property damage that takes place away from the insured's premises and is caused by a product sold by the insured or a service completed by the insured.

A statement signed by the policyholder making formal claim against the company for damage to or loss of the property insured.

Covers accidental losses resulting from damage to property of the insured. If the loss is covered by the insurance policy, the payment is made directly to the insured.

A booklet that highlights the important features of the proposed coverage and related services and states the premium.

A method of handling insurance when more than one policy applies to a loss. Each policy covers a portion of the loss in proportion to the relationship its limit of liability bears to the total limit of liability under all applicable policies.

In tort, the direct causal relationship between the breach of duty owed to another party and damages sustained by that party. In relation to an auto accident, the specific action or lack of action of a party that led to the accident. Example: If the first party involved in the accident was speeding but the second party pulled out in front of the first party, then it would be determined that the act of pulling out on front of the second party was the proximate cause of the accident.

Principle of law which expects each person to behave like a prudent person by following those ordinary considerations that guide human affairs.

Damages awarded to punish the wrongdoer for anti-social actions, rather than simply reimbursing the plaintiff for the loss. Punitive damages are awarded when the injury is intended, or involves a wrong more flagrant than negligence.

A statement regarding the premium that will be charged for certain coverage.

Commercial Office Buildings, Residential Apartment Buildings, Housing Cooperatives, Housing Condominiums, Office Condominiums, Warehouses, Manufacturing Plants.

A pattern of behavior used as a basis for defining negligent conduct. One is required to act as though he or she has the physical attributes of the person actually involved in the case, as well as to exercise a certain degree of mental capacity that of the average person of similar age and experience. Persons holding themselves out as having superior skills, knowledge or intelligence also have a special standard of conduct imposed on them, which is higher than the one imposed the average person.

An agreement by one insurer (the primary insurer) with another insurer (the reinsurer) with which a risk is shared.

Written acknowledgment stating that all obligations past, present or future arising out of a particular accident or occurrence have been fulfilled. Signing by the claimant generally relieves the company and the insured of any further obligations.

Pays the cost of renting a substitute for a car disabled in an accident.

An indirect property coverage available under Dwelling and Homeowners policies and also available with certain commercial contracts which reimburses the insured for rents lost when rented property is damaged by a peril insured against.

The current replacement cost of a building is the amount it would cost to construct the building today using materials of the same kind and quality, with no deduction for depreciation. The replacement cost of a house does not include the value of the land because the land itself will not be damaged by most perils.

A method of collecting premiums for exposures which are difficult to evaluate “before the fact.” Instead of paying a flat premium, the insured pays a deposit, then submits periodic reports to the insurer, showing the status of the factors on which the premium is based. From these status reports, premiums are calculated and charged against the deposit.

A Latin phrase meaning “things accomplished.” Applied to the rules of evidence, evidence of statements made about things done spontaneously or immediately following an event, which serve to establish the facts of the event, is admitted in evidence as an exception to the “hearsay rule.” Also known as an “excited utterance.”

“The event speaks for itself.” Res ipsa loquiteur is a presumption that the defendant was negligent, and which arises upon proof that the cause of injury was in the defendant’s exclusive control and that the accident was one which ordinarily does not happen in the absence of negligence. Occurs when the facts proved are more consistent with negligence on the part of the defendant than with other causes. The plaintiff proves the happening of the accident speaks for itself in determining negligence. Res ipsa loguitur does not apply when the cause of the accident is known, for that is prima facie evidence.

commercial real estate including, apartments buildings, Cooperatives and Condominiums.

“Let the master answer” - provides that a principal is responsible for the wrong-doings of his or her agent.

Retirement plans, including employer-sponsored pension plans and individual annuities, provide income for people who retire. Plans that guarantee income for life, no matter how long the person may live, are provided through life insurance companies.

The possibility of financial loss.

A risk manager is responsible for preserving a firm's assets against accidental losses of various kinds. Risk managers buy insurance, promote sound loss control, and manage retention (self-insurance) programs for their employer's organization. Large firms might have a risk management department involving many employees, and small organizations might have just one person who performs both risk management duties and other responsibilities.

The property in which an insurance company secures an ownership interest as a result of paying a claim for total loss or damage based on the true value of the property in its undamaged state or before the loss occurred.

See personal articles floater.

In a personal or commercial umbrella policy, a deductible that applies to liability losses not covered by other policies.

A federal insurance program that provides (1) monthly income to retired people, (2) monthly income to the dependent survivors of workers who die before retirement, (3) monthly income to disabled workers, and (4) Medicare health care benefits to people age sixty-five and older.

The time period during an insurance cycle during which insurance prices are lower and insurance is readily available.

Damages which compensate for direct and specific expenses that are involved in a loss including property damage, medical bills, loss of use, rental expenses, and lost wages. Special Damages do not include compensation for inconvenience or pain and suffering.

A homeowners policy that covers loss to the building from all perils except for those specifically excluded. Personal property coverage is for specified perils, the same as in the broad form homeowners policy.

Specified perils property policies cover any loss that is caused by one or more of the covered perils that is named (specified) in the policy. The burden of proof is on the insured. To prove that a loss is covered, the insured must prove that it was caused by one of the perils described (specified). Compare 'all-risks' and burden of proof.

A statute prescribing limitations to the right of action on certain described causes of action, declaring that no suit shall be maintained on such causes of action unless brought within a specific period of time after the right accrued. Example: California has a 1 year statute of limitations for bodily injury claims and a 3 year statute of limitations for property damage claims. i.e.: you have one year from the date of the accident to assert a bodily injury claim in the state of California. You have one year to file suit in order to protect the statute from running.

Refers to the direct responsibility for damages resulting from a deliberate action which is potentially hazardous.

When the insurer pays the insured for a loss, the insurer takes over the insured's right to collect damages from the other party responsible for the loss through a process called subrogation. The insurance company may subrogate against the party directly responsible for the loss.

The party (often the insurance company) which agrees to be responsible for loss which may result if the principal does not keep his or her promise.

Bonds which guarantee that someone will perform faithfully whatever he or she agrees to do or that someone will make an agreed-upon payment to another party.

Policy period, the period during which a policy provides coverage.

Covers loss of business income and other indirect losses resulting from direct damage to property.

A term applied to a miscellaneous and to a more or less unconnected group of civil wrongs, not arising from a contract, for which a court will provide for money damages.

Person committing a tort; wrongdoer. The person who was at fault for the accident.

Loss to the insured of the entire value of goods or other property by destruction, damage or deprivation. Also, loss entailing the payment of the face amount of an insurance contract. Also, property damages to the extent that the cost of repairs exceeds the market value less the salvage value.

A liability insurance policy that takes over where basic liability policies leave off. Personal umbrella policies typically provide $1 million or more of coverage on top of auto or homeowners policies. A commercial umbrella policy provides similar coverage for businesses. Umbrella policies usually include a self-insured retention that operates like a deductible. See self-insured retention.

A coverage that reimburses the insured for the difference between the actual damages sustained by the insured for bodily injury and the amount of liability insurance which meets the state's minimum financial requirements carried by the driver who was at fault, up to the limits of the insured's Underinsured Motorist coverage.

An underwriter evaluates requests for insurance, determining which applicants are accepted and which are rejected, as well as how much coverage the insurer is willing to provide and at what price. A commercial underwriter handles commercial insurance; a personal insurance underwriter handles personal insurance.

The insurance function which researches and evaluates insurance applications to decide which are acceptable to the company as insureds.

A coverage in personal or commercial auto policies that provides protection against bodily injury loss (also property damage in some states) when the insured is injured in an accident with a hit-and-run motorist or a motorist who has no insurance.

A principal 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.

A provision in a property insurance policy stating the method that is used to place a value on damaged property covered by the policy.

An endorsement that can be added to Commercial Property policies which sets the limit of insurance somewhat higher than expected peak values and then requires the insured to make periodic reports of actual values. These reports are averaged and the premium is then adjusted to reflect the average exposure.

Negligence which is not directly attributable to the person claimed against, but which is the negligence of another for whom the person claimed against is in some way responsible. Also known as imputed liability.

Applications accepted or rejected voluntarily (without regulatory constraint) by insurance companies are considered to be in the voluntary market.

The relinquishment of a right, either expressly or by implication. Express waiver is made voluntarily. In insurance matters, the policy may be reformed by endorsement or otherwise amended. Implied waiver may result from misleading actions or neglect on the part of the claim representative. A claim representative is not privileged in this area and must avoid all acts of waiver except those which the insurer has instructed the claim representative to perform.

Insurance which covers an employer's obligations under Workers Compensation laws, and which makes the employer responsible for stated damages in the event of a work-related injury or illness. Workers Compensation coverage also includes separate coverage for Employers Liability.

Action on account of injuries which result in death before a claim for them was compromised or reduced to judgment. The death is judged to be needless, unjust, reckless and unfair.