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Glossary of Terms Used in Insurance
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-A-
Accounts Receivable Insurance: Protection against
the inability to collect amounts due as a result of loss
or destruction of supporting documents.
Actual Cash Value (ACV): The value of property
determined by subtracting from current day Replacement
Cost of the amounts determined by such factors as
depreciation or obsolescence; not to be confused with
real estate market value for buildings. ACV is
traditionally an inexact term and its calculation can
vary depending on a property's age, location, past and
future usage, and other factors. (See also Replacement
Cost)
Additional Insured: An entity, other than the
Named Insured, that is also protected by an insurance
policy. Examples: a property landlord, a bank or other
mortgagee, a store or other "vendor" of an insured's
product. Additional Insured's do not always have
protection as broad as the Named Insured's.
Advertisers Liability Insurance: Coverage for
civil suits alleging libel, slander, defamation of
character, or copyright infringement resulting from the
insured's advertising- This coverage is also available
for advertising agencies and the media in which
advertisements are placed.
Agreed Amount Clause: A Property Insurance
Endorsement under which a carrier agrees in advance that
the amount of insurance carried complies with the
endorsement clause. The effect of the Agreed Amount
Clause is to prevent the carrier from invoking the
coinsurance "penalty" in settling a claim.
All-Risk Insurance: Property Insurance that
covers any event causing loss or damage if the ~
language does not specifically exclude such an event. "AII-Risk"
is really a misnomer, as all policies have some
exclusions. The important advantage of AIl-Risk
insurance is that it shifts the burden of proof to the
insurance carrier to show that the loss is excluded.
(See also Named Perils Insurance which obligates the
policyholder to show that the loss falls within the
definition of one of the covered perils listed in the
policy.)
Audit: In insurance, a process by which the
carrier reviews the basis upon which the initial
estimated premium was determined in certain types of
policies. The carrier can then adjust the premium to
reflect the actual exposure, during or after the policy
term. Examples: Workers Compensation Insurance premiums
are based on payroll; some forms of Liability Insurance
premiums are based on the insured's sales.
Automobile Liability Insurance: Coverage
protecting the policyholder against liability for having
caused personal injury or property damage to another
party while using a motor vehicle (car or truck). This
coverage is required in almost every state.
Automobile Physical Damage Insurance: Insurance
for loss of or damage to the policyholder's motor
vehicle (car or truck) including theft, collision, or
comprehensive (other-than-collision) coverage.
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-B-
Bailee's Customer Insurance: Insurance purchased
by a party (bailee) who has temporary possession of
another party's property. It covers the bailee's
responsibility for the property in the bailee's care,
custody, and control. A dry cleaner would be a typical
purchaser of this insurance.
Back-up of Sewers and Drains Insurance: Coverage
for damage to property from water that flows into the
insured premises from backed-up sewers or drainpipes.
Not to be confused with Flood Insurance which is more
comprehensive.
Binder: A temporary document evidencing insurance
until a ~ is issued. A binder is a contract under which
losses intended to be covered by the actual policy will
be paid.
Blanket Limit: In Property Insurance, an amount
of policy coverage that combines into a single limit
more than one exposure or kind of insurance. Examples: a
single blanket limit could apply to several buildings,
or a building and its contents; or direct damage to a
building, its contents, and loss of business income from
a covered peril.
Bodily Injury (BI): Physical injury to, or
illness sustained by, a person. See also Property Damage
(PD) and Personal Injury Insurance.
Boiler & Machinery Insurance: A form of Property
Insurance covering losses caused by breakdown of, or
damage to, certain kinds of machinery. Coverage includes
damage to property of others and can include Business
Interruption Insurance. Regular equipment inspections,
included in the policy premium, are an important service
provided by Boiler & Machinery Carriers.
Brick Construction: Describes a structure the
thickness of whose outer walls is no less than two
bricks in width.
Broker: (See Insurance Broker)
Broker of Record Letter: A written designation
from a policyholder authorizing a Broker to serve as the
policyholder's representative. This is usually used by a
policyholder as a means of changing brokers, and the
authorization can be rescinded.
Business Auto Insurance: Coverage for damage to
or damage caused by vehicles owned, used, hired, or
rented by businesses. Includes Automobile Liability
Insurance, Collision Insurance, and Comprehensive
Insurance.
Business Income Insurance: (See Business
Interruption Insurance)
Business Interruption Insurance: Also known as
Business Income Insurance and can include Extra Expense
Coverage. A form of Property Insurance that indemnifies
the policyholder for loss of business income, or the
above normal additional expenses to continue operations,
resulting from damage to covered property.
Business Owners Package: (See Package Policy)
Business Owners Policy "BOP": A policy that
combines, or "packages" several kinds of Property
Insurance and Liability Insurance commonly needed by
small and medium size business. Premiums can be
discounted because of the economies of issuing several
kinds of coverage in one contract.
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Cargo Insurance: A form of Marine Insurance
purchased by shippers to cover losses to property in
transit. Coverage usually provides All-Risk Insurance.
Carrier: In insurance, the party underwriting,
issuing, and assuming the risks included in the
insurance policy; also known as the insuror.
Casualty Insurance: See Property and Casualty
Insurance
Certificate of Insurance: A document evidencing
the existence of an insurance policy. A certificate is
not itself a policy and frequently does not include a
full recitation of all the terms, conditions, and
limitations of the actual policy.
Check Room Liability Insurance: Insurance,
typically purchased by restaurants or catering halls, to
cover their legal responsibility for loss or damage to
customers' property that has been checked.
Claim: a sum requested of an insurer by a
policyholder for payment of a loss covered by the policy
Claims History Letter: a letter requested by a
Carrier or Broker documenting the prior history of
insurance claims made by party seeking an insurance
proposal or offer. Typically a three-year record of
prior claims is requested.
Claims-Made Basis Liability Form: A form of
insurance liability that covers claims first made during
the time the policy is in effect, regardless of when the
event giving rise to the claim occurred.
Claims Occurrence Basis Liability Form: A form of
Liability Insurance that covers claims that occur during
the time the policy is in effect regardless of when
notice of the claim is first submitted. Switching
coverage between a Claims-Made Basis Liability Form and
a Claims Occurrence Basis Liability Form can have
important coverage consequences and should only be done
after consultation with a professional insurance
advisor.
Coinsurance Clause: A provision in a Property
Insurance policy that stipulates the percentage of the
property's value that must be insured in order to
collect on a partial loss to the property without
penalty.
Example:
Building (or Contents) Value: $ 500,000
Coinsurance Clause: 80%
Amount of Insurance Required to be Purchased: $ 400,000
As long as $400,000 of insurance is purchased, a partial
loss, say, $100,000 will be paid in full. If, as an
example, only $300,000 insurance, or three-quarters of
the required amount, were purchased, only three quarters
of the loss would be paid- $75,000. There would be, in
this example, be a $25,000 penalty. (See also Agreed
Amount Clause)
Collision Insurance: In automobile insurance,
coverage for damages to the policyholder's vehicle
resulting from striking another vehicle or object while
moving. (See also Comprehensive Insurance)
Comprehensive Insurance: In automobile insurance,
coverage for loss of or damage to the policyholder's
vehicle from a cause other than Collision. Examples:
theft, vandalism, or fire. (See also Collision
Insurance)
Computer Virus Coverage: See Electronic Errors
and Omissions
Consequential Loss: A reduction in or loss of the
value of property that had not been physically damaged
resulting from direct physical damage to other property.
Example: a freezer loses power due to an electrical fire
in a remote section of a food warehouse, and the
increase in temperature spoils the meat in the freezer.
Contingent Business Interruption: Loss of
business income from damages to premises other than the
insured location. Examples of such remote premises: a
contributing property, such as an important supplier, or
a recipient property, such as a major customer.
Copyright Infringement Coverage: A form of
Intellectual Property coverage protecting the
policyholder against claims for violation of another's
copyrights.
Corporate Reimbursement Insuring Agreement: In
Directors and Officers Liability Insurance, a policy
provision under which an insured company is reimbursed
by the Carrier for amounts the company pays its
directors or officers for their individual losses
resulting from their wrongful acts pursuant to the
company's by-laws or other agreements.
This coverage differs from that provided by a different
policy provision under which directors or officers are
reimbursed directly by the insurance company. (See also
Entity Insuring Agreement).
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Data Processing Insurance: (See EDP)
Debris Removal Insurance: In Property Insurance,
a policy provision providing coverage for the cost of
removing debris from the premises damaged by a covered
peril.
Deductible: The amount subtracted from the amount
of damages payable under a policy before the claim is
paid. The deductible can be a flat dollar amount, a
percentage, or, in some coverages such as Business
Interruption Insurance, a specified period of time
rather than a dollar amount.
Defamation of Character Coverage: (See Personal
Injury Insurance).
Depositor's Forgery Coverage: Insurance coverage
for losses due to forgery or alteration of financial
instruments such as checks, drafts, or notes
Direct Billing: A system of insurance premium
billing whereby the - Carrier sends the bill directly to
the policyholder.
Directors and Officers Liability Insurance (D & O):
Coverage protecting directors or officers of companies
against legal judgments and related expenses resulting
from wrongful acts committed in their individual
capacity as company directors and officers. Insurance is
included for direct coverage of individual directors and
officers and also for reimbursement of the corporation
if the corporation has indemnified the directors and
officers for their losses (see Corporate Reimbursement
Insuring Agreement). The policy can also cover the
corporation itself. (See Entity Insuring Agreement) The
need for D & 0 insurance is not limited to public
companies.
Disability Benefit Insurance: Insurance required
in certain states that reimburse employees for loss of
income resulting from injury or sickness related to
employment. The amount and duration of reimbursement are
often limited. (See also Workers Compensation Insurance
and Long Term Disability Insurance)
Dividend: A portion of the premium returned to
the policyholder under a participating policy.
Characteristic of life insurance policies.
Drive Other Car Coverage: A provision of an
automobile policy that extends coverage to an insured
party while driving a vehicle not specifically described
on the policy.
Druggist Professional Liability Insurance:
Coverage for professional druggists against errors or
omissions that result in injury or illness.
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Earthquake Insurance: Insurance against damages
from earthquakes or earth movement. This coverage is
typically excluded from Property Insurance policies,
especially in earthquake-prone geographical zones,
unless purchased as an Endorsement for an additional
premium.
Effective Date: The date and time at which an
insurance binder or policy is put in force. Sometimes
called inception date. (See also Expiration Date)
Electronic Errors and Omissions: Coverage
tailored to the technology/new media sector for third
party claims arising from the performance of
professional services. Includes coverage for claims
relating to content posted on the web or on proprietary
software including libel, slander, plagiarism,
infringement of copyright, trademark, trade
name, etc. Coverage also available for losses due to
computer security breaches involving Internet sites,
extranets, LAN/W AN systems, and other network
environments where data is stolen or corrupted.
Electronic Data Processing & Media Insurance (EDP):
Coverage for various kinds of hardware and software both
for direct damage to the property and extra expense of
returning to normal business after the damage occurs.
Employee Benefits Liability Insurance: Coverage
protecting an employer against liability for errors or
omissions in the administration of employee benefits
plans. Example: failure to enroll an eligible employee
in a group medical plan.
Employee Dishonesty Insurance: coverage that
reimburses an employer for losses due to dishonest acts
of employees, such as embezzlement. This coverage is
often provided under a Fidelity Bond. (See also Money
and Securities Insurance)
Employers Liability Insurance: Also identified as
Coverage B under Workers Compensation Insurance.
Coverage protecting an insured employer against common
law suits by employees for on-the-job injuries or
illnesses not covered by the Workers Compensation law of
the jurisdiction in which the occurrence took place
(Coverage A).
Endorsement: On an insurance policy, an attached
written form that adds or restricts coverage, or alters
the policy in some other way. Also called a Rider.
Employment Practices Liability Insurance (EPLI):
Coverage for a business entity, its directors, officers,
and other employees for lawsuits resulting from improper
employment practices such as discrimination, sexual
harassment, or wrongful termination. Policies can
include Punitive Damages, where permitted by state law.
Entity Insuring Agreement (Entity Coverage): In
Directors and Officers Liability Insurance a policy
provision that insures the corporation itself against
lawsuits based on allegations of wrongful acts committed
by the corporation's directors or officers. This clause
is a relatively recent addition to D & O policies which
were originally designed to protect just the individual
directors and officers.
Environmental Impairment Liability Insurance (EIL):
Coverage for losses resulting from liability for damage
to the environment and related Property Damage or Bodily
Injury. Typically, the cause of such damages is
pollution, and such losses are usually not covered by
standard General Liability insurance policies. (See also
Pollution Clean-Up Insurance)
Equipment Floater: A form of insurance coverage
usually written as All Risk Insurance, protecting
against loss of or damage to various types of equipment.
Typically purchased by contractors.
Errors and Omissions Insurance: A Professional
Liability policy providing coverage for negligent acts
or omissions in the policyholder's professional capacity
that harm a client. Examples: insurance agents,
attorneys, architects, engineers, and healthcare
providers.
Exclusion: A peril not covered by the insurance
policy. Certain kinds of property can also be excluded
from coverage. See also All-Risk Insurance.
Experience Modification: An adjustment to the
premium in a Workers Compensation Insurance policy that
increases or reduces the premium to reflect the
policyholder's individual claims experience in relation
to the overall experience of similar policyholders as a
group.
Expiration Date: The final day and time that an
insurance policy or binder is in force. (See also
Effective Date)
Exposure: The chance or possibility of loss. Also
called - Risk.
Extra Expense Insurance: Coverage for the
additional costs, above normal expenses, to continue
operating a business after an insured peril causes
damage. This is distinguished from coverage for the
expected income the business loses as a result of the
occurrence. See also Business Interruption Insurance.
Example: After their premises are destroyed by fire, a
website design firm has to rent more expensive space and
lease equipment to continue
servicing their clients.
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-F-
Fidelity Bond: See Employee Dishonest Insurance.
Fiduciary Bond: Also known as a Judicial Bond. An
instrument issued by an insurance company acting as a
Surety, that guarantees an individual entrusted with the
assets of another party will safeguard the assets and
manage them appropriately. Examples: bonds issued for
guardians of a minor child or incompetent person.
Fine Arts and Antiques Insurance: A form of
Floater covering such objects for individuals or
businesses. Note: professional dealers must buy fine
arts dealers Insurance.
Fire Insurance: (See Property Insurance)
Fire Legal Liability Insurance: Coverage for
one's legal responsibility for allowing a fire to damage
real property in their care, custody and control.
Example: a tenant negligently allows afire to start or
spread causing damage to their office space. Damage to
the part of the building where they had care, custody
and control can be covered by the Fire Damage Legal
Liability coverage.
Fire Resistive Construction: A type of building
construction designed to prevent the frequency or impede
the spread of fire. It usually involves the use of
steel, concrete, or other non-combustible material, and
often results in lower costs for fire insurance than
Frame, Masonry or Brick Construction.
Floater: An Inland Marine Insurance policy
covering various kinds of property at more than one
location or while moving between locations.
Flood Insurance: Coverage for damage caused by
water that overflows its natural boundaries. This is
frequently excluded by standard Property Insurance
policies, but can be included at an additional cost by
Endorsement. Coverage is also available through the
government-sponsored program under the National Flood
Insurance Act,
Frame Construction: Building construction in
which the outer walls are made of wood. See also - Brick
Construction and Fire Resistive Construction.
Furniture and Fixtures Coverage: In Property
Insurance, coverage for the contents of a building other
than merchandise for sale or in the process of being
manufactured, or machinery.
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Garage Keepers Legal Liability Insurance:
Liability coverage for loss or damage to customers'
vehicles caused by businesses that accepts them for
storage, parking, service, or safekeeping.
General Aggregate Limit: In a General Liability
Insurance policy, the maximum amount the company will
pay regardless of the number of different kinds of
coverage provided by the policy or the number of
claimants in one incident. Examples: a general liability
policy may provide a $500, 000 limit for any one
incident causing injury on the insured's premises, and a
separate $500, 000 limit for any one incident of injury
caused by the insured's product: but the policy may also
limit the total it will pay for all such claims to
$1,000,000 in any one policy year. In an Automobile
Liability Insurance policy, with a $500,000 aggregate
limit, if two injured people each were awarded $300,000,
$100,000 would not be covered. See also Product
Liability Insurance.
General Liability Insurance: Coverage for an
insured's negligent acts or omissions that cause
personal or bodily injury to another person or damage to
property belonging to another. Also referred to as third
party insurance, the policyholder being the first party,
the insurer the second party, and the liability
claimant, the third party, various kinds of general
liability insurance can include Personal Injury,
covering torts such as libel or slander, and Product
Liability Insurance, covering injuries caused by
something the insured imports, manufactures, processes,
or sells,
Glass: (See Plate Glass Coverage)
Guaranteed Cost Insurance: A form of policy
pricing under which the basic cost of the policy will
not vary for a given policy period regardless of the
claims for that period. Usually this is descriptive of
Workers Compensation Insurance, and the term contrasts
with retrospectively rated workers compensation policies
whose basic premium is
adjusted at the end of the policy period to reflect the
claims experience during the period. Even guaranteed
cost workers compensation policy premiums are subject to
Experience Modification adjustments. In Life Insurance,
guaranteed cost refers to policies whose premium is
fixed and not subject to dividends.
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Hired/Non-Owned Automobile Insurance: A form of
Automobile Liability Insurance covering vehicles used,
but not owned, by the insured. This is important
coverage for businesses, and also for individuals who do
not own their own vehicle but rent or borrow vehicles.
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-I-
Improvements and Betterments Coverage: In
Property Insurance, protection against damage to
physical modifications to a structure, as differentiated
from the structure itself. Typically carried by a tenant
to protect his interest in such modifications to leased
space in the property.
Increased Cost of Construction Insurance: In
Property Insurance, coverage for the additional cost of
restoring damaged property to be in compliance with
building codes that were not applicable when the
structure was first built.
Inland Marine Insurance: A broad category of
insurance that encompasses coverages applicable to
property that is movable from one location to another.
Examples: Floaters of various kinds, Transit Insurance,
Valuable Papers and Records. Insurance.
Insurance Agent: A representative of an insurance
company. Some agents, often called captive agents,
represent only one company, while others, independent
agents, represent more than one company. See also
Insurance Broker.
Insurance Broker: A representative of the
Insured, as opposed to an Insurance Agent, who is a
representative of an insurance company. Brokers are not
restricted to placing clients' business with any
particular company. Notwithstanding that a broker does
not represent any insurance company, in most states
brokers are fiduciaries', and premium payment by a
policyholder to a broker constitutes payment to the
insurance company that issued the
policy.
Insured: A party protected by an insurance
policy. Not all insureds named in a policy have
identical rights. (See also Additional Insured and Named
Insured)
Intellectual Property: Intangible property that
is the product of creative use of the mind in developing
ideas and concepts. In Risk Management, the most
contemporary exposures are various kinds of computer
software programs; Trade secrets, proprietary
information, copyrights, trademarks and other forms of
expression are also intellectual property.
Internet Errors and Omissions Insurance: (See
Electronic Errors and Omissions Insurance)
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Joisted Masonry Construction: Older construction
using large timbers for building skeleton with block
and/or brick on the outside and sometimes within
internal walls.
Judicial Bond: (See Fiduciary Bond)
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-L-
Lawyers Professional Liability: A form of Errors
and Omissions Liability Insurance protecting attorneys
from financial loss due to the negligent handling of
clients' legal matters.
Lead Base Paint Liability: Coverage protecting
property owners from financial loss due to claims
alleging personal injuries from the ingestion of paint
chips, dust or fumes containing lead. Most insurance
companies issuing General Liability Insurance policies
intend and attempt to exclude such claims. Separate
policies designed and intended to cover this exposure
are available,
Leasehold Insurance: Coverage protecting a
tenant, usually holding a long term lease at an
advantageous rate, in the event of cancellation of the
lease because an insured peril damages or destroys the
property. The measure of damages would be the market
rental value of the leased premises less the actual rent
the tenant was paying, for the balance of the lease
term.
Liability Insurance: (See General Liability
Insurance)
Libel: Generally, a written false and defamatory
statement about another. See also Slander and Personal
Injury Insurance.
Limit: The maximum amount of insurance payable by
a policy. The limit can apply to the entire policy, or a
particular kind of insurance included in the policy
(sometimes called a sub-limit), or the maximum payable
during the entire policy term. (See also General
Aggregate Limit)
Liquor Liability Coverage: Insurance covering
responsibility for personal injury or property damage
caused by a person to whom the policyholder has sold or
served alcohol.
Long Term Care Insurance: Coverage for the cost
of nursing or custodial care, at home or in an
institution, necessitated by injury or illness
(Alzheimer's Disease can be included). This type of
long-term care coverage is not included in Medicare or
most major medical insurance policies.
Long Term Disability Insurance: Coverage to
replace income lost as a result of inability, or only
partial ability, to work because of an injury or
illness. Monthly benefits can continue for a selected
number of years or for life. Not to be confused with
short term Disability Benefit Insurance.
Loss of Rents Coverage: A form of Property
Insurance covering a property owner's rental income lost
as a result of a peril covered by the policy. Coverage
can apply even if the property is not rented at the time
a loss occurs.
Loss Payable Clause: A policy Endorsement under
which a policyholder can authorize a claim to be paid to
another party. Typically, the party named as loss payee
is the mortgagee of the insured Real Property or a
secured lender.
Loss Payee: A party other than the policyholder
to whom the claim proceeds under a Property Insurance
policy's Loss Parable Clause are paid.
Loss Run: An historical record, frequently in the
form of a computerized print -out, or all claims
recorded under a policy for a given period of time.
Commercial insurance underwriters frequently require
loss runs for the previous' three or five years when
considering whether to offer the applicant a policy.
Loss Run Request Letter: A written authorization,
given by an applicant for insurance to an agent or
broker, requesting and permitting the applicant's
current or previous insurance Carriers to provide a Loss
Run.
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Marine Insurance: A form of insurance usually
covering property in transit. (See also Inland Marine
Insurance.)
Masonry Non-Combustible Construction: Concrete
block or poured concrete on exterior walls, floors and
roof.
Medical Payment Insurance: In General Liability
Insurance policies, a coverage that pays the medical
costs of an injured party regardless of the
policyholder's responsibility for the injury. Medical
Payments coverage is usually provided for a nominal
amount to dispose of small claims for minor injuries.
Money and Securities Insurance: Coverage for a
business, both on premises and in transit, for loss or
destruction of currency or negotiable instruments.
Usually written on as All-Risk Insurance, but excluding
Employee Dishonesty Insurance.
Multimedia Liability Insurance: see Electronic
Errors & Omissions.
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Named Insured: The party designated in an
insurance policy as the insured. See also Additional
Insured.
No Fault Automobile Insurance: A type of
automobile insurance coverage under which victims of
accidents are compensated without regard to fault or the
need to prove negligence on anyone's part. Various state
no-fault laws vary greatly in their provisions,
Non-Combustible Construction: Usually metal
(steel) on steel frame with sheet rock partitions. Roof
can be either built-up or membrane.
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Occurrence: Generally defined simply as an event
or happening. In insurance policies, in addition to
meaning a sudden accident, occurrence can also mean
repeated or continual exposure to some event causing
loss.
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Package Policy: An insurance policy for
businesses in which more than one kind of coverage is
provided under a single contract. Also known as a
Special Multi-Peril Policy (SMP), the contract typically
includes Property Insurance, General Liability
Insurance, and other coverages, at a discounted premium
reflecting the economies of one underwriting unit at the
insurance company issuing multiple coverages.
Peak Season Endorsement: A Rider added to a
policy covering business inventory under which the
amount of insurance increases automatically to protect
the policyholder during specified high volume periods of
the year.
Personal Injury Insurance: In General Liabilitv
Insurance policies used to describe coverage for civil
torts, such as Libel or Slander, as differentiated from
physical injury.
Personal Lines Insurance: Policies covering
individuals and families for property and casualty
Exposure. Examples: homeowners, personal automobile,
boat, fine arts and jewelry insurance.
Personal Property: property other than Real
Property (usually meaning buildings); also called
chattel. Term can also apply to business property other
than buildings,
Plate Glass Insurance: A policy covering breakage
of glass. Glass coverage can also be part of a Package
Policv
Policy: An insurance contract.
Pollution Clean-up Insurance: Coverage
indemnifying the policyholder for the costs of cleaning
up, or remediating, a site damaged by spillage, seepage,
or some other environmental impairment to property. See
also Environmental Impairment Liability Insurance.
Premium Indication: An estimate of cost, terms,
and conditions of coverage under a proposed insurance
policy that is still subject to adjustment upon
underwriters' review of additional Exposure information.
Premium Quotation: An exact price at which a
policy with agreed terms and conditions can be put into
effect and for which a binder can be issued.
Prior Acts Coverage: In Professional Liability
Insurance, coverage for claims resulting from events
that occurred before the policy's Effective Date.
Product Liability Insurance: Coverage for claims
of Property Damage, Bodily Injury, or Personal Injury
(See Personal Injury Insurance), caused by the
policyholder's product. Mainly for manufacturers, but
can also be needed by importers of foreign-made
products.
Professional Liability Insurance: Coverage for
professional practitioners in numerous fields protecting
against claims that their professional errors or
improper conduct resulted in damage or injury. Examples:
Druggists Professional Liability Insurance, Attorneys
Errors and Omissions Insurance.
Proof of Loss: A document setting forth the
details of a claim. This is usually required before a
property claim can be paid.
Property and Casualty Insurance: The two main
categories of insurance as distinguished from Life and
Health Insurance. Property Insurance refers to coverage
for loss or damage to belongings of the policyholder or
for which the policyholder is responsible (first party).
Casualty Insurance describes coverage for loss or damage
caused by the policyholder to others (third parties) or
their property. Frequently referred to as P & C.
Property Damage (PD): Loss or damage to assets or
possessions. See also Bodily Injury (BI) and Personal
Inure Insurance.
Property Insurance: See Property and Casualty
Insurance.
Public Adjuster: A professional who assists
policyholders in preparing claims for presentation to
insurance companies.
Punitive Damages: In civil litigation, damages
awarded against a defendant for gross negligence.
Uninsurable in most states.
Purchasing Group: An entity created under several
Federal Risk Retention acts (principally the Risk
Retention Act of 1986) that enables businesses that are
unaffiliated except for the sharing of certain similar
risk characteristics to purchase General Liability
Insurance as a group.
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Real Property: Generally, land and buildings:
real estate. See also Personal Property.
Replacement Cost: A method of valuation, often
added by an Endorsement to a Property Insurance policy,
that pays claims based on present-day prices, without
considering depreciation, for repairing or replacing the
damaged property with materials of like, kind and
quality. See also Actual Cash value.
Retroactive Date: In the history of Liability
Insurance, the date after which claims can occur and be
covered by the policy.
Rider: See Endorsement.
Risk: See Exposure.
Risk Management: Broadly, the practice of
identifying Exposure to loss and addressing such
exposure by assuming the risk (possibly through a formal
self-insurance program), transferring risk to another
party, eliminating or reducing the risk through loss
control programs, or buying insurance. Some or all of
these strategies can be employed at the same time.
Risk Retention Act of 1986: A Federal statute
enabling businesses that are unaffiliated except for the
sharing of certain similar risk characteristics to
purchase Property Insurance as a group. The major
vehicles that eligible businesses use are Liability
Groups and Risk Retention Groups.
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-S-
Slander: Generally, oral statements about another
that are false and defamatory. See also Libel and
Personal Injury Insurance.
Surety: A guarantee that some promise or
undertaking will be fulfilled or completed. Also a
person or organization making such a guarantee.
Surety Bond: A contract under which a ~
guarantees the fulfillment of some promise or obligation
on which another party has defaulted. Note: surety bonds
are not the same as insurance policies, as a Surety will
often insist on collateral and will seek recourse
against the party whose obligation the surety has had to
fulfill, but many insurance companies also issue such
bonds.
Surplus Line Carrier: An insurance company that
issues policies not generally available from licensed
carriers. Surplus lines carriers are not "admitted" to
do business in a given state and are therefore not
subject to all the insurance laws of that state.
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-T-
Trademark Infringement Coverage: A form of
liability protection for losses from claims alleging
theft or improper use of another's trademark. A form of
Intellectual Property coverage.
Transit Insurance: See Inland Marine Insurance.
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-U-
Umbrella Liability: A form of "catastrophe"
liability coverage usually issued in $ 1 million dollar
increments, intended to protect policyholders against
high damage awards in excess of the Limit provided by a
basic, or primary, policy such as Automobile Liability
Insurance and General Liability Insurance. Insurance
Companies issuing Umbrella Liability policies require
policyholders to maintain certain minimum amounts of
basic, or underlying,
insurance which must be exhausted in the payment of a
claim before the Umbrella policy can be called upon. The
underlying insurance can usually be provided by a
different carrier than the one issuing the Umbrella
policy.
Unauthorized Access to Data Coverage "Unauthorized
Access": A form of liability insurance protecting
the policyholder against losses from claims alleging the
access to and/or misuse of data. A form of Intellectual
Property coverage.
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Valuable Papers and Records Coverage: A form of
Inland Marine Insurance covering the cost of reproducing
important documentation. Usually issued as All-Risk
Insurance.
Valuation: The basis upon which Real Property or
Personal Property subject to insurance is assessed or
appraised for purposes of establishing the proper amount
of insurance to be purchased or for determining the
amount to be paid when a claim has occurred. The two
principle valuations used are Actual Cash value and
Replacement Cost.
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Workers Compensation Insurance: Protection
providing benefits for workers injured or contracting
illness on the job. Required in all states, workers
compensation insurance covers medical treatment and loss
of wages, subject to benefit schedules that differ from
state to state. See also Employers Liability Coverage
and Disability Benefit Insurance.
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