All Key Words - Ass 1 - 9

8/10/2019 All Key Words - Ass 1 - 9

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Term 1

Umbrella liability policy

Definition 1

A liability policy that provides excess

coverage above underlying policies

and may also provide coverage not

available in the underlying policies,subject to a self-insured retention.

Term 2

Liability coverage

Definition 2

Coverage that protects the insured

from damages owed because of legal

liability to another party. For auto

policies, it protects insureds against

liability arising out of the ownership or

operation of automobiles.

Term 3

Term life insurance

Definition 3

Life insurance that provides coverage

for a specified period, such as ten or

twenty years, with no cash value.


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Term 4

Permanent life insurance

Definition 4

Coverage until death.

Term 5

Long-term care insurance

Definition 5

Insurance that pays for extended

medical care or custodial care received

in a nursing home, hospital, or home.

Term 6

Annuity

Definition 6

A type of life insurance policy or

contract that makes periodic pay-

ments to the recipient for a fixed period

or for life in exchange for a specified

premium.


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Term 7

Commercial Package Policy (CPP)

Definition 7

Policy that covers two or more lines of

business by combining ISOs

commercial lines coverage parts.

Term 8

Businessowners policy (BOP)

Definition 8

A package policy that combines most

of the property and liability coverages

needed by small and medium-sized

businesses.

Term 9

Commercial auto insurance

Definition 9

Insurance that covers a business or a

not-for-profit organization against loss

exposures arising out of the

ownership, maintenance, or use of

automobiles.


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Term 10

Auto physical damage coverage

Definition 10

Coverage for damage to or theft of a

covered auto that can include both

collision coverage and other thancollision (comprehensive) coverage.

Term 11

Commercial property insurance

Definition 11

Insurance that covers commercial

buildings and their contents against

various types of property loss.

Term 12

Ocean marine insurance

Definition 12

Insurance that covers vessels and

their cargoes, including various

vessel-related liability exposures.


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Term 13

Inland marine insurance

Definition 13

Insurance that covers many different

classes of property that typically

involve an element of transportation.

Term 14

Commercial crime insurance

Definition 14

Insurance that covers (1) money andsecurities against numerous perils (not

limited to crime perils) and (2) property

other than money and securities

against crime perils, such as employee

theft, robbery, theft by outsiders, and

extortion.

Term 15

Commercial general liability (CGL)

insurance

Definition 15

Insurance that covers many of the

common liability loss exposures faced

by an organization, including its

premises, operations, and prod- ucts.


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Term 16

Professional liability insurance

Definition 16

Insurance that covers persons

engaged in various occupations

against liability resulting from their

rendering or failing to render

professional services.

Term 17

Workers compensation insurance

Definition 17

Insurance that provides coverage for

benefits an employer is obligated to

pay under workers compensation

laws.

Term 18

Private insurer

Definition 18

A nongovernment insurance provider.


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Term 19

Stock insurer

Definition 19

An insurer that is owned by its

stockholders and formed as a

corporation for the purpose of earninga profit for the stockholders.

Term 20

Mutual insurer

Definition 20

An insurer that is owned by its

policyholders and formed as a

corporation for the purpose of

providing insurance to them.

Term 21

Reciprocal insurance exchange

(interinsurance exchange)

Definition 21

An insurer owned by its policyholders,

formed as an unincorporated

association for the purpose of

providing insurance coverage to its

members (called subscribers), and

managed by an attorney-in-fact.

Members agree to mutually insure

each other, and they share profits and

losses in the same proportion as theamount of insurance purchased from

the exchange by that member.


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Term 22

Captive insurer, or captive

Definition 22

A subsidiary formed to insure the loss

exposures of its parent company and

the parents affiliates.

Term 23

Reinsurance

Definition 23

The transfer of insurance risk from one

insurer to another through a

contractual agreement under which

one insurer (the reinsurer) agrees, in

return for a reinsurance premium, to

indemnify another insurer (the primary

insurer) for some or all of the financial

consequences of certain loss

exposures covered by the primarys

insurance policies.

Term 24

Underwriting

Definition 24

The process of selecting insureds,

pricing coverage, determining

insurance policy terms and conditions,

and then monitoring the underwriting

decisions made.


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Term 28

Premium audit

Definition 28

Methodical examination of a

policyholders operations, records,

and books of account to determine the

actual exposure units and premium for

insurance coverages already provided.

Term 29

Solvency

Definition 29

The ability of an insurer to meet its

financial obligations as they become

due, even those resulting from insured

losses that may be claimed several

years in the future.

Term 30

Domestic insurer

Definition 30

An insurer doing business in the

jurisdiction in which it is incorporated.


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Term 31

Foreign insurer

Definition 31

An insurer licensed to operate in a

state but incorporated in another state.

Term 32

Alien insurer

Definition 32

An insurer domiciled in a country other

than the United States.

Term 33

Admitted insurer

Definition 33

An insurer to which a state insurance

department has granted a license to do

business within that state.


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Term 34

Nonadmitted insurer

Definition 34

An insurer not authorized by the state

insurance department to do business

within that state.

Term 35

Surplus lines laws

Definition 35

State laws that permit producers with a

surplus lines license to write business

for an acceptable nonadmitted

insurer when protection from admitted

insurers is not available.

Term 36

Mandatory rate law

Definition 36

State law under which insurance rates

are set by a state agency or rating

bureau and all licensed insurers are

required to use those rates.


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Term 40

Flex rating law

Definition 40

An insurance rating law under which

prior approval is required only if the

new rates exceed a certain percentage

above (and sometimes below) the

rates previously filed.

Term 41

Open competition (no-file law)

Definition 41

An insurance rating law that allows

insurers to develop and use rates

without having to file with or get

approval from the state insurance

department.

Term 42

Market conduct regulation

Definition 42

Regulation of the practices of insurers

in regard to four areas of operation:

sales practices, underwriting

practices, claim practices, and bad-

faith actions.


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Term 43

Unfair trade practices law

Definition 43

State law that specifies certain

prohibited business practices.

Term 44

Solvency surveillance

Definition 44

The process, conducted by state

insurance regulators, of verifying the

solvency of insurers and determining

whether their financial condition

enables them to meet their financial

obligations and to remain in business.

Term 45

National Association of Insurance

Commissioners (NAIC)

Definition 45

An association of insurance

commissioners from the fifty U.S.

states, the District of Columbia, and

the five U.S. territories and

possessions, whose purpose is to

coordinate insurance regulation

activities among the various stateinsurance departments.


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Term 46

NAIC Annual Statement

Definition 46

The primary financial statement

prepared by insurers and required by

every state insurance department.

Term 47

Reserve

Definition 47

The amount the insurer estimates and

sets aside to pay on an existing claim

that has not been settled.

Term 48

Insurance Regulatory Information

System (IRIS)

Definition 48

An information and early-warning

system established and operated by

the NAIC to monitor the financial

soundness of insurers.


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Term 49

Guaranty fund

Definition 49

A state-established fund that provides

a system for the payment of some of

the unpaid claims of insolvent insurers

licensed in that state, generally fundedby assessments collected from all

insurers licensed in the state.

Term 50

Standard market

Definition 50

Collectively, insurers who voluntarily

offer insurance coverages at rates

designed for customers with average

or better-than-average loss exposures.

Term 51

Surplus lines insurance

Definition 51

Insurance obtained from nonadmitted

insurers when protection is not

available from admitted insurers.


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Term 52

Surplus lines insurer

Definition 52

A nonadmitted insurer that is eligible to

insure risks that have been exported

by a surplus lines licensee inaccordance with a surplus lines law.

Term 53

Loss adjustment expense (LAE)

Definition 53

The expense that an insurer incurs to

investigate, defend, and settle claims

according to the terms specified in the

insurance policy.

Term 54

Paid losses

Definition 54

Losses that have been paid to, or on

behalf of, insureds during a given

period.


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Term 55

Incurred losses

Definition 55

The losses that have occurred during

a specific period, no matter when

claims resulting from the losses arepaid.

Term 56

Incurred but not reported (IBNR)

losses

Definition 56

Losses that have occurred but have

not yet been reported to the insurer.

Term 57

Dividends

Definition 57

The portion of an organizations profits

that is paid to shareholders.


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Term 58

Assets

Definition 58

Types of property, both tangible and

intangible, owned by an entity.

Term 59

Admitted assets

Definition 59

Assets meeting minimum standards of

liquidity that an insurer is allowed to

report on its balance sheet in

accordance with statutory accounting

principles.

Term 60

Nonadmitted assets

Definition 60

Types of property, such as office

furniture and equipment, that

regulators do not allow insurers to

show as assets on financial

statements because these assets

cannot readily be converted to cash at

or near their market value.


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Term 61

Liabilities

Definition 61

Financial obligations, or debts, owed

by a company to another entity,

usually the policyholder in the case ofan insurer.

Term 62

Loss reserve

Definition 62

An estimate of the amount of money

the insurer expects to pay in the future

for losses that have already occurred

and been reported, but are not yet

settled.

Term 63

Unearned premium reserve

Definition 63

An insurer liability representing the

amount of premiums received from

policyholders that are not yet earned.


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Term 64

Policyholders surplus

Definition 64

Under statutory accounting principles

(SAP), an insurers total admitted

assets minus its total liabilities.

Term 65

Loss ratio

Definition 65

A ratio that measures losses and loss

adjustment expenses against earned

premiums and that reflects the

percentage of premiums being

consumed by losses.

Term 66

Expense ratio

Definition 66

An insurers incurred underwriting

expenses for a given period divided by

its written premiums for the same

period.


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Term 67

Combined ratio

Definition 67

A profitability ratio that indicates

whether an insurer has made an

underwriting loss or gain.

Term 68

Investment income ratio

Definition 68

Net investment income divided by

earned premiums for a given period.

Term 69

Producer

Definition 69

Any of several kinds of insurance

personnel who place insurance

business with insurers and who

represent either insurers or insureds,

or both.


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Term 70

Agent

Definition 70

In the agency relationship, the party

that is authorized by the principal to

act on the principals behalf.

Term 71

Agency

Definition 71

A legal, consensual relationship that

exists when one party, the agent, acts

on behalf of another party, the

principal.

Term 72

Principal

Definition 72

The party in an agency relationship

that authorizes the agent to act on that

partys behalf.


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Term 76

Binding authority

Definition 76

An insurance agents authority to

effect coverage on behalf of the

insurer.

Term 77

Apparent authority

Definition 77

A third partys reasonable belief that an

agent has authority to act on the

principals behalf.

Term 78

Independent agency

Definition 78

A business, operated for the benefit of

its owner (or owners) that sells

insurance, usually as a representative

of several unrelated insurers.


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Term 79

Broker

Definition 79

An independent producer who

represents insurance customers.

Term 80

Agency expiration list

Definition 80

The record of an insurance agencys

present policyholders and the dates

their policies expire.

Term 81

Independent agency network

Definition 81

A group of agencies that contractually

link to share services, resources, and

insurers to gain advantages normally

available only to large regional and

national brokers.


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Term 82

Managing general agent (MGA)

Definition 82

An authorized agent of the primary

insurer that manages all or part of the

primary insurers insurance activities,usually in a specific geographic area.

Term 83

Exclusive agency marketing system

Definition 83

An insurance marketing system under

which agents contract to sell

insurance exclusively for one insurer

(or for an associated group of

insurers).

Term 84

Direct writer marketing system

Definition 84

An insurance marketing system that

uses sales agents (or sales

representatives) who are direct

employees of the insurer.


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Term 85

Mixed marketing system

Definition 85

An insurers use of more than one

marketing system or distribution

channel.

Term 86

Cold canvass

Definition 86

Contacting a prospect without an

appointment.

Term 87

Loss run

Definition 87

A report detailing an insureds history

of claims that have occurred over a

specific period, valued as of a specific

date.


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Term 88

Agency bill

Definition 88

A payment procedure in which a

producer sends premium bills to the

insured, collects the premium, and

sends the premium to the insurer, less

any applicable commission.

Term 89

Direct bill

Definition 89

A payment procedure in which the

insurer assumes all responsibility for

sending premium bills to the insured,

collecting the premium, and sending

any commission payable on the

premium collected to the producer.

Term 90

Commission

Definition 90

A percentage of the premium that the

insurer pays to the agency or producer

for new policies sold or existing

policies renewed.


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Term 91

Contingent commission agreement

Definition 91

A contract provision in which an

insurer agrees to make supple- mental

payments to producers based on

profitability alone or on a combination

of profitability, volume, and growth in

the agencys book of business placed

with that insurer.

Term 92

Book of business

Definition 92

A group of policies with a common

characteristic, such as territory or type

of coverage, or all policies written by a

particular insurer or agency.

Term 93

Adverse selection

Definition 93

In general, the tendency for people

with the greatest probability of loss to

be the ones most likely to purchase

insurance.


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Term 94

Capacity

Definition 94

The amount of business an insurer is

able to write, usually based on a

comparison of the insurers writtenpremiums to its policyholders surplus.

Term 95

Underwriting guidelines (underwriting

guide)

Definition 95

A written manual that communicates

an insurers underwriting policy and

that specifies the attributes of an

account that an insurer is willing to

insure.

Term 96

Underwriting authority

Definition 96

The scope of decisions that an

underwriter can make without

receiving approval from someone at a

higher level.


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Term 97

Line underwriter

Definition 97

Underwriter who is primarily

responsible for implementing the steps

in the underwriting process.

Term 98

Staff underwriter

Definition 98

Underwriter who is usually located in

the home office and who assists

underwriting management with making

and implementing underwriting policy.

Term 99

Underwriting policy (underwriting

philosophy)

Definition 99

A guide to individual and aggregate

policy selection that supports an

insurers mission statement.


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Term 100

Advisory organization

Definition 100

An independent organization that

works with and on behalf of insurers

that purchase or subscribe to itsservices.

Term 101

Prospective loss costs

Definition 101

Loss data that are modified by loss

development, trending, and credibility

processes, but without considerations

for profit and expenses.

Term 102

Loss development

Definition 102

The increase or decrease of incurred

losses over time.


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Term 103

Trending

Definition 103

A statistical technique for analyzing

environmental changes and projecting

such changes into the future.

Term 104

Treaty reinsurance

Definition 104

A reinsurance agreement that covers

an entire class or portfolio of loss

exposures and provides that the

primary insurers individual loss

exposures that fall within the treaty are

automatically reinsured.

Term 105

Facultative reinsurance

Definition 105

Reinsurance of individual loss

exposures in which the primary

insurer chooses which loss exposures

to submit to the reinsurer, and the rein-

surer can accept or reject any loss

exposures submitted.


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Term 106

Underwriting audit

Definition 106

A review of underwriting files to ensure

that individual underwriters are

adhering to underwriting guidelines.

Term 107

Expert systems, or knowledge-based

systems

Definition 107

Computer software programs that

supplement the underwriting decision-

making process. These systems ask

for the information necessary to make

an underwriting decision, ensuring

that no information is overlooked.

Term 108

Hazard

Definition 108

A condition that increases the

frequency or severity of a loss.


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Term 112

Legal hazard

Definition 112

A condition of the legal environment

that increases loss frequency or

severity.

Term 113

Information efficiency

Definition 113

The balance that underwriters must

maintain between the hazards

presented by the account and the

information needed to underwrite it.

Term 114

Predictive analytics

Definition 114

Statistical and analytical techniques

used to develop models that predict

future events or behaviors.


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Term 115

Predictive modeling

Definition 115

A process in which historical data

based on behaviors and events are

blended with multiple variables and

used to construct models of

anticipated future outcomes.

Term 116

Catastrophe model

Definition 116

A type of computer program that

estimates losses from future potential

catastrophic events.

Term 117

Counteroffer

Definition 117

A proposal an offeree makes to an

offeror that varies in some material

way from the original offer, resulting in

rejection of the original offer and

constituting a new offer.


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Term 118

Experience rating

Definition 118

A ratemaking technique that adjusts

the insureds premium for the

upcoming policy period based on the

insureds experience for the current

period.

Term 119

Schedule rating

Definition 119

A rating plan that awards debits andcredits based on specific categories,

such as the care and condition of the

premises or the training and selection

of employees, to modify the final

premium to reflect factors that the

class rate does not include.

Term 120

Retrospective rating

Definition 120

A ratemaking technique that adjusts

the insureds premium for the current

policy period based on the insureds

loss experience during the current

period; paid losses or incurred losses

may be used to determine loss

experience.


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Term 121

Mix of business

Definition 121

The distribution of individual policies

that compose the book of business of

a producer, territory, state, or region

among the various lines and

classifications.

Term 122

Binder

Definition 122

A temporary written or oral agreement

to provide insurance coverage until a

formal written policy is issued.

Term 123

Certificate of insurance

Definition 123

A brief description of insurance

coverage prepared by an insurer or its

agent commonly used by

policyholders to provide evidence of

insurance.


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Term 127

Ratemaking

Definition 127

The process insurers use to calculate

insurance rates, which are a premium

component.

Term 128

Actuary

Definition 128

A person who uses mathematical

methods to analyze loss data and

develop insurance rates.

Term 129

Insurance rating system

Definition 129

The price per exposure unit

determined by adjusting the

prospective loss costs for expenses,

profits, and contingencies.


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Term 130

Loss costs

Definition 130

The portion of the rate that covers

projected claim payments and loss

adjusting expenses.

Term 131

Insurance advisory organization

Definition 131

An independent corporation that

works with and on behalf of insurers

that purchase or subscribe to their

services, which include developing

prospective loss costs and standard

policy forms.

Term 132

Law of large numbers

Definition 132

A mathematical principle stating that

as the number of similar but

independent exposure units increases,

the relative accuracy of predictions

about future outcomes (losses) also

increases.


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Term 133

Contingencies

Definition 133

A provision in an insurance rate for

losses that could not be anticipated in

the loss data.

Term 134

Class rating

Definition 134

A rating approach that uses rates

reflecting the average probability of

loss for businesses within large

groups of similar risks; the

predominant method used for rating

commercial properties.

Term 135

Individual rate, or specific rate

Definition 135

A type of insurance rate that reflects

the unique characteristics of an

insured or the insureds property.


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Term 136

Judgment rating

Definition 136

Rating used by underwriters to rate

one-of-a-kind risks.

Term 137

Final rate

Definition 137

The price per exposure unit

determined by adjusting the

prospective loss costs for expenses,

profits, and contingencies.

Term 138

First-party claim

Definition 138

A demand by an insured person or

organization seeking to recover from

its insurer for a loss that its insurance

policy may cover.


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Term 139

Third-party claim

Definition 139

A demand against an insured by a

person or organization other than the

insured or the insurer, seeking to

recover damages that may be payable

by the insureds liability insurance.

Term 140

Claimant

Definition 140

A party that makes a claim and that can

be either a first-party claimant or a

third-party claimant.

Term 141

Claim representative

Definition 141

A person responsible for investigating,

evaluating, and settling claims.


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Term 142

Third-party administrator (TPA)

Definition 142

An organization that provides

administrative services associated

with risk financing and insurance.

Term 143

Independent adjuster

Definition 143

An independent claim representative

who handles claims for insurers for a

fee.

Term 144

Public adjuster

Definition 144

An outside organization or person

hired by an insured to represent the

insured in a claim in exchange for a

fee.


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Term 145

Nonwaiver agreement

Definition 145

A signed agreement indicating that

during the course of investigation,

neither the insurer nor the insuredwaives rights under the policy.

Term 146

Reservation of rights letter

Definition 146

An insurers letter that specifies

coverage issues and informs the

insured that the insurer is handling a

claim with the understanding that the

insurer may later deny coverage

should the facts warrant it.

Term 147

Subrogation

Definition 147

The process by which an insurer can,

after it has paid a loss under the policy,

recover the amount paid from any

party (other than the insured) who

caused the loss or is otherwise legally

liable for the loss.


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Term 148

Mediation

Definition 148

An alternative dispute resolution (ADR)

method by which disputing parties use

a neutral outside party to examine the

issues and develop a mutually

agreeable settlement.

Term 149

Arbitration

Definition 149

An alternative dispute resolution (ADR)

method by which disputing parties use

a neutral outside party to examine the

issues and develop a settlement,

which can be final and binding.

Term 150

Appraisal

Definition 150

A method of resolving disputes

between insurers and insureds over

the amount owed on a covered loss.


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Term 157

Agreed value method

Definition 157

A method of valuing property in which

the insurer and the insured agree, at

the time the policy is written, on the

maximum amount that will be paid in

the event of a total loss.

Term 158

Salvage rights

Definition 158

The insurers rights to recover and sell

or otherwise dispose of insured

property on which the insurer has paid

a total loss or a constructive total loss.

Term 159

Constructive total loss

Definition 159

A loss that occurs when the cost to

repair damaged property plus its

remaining salvage value equals or

exceeds the propertys pre-loss value.


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Term 163

General damages

Definition 163

A monetary award to compensate a

victim for losses, such as pain and

suffering, that do not involve specificmeasurable expenses.

Term 164

Punitive damages (exemplary

damages)

Definition 164

A payment awarded by a court to

punish a defendant for a reckless,

malicious, or deceitful act to deter

similar conduct; the award need not

bear any relation to a partys actual

damages.

Term 165

Pure risk

Definition 165

A chance of loss or no loss, but no

chance of gain.


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Term 166

Speculative risk

Definition 166

A chance of loss, no loss, or gain.

Term 167

Avoidance

Definition 167

A risk control technique that involves

ceasing or never undertaking an

activity so that the possibility of a

future loss occurring from that activity

is eliminated.

Term 168

Retention

Definition 168

A risk financing technique by which

losses are retained by generating

funds within the organization to pay

for the losses.


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Term 169

Fixture

Definition 169

Any personal property affixed to real

property in such a way as to become

part of the real property.

Term 170

Money

Definition 170

Currency, coins, bank notes, and

sometimes travelers checks, credit

card slips, and money orders held for

sale to the public.

Term 171

Securities

Definition 171

Written instruments representing

either money or other property, such

as stocks and bonds.


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Term 172

Auto

Definition 172

As defined in commercial general

liability and auto forms, a land motor

vehicle, trailer, or semitrailer designed

for travel on public roads, including

attached machinery or equipment; or

any other land vehicle that is subject to

a compulsory or financial

responsibility law or other motor

vehicle insurance law in the state

where it is licensed or principally

garaged.

Term 173

Mobile equipment

Definition 173

Various types of vehicles designed for

use principally off public roads, such

as bulldozers and cranes.

Term 174

Recreational vehicle

Definition 174

A vehicle used for sports and

recreational activities, such as a dune

buggy, all-terrain vehicle, or dirt bike.


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Term 175

Peril

Definition 175

The cause of a loss.

Term 176

Mortgagee

Definition 176

A lender in a mortgage arrangement,

such as a bank or another financing

institution.

Term 177

Mortgagor

Definition 177

The person or organization that

borrows money from a mortgagee to

finance the purchase of real property.


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Term 178

Bailee

Definition 178

The party temporarily possessing the

personal property in a bailment.

Term 179

Legal liability

Definition 179

The legally enforceable obligation of a

person or an organization to pay a

sum of money (called damages) to

another person or organization.

Term 180

Constitutional law

Definition 180

The Constitution itself and all the

decisions of the Supreme Court that

involve the Constitution.


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Term 181

Statute

Definition 181

A written law passed by a legislative

body, at either the federal or state level.

Term 182

Statutory law

Definition 182

The formal laws, or statutes, enacted

by federal, state, or local legislative

bodies.

Term 183

Common law (case law)

Definition 183

Laws that develop out of court

decisions in particular cases and

establish precedents for future cases.


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Term 184

Criminal law

Definition 184

The branch of the law that imposes

penalties for wrongs against society.

Term 185

Civil law

Definition 185

A classification of law that applies to

legal matters not governed by criminal

law and that protects rights and

provides remedies for breaches of

duties owed to others.

Term 186

Tort

Definition 186

A wrongful act or an omission, other

than a crime or a breach of contract,

that invades a legally protected right.


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Term 187

Tort law

Definition 187

The branch of civil law that deals with

civil wrongs other than breaches of

contract.

Term 188

Negligence

Definition 188

The failure to exercise the degree of

care that a reasonable person in a

similar situation would exercise to

avoid harming others.

Term 189

Proximate cause

Definition 189

A cause that, in a natural and

continuous sequence unbroken by

any new and independent cause,

produces an event and without which

the event would not have happened.


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Term 190

Tortfeasor

Definition 190

A person or organization that has

committed a tort.

Term 191

Vicarious liability

Definition 191

A legal responsibility that occurs when

one party is held liable for the actions

of a subordinate or associate because

of the relationship between the two

parties.

Term 192

Intentional tort

Definition 192

A tort committed by a person who

foresees (or should be able to fore-

see) that his or her act will harm

another person.


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Term 193

Assault

Definition 193

The threat of force against another

person that creates a well-founded fear

of imminent harmful or offensivecontact.

Term 194

Battery

Definition 194

Intentional harmful or offensive

physical contact with another person

without legal justification.

Term 195

Defamation

Definition 195

A false written or oral statement that

harms anothers reputation.


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Term 196

Slander

Definition 196

A defamatory statement expressed by

speech.

Term 197

Libel

Definition 197

A defamatory statement expressed in a

writing.

Term 198

False arrest

Definition 198

The seizure or forcible restraint of a

person without legal authority.


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Term 199

Invasion of privacy

Definition 199

An encroachment on another persons

right to be left alone.

Term 200

Strict liability (absolute liability)

Definition 200

Liability imposed by a court or by astatute in the absence of fault when

harm results from activities or

conditions that are extremely

dangerous, unnatural, ultrahazardous,

extraordinary, abnormal, or

inappropriate.

Term 201

Hold-harmless agreement (or

indemnity agreement)

Definition 201

A contractual provision that obligates

one of the parties to assume the legal

liability of another party.


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Term 202

Warranty

Definition 202

A written or oral statement in a

contract that certain facts are true.

Term 203

Statutory liability

Definition 203

Legal liability imposed by a specific

statute or law.

Term 204

Personnel loss exposure

Definition 204

A condition that presents the

possibility of loss caused by a

persons death, disability, retirement,

or resignation that deprives an

organization of the persons special

skill or knowledge that the

organization cannot readily replace.


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Term 205

Key employee

Definition 205

An employee whose loss to a firm

through death or disability before

retirement would have economiceffects on the company.

Term 206

Disability

Definition 206

The inability (because of impairment)

of a person to meet his or her

personal, social, or occupational

demands; other activities of daily

living; or statutory or other legal

requirements.

Term 207

Valid contract

Definition 207

A contract that meets all of the

requirements to be enforceable.


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Term 208

Consideration

Definition 208

Something of value or bargained for

and exchanged by the parties to a

contract.

Term 209

Principle of indemnity

Definition 209

The principle that insurance policies

should provide a benefit no greater

than the loss suffered by an insured.

Term 210

Valued policy

Definition 210

A policy in which the insurer pays a

stated amount in the event of a

specified loss (usually a total loss),

regardless of the actual value of the

loss.


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Term 211

Concealment

Definition 211

An intentional failure to disclose a

material fact.

Term 212

Misrepresentation

Definition 212

A false statement of a material fact on

which a party relies.

Term 213

Material fact

Definition 213

In insurance, a fact that would affect

the insurers decision to provide or

maintain insurance or to settle a claim.


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Term 214

Conditional contract

Definition 214

A contract that one or more parties

must perform only under certain

conditions.

Term 215

Preprinted form

Definition 215

An insurance form that meets the

needs of many policyholders and is

therefore printed in bulk for future use.

Term 216

Manuscript form

Definition 216

An insurance form that is drafted

according to terms negotiated

between a specific insured (or group

of insureds) and an insurer.


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Term 217

Coverage part

Definition 217

A component of a CPP or a monoline

policy that contains the policy

provisions relating to a particular line

of business, such as commercial

property or commercial general

liability; consists of the coverageparts declarations page, one or more

coverage forms, applicable

endorsements, and in some cases a

general provisions form.

Term 218

Declarations page (declarations, or

dec.)

Definition 218

An insurance policy information page

or pages providing specific details

about the insured and the subject of

the insurance.

Term 219

Endorsement

Definition 219

A document that amends an insurance

policy.


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Term 220

Policy provisions

Definition 220

Any phrase or clause in an insurance

policy that describes the policys

coverages, exclusions, limits,conditions, or other features.

Term 221

Scheduled coverage

Definition 221

Insurance for property specifically

listed (scheduled) on a policy, with a

limit of liability for each item.

Term 222

Insuring agreement

Definition 222

A statement in an insurance policy that

the insurer will, under described

circumstances, make a loss payment

or provide a service.


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Term 223

Condition

Definition 223

Any provision in an insurance policy

that qualifies an otherwise enforceable

promise of the insurer.

Term 224

Exclusion

Definition 224

A policy provision that eliminates

coverage for specified exposures.

Term 225

Floater

Definition 225

A policy designed to cover property

that floats, or moves, from location to

location.


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Term 226

Named peril

Definition 226

A specific cause of loss listed and

described in an insurance policy. Also

used to describe policies containingnamed perils.

Term 227

Special form, or open perils policy

Definition 227

A policy that provides coverage for

any direct loss to property unless the

loss is caused by a peril specifically

excluded.

Term 228

Collision coverage

Definition 228

Coverage for direct and accidental

loss or damage to a covered auto

caused by collision with another

object or by overturn.


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Term 229

Other than collision (OTC) coverage

Definition 229

Coverage for physical damage to a

covered auto resulting from any cause

of loss except collision or a cause ofloss specifically excluded.

Term 230

Specified causes of loss coverage

Definition 230

Coverage for direct and accidental

loss caused by fire, lightning,

explosion, theft, windstorm, hail,

earthquake, flood, mischief, vandalism,

or loss resulting from the sinking,

burning, collision, or derailment of a

conveyance transporting the covered

auto.

Term 231

Direct loss

Definition 231

A reduction in the value of property

that results directly and often

immediately from damage to that

property.


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Term 232

Time element loss (indirect loss)

Definition 232

A loss that arises as a result of damage

to property, other than the direct loss

to the property.

Term 233

Net income

Definition 233

The difference between revenues

(such as money received for goods or

services) and expenses (such as

money paid for merchandise, rent, and

insurance).

Term 234

Extra expenses

Definition 234

Expenses, in addition to ordinary

expenses, that an organization incurs

to mitigate the effects of a business

interruption.


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Term 235

Additional living expense

Definition 235

A coverage in homeowners policies

that indemnifies the insured for the

additional expenses that are incurred

following a covered property loss so

that the household can maintain its

normal standard of living while the

dwelling is being restored.

Term 236

Named insured

Definition 236

A person, corporation, partnership, or

other entity identified as an insured

party in an insurance policys

declarations page.

Term 237

Loss payee

Definition 237

A party entitled to share in whatever

loss payment an insured receives.


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Term 238

Deductible

Definition 238

A portion of a covered loss that is not

paid by the insurer.

Term 239

Insurance-to-value provision

Definition 239

A provision in property insurance

policies that encourages insureds to

purchase an amount of insurance that

is equal to, or close to, the value of the

covered property.

Term 240

Coinsurance

Definition 240

An insurance-to-value provision in

many property insurance policies

providing that if the property is

underinsured, the amount that an

insurer will pay for a covered loss is

reduced.


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Term 241

Bodily injury

Definition 241

Physical injury to a person, including

sickness, disease, and death.

Term 242

Property damage

Definition 242

Physical injury to, destruction of, or

loss of use of tangible property.

Term 243

Personal injury

Definition 243

Injury, other than bodily injury, arising

from intentional torts such as libel,

slander, or invasion of privacy.


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Term 244

Release

Definition 244

A legally binding contract between the

parties to a dispute that embodies their

agreement, obligates each to fulfill the

agreement, and releases both partiesfrom further obligation to one another

that relates to the dispute.

Term 245

Supplementary payments

Definition 245

Various expenses the insurer agrees

to pay under a liability insurance policy(in addition to the liability limits) for

items such as premiums on bail bonds

and appeal bonds, loss of the

insureds earnings because of

attendance at trials, and other

reasonable expenses incurred by the

insured at the insurers request.

Term 246

Prejudgment interest

Definition 246

Interest that may accrue on damages

before a judgment has been rendered.


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Term 247

Postjudgment interest

Definition 247

Interest that may accrue on damages

after a judgment has been entered in a

court and before the money is paid.

Term 248

Medical payments coverage

Definition 248

Coverage that pays necessary medical

expenses incurred within a specified

period by a claimant (and in certain

policies, by an insured) for a covered

injury, regardless of whether the

insured was at fault.

Term 249

Occurrence basis coverage

Definition 249

Coverage that is triggered by the

actual happening of bodily injury or

property damage during the policy

period.


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Term 250

Claims-made coverage form

Definition 250

A coverage form that provides

coverage for bodily injury or property

damage that is claimed during thepolicy period.

Term 251

Retroactive date

Definition 251

The date on or after which bodily injury

or property damage must occur (or a

personal and advertising injury

offense must be committed) in order to

be covered.

Term 252

Each person limit

Definition 252

The maximum amount an insurer will

pay for injury to any one person for a

covered loss.


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Term 253

Each occurrence limit

Definition 253


pay for all covered losses from a single

occurrence, regardless of the number

of persons injured or the number of

parties claiming property damage.

Term 254

Aggregate limit

Definition 254


pay for all covered losses during the

covered policy period.

Term 255

Split limits

Definition 255

Separate limits for bodily injury and

property damage liability coverage.


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Term 256

Single limit

Definition 256

A single limit of liability for the

combined total of bodily injury and

property damage from any oneaccident or occurrence.

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