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    Act of God -- An acciden​t or event that is the result of natural causes, without any human intervention or agency, that could not have been prevented by reasonable foresight or care, e.g., floods, lightning, earthquake, storms.

    Actual Cash Value -- The present-day value of property measured in cash, arrived at by taking the replacement cost and deducting for depreciation brought about by physical wear and tear, and obsolescence. 

    Adjuster -- An individual representing the insurance company in discussions leading to agreement about the amount of a loss and company's liability. Sometimes the term "claim representative" may be used. 

    Adjustment -- The process of determining the cause and amount of a loss, the amount of indemnity that the insured may recover after all proper allowances and deductions have been made, and the proportion that each company (if more than one) is required to pay under its insurance contract. 

    Admitted Company -- An insurance company which has been licensed by the insurance department of the state in question. 

    Advertisers Liability Insurance -- Covers an insured against claims for libel, slander, defamation, infringement of copyright, invasion of privacy, etc., arising out of its advertising program. Also available for radio and television stations and advertising agencies. 

    All Risk Insurance -- Insurance protecting the insured from loss arising from any cause other than those causes specifically excluded by name in the policy. This contrasts with ordinary coverage which names the peril(s) insured against. 

    Assignment -- The transfer of the legal right or interest in a policy or contract to another party, generally in connection with the sale of property. 

    Assumed Liability -- (See Contractual Liability) 

    Assumption of Risk -- A term usually applied to an instance where a party does not purchase commercial insurance or provide for self insurance covering the risk of loss. 

    Audit -- An examination of the insured's books and records to determine actual exposures for premium computation purposes. 

    Automobile Liability Insurance -- A form of liability insurance which is specifically designed to indemnify for loss incurred through legal liability for bodily injury and damage to property of others caused by accident arising out of ownership or operation of an automobile. 

    Automobile Physical Damage Insurance -- Insurance covering loss or damage to the insured party's own vehicle caused by Fire, Theft, Wind, Hail, etc., and Collision. 

    Automatic Coverage -- Provided in some policies of insurance usually for a specified period and limited amount, to cover increasing values, newly acquired and changing insured properties. 

    Average Rate -- A rate for a blanket policy established by multiplying the rate for each location insured by the value at that location and dividing the sum of the results by the total values. 

    Average Weekly Benefit -- (Sometimes called weekly compensation in workers' compensation insurance.) The amount payable per week for disability or death as prescribed by law. This is usually a percentage of the average weekly wage, subject to a minimum and maximum amount. 

    Average Weekly wage -- The average rate of remuneration per week, computed as prescribed by law.


    Bailee -- One who has temporary possession of property belonging to another. Bailees have different degrees of liability for such property, sometimes as prescribed by contract between the parties. 

    Bid Bond -- A guarantee that the contractor will enter into a contract, if it is awarded to him, and furnish such contract bond
    (sometimes called performance bond) as is required by the terms thereof. 

    Binder -- A preliminary agreement to provide immediate insurance until a policy can be written. It should contain a definite time limit, should be in writing and clearly designate the company in which the risk is bound, the amount and the perils insurance against as well as the type of insurance. 

    Bodily Injury Liability -- Injury to the physical person of a human being, as compared to personal injury liability (non-physical) or property damage liability. 

    Builders Risk Insurance -- Insures a building during the course of construction. 

    Burglary -- Breaking and entering into premises of another, with felonious intent, and with visible forced entry. 

    Business interruption Insurance -- When one has a calamity of some kind which prevents the normal carrying on of business, he/she loses profits and has certain continuing expenses which may not be avoided. The insurance of this loss against any hazard is called "business interruption" insurance, or sometimes referred to as "use and occupancy."


    certificate of Insurance -- A written statement that a policy provides, at the time of certificate issue, coverages as stated therein. Usually also contains a disclaimer statement that the certificate does not alter or amend the insurance policy/coverages and does not obligate the insurance company in any way to the certificate holder. 

    Common Law -- Unwritten law based upon custom, as distinguished from laws passed by a legislative body, which is
    known as Statutory Law. 

    Comprehensive -- A type of coverage providing for insurance on a broad group of perils. 

    Compensatory -- Reimbursement to an injured party for out-of-pocket expenses. 

    Completed Operations -- Insurance coverage for injuries or damages resulting from the completed work or operations of the insured party. 

    Contract Bond -- A guarantee of the faithful performance of a construction contract and the payment of all labor and material bills incident thereto. 

    Concealment -- In insurance it means failure to disclose a material fact. Concealment may void an insurance policy. 

    Comprehensive General Liability Policy -- A form of liability insurance which reimburses the policyholder in the event he has become liable to pay money for damage or injury he has caused to others. This form does not include automobile liability insurance. 

    Contractual Liability -- Liability imposed or assumed by contract, such as but not limited to, indemnification or hold harmless clauses. Insurance for this type exposure is typically provided only upon acceptance of the contractual language by the insurance carrier and with an appropriate premium charge. (Distinguished from tort (civil wrong) liability or criminal liability.


    Debris Removal -- An insurance coverage where the company assumes liability for the removal of debris resulting from damage to insured property from a covered peril. 

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

    Deposit Premium -- The premium deposit required by the insurance company on those types of insurance subject to periodical premium adjustment. (See Audit).


    Employer's Liability -- Legal liability imposed on an employer making him/her responsible to pay damages to an employee injured by the employer's negligence. Generally replaced by "workers' compensation," which pays the employee whether the employer has been negligent or not. An insurance coverage provided by a workers' compensation policy. 

    Endorsement -- A formal, written amendment to an insurance policy becoming a part thereof. 

    Excess Insurance -- An insurance policy written to cover losses over and above another policy after the first (primary) policy insurance limits are exhausted. 

    Exclusion -- Something not covered by insurance and so stated in the wording of the policy. 

    Extended Coverage -- An endorsement extending the fire policy, usually to cover loss caused by windstorm, hail, explosion (except of steam boilers), riot, civil commotion, aircraft vehicles, and smoke.


    Fidelity Bond -- A bond which makes good if an employee steals or embezzles or otherwise robs his/her employer. Sometimes referred to as an "employee dishonesty bond." 

    Fine Arts Insurance -- Coverage for works of fine arts. Usually written on an "All Risk" and "valued" basis. 

    Floater Policy -- An insurance policy covering movable or mobile (non-vehicle) property while on land. Sometimes called "Inland Marine."


    Garage Keeper's Legal Liability -- A type of liability of mechanics garage owners have for vehicles while on the garage owner's premises.


    Hold Harmless -- See Indemnify 

    Hull Coverage -- Insurance covering damages to the hull of a ship or an aircraft.


    Indemnify -- To compensate another party for actual loss sustained, or in a contract, a clause where one party promises to compensate for losses of the other party from causes which may or may not be identified in that clause. The term "hold harmless" may sometimes be used in place of indemnify. 

    Insurable Interest -- No policy should be issued to insure a party who will not actually be out-of-pocket if the peril insured against should happen. The policyholder must have an interest in the insured object. 

    Insurance -- The making of a legal and enforceable contract between one party (the insurer or underwriter) with another (the insured) whereby in consideration of a sum of money (premium) the insurer agrees to pay an agreed amount of money to the insured if and when the latter may suffer some loss or may be injured by some event, the happening of which is described in the contract of insurance.






    Larceny -- Generally the unlawful taking of the personal property of another without his/her consent and with intent to deprive him/her of the ownership or use thereof. This offense is defined by statutes in practically all states and the definitions differ somewhat from state to state. 

    Liability -- The [financial] responsibility of a party for a wrong to another resulting from tort, contract liability (see indemnify) or criminal liability. Insurance cannot be purchased for criminal liability. 

    Liability Insurance -- A form of insurance that protects from financial liability that can be imposed for bodily injury or other personal injury or damage to property; such liability normally results from negligent acts or omissions. 

    Livestock Insurance -- Insurance against the death of an animal from named perils. 

    Loss Prevention -- Services sometimes provided by an insurance carrier to minimize loss potential of the insured party. Following or not following such service recommendations can affect premium to the insured. 

    Loss Reserve -- An estimate of the amount an insurer expects to pay for any reported loss or claim. This amount is set aside by the insurer in a "reserve account" for potential payment. The total reserves and actual paid losses of any insured are included for calculation of renewal insurance premiums to that insured.


    Malpractice -- Improper professional actions or failure to exercise proper professional skills by a person practicing a profession, such as a physician, dentist, architect, etc. 

    Minimum Premium -- The smallest premium which an insurance company may charge under the rules for writing a particular policy for a designated period. It is intended to cover the expense incurred in writing the policy for which premium on a strict pro rata basis are insufficient.


    Named Perils -- Named peril (or hazard) policies specify what hazards are insured against, contrary to so-called All Risk policies. 

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




    Personal Injury Liability -- Liability for non-physical injury to a human being; e.g., libel, slander, defamation of character, invasion of privacy, denial of due process, etc. 

    Performance Bond -- Insurance to cover the promise of one party to another to perform in a certain manner to accomplish a designated goal, such as a contract for services. 

    Peril -- This term refers to the causes of possible loss, for instance: fire, windstorm, explosion and the like. 

    Pressure Vessel -- Something designed to contain gas or vapor (such as steam) under pressure. A steam boiler is an excellent example. 

    Product Liability -- Liability imposed for damages caused by accident and arising out of the handling or use or the existence of any condition in goods or products manufactured, sold, handled or distributed by the insured or others trading under his/her name. 

    Professional Liability -- See Malpractice 

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

    Property Damage Liability Insurance -- Covers the insured's legal liability for negligent damage to property of others. A form of "third party" insurance. 

    Property Insurance -- The insurance of real and personal property, owned or under the care, custody and control of the insured party, against physical loss or damage. A form of indemnity insurance not to be confused with property damage liability insurance (see that definition). 

    Punitive Damages -- Damages awarded separately and in addition to the compensatory damages, usually on account of malicious or wanton misconduct, to serve as a punishment for the wrongdoer, and possibly, as a deterrent to others. Sometimes referred to as "exemplary damages."




    Rate -- The price of $100 of insurance, usually for one year. Expressed in dollars and cents or in percent. 

    Rental Value Insurance -- Insurance which reimburses the owner of a building who occupies it himself for the cost of renting some other place if his own building be rendered unusable by some peril insured against. 

    Replacement Value -- The current cost at which an item or building can be replaced with comparable item or building. 

    Reporting Form -- A policy designed for use when values fluctuate during the policy term. Usually an adequate limit of liability is set, and the insured reports the values actually on hand on a given day of each month. A deposit premium may be charged at the beginning of policy term and then adjusted periodically based on actual reported values. 

    Reserve -- See Loss Reserves 

    Risk -- The chance of loss. Specifically, the possible loss or destruction of property or the possible incurring of a liability.
    Sometimes refers to the subject of an insurance contract. 

    Robbery -- The felonious taking, either by violence or threat of violence, of the personal property of another. Contrast larceny, where the theft is accomplished by stealth and the degree of turpitude is measured by the value of personal property. Robbery is commonly known as "hold-up."


    Salvage -- The value of property after it has been partially damaged by fire or other perils. Also used as a verb meaning to save endangered property and to enhance the value of damaged property. 

    Schedule of Insurance -- The list of individual items covered under one policy, such as various buildings. 

    Self Insurance -- A term used to mean the fund set aside by a party for the purpose of financial cover for the risk of loss.

    Short Rate -- The term "short rate" in insurance is used to describe the charge required for insurance taken for less than one
    year, and, in some cases, the earned premium for insurance cancelled by the insured before the end of the policy period. 

    Stop Loss -- The maximum amount an insurer will pay for any one loss as stated in the insurance policy. A term usually reserved for blanket policies having a total insured value for more than one building and intended to prevent the insurer from having to pay for total loss to all properties. In this event an excess policy may sometimes also be purchased. 

    Subrogation -- The legal process by which an insurance company seeks from a third party who may have caused the loss, recovery of the amount paid to the policyholder. 

    Survey -- (1) A careful examination of the insurance requirements of an insurance buyer and the report of such examination. (2) An insurance engineer's study of a risk for underwriting and/or accident and occupational disease prevention purposes.


    Temporary Total Disability Benefits -- The weekly benefit payable to an employee as prescribed by workers' compensation law because he/she is temporarily unable to perform any duties for his/her employer due to an accident or disease and arising out of his employment. 

    Third Party Insurance -- Generally , this insurance protects the insured party against financial loss arising from his/her acts or omissions that resulted in bodily injury or personal injury to others, or damage to the property of others. The term "Third Party" means, (1) the insurance company, (2) the insured and (3) the injured party (claimant). 

    Tort -- A wrongful act resulting in injury to another's person, property, or reputation for which the injured party is entitled to seek compensation.






    Waiver -- Usually, to waive one's rights to collect from another party for injuries suffered. In court, waivers must generally describe all the hazards, potential injuries, and the specific event , time and place for which they are intended. 

    Workers' Compensation Insurance -- Insurance to cover the liability imposed by law, which varies from state to state, to an employer for injuries or disease of a paid employee within the scope of employment and without regard to negligence of the employer or other employees of the employer.







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