Abandoment: As used in property insurance, prohibits the insured from abandoning damaged property to the insurance company for repair or disposal.
Accounts Receivable Coverage: Covers loss of sums owed to the insured by its customers that are uncollectible due to damage by an insured peril to accounts receivable records.
Actual Cash Value (ACV): Cost to repair or replace damaged property with materials of like kind and quality, less depreciation.
Additional Insured: A person or organization for whom insured status is arranged by endorsement.
Advertising Injury: General liability coverage that insures against libel, slander, invasion of privacy, copyright infringement and misappropriation of advertising in connection with the insured’s advertising of its goods or services.
Aggregate: The maximum amount an insurance company will pay during the policy.
All Risk Coverage: Property insurance covering loss arising from all causes of loss except those that are specifically excluded.
Application: A form with all the information needed for an insurance company to underwrite and rate a specific policy.
Audit: A verification of the financial records, usually payroll or receipts, of an organization to determine exposures and premiums.
Automobile: A land motor vehicle, trailer or semi-trailer designed for travel on public roads, not including mobile equipment.
Bailee Coverage: Coverage on property left in the care of the insured for storage, repair or servicing.
Basic Cause of Loss Form: Property coverage for named perils: Fire, Lightening, Explosion, Smoke, Windstorm, Hail, Riot, Civil Commotion, Aircraft, Vehicles, Vandalism, Sprinkler Leakage, Sinkhole Collapse and Volcanic Action.
Basic Limits: The minimum limits of liability that can be carried by an insured Best’s Rating: A rating system by A.M. Best Company giving the financial condition of insurance companies.
Binder: A legal agreement issued on behalf of insurance companies to provide temporary evidence of insurance until a policy can be issued.
Bodily Injury by Accident Limit (Workers’ Compensation): The most an insurer will pay under Part Two of a Workers’ Compensation Policy for claims arising out of any one accident, regardless of how many employee claims arise out of the accident.
Bodily Injury by Disease – Each Employee (Workers’ Compensation): The most an insurer will pay under Part Two of a Workers’ Compensation Policy for damages due to bodily injury by disease to any one employee.
Bodily Injury by Disease – Policy Limit (Workers’ Compensation): The most an insurer will pay under Part Two of a Workers’ Compensation Policy employee bodily injury by disease claims during the policy period regardless of the number of employees who make such claims.
Bodily Injury Liability Limits: The insured is legally liable for damages due to bodily injury, sickness, or disease, including resulting death.
Boiler & Machinery Insurance: Coverage for loss caused by mechanical or electrical equipment breakdown, including damage to the equipment.
Bond:A written agreement in which one party, the surety, guarantees the performance or honesty of a second party, the principal (obligor), to the third party (oblige) to whom the performance or debt is owed.
Brands and Labels Endorsement: Property insurance coverage that allows the insured to remove labels from damaged goods or mark the items as salvage, provided the goods are not damaged in the process.
Broad Causes of Loss Form: Property coverage for the named perils: Fire, Lightening, Explosion, Smoke, Windstorm, Hail, Riot, Civil Commotion, Aircraft, Vehicles, Vandalism, Sprinkler Leakage, Sinkhole Collapse, Volcanic Action, Breakage of Building Glass, Falling Objects, Weight of Snow, Ice or Sleet, Water Damage (in the form of leakage from appliances) and Collapse from Specified Causes.
Building Ordinance Coverage: Covers against loss caused by enforcement or ordinances or laws regulating construction and repair of damaged buildings
Burglary: Theft of property by forcible entry, which is evidenced by visible signs, in a premises, by a person.
Business Auto Policy: Auto Policy for businesses that includes auto liability and auto physical damage coverage’s.
Business Income Coverage: Insurance covering loss of income by a business when operations are interrupted due to property loss that is a covered cause of loss.
Business Interruption Coverage: See Business Income Coverage.
Business Owners Policy (BOP): A Policy that combines property and liability coverage’s for special types of small businesses.
Capital: Equity of shareholders of a stock insurance company. The company’s capital and surplus are measured by the difference between its assets minus its liabilities. This value protects the interests of the company’s policyowners in the event it develops financial problems; the policyowners’ benefits are thus protected by the insurance company’s capital. Shareholders’ interest is second to that of policyowners.
Capitalization or Leverage: Ensures the exposure of a company’s surplus to various operating and financial practices. A highly leveraged, or poorly capitalized, company can show a high return on surplus, but might be exposed to a high risk of instability.
Captive Agent: Representative of a single insurer or fleet of insurers who is obliged to submit business only to that company, or at the very minimum, give that company first refusal rights on a sale. In exchange, that insurer usually provides its captive agents with an allowance for office expenses as well as an extensive list of employee benefits such as pensions, life insurance, health insurance, and credit unions.
Case Management: A system of coordinating medical services to treat a patient, improve care and reduce cost. A case manager coordinates health care delivery for patients.
Casualty: Liability or loss resulting from an accident.
Casualty Insurance: That type of insurance that is primarily concerned with losses caused by injuries to persons and legal liability imposed upon the insured for such injury or for damage to property of others. It also includes such diverse forms as plate glass, insurance against crime, such as robbery, burglary and forgery, boiler and machinery insurance and Aviation insurance. Many casualty companies also write surety business.
Claim: A demand made by the insured, or the insured’s beneficiary, for payment of the benefits as provided by the policy.
Coinsurance: In property insurance, requires the policyholder to carry insurance equal to a specified percentage of the value of property to receive full payment on a loss. For health insurance, it is a percentage of each claim above the deductible paid by the policyholder. For a 20% health insurance coinsurance clause, the policyholder pays for the deductible plus 20% of his covered losses. After paying 80% of losses up to a specified ceiling, the insurer starts paying 100% of losses.
Collision Insurance: Covers physical damage to the insured’s automobile (other than that covered under comprehensive insurance) resulting from contact with another inanimate object.
Commercial Lines: Refers to insurance for businesses, professionals and commercial establishments.
Comprehensive Insurance: Auto insurance coverage providing protection in the event of physical damage (other than collision) or theft of the insured car. For example, fire damage or a cracked windshield would be covered under the comprehensive section.
Coverage: The scope of protection provided under an insurance policy. In property insurance, coverage lists perils insured against, properties covered, locations covered, individuals insured, and the limits of indemnification. In life insurance, living and death benefits are listed.
Death Benefit: The limit of insurance or the amount of benefit that will be paid in the event of the death of a covered person.
Deductible: Amount of loss that the insured pays before the insurance kicks in.
Dividend: The return of part of the policy’s premium for a policy issued on a participating basis by either a mutual or stock insurer. A portion of the surplus paid to the stockholders of a corporation.
Earned Premium: The amount of the premium that as been paid for in advance that has been “earned” by virtue of the fact that time has passed without claim. A three-year policy that has been paid in advance and is one year old would have only partly earned the premium.
Elevation Certificate– a document prepared by a qualified engineer or surveyor that provides information about the elevation of the building in relation to the area’s mean high tide as well as information about the building and the location on the most current flood maps.
Elimination Period: The time which must pass after filing a claim before policyholder can collect insurance benefits. Also known as “waiting period.”
Employers Liability Insurance: Coverage against common law liability of an employer for accidents to employees, as distinguished from liability imposed by a workers’ compensation law.
Encumbrance: A claim on property, such as a mortgage, a lien for work and materials, or a right of dower. The interest of the property owner is reduced by the amount of the encumbrance.
Exclusions: Items or conditions that are not covered by the general insurance contract.
Expense Ratio: The ratio of underwriting expenses (including commissions) to net premiums written. This ratio measures the company’s operational efficiency in underwriting its book of business.
Exposure: Measure of vulnerability to loss, usually expressed in dollars or units.
Fiduciary Liability: The liability placed on trustees, employers, fiduciaries and professional administrators with respect to errors and omissions in the administration of employee benefit programs.
Fine Arts Coverage: Property insurance for works of art.
Fire Department Service Charge Coverage: Coverage in a property insurance policy for charges incurred by the insured from a fire department for their services in fighting a fire.
Fire Legal Liability Coverage: Liability coverage for the insured’s legal liability for fire damage to premises rented by the insured.
Fire Wall: A wall designed to prevent the spread of fire from one part of a building to another.
Flat Cancellation: The full cancellation of a policy as of the effective date of coverage which requires the return of paid premium in full.
Flood Coverage: Coverage for damage to property caused by flood.
Flood Exclusion: A provision in most all property insurance policies eliminating coverage for damage by flood and possibly other types of water damage, such as seepage and sewer backup.
Follow Form: An umbrella policy provision that follows the underlying policy for coverage’s and policy provisions.
Forgery or Alteration Coverage: Covers loss due to the dishonesty of writing, signing or altering of checks and bank drafts.
Fortuitous Event: An event that is subject to chance without the implication of suddenness.
Frequency: The number of times that a loss will occur within any given period of time.
Full Coverage: Any form of insurance that provides payment in full of all losses caused by the perils insured against without applying a deductible or depreciation.
Garage Liability Insurance: Insurance coverage for the legal liability of automobile dealers, garages, repair shops and service stations for bodily injury and property damage arising out of their business operations.
Garage-keepers Coverage: Provides coverage to the owners of storage garages, parking lots and body and repair shops for their liability of damage to automobiles left in their custody for safekeeping or repair.
General Aggregate Limit: The maximum amount of insurance payable during the policy period for losses (other than those arising from the products – completed operations hazards as covered under the standard commercial general liability policy)
General Liability Insurance: Insurance protecting businesses from most liability exposures other than automobile and professional liability.
Glass Insurance: A property insurance policy covering breakage of building glass regardless of cause.
Governing Classification: In Workers’ Compensation Insurance, the classification that best describes the workers’ compensation exposure of an employer’s business.
Gross Negligence: Willful and wanton misconduct.
Gross Vehicle Weight (GVW): The weight specified by a manufacturer for the maximum total loaded weight of a single vehicle.
Hired Automobile: An automobile whose exclusive use has been temporarily given to another for a monetary sum or other consideration. The business auto definition of ‘hired autos,’ however, includes auto borrowed except those borrowed from employees or partners.
HO-1 Policy – Basic Form: A basic homeowners policy, termed basic form, that covers named-perils. This insurance provides coverage for an owner-occupied, standalone home or property and the owner’s contents. There are ten perils that are named in this policy. They are: Lightning, theft, vandalism, explosions , smoke/fire, hail/windstorms, damage from vehicles and aircraft, riots and civil commotion, and volcanic eruption.
HO-2 Policy – Broad Form: Similar to an HO-1 Policy but with additional coverage. It is considered a broad form policy. This home insurance policy can cover your home and personal property against 10 named perils with additions such as: Falling objects, weight of ice/snow/ sleet, freezing of AC/heating system, overflow or discharge of water/steam, sudden damage from artificially generated electrical current, and sudden or accidental breaking or bulging of pipes.
HO-3 Policy – Special Form: Most common homeowners insurance policy types. This special form covers your home and other structures on an open-perils basis (perils from HO-1 and HO-2) and your personal property on a named-perils basis.
HOB – Hybrid Homeowners Policy: This policy is very similar or identical to the HO-3 but can provide more coverage against water damage for coastal areas of the U.S. The HOB policy may also cover accessories and equipment on a property.
HO-4 Policy – Tenant’s form: A policy that is specific to renters. This policy is also considered renters insurance. An HO-4 protects a renter’s personal property on a named perils basis and covers their personal liability.
HO-5 Policy – Comprehensive Form: A comprehensive form home insurance policy that covers the home, other structures, and personal property on an open-perils basis.
HO-6 Policy – Condominium Form: A condo insurance policy that covers the unit from the walls in. It also covers the things inside the unit – appliances, fixtures, and belongings – as well as personal liability and more.
HO-7 Policy – Mobile or Manufactured Home Form: This policy is similar to an HO-3 but is specifically for mobile or manufactured homes. While both types of dwellings may be interchangeable, they are defined slightly differently. Manufactured homes and mobile homes are both regulated by HUD (Housing and Urban Development, division of the federal government). According to HUD, a factory-built home prior to June 15, 1976 is named as a mobile home. A manufactured home is defined as a home built after June 15, 1976. These homes don’t fall under regular homeowners insurance coverage which is why they have a designated HO-7 form.
HO8 Policy – Older Property Form: This policy is a modified coverage form that provides home insurance and coverage for older buildings. Older homes that are forty years or older, made with materials that are hard to find, or no longer used in construction fit into this category. This policy covers replacement costs that outweigh the property’s market value.
Hold Harmless Agreement: A contractual agreement that requires one contracting party to assume certain legal liabilities of the other party.
Host Liquor Liability: Liability coverage for hosts of business or social functions arising out of the serving or distribution of alcoholic beverages by a party not engaged in this activity as a business enterprise.
Improvement and Betterments: Additions or changes made by a lessee at his own expense to property that may not legally be removed, usually covered under the tenants property coverage.
Incurred Losses: The amount of paid claims and loss reserves within a particular period of time, usually a policy year. Customarily computed as losses incurred during the period, plus outstanding losses at the end of the period, less outstanding losses at the beginning of the period.
Independent Adjuster: A claims adjuster who provides adjustment services to insurance companies but is not employed by them.
Independent Contractor: An individual or company who has agreed, in writing, with another party to perform a job or function on behalf of that party.
Inflation Guard Provision: A provision that increases the limit of insurance by a specified percentage over a specified period of time to offset inflation costs.
Insurance to Value: Insurance written in an amount equal to the value of the property or which meets coinsurance requirements.
Insurer: An insurance company that provides insurance coverage and other insurance related services.
Joint Venture: A business relationship when two or more persons join their labor or property for a business undertaking and share profits.
Judgement Rate: A rate that is applied solely to individual insureds by the insurance company.
Lapse: The termination of an insurance policy due to the failure to pay the premium.
Leasehold Interest: Property insurance covering the loss suffered by a tenant due to termination of a lease because of damage to the leased premises by a covered loss.
Lessee: The person to whom a lease is granted Lesser: The person granting the lease.
Liability: The legal obligation to pay a monetary award for injury or damage caused by one’s negligent or statutorily prohibited action.
Liberalization Clause: A provision within an insurance policy that broadens the coverage if the insurance company offers a broader coverage form within the first 45 days of coverage.
Lien: An obligation that can be held by an individual who has an interest in a particular matter or property.
Limit of Liability: The most an insurance company agrees to pay in the case of loss.
Longshore and Harbor Workers’ Compensation Act: A federal law that provides workers’ compensation benefits to employees of a vessel injured in maritime employment – usually in loading, unloading, repairing or building a vessel – but not applicable to crew members.
Loss: The amount an insurance company pays for damages under the terms of a policy.
Loss Adjustment Expense: The cost assessed to a particular claim for investigating and adjusting that claim.
Loss Constant: A flat charge added to the premium of small workers’ compensation policies to off set higher loss ratios.
Loss Control: A technique that is put in place to reduce the possibility that a loss will occur or reduce the severity of those that do occur.
Loss Payable Clause: An insurance clause that authorizes loss payments to a person or entity having an insurable interest in the covered property.
Loss Ratio: Percentage of losses incurred against earned premiums.
Loss Report: A form showing reported claims which provides information such as the date of occurrence, type of claim, amount paid and amount reserved for each loss Loss Reserve: An estimated amount set aside for a particular claim that has not yet been paid.
Lost Policy Release: A signed statement by the named when the insured wishes to cancel the policy, but has lost or mislaid the policy, which releases the insurance company from all liability or losses.
Medical Payments, Auto: Coverage, which is optional, under an auto policy to pay for medical expenses for bodily injury caused by an auto accident, regardless of fault. Coverage for persons other than the named insured and his or her family members is typically restricted to circumstances when they are occupants of the insured auto.
Medical Payments, General Liability: A general liability coverage that reimburses others, regardless of fault, for medical or funeral expenses incurred as a result of bodily injury or death sustained by an accident Mexico Coverage: Coverage which is sometimes provided under automobile policies for the operation of an insured motor vehicle within Mexico, usually limited to a stated number of miles from the U.S. border.
Minimum Premium: The lowest amount of premium to be charged for providing particular insurance coverage.
Misrepresentation: A false or misleading statement, either directly or indirectly that, if intentional and material, can allow the insurer to void the insurance contract.
Mobile Equipment: Equipment such as earth movers, tractors, diggers, farm machinery, forklifts, etc., that even when
self-propelled, are not considered as automobiles for insurance purposes.
Monopolistic State Funds: States or Jurisdictions where an employer must obtain workers’ compensation insurance from a state fund or qualify as a self-insurer, as is allowed in five of the states: North Dakota, Ohio, Washington, West Virginia, Wyoming, Puerto Rico and the U.S. Virgin Islands.
Mortgage Clause: Property insurance provisions granting protection for the mortgagee named in the policy. It establishes that loss to mortgaged property is payable to the insured and to the mortgage named in the policy.
Named Perils Coverage: A property insurance term referring to exact causes of loss specifically listed as covered.
National Flood Insurance Program: A federally funded program established to make flood insurance available to properties located in participating communities.
Nonadmitted Insurer: An insurance company that is not licensed to do business in a specific state. The insurers may write coverage through an excess and surplus lines broker that is licensed in these jurisdictions.
Nonowned Automobile: In commercial auto policies, coverage for autos that are used in connection with the named insured’s business but are neither owned, leased, hired, rented, or borrowed by the named insured. The term specifically applies to vehicles owned by employees and used for company business.
Nonsubscription: A Workers Compensation term used in Texas that refers to employers who choose to be out of the Workers Compensation system. Firms that are proven negligent in causing a worker’s injury, can be held liable in tort, since nonsubscribing employers waive the traditional common law defenses available to employers subject to Workers Compensation laws.
Occupational Disease: A conditon or disorder that is caused by exposure to environmental factors associated with employment, including acute and chronic illnesses or diseases that may be caused by inhalation, absorption, ingestion or direct contact.
Occupational Injury: An injury arising in the course and scope of employment that is caused by factors associated with the work undertaken.
Occurrence: A continual, gradual or
repeated exposure to substantially the same general harmful conditions. General liability policies insure liability for bodily injury or property damage that is caused by an occurrence.
Ordinance and Law– a valuable coverage for home owners which provides additional limits, usually 25 to 50% of building coverage, to pay the increased cost of rebuilding and replacement. This coverage is triggered when local laws or ordinances require the improvements or enhancements in order for the rebuilt structure to come into compliance with new the requirements.
Ordinance & Law for commercial buildings in Florida has three separate components or parts.
- Coverage A – Undamaged Portion of the Building
- Coverage B – Demolition
- Coverage C – Increased Costs of Construction
Part A) Provides for how it applies to the undamaged portion of the building when damages exceed a certain threshold.
Part B) Is the amount of coverage available for the increased cost of demolition and debris removal when a portion of the original, undamaged structure remains.
Part C) Pays for mandatory building enhancements so the new structure comes into compliance with new codes, such as replacing windows, installing fire suppression systems or elevators for ADA compliance.
As you can see, all three sections are needed and highly recommended. Without this valuable coverage, the additional required costs for the upgrading of the building during reconstruction would be the responsibility of the building owner.
Package Policy: A policy providing several different coverages combined into one policy. Refers to a policy providing both general liability insurance and property insurance.
Payroll Limitation: A limit on the amount of payroll for certain classifications used for the development of premium.
Peril: Cause of loss such as fire, windstorm, collision etc.
Personal Auto Policy (PAP): A policy insuring private-passenger autos owned by individuals.
Personal Injury: A General Liability coverage for insurable offenses that cause harm, other than bodily injury, such as false arrest, detention or imprisonment, malicious prosecution, wrongful eviction, slander, libel and invasion of privacy.
Personal Injury Protection (PIP): An automobile insurance coverage mandated by law in some states. The statutes typically require insurers to provide or offer to provide first-party benefits for medical expenses, loss of income, funeral expenses and similar expenses without regard to fault.
Personal Property: All tangible property not classified as real property such as contents.
Policy Fee: A one-time charge per policy that does not change with the size of the premium.
Policy Period: The term or duration of a policy including the effective and expiration dates Pollutant: An irritant or contaminant, whether in solid, liquid, or gaseous form, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste Premises: The location where coverage applies.
Premises-Operations: A category of hazard ordinarily insured by a general liability policy which is composed of those exposures to loss that fall outside the defined ‘products-completed operations hazard,’ including liability for injury or damage arising out of the insured’s premises or out of the insured’s business operations while such operations are in progress Premium: The amount of money an insurance company charges to provide coverage in a policy.
Pro Rata Cancellation: The cancellation of an insurance policy with the return premium being the full proportion of premium for the unexpired term of the policy, without penalty for early cancellation.
Product: Items manufactured, sold, handled, distributed or disposed of by the named insured or others involved with the named insured in the course of their business. Includes containers, parts and equipment, product warranties and provision of or failure to provide instructions and warnings.
Product Liability: The liability for bodily injury or property damage a merchant or manufacturer may incur as a consequence of some defect in the product sold or manufactured Products-Completed Operations: General Liability coverage for liability arising out of the insured’s products or business operations conducted away from the insured’s premises once those operations have been completed.
Professional Liability: Coverage designed to protect professionals such as physicians and real estate brokers, against liability incurred as a result of errors and omissions in performing professional services.
Property Damage: In the general liability policy, a physical injury to property, resulting in the loss of use.
Property Insurance: First-party insurance for real and personal property against physical loss or damage.
Real Property: Real estate including buildings and vegetation.
Renewal Policy: A policy issued to replace an expiring policy.
Rents or Rental Value Insurance: Insurance that reimburses a building owner for loss of rental income due to damage by an insured peril.
Replacement Cost Coverage Endorsement: A property insurance provision that changes the valuation of covered property to replacement cost with no deduction for depreciation.
Return Premium: The amount of premium due to the insured should the actual cost of a policy be less than the insured previously paid.
Robbery: Theft of property while force is used or threatened.
Short-Term Cancellation: Cancellation of an insurance policy prior to the expiration date in which a penalty in the form of a less than full prorate premium refund is allowed.
Special Causes of Loss Form: A cause of loss form providing coverage from all causes of loss unless specifically excluded or limited.
Specified Causes of Loss Coverage: Auto physical damage coverage only for losses caused by the perils listed in the policy.
Sprinkler Leakage Coverage: Coverage for property damage caused by the accidental discharge or leakage of water from automatic sprinkler systems or other fire prevention devices.
Surplus Lines Insurance: Insurance written by insurers not licensed in the states where the risks are located and placed with such insurers under the surplus line laws of the various states. Before such placements can be made through specially licensed surplus line agents and brokers, state laws generally require evidence reported before some predetermined future date (‘sunset’).
Time Element Insurance: A term referring to property coverage for loss of earnings or income resulting from the inability to put damaged property to its normal use.
Transit Coverage: Coverage on the insured’s property while in transit from one location to another, over land.
Umbrella Liability Policy: A policy designed to provide additional protection against catastrophic losses covered under liability policies, such as the business auto policy, commercial general liability policy, watercraft and aircraft liability policies and employers liability coverage. It provides excess limits when the limits of the underlying liability policies are used up by the payment of claims and it drops down and picks up where the underlying policy leaves off when the aggregate limit of the underlying policy in question is exhausted by the payment of claims. It also provides protection against some claims not covered by the underlying policies, subject to a self-insured retention.
Underinsured Motorists Coverage: Provides coverage for bodily injury, and in some states property damage, for losses incurred by an insured when an accident is caused by a motorist who does not have sufficient insurance limits.
Underlying Coverage: The insurance or coverage in place on the same risk that will respond to loss before the excess policy is called on to pay any portion of the claim.
Unearned Premium: That portion of the policy premium that represents the unexpired policy term.
Uninsured Motorist coverage: Provides coverage for bodily injury, and in some states property damage, for losses incurred by an insured when an accident is caused by a motorist who is not insured.
Utility Service Interruption Coverage: Coverage for the loss to an insured due to lack of incoming electricity which was caused by damage from a covered cause of loss, such as a fire or windstorm, to property away from the insured’s premises – usually the utility generating station. Also referred to as ‘off-premises power coverage’.
Vacancy Provision: Property insurance provision found in commercial property policies that restrict coverage in connection with buildings that have been vacant for a specified number of days, usually 60 days.
Valuable Papers and Records Coverage: Coverage that pays the cost to reconstruct damaged or destroyed valuable papers and records and usually includes almost all forms of printed documents or records except money or securities; data processing programs, data and media are usually excluded.
Waiver of subrogation: Also known as ‘transfer of rights of recovery,’ the relinquishment by an insurer of the right to collect from another party for damages paid on behalf of the insured.