A

acts of God: natural occurrences beyond control such as floods, earthquakes, etc.

actual cash value (ACV): replacement cost minus depreciation

additional living expense: a coverage found in the Dwelling Property and Homeowners Programs which reimburses the insured for the additional cost of living resulting from a covered peril that makes the insured premises "uninhabitable."

advertising injury: an injury arising out of material that slanders or libels a person in an advertising context, including infringement of copyright, title or slogan.

agreed amount: an amount of insurance coverage agreed upon by the insured and insurer, which represents a fair value of the property at the time of policy inception.

all risk: a policy that covers the risk of loss or all perils except those that are specifically excluded. Also called open perils policy.

arbitration: a process by which insurance companies usually settle their differences when one company subrogates against another. The decision at arbitration is final and binding.

assigned risk: special plans which are created to provide auto and workers compensation insurance for individuals unable to obtain same in the voluntary market.

attractive nuisance: in negligence cases, situations which "attract" children and are inherently dangerous, such as swimming pools and construction sites.

audit: a formal review of an initial premium computation.

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binder: a temporary contract of insurance, oral or written, offered by an insurer while a policy is pending. It is usually written for a period of 30 or 60 days and remains in force until a permanent policy is either issued or denied.

blanket insurance: a single policy written on an insured’s interest for the following situations: two or more different types of properties at one location, two or more pieces of the same type of property at one location, two or more different types of property at two or more locations.

bodily injury liability: coverage which agrees to pay all sums which the insured becomes legally obligated to pay for bodily injury (including death) sustained by any person in an occurrence.

bonds: there are two general types of bonds. Fidelity bonds address employee dishonesty and surety bonds address the guarantee of performance.

business auto policy: insures a variety of commercial motor vehicles under one policy, such as a construction company’s fleet of trucks and cars.

business income insurance: provides for lost income resulting from the cessation of business due to a covered direct loss.

businessowners policy (BOP): a commercial package policy designed primarily for small and medium-sized apartment, office and mercantile risks.

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cancellation: the act of terminating an insurance policy during the policy period.

care, custody and control: a phrase used in property and liability insurance to indicate an individual’s possession and responsibility for property, owned by another. Also known as the 3 C’s.

casualty insurance: primarily refers to coverage designed to address the liability of individuals and organizations resulting from negligent acts in their personal, business or professional roles including: general liability, automobile, workers compensation, crime insurance and bonds.

causes of loss forms: forms used in commercial building and persona property coverage which describe the perils covered as well as the exclusions.

certificate of insurance: a document that evidences the existence of insurance coverage.

coinsurance clause: an agreements between the insurer and insured whereby the insurer agrees to provide a reduced premium rate for coverage and the insured agrees to carry a specified percentage of the replacement cost of the building.

collision: a physical damage auto coverage which covers loss to an insured vehicle caused by collision with another object or overturn.

comparative negligence: in workers compensation law defenses, a negligent employee may recover a portion of his damages.

completed operations: operations are completed when all operations to be performed under a contract or at a given site have been completed, or a portion of the work has been put to its intended use.

comprehensive coverage: a physical damage auto coverage which covers losses to an insured vehicle caused by missiles or falling objects, theft, explosion, windstorm, flood, contact with birds or animals, etc.

concealment: the failure to disclose a material fact. A fact is material if it would have changed the underwriting judgment on the policy in question.

conditions: provisions in an insurance contract that describe the rights and duties of the insured and insurer.

contingent liability: liability which arises out of the work done by independent contractors.

contractual liability: coverage which provides bodily injury and property damage for occurrences arising out of the liability assumed by the insured under a specified contract.

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declarations: the portion of an insurance contract featuring names and addresses, insurance type, policy period, premiums and rates, etc.

depreciation: the lessening of the value of real and personal property due to age, wear and tear, etc.

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earned premium: premium which has been paid by the insured and which has been earned from the insurer’s point of view for protection provided.

excess liability: liability coverage which provides higher limits as opposed to the coverage for expanded liability expenses provided by extended liability coverage.

exclusions: details of what the contract will not cover.

expiration date: the date on which an insurance policy ceases to provide coverage.

exposure: all businesses have certain commercial liability exposures such as premises-operations, products-completed operations, contracts, contingent liability, personal injury and advertising injury.

extended coverage (EC) perils: a grouping of perils which include windstorm, civil commotion, smoke, hail, aircraft, vehicles, volcanic eruption, explosion and riot.

extra expense insurance: an indirect loss property coverage designed for businesses that cannot afford to shut down following direct damage by a covered peril.

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fire insurance: often used to describe property insurance since fire is the most basic property peril.

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garagekeepers legal liability: or garagekeepers coverage, pays all sums the insured legally must pay as damages for loss to a covered auto left in the insured’s care, custody and control.

garage liability: pays all sums which an insured legally must pay as damages because of bodily injury or property damage to which the insurance applies, caused by an accident and resulting from the ownership, maintenance or use of a covered auto.

general liability insurance: deals with such exposures as premises-operations, products-completed operations, etc.

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hazards: any condition that gives rise to a peril.

improvements and betterments: a term used to describe the property improvements made by a tenant to the apartment which he/she rents.

indemnity: a term describing the purpose of property insurance — to reimburse or compensate for a covered loss.

inland marine: covers property exposed to loss from transportation on land.

insurance: a method of handling pure risk by spreading it over a large number of similar exposure units to predict individual losses with some accuracy.

insurance to value: in property insurance, the ratio of the amount of insurance carried to the replacement cost value of an insured property. Insured parties should strive to carry an amount of insurance as close as possible to 100% of the replacement cost.

insuring agreement: one of four parts of the insurance contract which describes the obligations assumed by the insurance company. In short, it is the language that provides a policy’s coverage.

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judgment: an amount of money awarded to a third party in negligence cases in a court of law.

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liability insurance: addresses the responsibilities of an insured based on a particular exposure such as premises-operations, products-completed operations, automobile, etc.

libel: involves the dissemination of false information about another individual’s character or reputation through the written word.

limit of liability: the maximum amount the insurer will pay for any one loss.

loss: in property insurance, an unintended, unforeseen reduction in economic value.

loss of use: the inconvenience caused to an individual for the inability to use property.

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mysterious disappearance: describes the disappearance of insured property without information as to how the loss occurred.

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named insured: the insureds named in the Declarations of an insurance policy.

named perils: a named perils policy actually lists the perils covered.

negligence: an unreasonable or imprudent act, but not an intentional act.

nonowned auto: an auto used by the insured that is leased, hired or borrowed.

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occurrence: a sudden, unexpected, unforeseen event resulting in financial loss including repeated and continuous exposure to conditions.

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pair and set clause: appears in many property policies describing how a claim should be handled when one item of a pair or set is damaged, lost or destroyed.

peril: the immediate, specific cause of a loss.

personal injury: an injury, other than bodily injury, arising out of one or more of the following actions: false arrest, detention or imprisonment; malicious prosecution; wrongful entry into or eviction of a person from a dwelling that person occupies; slander or libel against a person or organization; violation of rights of privacy.

personal liability: pays on behalf of the insured, all sums which the insured becomes legally obligated to pay as damages because of bodily injury or property damage caused by an occurrence resulting from personal premises and activities.

personal property floater: an all risk personal inland marine floater providing unscheduled personal property coverage, worldwide, on all risk basis.

physical damage: in automobile coverage, this term is used to include collision and comprehensive insurance.

premium: the cost of an insurance policy developed by multiplying a company’s rate per thousand dollars for insurance by a multiple of one thousand dollar units.

products liability: the claim of negligence involving the products exposure usually is based on one of the following: improper product design, improper product assembly, failure to inspect product, failure to warn of dangerous characteristics, deceptive advertising, failure to foresee possible misuse.

professional liability: arises from a failure to use due care and the degree of skill required and expected of a particular profession.

proof of loss: a form developed by insurance companies to be completed by insured to substantiate property claims.

property damage liability: coverage which agrees to pay, on behalf of the insured, all sums which the insured becomes legally liable to pay for property damage.

property insurance: coverage of real property (land) and personal property against physical loss or damage from covered perils.

pro rata liability (other insurance): if more than one insurance policy is written on property, each policy must pay a proportionate share of the loss, each must not match the loss.

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rate: the per unit cost of insurance which, when multiplied by a multiple of one thousand units, equals the premium.

replacement cost (RC): the amount of money it would cost to replace a damaged or destroyed item with one of like kind and quality at the time of loss.

risk: uncertainty concerning financial loss; the chance of loss.

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scheduled insurance: to schedule something in insurance terms is to list or specify it on a form.

short rate: when an insured cancels an insurance policy, unearned premium is returned on a short rate basis with a charge deducted for administration cost.

slander: involves the oral dissemination of false information about another individual’s character or reputation.

subrogation: a process by which the insurance company, after paying its insured for a loss, assumes the insured’s rights of recovery against a responsible third party and proceeds accordingly.

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umbrella liability coverage: designed to provide coverage for higher limits than are generally available under basic liability policies or liability exposures either limited or excluded under basic liability policies.

underinsured motorist coverage: covers the insured when involved in an accident with a driver who has auto liability insurance, but the limits are insufficient to compensate for damages.

underwriting: the process by which prospective insureds are reviewed or examined for their acceptability as insureds.

unearned premium: premium which has been paid to an insurance company, but which has not been earned from the insurer’s standpoint.

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vacancy: refers to a building which is unfurnished and not being used as a dwelling or for business.

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windstorm: the peril involving damage by wind, including high winds, cyclones, tornadoes and hurricanes.