Insurance Glossary

List of Insurance Terms and Definitions

Insurance Terms



Abandonment Clause: A clause often contained in property insurance policies
stating that the insured cannot abandon damaged property to the insurer and
demand to be reimbursed for its full value.

Accident: A fortuitous, unexpected, undesigned, unintended event occurring
suddenly. Today.

Accommodation Line: Business accepted by a company which normally would be
rejected according to a strict underwriting standard, but which is accepted
because of the relationship of the agent to the company or the client to the
company and agent.

Account Current: The report of premium transactions, usually on a monthly basis,
either provided by the agency to the company, or by the company to the agency.

Accounts Receivable Coverage Form: An inland marine coverage form that insures
against loss the insured suffers when not able to collect account receivables
from customers

Accredited Advisor in Insurance (AAI): Designation offered by the Insurance
Institute of America (CPCU/IIAA) that stresses the production side of insurance,
with study in personal and commercial property and liability contracts, sales
and agency management.

Accredited Customer Service Representative (ACSR): Designation offered by the
Independent Insurance Agents of America (IIAA) that stresses the service side
of insurance, with study in commercial and/or personal lines insurance contracts,
account development, errors and omissions, and quality customer service.

Actual Cash Value (ACV): The cost to replace an item of property at the time
of loss, less an allowance for depreciation. Often used to determine amount
of reimbursement for a loss (Replacement Cost — Depreciation).

Actuary: A statistical specialist responsible for rate, reserve, and dividend
calculations as well as other insurance-related statistical studies.

Additional insured: This is an individual, company or some other entity that
is not considered the insured as definded under the insurance policy of another,
but may be added to that policy by endorsement to aford a degree of insurance

Additional Living Expense: A type of insurance included within homeowners’
policies. ALE coverage reimburses the insured for the cost of maintaining a
comparable standard of living following a covered loss that exceeds the insured’s
normal expenses prior to the loss.

Adjustable Exposures: Premiums for some coverages (exposures) are based on
estimates of amounts which may change during the policy term. These include:
sales, payroll, costs of contracts, numbers of items held in inventory, etc.
These are reviewed and any premium adjustment is made at the time of audit.
(See Audit)

Adjuster: A representative of the insurer who arranges for adjustment and/or
settlement of a loss

Admitted Aircraft Liability Coverage: A coverage sometimes written in conjunction
with Aircraft passenger liability which can provide reimbursement for death
or dismemberment without requiring legal action.

Advertising Injury: Coverage provided under Liability policies which provides
coverage against liability for libel, slander, violation of privacy, misappropriation
of advertising ideas or infringement of copyright, title or slogan.

Agency Agreement: The contract which establishes the legal relationship between
the agent and the insurer. In addition to other features, it sets forth the
authority of the agent and his scale of commissions.

Agency Bill: A bill for the policy is produced in the agent’s office and the
policyholder pays the premium to the agent.

Agency Management System: In-house computer capable of performing multiple
functions: accounting, client and policy information maintained and word processing
are included. Other functions include diary/suspense, claims handling, sales
and marketing, etc.

Agent: Usually an insurance company appointed representative which is licensed
by the state in which they do business. They can solicit, market, negotiate,
bind, and administer insurance policies for the insurer.

Aggregate Limit: A type of policy limit found in liability policies which limits
coverage to a specified total amount for all losses occurring within the policy

Agreed Value: Written with property insurance policies. It waives the Coinsurance
clause and requires the insured to carry insurance equal to at least 80% of
a signed statement of values filed with the company.

Aircraft Hull Insurance: Physical damage insurance provided to cover loss or
damage to an insured aircraft, in motion, not in motion or both.

Aircraft Liability Insurance: Coverage written to cover public and passenger
liability and property damage liability.

Airport and Air Meet Liability: Coverage that provides protection to airports
for bodily injury and property damage liability.

All Risk Insurance: Insurance protecting the insured from loss arising from
any peril other than those perils specifically excluded by name. This contrasts
with Named Peril insurance, which names the peril or perils insured against.

Allied Lines: Property coverages which are closely associated and frequently
sold with fire insurance: Dwelling insurance, Earthquake insurance, Sprinkler
Leakage, etc.

Application: Form to collect information for a particular account.

Apportionment: The division of loss among insurers when two or more cover the
same loss.

Appraisal: A survey of values in order to determine the appropriate amount
of insurance to be written or the proper amount of loss to be paid.

Appraisal Clause: Clause which provides an appraisal procedure when the insured
and the insurer are in disagreement regarding the amount of a loss. Insured
and insurer each choose an appraiser, who, failing to agree, select an umpire.
Agreement of any two of the three will be decisive.

Assignment: Transfer of a legal right or interest in a policy from one party
to another (as when an insured property is sold).

Assignment Clause: A condition in insurance policies that specifies that transferring
the policy to another is not valid unless the company consents to it in writing.

Attractive Nuisance: This a condition that can attract and injure people (namely
children). The occupants of land on which such a condition exists are liable
for their injuries.

Audit: Procedure involving reporting and/or reviewing the policyholder’s records
at sometime after the policy takes effect to determine the final premium for
the policy.

Automobile Liability Insurance: Insurance to protect against financial loss
because of a legal liability act that has automobile related injuries to others
or damage to property of others.

Automobile Mechanical Breakdown Insurance: Coverage designed to indemnify against
the costs of mechanical failures or breakdowns not covered under the dealer’s
or manufacturer’s warranty.

Automobile Physical Damage Insurance: Insurance coverage to indemnify insured
for damage to, or loss, of an insured automobile resulting from covered perils.

Aviation Insurance: Insurance which provides both liability and physical damage
(also called Aircraft Hull insurance) coverage for aircraft. Liability coverage
available separately for hangarkeepers and airport owners or operators.


Bailee: One who has temporary custody of property belonging to another. (Example:
dry cleaners.)

Bailees Policy: Inland Marine insurance obtained by a bailee, to cover loss
or damage to customers property in the bailee’s custody, without regard to

Barratry: Illegal acts committed willfully by a ship’s master or crew for the
purpose of damaging the ship or cargo. This Ocean Marine peril includes hijacking,
abandonment and embezzlement.

Bail Bond: Surety bond that guarantees that the principal will appear in a
criminal proceeding. See Court bond.

Basic Causes Loss Form: This form provides coverage for the following names
perils: fire, lightning, explosion, smoke, windstorm, hail, riot, civil commotion,
aircraft, vehicles, vandalism, sprinkler leakage, sinkhole collapse, and volcanic

Basic Limits of Liability: Minimum amounts of insurance. Usually the lowest
amounts which can be written at the published rates or the minimum amounts
an insurer is willing to underwrite.

Beneficiary: The person named in a Life or Disability policy as a recipient
of a death benefit.

Bid Bonds: A type of Contract bond which guarantees the obligee that if a contractor’s
bid is accepted, the contractor will provide the required Performance bond.
See also Contract bond.

Bind: The agent or company representative agrees to cover the item/person etc.
until the formal insurance contract is issued.

Binder: An oral or written statement providing immediate insurance protection,
valid for a specified period. Designed to provide temporary coverage until
a policy can be issued or denied.

Binding Authority: Authority granted by the insurance company who will ultimately
assume responsibility for providing coverage. Allows an agent to act on behalf
of the company for specific reasons and within prescribed guidelines.

Blanket Insurance: Insurance where a single amount of insurance applies to
two or more coverage items. Contrast Specific insurance. Also a type of Employee
Dishonesty coverage that covers loss caused by any employee. Contrast Name
Schedule coverage and Position Schedule coverage.

Blue Sky Bond: Surety bond required of investment companies, guaranteeing against
misrepresentation of securities and defrauding the public.

Bodily Injury Liability Insurance: Protection against loss arising out of the
liability imposed on the insured by law for damages due to bodily injury, sickness,
or disease, including resulting death.

Boiler and Machinery Coverage Form: Insurance which covers the insured against
loss (liability and physical damage) arising out of the use of steam boilers
or other machinery. Part of the Commercial Package policy.

Broad Causes of Loss Form: This form provides coverage for Basic Causes of
Loss plus 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

Broker: One who represents an insured in the solicitation, negotiation, or
placement of insurance.

Broker of Record: A common term of “Agent of Record” is used to designate
the broker who is to handle certain insurance policies for the named insured

Brokerage Business: Generally, insurance accounts handled for one agent by
another agent.

Builders Risk Coverage Form: Insurance that provides coverage for buildings
under construction as well as materials, equipment, supplies and temporary
structures used in construction. Part of the Commercial Property portion of
the Commercial Package policy.

Burglary: As it is defined in Crime insurance policies, the taking of property
by a person unlawfully entering or leaving the premises, as evidenced by visiblesigns
of forced entry or exit.

Burglary and Theft Coverage Form: Insurance coverage against property losses
as a result of burglary, robbery, or larceny as defined by burglary.

Business Auto Coverage Form: A form which is a part of the Commercial Auto
Coverage Part and is designed to cover the auto exposures of businesses, other
than truckers or garages.

Business Income Insurance: A coverage which reimburses the insured for loss
of earning due to an interruption in operations caused by a covered peril;
available with or without extra expense. One of the Commercial Property forms
available as part of the Commercial Package policy.

Business Personal Property: Furniture, fixtures (permanetly installed), equipment,
machinery, merchandise, and all other personal property owned by the insured
and used in the insured’s business.

Businessowners Policy: A multi-peril, multi-line package policy designed to
provide broad property and casualty coverages for small businesses.


Camera and Musical Instrument Dealers Form: An all risk Inland Marine dealers
form that covers stocks of merchandise at the insured’s premises, in transit,
away in an employee’s custody or elsewhere.

Cancellation: Termination of an insurance policy in force by a voluntary act
of the insured or by insurer for lack of payment, fraud, misrepresentation

Capacity: The maximum amount of coverage a company will write on a specific

Capital Stock Company: A corporate form of insurer, owned by stockholders and
having reserve and surplus funds.

Captive Agent: An agent under exclusive contract to one company.

Captive Insurance Company: A company formed to insure the risks of a parent
company. This is usually done when business insurance for a certain commercial
risk cannot be obtained through markets

Cargo Liability Insurance: Protects against legal liability for loss or damage
to cargo or baggage. May be part of an Ocean Marine or Aviation policy.

Casualty Insurance: A line of insurance which historically has included a wide
variety of unrelated coverages. One important coverage in the casualty lineis
Liability. Casualty also includes Aviation, Auto, Boiler And Machinery, Crime,
Workers Compensation and Surety Bonds.

Catastrophe: An event which loss is of extraordinary magnitude, such as a hurricane
or tornado

Causes of Loss Form: A form which is a part of the Commercial Property Coverage
Part of the Commercial Package policy. It specifies what perils are insured
against and lists exclusions. Several different versions provide increasingly
broad coverage from basic to broad to special. An earthquake form is also available.

Certificate of Insurance: Evidence to another that one has insurance of a certain
type and amount. Proof of insurance.

Certified Professional Insurance Man (CPIM): Designation granted by the National
Association of Insurance Women upon successful completion of courses of study
in basic insurance principles, personal and commercial property and liability

Certified Professional Insurance Woman (CPIW): Designation granted by the National
Association of Insurance Women upon successful completion of courses of study
in basic insurance principles, personal and commercial property and liability

Chartered Life Underwriter (CLU): A designation granted by the American College
of Life Underwriters upon successful completion of a series of examinations
in Life and Health insurance, economics, business insurance, estate planning,

Chartered Property and Casualty Underwriter (CPCU): Designation granted by
the American Institute for Property and Liability Underwriters/ Insurance Institute
of America upon successful completion of a series of examinations in the fields
of insurance other than Life insurance, including accounting, financing, economics,
and management.

Claim: The assertion of a legal right against an insurer, that carries with
it a demand for appropriate relief.

Claims-Made Form: A liability form which is part of the Commercial General
Liability part of the Commercial Package policy. Covers bodily injury and property
damage which occurs on or after the retroactive date, if any, and for which
a claim is first made during the policy period.

Coinsurance Clause: A clause that requires an insured to pay part of a loss
if the coverage provided under the policy limits is less than a specified percentage
of the value of the property at the time of loss.

Collision: A type of physical damage insurance which covers loss due to the
insured object striking another object. Collision may also include upset of
the insured object.

Commercial Articles Coverage Form: Part of the Inland Marine Coverage part
of the Commercial Package policy. Provides all risk coverage for cameras and
musical instruments on either a scheduled or blanket basis.

Commercial General Liability Policy (CGL): An Insurance policy that provides
limits for general liability, fire legal liability, medical payments, products
and completed operations, as well as advertising and personal liability.

Commercial Package Policy (CPP): A simplified, easy-to-read commercial package
policy introduced by ISO. Includes General Liability, Commercial Property,
Commercial Inland Marine, Commercial Crime, Boiler and Machinery, Commercial
Auto and Farm. Forms may be used in the package policy or may be used to issue
monoline policies.

Common Policy Conditions: A form containing conditions that apply to all coverages
issued under the Commercial Package policy program.

Comprehensive Coverage: In automobile insurance, a broad physical damage coverage
which covers all property losses except collision and those perils or property
which are specifically excluded.

Computer Fraud Coverage Form: A form which is a part of the Commercial Computer
Crime Coverage part of the Commercial Package policy. It covers loss of all
types of property by theft related to the use of computers to fraudulently
cause a transfer of property from inside the insured’s or a banking premises.

Concealment: The withholding of a material fact from the insurance company.
May void the policy.

Concurrent Insurance: Two or more policies with the same conditions that cover
the same interest in identical property.

Conditional Binding Receipt: A receipt given for premium payments accompanying
an application for insurance

Conditionally Renewable: A type of health insurance cancellation clause that
states that the insurer can refuse to renew the policy only under certain conditions
stated in the policy.

Conditions: The portion of an insurance contract which sets forth the rights
and duties of the insured and the insurance company.

Condominium Association Coverage Form: A part of the Commercial Property Coverage
part of the Commercial Package policy which covers the buildings in a condominium
complex (not the unit-owner’s personal property).

Condominium Commercial Unit-Owners Coverage Form: A part of the Commercial
Property Coverage part of the Commercial Package policy which covers business
personal property.

Consequential Damage: Damage which occurs as “consequence” of a directloss,
such as loss from spoilage resulting from lack of power, light, heat, etc.Not
generally covered under property policies unless specified.

Consequential Loss: A loss arising indirectly from an insured peril, such as
damage to goods as a result of fire that causes failure of refrigeration while
not actually burning the stored goods themselves.

Conservation Bond: Fiduciary bond for those appointed to manage and preserve
property other than estates of decedents.

Construction Bond: This bond will protect the owner of a building or other
structure should the contractor be unable to fulfill his contractual duty to
the insured. In such a case, the insurer is obligated to see that the work
is completed

Constructive Total Loss: In Ocean Marine insurance, a loss which occurs when
property is not completely destroyed but the cost to salvage or repair the
property would exceed its value.

Contingent Liability: Liability which an insured or business incurs because
of the actions of others (i.e., family or employees). Also called vicarious

Continuous Policy: A policy without an expiration date. One that remains in
effect until cancelled.

Contract: A legal agreement between two parties promising a certain performance
in exchange for a certain consideration.

Contract Bond: A category of Surety bonds which guarantees the fulfillment
of contractual obligations. Includes Bid bonds, Labor and Materials bonds,
Performance bonds, Payment bonds and Supply bonds.

Contractors Equipment Coverage Form: Part of the Inland Marine Coverage part
of the Commercial Package policy. It covers various types of contractors mobile

Contractual Liability Insurance: Provides coverage against liability rising
out of an insured’s contractual obligations. Excluded in the Commercial General
Liability policy, subject to several exceptions.

Controlled Lines: Classes of Inland Marine coverage for which standardized
forms have been prepared as part of the Commercial Package policy. Contrast
uncontrolled lines.

Countersignature: Signature of a licensed agent or representative on a policy
necessary to validate it.

Court Bond: A category of judicial bonds required for most types of court litigation:
civil suits, criminal actions, appeal, bail bonds, etc. (Includes bail bonds,
litigation bonds)

Coverage Trigger: The event which triggers coverage under a Commercial General
Liability Coverage form. Under the Occurrence form, the coverage trigger is
bodily injury or property damage which occurs during the policy period. Under
the Claims-Made form, the trigger is BI or PD which occurs on or after the
retroactive date and for which claim is made during the policy period.

Crime Coverage Plans: Various groups of Crime Coverage forms designed to provide
a package of crime insurance to meet the insured’s needs.

Crop-Hail Insurance: Insurance Coverage against damage to growing crops.

Customs Bond: A Surety bond that may be required of those associated with import
or export activities, to guarantee that the required custom will be collected,
reported and paid.


Dealers Drive-Away Coverage: A coverage which can be added to the Garage policy
by endorsement. It eliminates the exclusion regarding coverage for autos being
driven or transported from point of purchase or distribution to destination,
if such points are more than 50 miles apart.

Debris Removal: A coverage provided in many property contracts which reimburses
the insured for expenses involved in removing debris produced by a loss from
a peril insured against.

Declarations: The page of an insurance contract that indicates the name of
the policyholder, the insurance company, the period of coverage, what is covered
(property, liability) under the contract.

Declination: Rejection of an application for insurance by the insurer.

Deductible: Usually, a dollar amount the insured must pay on each loss to which
the deductible applies. The insurance company pays the remainder of each covered
loss up to the policy limits. See also Franchise, Percentage and Straight.

Depreciation: Decrease in the value of any type of tangible property over a
period of time resulting from use, wear and tear and obsolescence.

Deviating Company: An insurance company which varies (deviates) from bureau
rules, rates or forms.

Difference In Conditions: An insurance policy that is purchased in addition
to a named perils property insurance policy to obtain coverage for perils not
insured against in the named perils policy.

Direct Bill: The bill for the premium is produced by the insurance company
and sent directly to the policyholder. The policyholder then pays the insurance
company directly.

Direct Damage Loss: A loss involving value of tangible property which is physically

Direct Loss: Any financial loss that results directly from an insured peril

Direct Writer: An insurance company that secures its business either through
the direct selling system (its own employees) or the exclusive agency system

Directors’ and Officers’ Liability Insurance: The protection of corporate directors
and officers from liability arising out of errors in judgement, duty breachments,
and any wrongful acts related to their organizations

Disability Income Insurance: Line of insurance which includes coverages that
are designed to protect the insured against a loss of income resulting from
injury or sickness.

Discovery Period: A period of time, in Crime insurance, during which losses
that occurred during the policy period but are discovered during the “Discovery
Period” will be covered.

Dividend: Distribution of profit from a company to its policyholders.

Documentation: Supporting evidence or proof as to what has been done and the
reason therefore.

Domestic Insurer: An insurance company formed under the laws of the state in
which the insurance is written.

Double Indemnity: A Health policy provision that doubles death benefits otherwise
applicable for accidents under specified circumstances.

Draft: A form of payment, almost like a check.

Draft Authority: Authority granted to the agent by the insurance company to
handle small claims and issue drafts within prescribed limits.

Dread Disease Policy: A Health insurance policy which provides benefits for
a single illness.

Drive Other Car Coverage: An endorsement to the Business Auto policy which
covers named persons for nonbusiness use of autos they do not own. Used when
the named insured furnishes an auto to another, such as an employee, who does
not own his or her own car.

Driver Education Credit: A student discount or reduction in premium amount
for which younger drivers become eligible on completion of a driver education
course. These courses are available in most public school systems

Duplication of Benefits: A situation where identical or overlapping coverage
of the same type exists between two or more health insurance plans

Dwelling Policy: An allied lines policy which provides coverage for the dwellings
and personal property of individuals and families against fire andadditional


Earned Premium: That portion of the written policy premium applicable to the
expired, or used, part of the period for which the premium has been charged.

Earthquake Coverage: Available under the Commercial Package policy. Requires
the Coverage of Loss form – Earthquake.

Economic Loss: An estimated total cost, insured and uninsured, of mishaps (such
as: vehicle accidents, work accidents, and fires); including such factors as
property damage, funeral expenses, wage loss, insurance administration costs,
and medical, hospital and legal costs.

Effective Date: The beginning of the policy term, usually 12:01 a.m. of the
date shown.

Electronic Data Processing Coverage: Inland marine insurance designed to cover
computer hardware and software.

Employee Dishonesty Coverage Form: Part of the Commercial Crime Coverage part
of the Commercial Package policy, it covers loss resulting from dishonest acts
of employees. This coverage is excluded under other Crime insurance forms.
Formerly this coverage was provided under Fidelity bonds or combination policies
that included Fidelity bonds.

Employers Liability Coverage: Coverage provided under a Workers Compensation
policy to cover the employer’s liability arising out of employee’s work-related

Endorsement: A document which is attached to the policy and modifies or changes
the original policy in some way.

Equal Shares Clause: An insurance clause which states that when the insured
has other insurance, the loss payment made by the company will be based on
the number of applicable policies, not on their limits.

Equipment Dealers Coverage Form: An Inland Marine form which provides all risk
coverage for mobile agricultural and construction equipment owned by or in
the care of an equipment dealer.

Errors and Omissions Insurance: A form of insurance that indemnifies the insured
for any loss sustained because of an error or oversight on his part.

Excess and Surplus Insurance: Markets Facilities which have the capability
to provide coverage that cannot be obtained in the standard markets.

Excess Carrier: One who provides coverage over primary or underlying limits.

Excess Coverage: Coverage which applies only after limits of primary insurance
have been exhausted. See Primary Insurance.

Exclusions: Section of the insurance policy which lists property, perils, persons,
or situations which are not covered under the policy.

Exclusive Agency System: An insurance distribution system within which agents
sell and service insurance under contracts that limit representation to one
or more insurers under common management and which reserve to the insurer the
ownership, use, and control of policy records and expiration data.

Exemplary Damages: Damages awarded to make an example of the wrongdoer.

Expediting Expenses: A Boiler And Machinery coverage
that covers the cost of temporary repairs and the costs of speeding up permanent
repairs, i.e., over-time, or express transportation charges.

Experience: A statistical compilation of premiums and losses which establishes
the loss record of an insured or of a type of insurance written.

Experience Modification Factor: Used in workers compensation rating to reflect
the degree to which a particular employer has experience that is better or
worse that expected for that industry

Experience Rating: Process of determining the premium rate for a group risk,
wholly or partially on the basis of that group’s experience

Expiration Date: The date that coverage ceases to be provided by an insurance

Exposure: The state of being subject to the possibility of loss.

Extended Nonowned Coverage Endorsement: A Personal Auto policy endorsement
that extends liability coverage to named individuals for a nonowned automobile
which is furnished for their regular use.

Extended No-owned Coverage: A Personal Auto policy endorsement that extends
liability coverage to named individuals for a nonowned automobile which is
furnished for their regular use.

Extended Reporting Period: A period of time provided by the Claims-Made Commercial
General Liability Coverage form during which coverage will be provided for
claims made beyond the expiration date of the policy if the coverage part is
(1) canceled or not renewed or (2) if the insurer renews or replaces the Coverage
part with insurance that has a retroactive date later than the date shown in
the Declarations, or with an Occurrence form. The Basic ERP runs five years.
The Supplemental ERP has unlimited duration but is available only by endorsement
for an extra charge.

Extortion Coverage Form: A Commercial Crime form that covers all types of property
when surrendered away from the premises as a result of a threat to do bodily
harm to the insured or employee, or an invitee of either, while they are being
held captive, or allegedly being held captive.

Extra Expense Insurance: Covers additional expenses incurred by the insured
business to continue operations following a direct loss by a peril insured
against. One of the Commercial Property Coverage forms that can be included
in a Commercial Package policy.


Face Amount: The amount of insurance provided by a policy, usually found on
its face.

False Pretense Coverage: Coverage that can be added to a Garage policy by endorsement
to insure a dealer against loss from voluntarily parting with a covered auto
by trick or scheme or from acquiring an auto from someone who does not have

Farm Coverage Part: Part of the Commercial Package policy,
the Farm Coverage Part provides both property and liability forms that can
be used to provide farm coverage on either a monoline or package basis.

Farm Liability Coverage Form: A form that is a part of the Farm Coverage Part
and is designed to provide liability coverage for farm operations.

Farm Property Coverage Form: A form that is part of the Farm Coverage part
and provides seven separate property coverages designed specifically for farms.

Federal Crop Insurance: Comprehensive Insurance coverage with rates that are
subsidized by the federal government for unavoidable crop losses

Fidelity Bond: A class of bonds which guarantees an employee’s honesty. Today
this coverage is generally provided through Employee Dishonesty insurance.

Fiduciary Bond: A Judicial bond commonly used to bond fiduciaries: guardians,
administrators, trustees and executors, or persons appointed by a court to
manage the property of others. See Judicial bond.

File: A collection of information on a specific subject or person.

Film Coverage Form: An Inland Marine Coverage form that provides all-risk coverage
for exposed motion picture film, including sound recordings and magnetic or
video tapes that have been properly recorded until the first full quota of
positive prints or film have been made.

Financial Responsibility Law: State law which requires owners or operators
of autos to provide evidence that they have the funds to pay for automobile
losses for which they might become liable. Insurance is the usual method for
providing this evidence to the state.

Fire: Combustion accompanied by a flame or glow, which escapes normal confines
to cause damage

First Party Insurance: A loss which applies to the insured’s own property or
person and thus involves only the insurer and the insured.

Flat Cancellation: The cancellation of a recently written insurance contract
without charge to the insured.

Floater Policy: Coverage on goods of a mobile nature, whatever their location.

Flood Insurance: Coverage against loss resulting from rising water

Floor Plan Coverage Form: An Inland Marine Coverage form that provides all
risk coverage for merchandise for sale that has been financed.

Florida Joint Underwriting Association: A market source for persons who are
unable to purchase Auto insurance through normal channels. It is a syndicate
of all licensed companies in Florida that write Auto insurance, with direct
operations performed in their behalf by a group of servicing carriers.

Forgery or Alteration Coverage Form: A Commercial Crime form that covers loss
from forgery or alteration of checks, drafts, promissory notes or similar instruments.

Form: An insurance document such as a policy, endorsement, rider or application.

Franchise Bond: A Surety bond that may be required by a public body when it
awards a franchise.

Franchise Deductible: A deductible that specifies that no payment will be made
until loss equals or exceeds a prescribed amount; then the loss is paid in

Fraud: A false statement intended to deceive the insurer and induce it to part
with something of value or surrender a legal right. May void a policy.

Freight Coverage: An Ocean Marine coverage that provides protection for the
vessel owner in the event that freight charges are not paid.

Full Coverage: Often means all the coverage that is available. It usually applies
in connection with Automobile Insurance to include damage to the automobile
as well as liability protection. It also can mean coverage without deductibles

Fund: Money held in trust to pay pension benefits


Garage Coverage Form: A coverage form that is part of the Commercial Auto Coverage
Part and which provides coverage for garage businesses (dealers, service stations,
garages, parking lots, etc.). Includes coverage for liability, physical damage
and garagekeepers losses arising out of owned, nonowned and hired autos.

Garagekeepers Liability: A coverage which is part of the Garage coverage form.
Covers a garage risk’s legal liability for customers autos in the care, custody
or control of the garage. At the insured’s option, can also apply without regard
to fault, for an additional premium.

General Average: An Ocean Marine term used to indicate a partial loss resulting
from a sacrifice of cargo to save remaining property (jettison). Each party
shares in the loss in proportion to their total interest in property being

General Liability: A category of insurance which includes most of a business’s
liability exposures. Exposures covered include premises and operations, products
and completed operations, contractual liability, and contingent liability.

Glass Coverage Form: One of the Commercial Property forms that can be included
in the Commercial Package policy. Includes glass specified in a schedule and
may include the value of lettering or ornamentation on the glass.

Grace Period: In Health insurance, a period during which the policy will remain
in force, if unpaid by the premium due date. Florida law specifies the required
length of the grace period.

Group Insurance: A policy issued to cover more than one person or interest,
such as group life or hospitalization on all employees of a firm.

Guaranteed Renewable: A Health insurance policy provision that states that
the insurer must renew the policy to a certain age. While the company cannot
fail to renew the policy until the specified age, it can increase the premium.


Hangarkeepers Liability: A form of aviation bailee insurance that covers the
insured’s liability for damage to aircraft stored for safekeeping.

Hazard: Something that increases the chance of loss. For instance, faulty wiring
is a hazard because it increases the chance of a fire loss.

Health Insurance: Insurance of human beings against bodily injury, disablement
or death by accident or accidental means, or the expense thereof, or against
disablement or expense resulting from sickness, and every insurance appertaining

Health Maintenance Organization (HMO): A noninsurance alternative to dealing
with the risks of health care costs. An HMO provides comprehensive health services
to its members for a prepaid fixed fee, equivalent to an insurance premium.

Hold Harmless Agreement: A contractual arrangement whereby one party assumes
the liability in a given situation, thereby relieving the other party of responsibility.

Homeowners Policy: A personal multiple line contract incorporating both property
and liability coverages. Several different forms provide varying degrees of

Hospital Indemnity Insurance: Health insurance that pays a flat amount per
day of hospitalization, regardless of expenses or other insurance. Its primary
purpose is to supplement other coverage which may be inadequate due to rising

Hospitalization Expense Insurance: Health insurance designed to indemnify the
insured for basic hospitalization expenses of room and board in the hospital,
nursing care, lab fees, operating room, medical supplies and related items.

Hull Insurance: In Ocean Marine and Aviation insurance, insurance against physical
damage to plane or ship.


Improvements And Betterments: Permanent alterations which a tenant makes to
the rented property which will not be removed when the tenant leaves.

Inception Date: See Effective Date.

Indemnitor: In a Surety agreement, one who agrees to reimburse the surety for
any loss it may suffer from having bonded the principal.

Indemnity: A principle of insurance which provides that when a loss occurs,
the insured should be restored to the approximate financial condition occupied
before the loss occurred, no better, no worse.

Indemnity Bond: A License bond which holds the government harmless from injuries
or damages caused by the principal’s activities.

Independent Insurance Agent: One who represents more than one company, sells
and services the insurance solely on a commission or fee basis under contract,
and is recognized to own the business produced.

Indirect Damage: Loss resulting as a consequence of physical damage to property.

Indirect Loss: Loss which is a result or consequence of a direct loss.

Inflation Guard: A property insurance option which provides that the policy
limits will increase a certain percentage at regular intervals, for instance,

Inland Marine Insurance: A form of insurance originally designed as an extension
of marine coverage to insure transportation of goods over land. Today, it covers,
in addition to goods in transit, a variety of portable property.

Insolvency Bond: Fiduciary bonds that are required of persons appointed to
conserve remaining assets and protect creditors.

Installation Form: An uncontrolled Inland Marine form that covers property
in transit and at premises where an installation is to be made.

Instrumentalities Of Transportation And Communication: A category of Inland
Marine insurance covering such property as bridges, tunnels, pipelines, etc.

Insurable Interest: Any actual, lawful and substantial economic interest in
the safety or preservation of the subject of the insurance from loss, destruction
or pecuniary damage or impairment. A claim may be paid only when an insurable
interest exists.

Insurance: A contract whereby one undertakes to indemnify another or pay or
allow a specified amount or a determinable benefit upon determinable contingencies.

Insurance Service Office (ISO): An organization made up of member companies,
which collects and analyzes statistics collected from members and then establishes
and files standard rates for many lines of insurance. Also develops standardized

Insured: Also referred to as the policyholder. The person, business or other
entity that is covered by the policy.

Insurer: The insurance company.

Insuring Agreement: The section of an insurance policy which states which losses
will be indemnified, what property is covered, which perils are insured against.

Invoice: A bill for providing coverage.


Jettison: A voluntary action to rid the ship of cargo in order to prevent further
damage or peril.

Jewelers Block: An all risk Inland Marine form for retail jewelers that covers
the insured’s stock in trade and the property of others, while at the insured’s
premises, in transit and elsewhere.

Jones Act (Merchant Marine Act of 1920): Allows seamen a remedy to sue their
employer for negligence in the event of injury or illness incurred in service
of the vessel.

Judicial Bond And Bonds Required By Courts: See Fiduciary bonds and Court bonds.


Keep Out Program: This is a common term used by the F.R.P.C.J.U.A to allow
insurers to take policies out of the F.R.P.C.J.U.A. before policies are issued
giving the insured an admitted carrier for their homeowner’s insurance


Labor and Materials Bond: See Payment bond.

Lapse: A policy becoming invalid because of failure to pay the premium on time.

Leasehold Interest Coverage Form: A form which belongs to the Commercial Property
Coverage part of the Commercial Package policy; It covers a tenant for certain
losses following damage to the premises from a covered peril, such as tenant’s
loss of a favorable lease or loss of remaining value of improvements or betterments
made by a tenant.

Legal Liability: Rules of law dictate that a person must pay for damages done
to another.

Legal Liability Coverage Form: This form belongs to the Commercial Property
Coverage part of the Commercial Package policy. It covers the insured for negligently
damaging property owned by others, but in the insured’s care, custody or control.

Lessee: The person to whom a lease is granted, commonly called the tenant.

Lessor: The person granting a lease, commonly called the landlord.

Liability Insurance: Insures the individual for financial losses which arise
out of the person’s responsibilities to others imposed by law or contract.

Liability Limits: The amount (limits) of protection the insured receives in
a liability insurance policy.

Liberalization Clause: A policy condition found in many standard policies which
states that if the insurer adopts a revision that would broaden coverage without
additional premium within some period of time prior to the policy period or
during the policy period, the insured receives the benefit of such roadened

License And Permit Bonds: A category of Surety bond which covers a wide variety
of occupations and operations, and which are often required as a condition
of doing business.

Limits Of Liability: The maximum amount of insurance the insurance company
will pay for a particular loss, or for a loss during a period of time.

Line: 1) A particular line of insurance. 2) Various types of insurance written
for a property owner. 3) The amount of insurance paid under a liability policy.

Liquor Liability Coverage: This form belongs to the Commercial General Liability
coverage part of the Commercial Package policy. It covers liquor liability
which is excluded from the standard CGL forms for those who are in the business
of manufacturing, distributing, selling, serving or furnishing alcoholic beverages.

Litigation Bond: See Court bond.

Lloyds: An unincorporated form of insurance carrier comprised of individual
underwriters responsible for the liabilities they assume.

Long-Term Disability (LTD) Income Insurance: Insurance replaces earnings lost
due to illness or disability occurring on or off the job. Individual policies
typically do not pay until the period of the disability exceeds a specified
elimination period, usually 30 days or longer.

Loss: Generally: 1) The reduction in value of the insured’s property. 2) The
amount sought in his claim. 3) The amount paid under a liability policy.

Loss Of Use Coverage: Under the Homeowners contract, covers the insured’s increased
cost of living after loss and rental value of any portion of the dwelling which
is rented out.

Loss Ratio: The percentage of losses in relation to premiums. For example,
a 60% loss ratio would mean that there were 60 cents in losses for each $1.00
of premium.

Losses Incurred: The total losses, paid or reserved, sustained by the insurer
during a particular period.

Lost Instrument Bonds: A category of Surety bonds issued in situations where
a principal loses valuable securities or other papers and requests issuance
of duplicates. Should the lost instruments turn up and be redeemed by the holder,
the issuer of the instrument would be reimbursed.

Lost Policy Release: A statement signed by the insured releasing the insurance
company from all liability under a lost or mislaid contract of insurance.


Mail Coverage Form: A part of the Commercial Inland Marine Coverage part of
the Commercial Package policy. It provides all risks coverage for valuable
contents of mail.

Major Medical Insurance: A type of health insurance intended to provide protection
against catastrophic losses. Some forms are designed to complement or supplement
basic hospital/surgical insurance; others provide both basic and catastrophic
illness coverage.

Manual: A book giving rates, classifications and underwriting rules for certain
types of insurance or bonds.

Marina Operators Legal Liability (MOLL): Covers liability for physical damage
to vessels in the insured’s care, custody and control. Often limited to “private
pleasure vessels” only.

Marine Insurance: A form of insurance primarily designed
to cover property in transport over land or sea.

Maturity Date: The date at which the face amount of a life insurance policy
becomes payable either by death or other contract stipulation.

Medicare Supplement Insurance: A type of Health insurance designed to cover
medical costs not payable under the Federal Medicare program.

Midterm Cancellations: Traditional pro-rata, short rate factors may or may
not be used in the event a mid-term cancellation. Coverage for first party
exposures in coastal areas could be subject to an earned premium factor that
is much higher than pro-rata or short rate factors.

Minimum Premium: The lowest premium for which a policy may be issued.

Miscellaneous Type Vehicle Endorsement: An endorsement which may be added to
the Personal Auto policy to cover motorcycles, motor homes, golf carts, mopeds
and other recreational vehicles.

Misrepresentation: Statement of something that is known to be untrue.

Moral Hazard: A condition of morals or habits that increases the probability
of a loss from a peril insured against.

Mortgagee: One who has a lender’s interest in real property.

Mortgagee Clause: A provision in a policy protecting the interest of the mortgagee.

Mortgagee Rights: Rights granted to a mortgagee, under a property contract
issued to a mortgagor, by virtue of the mortgagee’s financial interest in the

Mortgagor: One who has secured a loan from a mortgagee, usually the property
owner, and thus the insured under a property policy.

Motor Truck Cargo Policy: Inland Marine transportation insurance which protects
the carrier against its liability for damage to domestic shipments in its custody.

Multiple Line Insurance: The combination of two separate lines of insurance
into a single policy. Often referred to as package insurance.

Mutual Insurance Company: A cooperative form of insurance company owned by
and operated for the benefit of the policyholders.

MVR: Motor Vehicle Report – a listing of the tickets (violations) and/or accidents
for an individual driver over a period of time, i.e., three years, five years,


Named Insured: Any person, firm, or corporation designated by name as the specific
insured in a policy.

Named Nonowner Coverage: An endorsement that can be added to the Personal Auto
policy to provide coverage for a named individual who does not own an auto
while the insured is operating autos owned by others.

Named Perils Policy: A policy specifying only those perils to be insured against,
in contrast to a policy that insures all perils not specifically excluded.

Named Schedule Coverage: A type of Employee Dishonesty insurance that covers
loss only from named employees.

Negligence: The failure to exercise that degree of care that the law requires
to protect others from an unreasonable risk of harm. The failure to act as
a prudent person would have acted under similar circumstances.

Net Line: The amount of coverage a company will accept as its maximum.

No-Fault Insurance: See Personal Injury Protection.

Nonadmitted Insurer: An insurance company not licensed to do business in a
certain state. Such insurers can nevertheless write coverage through an excess
and surplus lines broker that is licensed in the jurisdiction.

Nonassessable Policy: One issued by a mutual or reciprocal exchange which provides
that the insured may not be assessed. His payments are thus limited to the
amount of premiums paid.

Noncancelable: A type of Health insurance policy which the company may not
cancel, but must renew to a certain age with no change in premium. Affords
the greatest degree of continuation protection to the insured.

Nuclear Energy Liability Endorsement: A mandatory endorsement which must be
included with the Commercial General Liability coverage part of the Commercial
Package policy. In general, it excludes all hazards related to nuclear energy.


Objects Definition Form: Part of the Boiler and Machinery Coverage part of
the Commercial Package policy. Defines the objects covered by the Boiler and
Machinery Coverage form in great detail.

Obligee: In bonds, the party to whom the principal makes the promise, and for
whose protection the bond is being written.

Occupancy: The type and character of the use of the property and the entity

Occurrence: In liability policies, generally defined to be an accident, including
continuous or repeated exposure to substantially the same general harmful conditions.

Occurrence Form: A Commercial General Liability Coverage form with a coverage
trigger that states that coverage applies only to bodily injury or property
damage which occur during the policy period, regardless of when claim is made.

Ocean Marine Insurance: Marine insurance designed to provide broad coverage
for cargo and ships in transit over sea. Includes Cargo insurance, Hull insurance,
and liability coverage (Protection and Indemnity).

Optionally Renewable: A type of health insurance that cannot be canceled during
the policy term, but for which the company reserves the right to nonrenew the
policy at expiration.

Owners And Contractors Protective Liability: A form of Liability insurance
which protects an owner or general contractor against liability arising out
of the acts of independent contractors or subcontractors. May be issued to
the independent contractor or subcontractor, or may be issued directly to the
owner or general contractor.


Package Insurance: A policy combining two or more lines of insurance which
might otherwise have been written as separate policies.

Participating Policy: A policy on which dividends are paid.

Particular Average: In Ocean Marine insurance, a partial loss which is not
part of a general sacrifice of property (general average).

Payment Bond: A type of Contract bond which guarantees that bills for labor
and materials will be paid to the contractor as they are due. Also called Labor
and Materials bond. See Contract bonds.

Peak Season Endorsement: A Commercial Property endorsement which provides for
higher limits to apply during specific periods of the year when inventory is
at a peak.

Penalty: The amount of a bond.

Percentage Deductible: A deductible which requires a deduction from the loss
of a percentage of the value of the property.

Performance Bonds: Contract bonds which guarantee that jobs will be completed
by the contractor according to contract specifications.

Peril: The cause of loss. Examples include fire, windstorm or explosion.

Perils Of The Sea: Unique perils to which property in transit by water is exposed.
Includes unusual action of wind or waves, stranding, lightning, collision and

Personal Articles Floater: Personal Inland Marine insurance which provides
all risk coverage on nine optional classes of personal property: jewelry, furs,
cameras, musical instruments, silverware, golf equipment, fine arts, stamp
collections and coin collections.

Personal Auto Policy: Easy-to-read auto policy which provides broad coverage
for both owned and non-owned autos, used, maintained or operated by the insured
and family.

Personal Effects Floater: Provides all risk coverage for individuals and families
who desire to insure their personal belongings (baggage) while traveling or

Personal Injury Protection: A coverage provided in Auto policies in the state
of Florida that provides coverage for the insured’s own injuries on a first-party
basis, without regard to fault. This is a required coverage and must be carried
by all owners of motor vehicles in Florida.

Personal Liability Policy: Provides broad coverage for an individual’s or family’s
liability exposure for bodily injury or property damage. Similar to coverage
included in Homeowners contract.

Personal Property Floater: Personal Inland Marine floater which provides all
risk coverage on unscheduled personal property.

Physical Damage: In auto insurance, damage or loss to the insured’s own autos
or autos in the insured’s care, custody or control.

Physical Hazard: The material, structural or operational features of the property
to be insured. It involves the condition or type of property, not the persons
owning or managing it.

Physicians and Surgeons Coverage Form: Part of the Commercial Inland Marine
Coverage part of the Commercial Package policy. It covers insureds in the medical
and dental professions for loss to medical, surgical and dental equipment,
furniture, fixtures and improvements or betterments.

Physicians Coverage: A type of Health insurance that reimburses the insured
for nonsurgical care provided by a physician.

Policy: An insurance contract.

Policy Forms: Although some carriers use standardized policy forms, many do
not. Assumptions should not be made that coverage is according to standard
forms. If uncertain, please ask us to provide a specimen policy form for review.

Policy Period: The period during which the policy contract is in force and
affords protection, from inception date to expiration date.

Pollution Liability Coverage: A form of liability insurance that can be added
to the CGL section of the Commercial Package policy to provide limited coverage
for pollution.

Position Schedule Coverage: A form of Employee Dishonesty insurance which covers
only people who fill positions named in the policy.

Preferred Provider Organization (PPO): A group of doctors and hospitals who
join together to dispense medical services to specified user groups at discounted
costs. This type of organization differs from a Health Maintenance Organization
(HMO) in that the medical care providers are not economically tied to one another
but rather to fee schedules.

Premises: The particular location of property as designated in the policy.

Premises Burglary Coverage Form: One of the Commercial Crime Coverage forms
which are a part of the Commercial Package policy. Provides coverage for property
other than money and securities if caused by burglary or attempted burglary
or robbery of a watchperson.

Premises Theft And Robbery Outside The Premises Coverage: One of the Commercial
Crime Coverage forms which are a part of the Commercial Package policy. Covers
property other than money and securities against any act of stealing from within
the premises and robbery outside the premises.

Premium: The consideration (price) paid by the insured to the insurer for insurance
protection over a specified period.

Premium Finance: Allows the insured to pay part of the premium when coverage
takes effect and pay the rest during the policy period through arranged payments.

Preservation Of Property: This is a property insurance coverage, sometimes
known as a removal, which provides coverage for property that has been removed
from the premises to protect it following a covered loss.

Primary Insurance: When two or more coverages or policies apply to the same
loss, the one which pays first, up to its limit of liability or the amount
of the loss, whichever is less. See excess insurance.

Principal: In bonds, the party who promises to do (or not to do) a specific

Private Passenger Autos: Ordinary cars, station wagons and jeeps, utility autos
(pickups, panel trucks and delivery vans of 1,500 lbs. or less, not used commercially)
and utility trailers designed to be pulled by a private passenger auto.

Pro Rata Cancellation: Calculation of the premium charge for a cancelled policy
based upon the exact time the protection had been in force.

Probate Bond: Fiduciary bond dealing with those who administer estates of a
deceased person.

Producer: A term commonly applied to agent, solicitor, or other person who
sells insurance, producing business for the insurer.

Products and Completed Operations: A form of insurance which covers a company
against liability arising out of its products or its completed operations.
Included in CGL forms or may be purchased separately.

Professional Liability: Liability arising out of the rendering or failure to
render services of a professional nature.

Proof Of Loss: (1) The evidence offered by the insured to prove entitlement
to collect the amount claimed from the insurer. (2) The statement, signed and
sworn by the insured, setting forth the claim information required by the policy.

Property Damage: A type of loss covered under many liability contracts. Property
damage means physical injury to tangible property, including loss of use.

Property Insurance: Insurance that indemnifies the person with an interest
in physical property for its loss or the loss of its income-producing ability.

Proposal: A written presentation to a prospect indicating various coverages,
options, and may also include premiums.

Prospect: The person or entity for whom the agent is trying to provide insurance

Protected Risk: A risk located in an area served by a fire department.

Protection: 1) A term denoting the insurance provided under a policy. 2) A
term indicating the existence of fire fighting facilities in the area which
the risk is located.

Protection And Indemnity: In Ocean Marine insurance, a form of liability insurance.

Proximate Cause: A fundamental doctrine in property insurance that holds that
when there is an unbroken connection between an occurrence and damage that
grows out of the occurrence, then the resulting damage is a part of the occurrence.

Public Official Bonds: A category of Surety bonds furnished by principals who
are elected or appointed to fill positions of trust, guaranteeing their faithful
and honest performance in office.

Punitive Damages: Damages that punish the wrongdoer for antisocial actions,
rather than compensating for loss.

Pure Risk: Uncertainty whether a loss will occur. Only pure risks are insurable.


Quotation: A notification of the premium for coverage before the policy has
been issued.


Rate: The cost of a given unit of insurance. Often the price per $100 or $1,000
of insurance. Can also be a percentage.

Rebate: The unlawful practice of returning a part of a premium to an insured.

Reciprocal Exchange: A form of insurance carrier made up of entities (subscribers)
who pool their assets and liabilities under the management of an attorney-in-fact.

Release: An instrument which provides evidence of the discharge of a claim
or the abandonment of one’s right to claim against another.

Renewal: The continuation of coverage for another period after a policy has

Replacement Cost: The cost to replace a damaged or destroyed item of property,
without deducting depreciation. May be the basis of reimbursement for loss
to buildings, or by endorsement, to personal property.

Replacement Cost Endorsement: An endorsement that can be added to an HO-3 form
to provide replacement cost coverage on personal property (with limitations).

Reporting Form: A method of collecting premiums for exposures which are difficult to evaluate “before the fact.” Instead of paying a flat premium, the insured
pays a deposit, then submits periodic reports to the insurer, showing the status
of the factors on which premium is based. From these status reports, premiums
are calculated and charged against the deposit.

Representation: Statements an applicant for insurance believes to be true.
Does not carry as much force as warranty.

Residual Market: An organization created by the Legislature to provide Florida
residents with crucial or required coverages generally unavailable in the voluntary

Retroactive Date: A date stated in the Declarations of a CGL Coverage form
which is normally the same date as the date of the issuing company’s first claims-made policy for the insured. No coverage is provided under the claims-made form for bodily injury or property damage that occurs prior to the retroactive date.

Return Premium: The amount due the insured if a policy is cancelled, its amount reduced or its rate reduced.

Rider: Another word for endorsement.

Risk: 1) Uncertainty as to financial loss. 2) The person or thing insured.

Risk Management: Preserving financial resources against loss through various
methods including the purchase of insurance.

Robbery: In Crime insurance, the taking or attempted taking of property by
one who has caused or threatened to cause bodily harm or committed and witnessed
an obviously unlawful act.

Robbery And Safe Burglary Coverage: A Commercial Crime Coverage form that covers
loss to property other than money or securities from robbery of a custodian,
robbery outside the premises and safe burglary.

Running Down Clause: An Ocean Marine clause that provides protection should
the ship owner be held liable for the negligent operation of the vessel in
damaging another ship.


Safe Driver Insurance Plan: An Automobile insurance rating program which applies
the lowest rates to operators with the best driving records. Points are assigned
for accidents and traffic violations, with higher rates resulting as points

Salvage: Damaged property that may be retrieved, reconditioned, and sold to
reduce an insured loss.

Schedule: A list of individual items covered under one policy with specific
amounts of insurance applicable to each.

Scheduled Personal Property Endorsement: An endorsement to the Homeowners policy
that schedules specific amounts of coverage for one or more of several categories
of personal property on an all risks basis.

Self-Insurance: Financial preparation, in accordance with law, for meeting
an insured’s own risks by appropriating sufficient funds, in advance. Self-insurance
does not mean “no insurance”.

Self-Insurance Bond: A Surety bond that can be provided as evidence of compliance with an insurance requirement.

Settlement: An adjustment where the disposition of the claim involves the payment of a sum of money to the insured or third-party claimant.

Severability Clause: A standard Liability insurance clause which means that
insurance applies separately to each insured.

Short Rate: The method of calculating the return premium on policies cancelled
by the insured, providing a penalty because of the cancellation.

Signs Coverage Form: A Commercial Inland Marine Coverage form that provides
all risk coverage for neon, fluorescent, automatic or mechanical electrical signs.

Single Limits: In Auto Liability, policy limits that apply to all bodily injury and property damage arising from a single accident.

Small Business Boiler And Machinery Broad Form: A Boiler and Machinery Coverage form for small businesses that provides somewhat broader coverage than the standard Small Business Boiler and Machinery.

Solicitor: An individual appointed and authorized by an agent to solicit and
receive applications for insurance as a representative of such agent.

Sound Receiving And Transmitting Equipment Endorsement: An endorsement that
can be added to an Auto policy for such equipment permanently installed in
the auto.

Special Causes of Loss Form: This form provides what is commonly referred to
as “all risk” coverage: coverage for loss from all causes not specifically excluded.

Specialty Company: An insurance company writing limited lines of coverage,
not a broad across-the-board book of business.

Specific Insurance: Property specifically listed and covered for a specific
amount. Also called Scheduled coverage.

Specified Perils Policy: A policy which names the specific perils insured against.

Split Limits: In Auto Liability insurance, policy limits that apply one limit
to each person injured, another for the bodily injury claims of all persons injured in a single accident, and a separate limit for all property damage arising out of a single accident. Split limits are usually written without zeros and separated by slashes, for example, 15/30/10. Also called dual limits.

SR-22 Filing: A form which must be filed by the insurance company stating that
auto liability insurance is in effect for a particular individual. Required when insurance is provided to an individual who was in an accident or was convicted of a traffic offense and was unable to show financial responsibility.

Straight Deductible: A deductible that specifies the deduction of a flat amount.

Subdivision Bond: A Contract bond that may be required by an authority, guaranteeing that promised streets, walks, sewers, lights and other required improvements
will be installed.

Subrogation: The assignment of rights of recovery from the insured to his insurer.

Sue And Labor Clause: A clause in Ocean Marine policies that requires the insured to take all steps necessary to save and preserve goods from loss or to minimize
a loss which has occurred.

Supplementary Payments: Found in most liability contracts. Supplementary Payments provide “extra” coverage over and above the insured’s limit of liability. Included
are defense costs, first aid, bond premiums, accrued interest on judgments, etc.

Supply Contract Bond: A form of Contract bond which guarantees that a supplier
will furnish supplies, products or equipment, sometimes including installation. See Contract bond.

Surety Bonds: Bonds which guarantee that someone will perform faithfully whatever he or she agrees to do or that someone will make an agreed upon payment to
another party.

Surgical Expense Insurance: A type of Health insurance that covers fees of
physicians for performing surgery, with a maximum amount payable for each procedure.

Syndicate: A group of insurers or underwriters who join to insure property
that may otherwise be to high of a hazard.


Tapes And Records Endorsement: An endorsement that can be added to an Auto
policy that provides coverage for tapes and records owned by the insured while
contained in the covered auto.

Target Risk: A large, hazardous risk on which insurance is difficult to place.

TIME. If death occurs during the term for which the policy is written, proceeds are payable to the beneficiary. If the insured survives the term, the policy expires. There is no cash value build up in a term policy.

Theatrical Property Coverage Form: All risks Commercial Inland Marine coverage
form that covers scenery, costumes and theatrical property for either a single production or blanket for all productions.

Theft: In Crime insurance, a broad term encompassing any unlawful taking of
property, but usually meant to exclude employee dishonesty and mysterious disappearance.

Theft, Disappearance and Destruction Coverage Form: A Commercial Crime Coverage form which covers money and securities for loss by theft, disappearance or destruction, both inside and outside of the premises.

Third Party Insurance Coverage: Those coverages under which the insured obtains protection against a legal obligation to pay damages to others because of injuries
to persons or damage to property.

Third Party Loss: A situation involving a person other than the insurer and
the insured.

Tort: A civil wrong other than a breach of a contract for which the court will
provide a remedy in the form of an action for money damages.

Towing And Labor Endorsement: An endorsement that can be added to an auto policy to cover towing and the costs of labor performed at the site of the disablement.

Trailer Interchange Insurance: A legal liability coverage provided under the
Truckers Policy. Provides coverage for damage to a specific trailer under the policy of the trucker in whose possession the trailer is at the time of loss, provided the trucker is liable for the damage under a written interchange agreement and the damage is caused by a covered peril.

Truckers Coverage Form: A form that is part of the Commercial Auto Coverage
Part and is designed specifically for the trucking industry. Includes Trailer Interchange insurance.


U.S. Internal Revenue Bond: A Surety bond required of those who collect and
must report taxes for certain controlled commodities, such as liquor or tobacco.

Umbrella Liability: High-limit excess coverage of all forms of liability to
which the insured may be subject.

Uncontrolled Lines: Commercial Inland Marine coverages which are not standardized.

Underwriter: One who judges the acceptance or rejection of insurance risks
on behalf of the insurance company.

Unearned Premium: The portion of the written premium that has not expired or
has not been used, but for which the insured has been charged.

Unfair Insurance Trade Practices Act: A Florida law describing certain practices that are prohibited, such as misrepresentation, denying claims without reasonable
investigation, etc.

Uninsured Motorist Coverage: Automobile coverage designed to provide protection for the insured should he or she be included in an accident in which the driver
at fault has no insurance (or not enough insurance) to cover the loss.

US L&H Act: A federal workers compensation program designed predominantly
for “dockside” workers.

Unscheduled Coverage: A single coverage amount which applies generally to personal property. Also called blanket insurance.

Utmost Good Faith: A principle of insurance which states that the insurance
company must be able to rely on the honesty and cooperation of the insured, and the insured must rely on the company to fulfill its obligations in good faith.


Vacancy: The absence of people and personal property from a building. Property coverage is often restricted when there are long periods of vacancy.

Valuable Papers Insurance: Inland Marine coverage form which provides all risk
coverage for valuable papers such as manuscripts, blue prints, records, and other printed documents.

Value Reporting Endorsement: An endorsement that can be added to Commercial
Property policies which sets the limit of insurance somewhat higher than expected
peak values and then requires the insured to make periodic reports of actual
values. These reports are averaged and the premium is then adjusted to reflect
the average exposure.

Valued Policy: A policy wherein the insurer agrees, in advance, that the coverage
limit applicable to the item will be considered its value.

Valued Policy Law: A statute, which states that if there is a total loss by
an insured peril to a building, the insurer must pay the amount provided in
the policy for which premium has been paid.

Vandalism And Malicious Mischief (V&MM): Protects property against damage
caused by vandals. Many property forms contain Vandalism and Malicious Mischief coverage.

Vicarious Liability: Negligence which is not directly attributable to the person claimed against, but which is the negligence of another for whom the person claimed against is in some way responsible. See Contingent Liability.


Waiting Period: In disability insurance, a period of time between issuance and acceptance before sickness benefits begin.

Waiver: The voluntary or intentional relinquishment of a known right. A waiver
may be expressed or implied.

Waiver Of Premium: An optional provision in Health insurance policies that
states that if the insured becomes totally disabled, premiums are waived and coverage remains in force.

Warranty: A specific agreement between the insured and the insurer that certain conditions will be met. This agreement becomes a part of the policy.

Watercraft Endorsement: An endorsement to the Homeowners contract which provides coverage for watercraft which is excluded under the HO policy itself.

Whole Life Insurance: Permanent life insurance that provides for the payment
of the face value upon death of the insured, regardless of when it may occur. Whole life insurance accumulates a cash value that may be borrowed or otherwise used by the insured.

Workers Compensation Insurance: Insurance which covers an employer’s obligations under Workers Compensation laws, which make the employer responsible for stated
damages in the event of a work-related injury or illness. Workers Compensation coverage also includes separate coverage for Employers’ Liability.

Write: To insure, to underwrite or to take an application.


Yearly renewable Term Insurance: Term life insurance that may be renewed annually without evidence of insurability to a stated age.


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