A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

ABANDONMENT - A clause in property insurance policies prohibiting the insured from abandoning damaged property to the insurer for repair or disposal. Arranging for repair or disposal is the insured's responsibility, unless the insurer elects otherwise.

ABATEMENT  - The act or process of diminishing the presence of a pollutant (e.g., asbestos or lead) in either degree or intensity.

ACCIDENT - An unexpected event, which happens by chance and is not expected in the normal course of events.

accidental death and dismemberment (AD&D) -  A type of coverage often written in conjunction with group life insurance plans. It essentially provides for (a) "double indemnity" when death is caused by an accident, and (b) defined dismemberment benefits. It will generally pay the full principal sum when death occurs or more than one member (e.g., hand, eye, or foot) is lost in an accident. One-half of the principal sum is generally paid when one member is lost.

ACCIDENTAL DEATH -  Death resulting directly and solely from (a) an accidental injury visible on the surface of the body or disclosed by an autopsy; (b) a disease or infection resulting directly from an accidental injury as described.

ACT OF GOD -  A sudden and violent act of nature, which could not have been foreseen or prevented. Examples: flood, earthquake.

ACTUAL CASH VALUE  -  Actual Cash Value (ACV) has many definitions.  It is also known as market value, the current cost of replacing an article with a similar one of like kind and quality. 

actuary -  An individual, often holding a professional designation, e.g., Fellow of the Casualty Actuarial Society (FCAS), who computes statistics relating to insurance, typically estimating loss reserves and developing premium rates.

ADDITIONAL INTEREST INSURED - Another person or company who may be liable in a claim against an insured  and who has been named as an Additional Interest Insured under the policy.

ADDITIONAL PREMIUM - An extra charge for an alteration, during the policy period, which increases the hazard or the Company's liability.

additional living expense (ALE) coverage -  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. For example, additional living expense insurance would cover an insured's motel bill while fire damage to the home is being repaired, the home is replaced, or until the insured moves to a permanent residence

ADJUSTER - A person who investigates a loss and negotiates settlement with the claimant on the Company's behalf.

AGGREGATE LIMIT  -  The maximum amount the insurer will pay during the policy period, irrespective of the policy's limit of liability.

ALL PERILS -  An optional coverage designed to provide protection for your vehicle for all types of losses except those specifically excluded in your policy. All perils coverage is the most complete coverage you can select to protect yourself from loss or damage to your own vehicle. This coverage is optional and may be purchased in addition to the mandatory coverages required by law, and it is subject to a deductible.

ALL RISK - Coverage against loss or damage from all perils except those specifically excluded.

anti-theft device  - A device in a car that reduces the chance that the vehicle will be stolen or vandalized or increases the chance of recovering a stolen car. Such devices include Global Positioning Satellite systems (GPS), local alarms, and starter disablers.

APPLICATION  - A form on which the prospective insured states facts requested by the insurance company and on the basis of which (together with any information from other sources) the insurance company decides whether or not to accept the risk, modify the coverage offered, or decline the risk.

APPRAISAL - A valuation of property made for determining its insurable value or the amount of loss sustained.

asbestos -   A mineral fiber that can pollute air or water and cause cancer or asbestosis when inhaled. Asbestos has been banned or severely restricted its use in manufacturing and construction. Liability arising out of asbestos-related injuries is commonly excluded from coverage  liability policies.

ASSUMED LIABILITY  - Liability which would not rest upon a person except that he has accepted responsibility by contract expressed or implied. This is also known as contractual liability.

assumption of risk  -  Based on the maxim "volenti non fit injuria." If a person knows the consequences of a particular act and voluntarily accepts that risk, he or she is solely responsible for any resulting injury.

AUTHORIZATION - The power or right to act on behalf of another.

AUTOMOBILE INSURANCE - Coverage on the risks associated with driving or owning an automobile. It can include  liability, direct compensation & property damage, accident benefits, collision, comprehensive, and uninsured motorist coverages.

AVOIDANCE OF RISK - Taking steps to remove a hazard, engage in an alternative activity, or otherwise end a specific exposure.

BASIC RATE – The standard charge for a given type of risk.

bAD FAITH- A term describing blatantly unfair conduct that exceeds mere negligence by an insurance company. For example, a bad faith claim may arise if an auto liability insurer arbitrarily refuses to settle a claim within policy limits, where an insured's liability is incontrovertible

bailee - A person or organization to whom possession of the property of others has been entrusted, usually for storage, repair, or servicing. Except for policies issued expressly for such purposes, most property policies specifically prohibit coverage for benefit of a bailee.

bailee coverage - Inland marine coverage on property entrusted to the insured for storage, repair, or servicing. It is typically purchased by businesses such as dry cleaners, jewelers, repairers, furriers, etc.

beneficiary - A person named by the insured to receive the proceeds or benefits accruing under a life policy.

benefits - Compensation for loss and other services provided by insurers under terms of insurance contracts.

betterment clause - a provision, often found in the physical damage section of automobile insurance policies, which stipulates that if the repair or replacement of the damaged parts results in better than "like kind or quality," the insurers will not pay for this net improvement. This clause is designed to preserve the concept of indemnity so the insured does not profit from the loss when the circumstances are such that it is impossible for the insurer to repair or replace the property without bettering the insured’s position.

bid bond - Used in conjunction with construction bidding processes. The bond acts as a guarantee that, if awarded the contract based on the bid submitted, the contractor will enter into a contract to perform the work at the price quoted. If the contractor declines to enter into a contract to perform the work at the agreed-upon price, the bid bond will reimburse the obligee (owner or upper-tier contractor) the difference between the defaulting contractor's bid and the next lowest bid, up to the penal sum of the bond.

bill of lading - A document that serves both as a receipt for goods being shipped and a contract defining the extent of the transporter's liability.

BINDER – A temporary or preliminary agreement, which provides coverage until a policy can be written or delivered.

BI/PD– Bodily Injury / Property Damage Liability Coverage.

blanket limit - A single limit of insurance that applies over more than one location or more than one category of property coverage, or both. This is in contrast to specific or scheduled limits of insurance, which are separate limits that apply to each type of property at each location.

BODILY INJURY – Term used in Auto and Casualty policies meaning physical injury, including sickness, disease, mental injury, shock or death.

BODILY INJURY LIABILITY – Pays when an insured person is legally liable for bodily injury or death caused by your vehicle or your operation of most non-owned vehicles. This coverage also pays for your legal defense if you are sued.

boiler and machinery insurance - Coverage for loss due to mechanical or electrical breakdown of nearly any type of equipment, including photocopiers and computers. Coverage applies to the cost to repair or replace the equipment and any other property damaged by the equipment breakdown. Resulting business income and extra expense loss is often covered as well. Equipment breakdown insurance is increasingly replacing traditional boiler and machinery insurance, in part simply because the title is more descriptive of the coverage provided. Also, today’s equipment breakdown policies typically provide slightly broader coverage than traditional boiler and machinery policies, and they usually do not use the specialized terminology found in traditional boiler and machinery policies.

bond - A three-party contract in which one party, the surety, guarantees the performance or honesty of a second party, the principal (obligor), to the third party (obligee) to whom the performance or debt is owed.

bonding - The process by which bonds are written.

breach - Failure to live up to the conditions or warranties contained in a contract.

BROAD FORM -PERSONAL LINES POLICY– A personal lines property form which provides All Risk coverage on the building and  named perils  coverage on the contents. This form normally adds the Extended Coverage and Vandalism and Malicious Mischief coverages.

BROAD FORM - COMMERCIAL POLICY– Coverage against loss or damage from all perils except those specifically excluded.

BROKER– An independent person or firm who acts on behalf of the insured in placing business with the insurance company. Responsible for the collection of premiums but having no authority to give coverage on the insurance company's behalf without their specific agreement. Compensation is on a commission basis.

BROKER OF RECORD - The independent broker authorized to represent an insured in the purchase, servicing, and maintenance of insurance coverage with a designated insurer. Most insurance companies will not disclose any information or discuss an insured's account with any broker other than the broker of record. An insured wishing to change their broker must submit a revised broker of record letter to the insurer authorizing them to release the insured's information and to discuss the insured's coverage with the new broker.

BUILDERS RISK – A special form dealing with the unique loss exposure of property under construction.

BURGLARY – Unlawful removal of property from premises involving visible forcible entry.

BUSINESS INTERRUPTION –  Insurance against business expenses and loss of income resulting from fire or other insured peril.

BUSINESSOWNERS POLICY (BOP) – Similar to the commercial package policy (CPP), it provides broad property and liability protection in a single contract and is designed for small and medium-sized mercantile, service, office or apartment risks.

buy/sell agreement - A contract among members of a firm that provides for the continuation of the business through an agreement by which each principal agrees that, in the event of his or her death, his or her estate will sell its interest back to the business entity for a predetermined amount. The amount may be calculated as a fixed amount or as a variable amount, depending on business factors. The agreement is usually funded by life insurance.

CANCELLATION – Termination of an insurance coverage during the policy period by the voluntary act of the insurance company or insured, effected in accordance with provisions in the contract or by mutual agreement.

care, custody, or control (CCC) - An exclusion common to several forms of liability insurance, which eliminates coverage with respect to damage to property in the insured's care, custody, or control. In some cases, CCC has been determined to entail physical possession of the property; in others, any party with a legal obligation to exercise care with respect to property has been deemed to have that property in its CCC

cargo insurance - Inland or ocean marine insurance covering property in transit.

carrier - An insurance or reinsurance company that insures or "carries" the insurance or reinsurance.

cash surrender value - The amount of cash available to the insured in an individual life insurance policy when the insured cancels and surrenders the policy.

CATASTROPHE – A sudden, great disaster.

causes of loss - The perils that can bring about or trigger loss or damage. Can be direct (the action immediately precedes the loss) or indirect (part of an uninterrupted chain of events leading to the loss).

certificate holder - An entity which is provided with an insurance certificate as evidence of the insurance maintained by another entity.

certificate of insurance - A document providing evidence that certain general types of insurance coverages and limits have been purchased by the party required to furnish the certificate.

CIVIL LIABILITY – Liability to other motorists, pedestrians and property owners that you assume when operating your automobile on a public roadway. 

CLAIM – Notice to an insurer that under the terms of a policy, a loss may be covered.

claims-made - A term describing an insurance policy that covers claims first made (reported or filed) during the year the policy is in force for any incidents that occur that year or during any previous period during which the insured was covered under a "claims-made" contract. This form of coverage is in contrast to the Occurrence policy, which covers an incident occurring while the policy is in force regardless of when the claim arising out of that incident is filed—1 or more years later.

CLAUSE – A term used to identify a particular part of a policy or endorsement.

CO-INSURANCE – In property insurance, a clause under which the insured shares in losses to the extent that he is underinsured at the time of loss.

COLLISION COVERAGE – An optional coverage designed to provide protection for your vehicle when damage occurs as a result of a collision with another object. This coverage is optional and may be purchased in addition to the mandatory coverages required by law, and it is subject to a deductible.

COMMERCIAL GENERAL LIABILITY COVERAGE (CGL) – A form of insurance sold to businesses to indemnify the business for third party liability claims due to negligence. Coverages can include premises and operations liability for onsite and jobsite accidents and products liability claims for products that injure third parties.   Protection may be provided on either an occurrence form or a claims-made basis.

commission - A certain percentage of premium produced that is retained as compensation by insurance agents and brokers. Also known as acquisition cost.

common law - Unwritten law derived from court case decisions based on custom and precedent. It is contrasted to statutory law.

COMPREHENSIVE COVERAGE -AUTOMOBILE INSURANCE – Comprehensive insurance reimburses you for damage to your own car from causes other than collision or overturning. The comprehensive portion of your policy pays for loss due to perils like hail, flood, theft, fire, glass breakage, falling objects, missiles, explosions, earthquakes, windstorms, vandalism or malicious mischief, riot or civil commotion, and collision with a bird or an animal.

When you look at a policy's comprehensive coverage, check for exclusions or limitations. If you have a special audio system installed in your car, for example, you should make sure your policy would cover the cost of the equipment if it were damaged or stolen.

It's also important to know if the policy pays for the actual cash value of damaged or stolen property (its current value after depreciation has been subtracted or the full amount required to replace it today.

COMPREHENSIVE FORM -PERSONAL LINES POLICY –  A personal lines property form which provides All Risk coverage on both the building and  contents. 

COMPULSORY INSURANCE  – Any form of insurance, which is required by law.

CONDOMINIUM CONTINGENT COVERAGE – Although a condo association has coverage on its building, in some instances it may not be enough. In the event of loss or damage to a policy holders individual unit, if the condo association's insurance is insufficient,  the unit owner, is responsible for the difference between the amount of damage and the amount available from the building insurance. Contingent coverage addresses this difference.

CONSEQUENTIAL DAMAGE – A loss, which is an indirect result of an accident or fire, e.g. food spoiled through breakdown of a refrigerator.

contingent beneficiary - Secondary beneficiary who receives policy benefits if the primary beneficiary predeceases the named insured under a life insurance policy.

contractual liability - Liability imposed on an entity by the terms of a contract. As used in insurance, the term refers not to all contractually imposed liability, but to the assumption of the other contracting party's liability under specified conditions.

COVER – To insure.

COVERAGE – Insurance.

CRIME COVERAGE – A generic term used to encompass the variety of crime coverage forms available to protect against losses of money, securities and property by such causes of loss as employee dishonesty, forgery, theft, burglary, robbery, kidnap, extortion and fraud.

DECLARATIONS (DEC SHEET) – A term used in insurance for the portion of the contract which contains information such as the name and address of the insured, the property insured, its location and description, the policy period, the amount of insurance coverage, applicable premiums, and supplemental representations by the insured.

 

DEDUCTIBLE – The portion of a loss that you are required to pay before your insurance coverage will respond. Deductibles can be used to reduce your physical damage premiums. For example, if you owned a policy with a $500 deductible and you suffered a covered loss totaling $1,200, you would pay the first $500 and the insurance company would pay the remaining $700. If the loss were only $200, you would pay the entire amount and the insurance company would pay nothing.

defendant - In a civil trial, the party against whom the suit has been brought.

deposit premium - The premium deposit required by the insurer on forms of insurance subject to periodic premium adjustment. Also called "provisional premium."

DEPRECIATION – Decrease in the value of property over a period of time due to use, wear, tear, and obsolescence. For example, if you paid $500 for a television set five years ago, its current value minus depreciation might be only $125, for example.

DIRECT LOSS (OR DAMAGE) – A loss, which is a direct consequence of a particular peril. Fire damage to a refrigerator would be a direct loss. Spoiling of food in the refrigerator as a result of the fire damage would be an indirect loss.

DIRECT WRITER – An insurance company, which sells its policies through salaried employees (licenced agents) who represent it exclusively, rather than through independent local agents, who represent several insurance companies.

DIRECTORS AND OFFICER LIABILITY – Protects officers and directors of a corporation against damages from claims resulting from negligent or wrongful acts in the course of their duties. Also covers the corporation (and even the officers and directors in some cases) for expenses incurred in defending lawsuits arising from alleged wrongful acts of officers or directors. These policies always require the insured to retain part of the risk uninsured.

dividend options - Varying ways in which insureds may elect to receive dividends under a life insurance policy. Dividends may be received in the form of cash payments, as increases to the policy's cash value, or as paid-up additional insurance.

double indemnity - Payment by a life insurance policy of two times the face value when death results from an accident, e.g., an auto accident, as opposed to a health problem, e.g., cardiac arrest.

due diligence - To give proper care and attention. This term is commonly used to refer to the review of financial and legal documents in a merger or acquisition, but is equally applicable to virtually any decision-making process.

duty to defend - A term used to describe an insurer’s obligation to provide an insured with defense to claims made under a liability insurance policy. As a general rule, an insured need only establish that there is potential for coverage under a policy to give rise to the insurer's duty to defend. Therefore, the duty to defend may exist even where coverage is in doubt and ultimately does not apply. Implicit in this rule is the principle that an insurer’s duty to defend an insured is broader than its duty to indemnify. Moreover, an insurer may owe a duty to defend its insured against a claim in which ultimately no damages are awarded, and any doubt as to whether the facts support a duty to defend is usually resolved in the insured's favor.

DWELLING POLICY OR DWELLING FIRE POLICY – A property policy available for owners of dwellings. Usually used for those dwelling risks that are not eligible for the homeowners package policies. 

EARNED PREMIUM – The portion of the policy premium allocated to the expired or used portion of the policy term. This also includes any short-rate charge made on policy cancellation.

EARTHQUAKE INSURANCE  – Insurance covering damage caused by an earthquake as defined in the contract.

easement - An interest that one party has in the land of another or a right of use over another party's property. An easement need not be written but may be implied or created by necessity or by prescription. Generally the party enjoying the benefit of being on the property of another assumes the liability of the property owner. Easements are "insured contracts" unless they are in connection with construction or demolition operations on or within 50 feet of a railroad.

EFFECTIVE DATE  – The date on which an insurance policy or bond goes into effect, and from which protection is furnished.

EMBEZZLEMENT  – The fraudulent use of money or property, which has been entrusted to one's care.

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.

ENDORSEMENT –  Amendment to the policy used to add or delete coverage. Also referred to as a "rider."

ERRORS AND OMISSION INSURANCE – A form of professional liability insurance which provides coverage for mistakes made by a person or persons in a profession not involved with the human body, such as lawyers, architects, engineers, or for mistakes made in a service business, such as insurance, real estate, and others.

equipment floater - Property insurance covering equipment that is often moved from place to place. A form of inland marine insurance.

estate plan - A plan for the systematic liquidation of one's estate. Conservation of estate assets is the uppermost consideration.

estimated premium - A preliminary figure that may be adjusted to reflect the extent of coverage provided under a given contract.

estoppel - A legal doctrine restraining a party from contradicting its own previous actions if those actions have been reasonably relied on by another party. For example, an insurer that has repeatedly accepted late premium payments from an insured may be estopped from later canceling the policy on the basis of nonpayment because the insured has been reasonably led to believe that late payments are acceptable.

evidence - Anything that can be used to prove or disprove an alleged fact.

EXCESS LIABILITY (UMBRELLA) – Liability insurance designed to provide an extra layer of coverage above the primary layer. The excess insurance does not respond, however, until the limits of liability in the primary layer have been exhausted. Because of the method of response, it is often much less costly than the primary layer, per $1,000,000 of coverage. The excess layer provides not only higher limits, but catastrophic protection for very large losses.

EXCLUSIONS – Certain causes and conditions, listed in the policy, which are not covered.

executive officer - As defined in the standard CGL policy, an executive officer is a person holding any of the officer positions created by the name insured organization’s governing document.

ex gratia payment - Latin: "by favor." A voluntary payment made by the insurer in response to a loss for which it is not technically liable under the terms of its policy.

EXPIRATION  – The date upon which a policy will end.

EXPOSURE – Degree of hazard threatening a risk because of external or internal physical conditions.

EXTENDED COVERAGE (EC)  – A common extension of property insurance beyond coverage for fire and lightning. Extended coverage adds insurance against loss by the perils of windstorm, hail, explosion, riot and riot attending a strike (civil commotion), aircraft damage, vehicle damage, smoke damage and volcanic eruption.

extended discovery period - A provision of coverage in claims-made policies, for claims brought against the insured following cancellation of the policy if the event(s) that caused the damage or injury occurred prior to the policy's cancellation.

face amount - Generally used to mean the amount of insurance provided.

fees - Fixed cost charges, as compared to percentage charges (called "commissions").

FIDELITY BOND – An insurance policy which reimburses an employer for losses resulting from dishonest acts of employees. May be written to cover specific employees or all employees, using either a schedule or blanket basis, or by scheduling positions versus named persons.

fiduciary - A person entrusted with the responsibility for the property or assets of another.

FIRE – Combustion sufficient to produce a spark, flame, or glow and which is hostile (as opposed to friendly – i.e., not in the place where it is intended to be, such as in a furnace.

FIRE INSURANCE – Coverage for loss of or damage to a building and/or contents due to fire.

FIRE RESISTIVE CONSTRUCTION – A building, which has exterior walls, floors, and roof constructed of masonry or other fire-resistive materials.

first dollar defense, umbrella - An umbrella or professional liability policy provision under which the insurer agrees to indemnify the insured for costs of claims defense in the self-insured retention area.

flat cancellation - The cancellation of a policy as of its effective date, before the company has assumed liability. This requires the return of paid premium in full.

FLEET - For classifying commercial vehicles under the business auto policy, five or more automobiles. Less than five is considered nonfleet. The distinction is made for statistical coding purposes.

FLOATER COVERAGE – A coverage extension that insureds moveable property, covering it wherever it may be.

FLOOD INSURANCE – A form of insurance designed to reimburse property owners from loss due to the defined peril of flood.   Usually not available for personal property policies but is available for businesses.

FOB - See Free on Board

FORGERY – In general, any false writing with intent to defraud.

FORM – An insurance policy itself or riders and endorsements attached to it.

FORTUITOUS EVENT – An unforeseen accident.

Free on board (FOB) - One of several standard terms used in contracts of sale to indicate responsibility for damage to goods during shipment. When goods are shipped FOB, the seller's responsibility ends when a carrier takes possession of them, or, with respect to ocean shipments, when the merchandise is placed safely aboard the vessel or when an on-board bill of lading has been issued. The buyer is responsible for insuring the goods from that point on.

GARAGED – The postal code where your vehicle is parked or garaged when not in use. This is usually your primary residence.

garage policy - A commercial auto policy designed to address the needs of auto dealers and other auto-related businesses (e.g., repair shops, service stations, storage garages). Coverages include garage liability, garagekeepers, and auto physical damage; other coverages are available by endorsement.

GENERAL AGGREGATE LIMIT  – The sum or total amount that will be paid in any one policy period, regardless of how many claims, losses, suits, or insureds may be involved. Some policies allow the aggregate limit to be reinstated after it has been exhausted, by endorsement and for additional premium.

GRACE PERIOD – A period after the premium due date, during which an overdue premium may be paid without penalty. The policy remains in force throughout this period.

guaranteed renewable - A provision in a life or disability policy that requires the insurer to renew the policy on its anniversary. The premium can usually be changed if the change applies to the entire class of insureds covered by the policy.

GVW - Gross vehicle weight.

HAZARD – A specific situation that increases the probability of the occurrence of loss arising from a peril, or that may influence the extent of the loss. For example, accident, sickness, fire, flood, liability, burglary, and explosion are perils. Slippery floors, unsanitary conditions, shingled roofs, congested traffic, unguarded premises, and uninspected boilers are also hazards.

HOMEOWNER INSURANCE – An elective combination of coverages for the risks of owning a home. Can include losses due to fire, burglary, vandalism, earthquake, and other perils.

HOUSEKEEPING – The general care, cleanliness and maintenance of an insured property.

hostile fire - A fire that becomes uncontrollable or expands outside its intended boundaries. For example, a fire set intentionally to burn brush becomes hostile if it spreads to other property; likewise, a fire that becomes much hotter than it is supposed to be or that cannot be extinguished is hostile even if it never spreads from the location where it was intentionally kindled.

host liquor liability - Liability for bodily injury or property damage arising out of the serving or distribution of alcoholic beverages by a party not engaged in this activity as a business enterprise.

IMPROVEMENTS AND BETTERMENTS – Additions or changes made by a lessee at his own cost to a building that he is occupying, which enhance its value. These become part of the realty and require special insurance consideration.

impaired property - Under commercial general liability coverage, property that has sustained loss of use because it incorporates the insured’s defective product or work and can be restored to use by the repair, removal, or replacement of the defective product or work. Claims for loss of use of impaired property are excluded from CGL coverage.

IN-FORCE – Insurance on which the premiums are being paid or have been fully paid. In life insurance, usually refers to insurance by face amount. In health, usually refers to premium volume being paid to insurance company or insurance companies in aggregate.

INCREASE IN HAZARD  – The standard fire insurance policy is suspended from liability while the hazard in a risk has been increased beyond what was contemplated at the time the policy was written. For example, if a dwelling house, insured as such, should be occupied for manufacturing purposes without getting consent from the insurer for such increase in hazard, the company would not have to pay a loss as long as the manufacturing condition existed.

INDEMNIFY – To restore the victim of a loss to the same financial position they were in prior to the loss.   This can be done  in whole or in part, by payment, repair, or replacement.

independent adjuster - A claims adjuster who provides services on a contract basis to insurance companies, self-insured firms, and governmental entities.  Independent adjusters are used when an insurer is overloaded with claims (often due to a catastrophe), a claim occurs in a remote locale, or when special expertise is required to adjust a claim.

independent contractor - An individual or company who has signed an agreement with another party to perform some job or function on behalf of that party without the direction or oversight of the party.

INDIRECT LOSS (OR DAMAGE) – Loss resulting from a peril, but not caused directly and immediately thereby. For example: Loss of property due to fire is a direct loss, while the loss of rental income as the result of the fire would be an indirect loss.

INLAND MARINE INSURANCE – A branch of the insurance business which developed from the insuring of shipments which did not involve ocean voyages. Involves the transporting on land. 

INSPECTION – Independent checking on facts about an applicant or claimant, usually by a commercial inspection agency.

installation floater - Inland marine coverage on property (usually equipment) being installed by a contractor.

INSURABILITY – Acceptability of an applicant for insurance to the insurance company.

insurable interest - An interest by the insured person in the value of the subject of insurance, including any legal or financial relationship. Insurable interest usually results from property rights, contract rights, and potential legal liability.

INSURANCE – A formal social device for reducing risk by transferring the risks of several individual entities to an insurer. The insurer agrees, for a consideration, to assume, to a specified extent, the losses suffered by the insured.

INSURANCE POLICY – Legal document issued to the insured setting out the terms of the contract of insurance.

INSURANCE TO VALUE – Insurance written in an amount approximating the value of the property insured.

INSURED – The person (or persons) whose risk of financial loss from an insured peril is protected by the policy. Sometimes call the "policyholder".

INSURER – The Insurance Company.

JEWELERY FLOATER  – An inland marine policy insuring jewelry wherever it may be.

joint and several liability - A legal doctrine a that allows an injured person to sue and recover from any one or more of several wrongdoers at his option, regardless of that wrongdoer's degree of negligence. The injured party cannot receive double compensation but can choose to recover 100 percent of a damages award from any defendant who is found liable to any extent.

JOINT TENANCY – Ownership of property shared equally by two or more parties under which the survivor assumes complete ownership. This is different from a tenancy in common where the heirs of a deceased party to the tenancy inherit his or her share.

LAPSE – Termination of a policy because of failure to pay the premium.

LESSEE – The person, to whom a lease is granted, commonly called the tenant.

LESSOR – The person granting a lease, also known as the landlord.

LIABILITY INSURANCE – In an accident where you are charged with injuring another person or damaging his or her property, liability insurance pays the cost of your legal defence, as well as the cost of any damages for which you are found legally responsible.

Liability - Any legally enforceable obligation. Within the context of insurance, the obligation to pay a monetary award for injury or damage caused by one's negligent or statutorily prohibited action

LIABILITY LIMITS – The sum or sums beyond which a liability insurance company does not protect the insured on a particular policy.

LIBEL – A written statement about someone, which is personally injurious to that individual.

life expectancy - The average number of years a person of a certain age is expected to live as shown on an annuity table or mortality table.

LIMIT OF LIABILITY – The maximum amount, which an insurance company agrees to pay in case of loss.

LIMITS – Maximum amount a policy will pay either overall or under a particular coverage.

litigation - The process of investigating and adjudicating the facts and law in a particular case. In general usage, the bringing or defense of a lawsuit.

long-term disability (LTD) income insurance - LTD insurance replaces earnings lost due to illness or disability occurring on or off the job. Coverage may be purchased on an individual or group basis. Individual policies typically do not pay until the period of the disability exceeds a specified elimination period, usually 30 days or longer. Recovery under group disability income policies is often structured to begin after short-term disability income insurance benefits or uninsured salary continuance payments cease. One of the most important provisions in either group or individual policies is the definition of "disability." The broader the definition, the broader the scope of coverage. Most LTD policies are structured to pay benefits until the insured reaches age 65.

LOSS – Generally refers to:
the amount of reduction in the value of an insured's property caused by an insured peril,
the amount sought through an insured's claim, or
the amount paid on behalf of an insured under an insurance contract.

LOSS ASSESSMENT COVERAGE –This coverage is for condominium owners.   It pays for their share of any special assessments made by the Condominium Corporation that are the result  of direct loss to the collectively owned condominium property, caused by an insured peril .

LOSS EXPERIENCE  –The loss history for an account, a line of business, a book of business, or some other defining category. Loss experience may include the date of loss, type of loss, amount of loss, whether the loss is open or closed, and a summary of the details of the loss.

LOSS OF USE INSURANCE – Coverage to compensate an insured for the loss of use of property if it cannot be used because of a peril covered by the policy.

loss payable clause - An insurance provision authorizing payment in the event of loss to a person or entity other than the named insured having an insurable interest in the covered property. Under a typical loss payable clause, the insurer is under no obligation to make payment to the loss payee if payment for a loss can be denied to the insured.

LOST POLICY RELEASE FORM (LPR) – An agreement signed by the policyholder relieving the insurer from liability under an insurance contract which has been lost, misplaced or is otherwise unavailable. The lost policy release form is used to fulfill the requirement that a policy be returned when the insured requests that coverage be canceled.

marine insurance - A type of insurance designed to provide coverage for the transportation of goods either on the ocean or by land as well as damage to the waterborne instrument of conveyance and to the liability for third parties arising out of the process. The two branches of marine insurance are ocean marine (primarily water-based exposures) and inland marine (primarily land-based exposures).

MARKET VALUE – The price for which something would sell, especially the value of certain types of assets, such as stocks and bonds. It is based on what they would sell for under current market conditions. For example, common stock market value would be the price of the stock as of a specified date.

MATERIAL MISREPRESENTATION – The policyholder / applicant makes a false statement of any material (important) fact on his/her application. For instance, the policyholder provides false information regarding the location where the vehicle is garaged.

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

mediation - The act of a third person in assisting two adverse parties adjust or settle their dispute.

medical payments, auto - Optional coverage under an auto policy to pay for medical expenses for an insured who sustains bodily injury caused by an auto accident, without regard to fault.

medical payments, homeowners - Coverage designed to pay for medical expenses to others who are accidentally injured on an insured location or by the activities of an insured, resident employee, or an animal owned by or in the care of an insured. These payments are not based on the law of negligence; that is, no negligence on the part of the insured has to be proven for payment to be made.

minimum premium - The least amount of premium to be charged for providing a particular insurance coverage. The minimum premium may apply in any number of ways such as per location, per type of coverage, or per policy.

moral hazard - A term used to describe a subjective hazard that tends to increase the probable frequency or severity of loss due to an insured peril. Moral hazard is measured by the character of the insured and the circumstances surrounding the subject of the insurance, especially the extent of potential loss or gain to the insured in case of loss. For example, insurance on a thriving business is not subject to a moral hazard to as great an extent as insurance on an unprofitable business. On the other hand, an insured with high moral standards may pose less of a moral hazard even with an unprofitable business than an insured with low moral standards. Moral hazards are considered when underwriting insurance, particularly fire insurance, and are also addressed by certain policy exclusions. For example, underwriters are hesitant to insure vacant and unoccupied buildings because of the possibility that an insured will be tempted to intentionally start a fire to obtain an insurance recovery.

MORTGAGE INSURANCE POLICY – In life and health insurance, a policy the benefits from which are intended to pay off the balance due on a mortgage or meet the payments on a mortgage as they fall due upon or after the death or disability of the insured.

MORTGAGEE – The creditor to whom a mortgage is given and who lends money on the security of the value of the property mortgaged. MORTGAGOR – The debtor who receives money and in turn grants a mortgage on his property as security for a loan.

motor truck cargo - An inland marine form covering loss of property in the course of transit, either by common carrier or on the insured's own vehicles, depending on the form used.

mutual company - A corporation owned and operated by and for its insureds. Every owner of the company is an insured; every insured is an owner.

NAMED INSURED – The first person in whose name the insurance policy is issued.

NAMED PERILS – Named perils are the specific dangers a policy insures you against – such as fire, windstorm, and hail in a homeowner's policy, for example. These perils are "named" or listed in the policy.

natural death - Indicates death not caused by external sources; usually pertains to death from disease or old age.

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

NO-FAULT INSURANCE – No-fault insurance is designed to speed up claims payments to accident victims and to lower the cost of auto insurance by reducing the number of lawsuits for minor claims. Under no-fault insurance, a person's own insurance company pays for financial losses like medical expenses and lost wages due to an accident, regardless of who caused it. (In a fault system, your expenses won't be paid by the other party's insurance company until he or she has been proved negligent.) In exchange, the right to sue may be restricted in some cases.

nonmedical - Life or health insurance coverage written without a medical exam. However, the insured completes a detailed questionnaire concerning his or her health. This information becomes a warranty so that any misstatements could potentially void the policy.

NON-OWNED AUTOMOBILE LIABILITY INSURANCE  – Coverage for the policyholder against liability incurred while driving an automobile not owned or hired by the policyholder or resulting from the use of someone else's automobile on the insured's behalf, such as an employee using a personal car for the employer's business purposes.

nonparticipating (non-par) - Life insurance contracts in which no policy dividends are paid.

NONRENEWAL –  When an insurer chooses not to renew coverage due to a policyholder's poor loss experience, a decision to stop offering a type of coverage or other reason. 

notice of claim provision - A provision in a liability insurance policy requiring the insured to promptly notify the insurer in the event that a claim is made against the insured.

obligee - A person or organization to whom another party (the "obligor") owes an obligation. In a bonding situation, this is the party that requires and receives the protection of the bond. For example, under a performance bond, the obligee is the project owner for whom the bonded contractor is required to perform the specified work.

obligor - A person or organization that is bound by an obligation to another. In a bonding situation, this party, commonly called the "principal," purchases a bond to protect the party to whom it owes an obligation. For example, under a performance bond, the obligor is the contractor that is required to perform the specified work for the project owner.

OCCASIONAL DRIVER – The person who is not the primary or principal driver of the vehicle.

OCCUPANCY – In insurance, this term refers to the type and character of the use of property in question.

OCCURRENCE – An event that results in an insured loss. In some lines of insurance, such as Liability, it is distinguished from accident in that the loss does not have to be sudden and fortuitous and can result from continuous or repeated exposure, which results in bodily injury or property damage neither expected nor intended by the insured.

ocean marine coverage - nsurance covering the transportation of goods and/or merchandise by vessels crossing both foreign and domestic waters including any inland or aviation transit associated with the shipment. This type of marine insurance also encompasses coverage for damage to the vessels involved in shipments and any legal liability arising in the course of shipment.

PACKAGE POLICY  – A combination of property-liability coverages of two or more separate policies in one contract with one premium. The development of package policies is a move toward economy and efficiency in giving the policyholder one document instead of several.

PAID UP - Life insurance for which premiums have been paid but the policy has not yet matured.

paid-up additions - Single premium life insurance coverage bought in addition to the face amount of the policy by using policy dividends.

pair or set clause - Provision found in homeowners and commercial property forms dealing with losses involving part of a set or one of a pair. In this case, the insurer can either (1) repair or replace any part to restore the pair or set to its value prior to the loss, or (2) pay the difference between the actual cash value of the property before and after the loss.

PARTIAL LOSS – A loss under an insurance policy which does not either (1) completely destroy or render worthless the insured property, or (2) exhaust the insurance applying thereto.

participating (par) - An insurance policy that pays dividends.

PERIL – Cause of a possible loss. For example, fire, theft, or hail.

PERSONAL ARTICLES FLOATER – Provides all risk coverage, subject to reasonable exclusions for valuable items such as furs, jewellery, cameras, silverware, etc. formerly insured under separate contracts. The items are generally listed by description and value.

PERSONAL INJURY – Injury other than bodily injury arising out of false arrest or detention, malicious prosecution, wrongful entry or eviction, libel or slander, or violation of a person's right to privacy committed other than in the course of advertising, publishing, broadcasting or telecasting. Contrast with Advertising Injury.

PERSONAL PROPERTY – Any property of an insured other than real property. Homeowner policies protect the personal property of family members, and commercial forms are used to protect many types of business personal property of an insured.

PERSONAL PROPERTY FLOATER – A broad policy covering all personal property world-wide, including insured's domicile.

PERSONAL PROPERTY LIMITATIONS – Don't assume everything you own is adequately insured by a standard homeowner's policy. The typical homeowner's policy provides only limited coverage for many expensive items. Extra coverage can be purchased separately.

PHYSICAL DAMAGE – A generic term indicating actual damage to property.

PHYSICAL DAMAGE COVERAGE – Physical damage coverage insures you against damage to your car. The physical damage section of an automobile policy can include both comprehensive coverage – which protects you against theft and vandalism, among other things – and collision coverage.

PHYSICAL HAZARD – The material, structural, or operational features of the risk itself, apart from the morale or moral hazards of the persons owning or managing it.

PILFERAGE – Petty theft, especially theft of articles in less than package lots.

POLICY – Legal document issued to the insured setting out the terms of the contract of insurance.

POLICY EXPIRATION DATE – The date when your current insurance policy expires. This date can be found on your current Declaration (or "DEC") page, insurance identification card, or recent cancellation notice. This date is not to be confused with the date of your next payment or the date when your renewal payment is due.

POLICY LIMIT – The maximum amount a policy will pay, either overall or under a particular coverage.

POLICY PERIOD (OR TERM) – The period during which the policy contract provides protection, e.g., six months or one or three years.

POLICYHOLDER – The person (or persons) whose risk of financial loss from an insured peril is protected by the policy.

POLICY LOAN - A loan from the insurer to a life insurance policy owner using the cash value as security for the loan.

pollution exclusion - A provision in either first-party or third-party insurance policies that excludes coverage for losses caused by "pollution," a term usually defined to mean an irritant or contaminant, whether in solid, liquid, or gaseous form, including—when they can be regarded as an irritant or contaminant—smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste.

PREFERRED RISK – An insurance classification indicating a risk that is superior to the average risk on which the rate has been calculated and thus eligible for a reduced rate.

PREMISES – The particular location of property or a portion thereof as designated in a policy.

PREMIUM – The amount of money an insurance company charges for insurance coverage.

premium audit - An audit of the exposure basis for an insurance policy, i.e., payroll, sales, or vehicle count, after the end of a policy period to determine the actual (audited) exposure for the purpose of making a final calculation of the premium and premium taxes.

premium loan - A loan against the cash value of a life insurance policy to pay the policy premium.

premium notice - Notice from the insurer that the premium is or will soon be due.

primary beneficiary - The beneficiary named as being first to receive proceeds or benefits when they come due or are payable. If the primary beneficiary is not living at the time the proceeds are payable, the benefits are paid to the secondary beneficiary.

primary cover - The policy that responds first to an insured loss, either on a first-dollar basis or after allowing for a deductible. When the primary coverage limits are paid, any remaining loss is covered by whatever excess layer of insurance may be in place.

PRIMARY RESIDENCE – The place where you will reside for the majority of your policy term.

PRINCIPLE DRIVER – The person who drives the car most often.

PRODUCT LIABILITY The liability that a merchant or a manufacturer may incur as the result of some defect in the product sold or manufactured.

PRODUCT/COMPLETED OPERATIONS LIABILITY  – Coverage designed to protect against the liability for injury, loss, or damage that a merchant or a manufacturer may incur as the result of some defect in the product sold or manufactured.

PROFESSIONAL LIABILITY INSURANCE – Liability insurance to indemnify professionals, doctors, lawyers, architects, etc. for loss or expense resulting from claim on account of bodily injuries because of any malpractice, error, or mistake committed or alleged to have been committed by the insured in his profession.

PROHIBITED RISK – Any class of business, which an insurance company will not insure under any condition.

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

PROPERTY DAMAGE LIABILITY – Pays when an insured person is legally liable for damage to the property of others caused by your vehicle or your operation of most non-owned vehicles. This coverage also pays for your legal defense costs if you are sued.

PROPERTY INSURANCE – Property Insurance indemnifies an insured whose property is stolen, damaged, or destroyed by a covered peril. The term property insurance includes direct or indirect property losses covered in several lines of insurance.

pro rata - Proportionately.

pro rata cancellation - The cancellation of an insurance policy or bond with the return premium credit being the full proportion of premium for the unexpired term of the policy or bond, without penalty for interim cancellation.

PROTECTION –Term used interchangeably with the word "coverage" to denote the insurance provided under the terms of a policy. Term used to indicate the existence of fire-fighting facilities in an area known as a "protected" area.

proximate cause - In the context of first-party property insurance, "proximate cause" refers to the cause of loss in a multiple-cause situation on which courts focus to determine if the loss is covered. For sequential-cause situations, where the first event sets in motion a chain of events that causes a second event that causes the loss, there are three common law tests for ascertaining the "proximate cause": (1) the last-cause test, (2) the first-cause test, and (3) the predominant-cause test. The last-cause test (which developed earliest) states that the loss will be covered if the last cause in the chain of events is covered. The first-cause test states that the loss will be covered if the first cause in the chain of events is covered. The predominant-cause test states that the loss will be covered if the covered cause of loss is "predominant" over the noncovered cause of loss. For concurrent-cause situations, where two or more events happen simultaneously to produce the same injury or damage, only the predominant-cause test can be used.

In the context of third-party liability insurance, "proximate cause" refers to a doctrine by which a plaintiff must prove that the defendant's actions set in motion a relatively short chain of events that could have reasonably been anticipated to lead to the plaintiff's damages. If the defendant's actions were "proximate" or close enough in the chain of causation to have foreseeably led to the plaintiff's damages, courts will impose liability. Otherwise, if the defendant’s actions set in motion a long, bizarre chain of events that could not have reasonably been foreseen to lead to the plaintiff’s damages, courts will not impose liability.

QUOTE – An estimate of the cost of insurance, based on information supplied to the insurance company by the applicant.

RATE – The per unit cost of insurance. (See also Premium).

RATED – Usually used in combination, rated-up or rated policy. A policy issued with an extra premium charge.

reasonable repairs - Additional coverage provided by the homeowners policy. The insurer will pay for any reasonable costs incurred by the named insured to protect his or her insured property from further damage, if the cause of loss is a covered peril. This is additional coverage, and does not affect the limit of insurance applicable to the covered property. This concept is referred to as the "sue and labor clause" in most commercial property and marine forms.

REIMBURSEMENT – Payment of an amount of money related to the amount of the loss to or on behalf of the insured upon the occurrence of a defined loss.

REINSTATEMENT – Restoring a lapsed policy back in force. The reinstatement may be effective after the cancellation date, creating a lapse of coverage. Some companies require evidence of insurability and payment of past due premiums plus interest.

REINSURANCE – A contract of indemnity against liability by which the insurance company procures another insurance to insure it against loss or liability by reason of the original insurance.  Insurance by one insurance company of all or part of a risk accepted by it with another insurance company which agrees to reimburse the insurance company for the portion of the claim reinsured. The insurance company obtaining the reinsurance is called the "ceding insurance company;" the insurance company issuing the reinsurance is called the "reinsurer." A reinsurer may, in turn, seek reinsurance on some portion of the risk it has reinsured, a process known as "retrocession."

release - The document relinquishing a claim. A plaintiff or claimant signs a release in exchange for monetary payment, thereby giving up the right to pursue further indemnity in connection with the claim.

RENEWAL – The continuation in full force and effect of something that is about to expire. With an insurance policy it is made either by the issuance of a new policy or renewal receipt or certificate, to take effect upon the expiration of the old policy.

REPLACEMENT COST – The cost of replacing property without deduction for depreciation.

renewable term - Term life insurance that may be renewed periodically without evidence of insurability but often at a higher premium.

RIDER – Usually known as an endorsement, a rider is an amendment to the policy used to add or delete coverage.

RISK – A chance of loss. A person or thing insured. (Impaired or substandard risk: An applicant whose physical condition or moral habits do not meet the standard on which the rate is based).

RISK MANAGEMENT – Management of the pure risks to which a company might be subject. It involves analyzing all exposures to the possibility of loss and determining how to handle these exposures through such practices as avoiding the risk, retaining the risk, reducing the risk, or transferring the risk, usually by insurance.

ROBBERY – The felonious taking, either by force or by fear of force, of the personal property of another, commonly known as "hold-up."

sales - Exposure base in commercial general liability (CGL) insurance for insureds in the manufacturing/processing or mercantile business classifications. Gross sales as an exposure base is defined as "the gross amount charged by the named insured, concessionaires of the named insured or by others trading under the insured's name for all goods or products, sold or distributed; operations performed during the policy period; rentals; and dues or fees.

salvage - (1) Property after it has been partially damaged by an insured peril such as a fire. (2) As a verb, to save endangered property and to protect damaged property from further loss.

salvage value - The amount for which an asset can be sold at the end of its useful life. In insurance circles, this term commonly refers to the scrap value of damaged property. In property insurance, salvage value (e.g., scrap value) will be subtracted from any loss settlement if the insured retains the damaged property. In extra expense coverage, the salvage value of property purchased for temporary use while repairs are made will be deducted in determining the amount of loss recovery.

schedule - A list of an insured's locations or property such as computers, mobile equipment, or vehicles. Can also refer to a list of primary or underlying insurance.

self-insured retention (SIR) - A dollar amount specified in an insurance policy (usually a liability insurance policy) that must be paid by the insured before the insurance policy will respond to a loss. SIRs typically apply to both the amount of the loss and related costs, e.g., defense costs, but some apply only to amounts payable in damages, e.g., settlements, awards, and judgments. An SIR differs from a true deductible in at least two important ways. Most importantly, a liability policy's limit stacks on top of an SIR while the amount of a liability insurance deductible is subtracted from the policy's limit. As contrasted with its responsibility under a deductible, the insurer is not obligated to pay the SIR amount and then seek reimbursement from the insured; the insured pays the SIR directly to the claimant. While these are the theoretical differences between SIRs and deductibles, they are not well understood, and the actual policy provisions should be reviewed to ascertain the actual operation of specific provisions.

SETTLEMENT – Usually, a policy benefit or claim payment. It dennotes an agreement between both parties to the policy contract as to the amount and method of payment.

short-rate cancellation - A financial penalty incurred when the insured cancels an insurance contract prior to the expiration date of the contract. The insurer keeps a percentage of unearned premium (UEP) to cover costs

soft market - One side of the market cycle that is characterized by low rates, high limits, flexible contracts, and high availability of coverage

specialty risks - Term used by commercial insurers to describe unusual coverage features or types of risks not underwritten by most insurers.

SPECIFIED PERILS – In Automobile Insurance.  An optional coverage designed to provide basic protection for your vehicle for loss or damage resulting from incidents specifically stated in your policy. A few examples of the types of losses insured under named perils coverage include fire, lightning, theft, explosion, earthquake, windstorm and hail. This coverage is optional and may be purchased in addition to the mandatory coverages required by law, and it is subject to a deductible.

SPECIFIED PERILS –  In Property Insurance.  A specific list of those  causes of loss (perils) specified as covered. The types of losses insured are fire, lightning, explosion, windstorm or hail, smoke, aircraft or vehicle damage, riot or civil commotion, vandalism, sprinkler leakage and collapse.

speculative risk - Uncertainty about an event under consideration that could produce either a profit or a loss, such as a business venture or a gambling transaction. A pure risk is generally insurable while speculative risk is usually not.

split dollar plans - A form of life insurance co-ownership that allows one party, often the employer, to help another person carry life insurance protection. Generally the insured pays the portion of the premium attributable to the life insurance protection while the other party pays the portion attributable to the cash value build-up. At the insured's death, an amount of the proceeds equal to the cash value is paid to the other party with the remaining amount paid to the insured's beneficiaries. This approach provides protection in a permanent life insurance contract at a very low cost to the insured.

statutory law - That body of law which is enacted by legislative bodies. It is separate and distinct from common law.

STATUTORY CONDITIONS - A set of conditions that are included in fire and automobile policies as stipulated by various insurance acts.

SUBROGATION – The right of an insurance company to step into the shoes of the party whom they compensate and sue any party whom the compensated party could have sued.

TAIL COVERAGE  – Insurance coverage available to provide protection for tail exposures. The present occurrence version of the commercial general liability (CGL) form already provides protection for losses that occurred during the policy period, regardless of when they are reported or claims made. The claims-made version of the CGL must be endorsed to provide coverage for claims that are not made during the policy period.

TENANTS POLICY – A Homeowners form, which is specifically designed for people who rent.

term life insurance - A policy that gives protection for only a definite period of time (e.g., 1, 3, or 5 years). 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. Guaranteed renewable term insurance can be renewed without proof of insurability. Under other types of term insurance, the insured must once again undergo an underwriting process (e.g., a medical examination).

TERRORISM EXCLUSION  – Policy wording that typically defines what acts are considered to be the result of actions by terrorists and then an explanation of which acts are barred from coverage under the applicable insurance policy. The specific wording varies since standard wording is evolving.

THEFT – Any act of stealing. Theft includes larceny, burglary and robbery.

THIRD PARTY INSURANCE – Protection of the insured against liability for damage to or destruction of the bodies or property of others.

TOTAL LOSS – A loss of sufficient size so that it can be said there is nothing left of value. The complete destruction of the property. The term is also used to mean a loss requiring the maximum amount a policy will pay.

TRANSFER OF RISK – Shifting all or part of a risk to another party. Insurance is the most common method of risk transfer, but other devices, such as hold harmless agreements, also transfer risk. One of the four major risk management techniques. See Risk Management.

UMBRELLA LIABILITY POLICY – a policy that pays for liability losses in excess of those covered in homeowners and auto insurance.

UNDERWRITER – A person trained in evaluating risks and determining the rates and coverages that will be used for them. An agent, especially a life insurance agent, who might qualify as a "field underwriter." In theory, the agent is supposed to do some underwriting before submitting the case to the home office underwriter; i.e., to make a decision on the basis of facts known to him on whether or not the risk is sound and to report all facts known to him that might affect the risk.

UNDERWRITING – The process of evaluating a risk for the purpose of issuing insurance coverage on it.

UNINSURED MOTORIST – Uninsured motorist coverage is found in the automobile policy.  It protects you in situations where your vehicle has been wrecked by another driver who doesn't have a insurance at all, and can't pay for your losses. 

universal life insurance - A very flexible life insurance product that pays much higher interest than conventional whole life and allows the insured to adjust the premium and death benefits

vacancy permit endorsement - A property insurance endorsement that suspends some or all of the coverage restrictions that apply to buildings that have been vacant for more than a specified period of time (typically, 60 days).

VACANT BUILDING –  A building with nothing in it. If the furniture is in the building and the owner intends to return, the building is unoccupied.

valuable papers and records coverage - Inland marine coverage that pays the cost to reconstruct damaged or destroyed valuable papers and records. "Valuable papers and records" usually is defined to include almost all forms of printed documents or records except money or securities; data processing programs, data, and media are usually excluded.

VALUATION – Estimation of the value of an item, usually by appraisal.

VANDALISM – Used synonymously with malicious mischief; willful physical damage to property.

VANDALISM AND MALICIOUS MISCHIEF (V&MM) – Damage or destruction to property, which is willful. This coverage can be purchased under many Property forms and is automatically covered under most Homeowners policies.

vicarious liability - The liability of a principal for the acts of its agents. Vicarious liability can result from the acts of independent agents, partners, independent contractors, employees, and children.

VIN – The vehicle identification number (VIN) on your vehicle. This number is usually found on the dashboard of your vehicle on the driver's side, and is usually listed on the vehicle registration and title. The VIN is a combination of letters and numbers 17 characters in length that can be used to identify the make, model, and year of your car.

void - Without legal effect; unenforceable. A number of actions on the part of the insured can render coverage under an insurance policy void.

voidable - A policy that can be made void at the option of one or either of the parties to it.

Voluntary Medical payments (property insurance) - Pay the medial bills for people accidentally hurt in your home.  It also pays for people hurt away from your home by you, your household members, or by your pets.  Often, this coverage is provided no matter who is at fault for the injury.  It is intended to cover the costs of minor injuries without the need for a third part to sue for reimbursement.  The medical payments coverage does not apply to injuries to you or to those who live with you .  Nor does it cover injuries related to at-home business activities.

WAIVER –A rider waiving (excluding) liability for a stated cause of accident or (especially) sickness.
A provision or rider agreeing to waive (forego) premium payment during a period of disability.
The giving up or surrender of a right or privilege that is known to exist. It may be effected by the agent, adjuster, or insurance company employee or official orally or in writing.

WARRANTIES–  Warranties are commonly used in commercial polices and express that a certain set of conditions exist.  Breaking a warranty could violate the policy conditions and cause denial of a claim. Warranties that are included your policies are:

Locked Vehicle Warranty – Items in vehicles must be locked in proper containers and there must be signs of forcible entry before theft losses are covered.

Property Protection Systems This includes all alarms, warning system, including sprinklers. The systems shall be maintained in full operating order.  In the event of any impairment or defect or if the systems becomes inoperative or are removed, then the insurance company must be notified.   This also includes any notification from the police that they will suspend responding to alarm signals Notice To Authorities  - losses including malicious acts, burglary, robbery, theft or attempt thereat, must be reported to Police

Vacancy:  The Insurance Company must be notified immediately of any location insured, which becomes vacant

Whole life insurance - Life insurance that has no expiration date and which provides for the payment of the face value upon death of the insured, regardless of when it may occur. This contrasts with term insurance, which pays benefits only if death takes place during the limited term (e.g., 1, 3, 5, or 10 years) of the policy. Under permanent life insurance policies, the insured pays a level premium rate all of his or her life. This approach results in an overpayment of premiums in the early years of the policy and an underpayment in the latter years—which is intended to average out over the life of the insured. Most types of permanent life insurance (e.g., whole life, universal life, and variable life insurance) accumulate a cash value that may be borrowed or otherwise used by the insured.

WORKERS COMPENSATION  – Protection which provides benefits to employees for any injury or contracted disease arising out of and in the course of employment. 

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