Abandonment Condition - A condition often contained in Property insurance policies that states that the insured cannot abandon damaged property to the insurer and demand to be reimbursed for its full value.
Accident - A loss that occurs at a specific time and place.
Accounts Receivable Insurance - Filed Commercial Inland Marine form that insures against loss the insured suffers because of an inability to collect from customers when accounts receivable records are damaged or destroyed. This coverage can also be added by endorsement to the Businessowners policy.
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 the amount of reimbursement for a loss.
Additional Coverages - Supplemental insurance coverages that apply only in certain circumstances, have reduced or separate limits of liability or require the insured to meet certain requirements before they are applicable. Also called coverage extensions, other coverages and extended coverages.
Additional Insured - An individual or company, in addition to the insured, who is listed in the Declarations. An example is a mortgage company that has an insurable interest in the property insured.
Advertising Injury - Coverage included in Commercial General Liability policies that insures against liability from publication, either orally or in writing, of material that is slanderous, libelous, disparaging, or in violation of right of privacy, from misappropriation of another’s copyright, title or slogan.
Agency - Principles governing the authority of any agent that represents a principal.
Agent - An individual or organization that legally represents another, a state-licensed professional who represents the insurance company in the sale and servicing of insurance, the direct link between the insurance company and the policyholder.
Agreed Value Condition - Condition found in some Property insurance policies that stipulates a certain value that will meet the coinsurance requirement. If the policy limit equals or exceeds this amount, the insured will not be assessed a coinsurance penalty.
Alien Company - An insurance company incorporated in a country other than the United States that is doing business in the United States.
All Risk Policy - See Open Peril Policy
A.M. Best Company - Organization that rates the financial stability of insurance companies doing business in the United States.
Application - Questionnaire filled out by an agent and the prospect who is seeking insurance. The form contains information used to underwrite and rate the policy.
Appraisal Condition - Policy condition that outlines a procedure for when the insured and insurer disagree on the amount of a loss. The insured and the insurer each select an appraiser. The two appraisers select an umpire. If the appraisers cannot agree on the amount of loss, the umpire is consulted. The amount agreed to by any two of the three parties is the amount paid for the loss.
Appurtenant Structure - A structure of lesser value, such as a barn or tool shed, pertaining to or belonging to the insured structure.
Assumed Risk - Legal term based on the common law
principle that a person who knowingly exposes himself or herself to danger
or injury assumes the risk of loss and cannot hold another person responsible
for the loss.
Authorized Insurer - Company that meets a state insurance department’s standards and is authorized to do business in that state. Also called an admitted insurer.
Automatic Increase in Insurance Endorsement - Dwelling policy endorsement that provides an annual increase in the Coverage A amount of 4%, 6% or 8%.
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Bailee - A person or organization that has temporary possession of someone else’s personal property.
Binder - Oral or written statement that provides immediate insurance protection for a specified period. Designed to provide temporary coverage until a policy is issued or denied.
Blanket Insurance - Type of insurance policy that covers more than one item of property at a single location or one or more items of property at multiple locations.
Bodily Injury (BI) - Defined in most policies to include injury, sickness, disease, and death resulting from any of these at any time.
Boiler and Machinery Coverage Form - Insurance that covers the insured for losses arising out of the use of steam boilers or other machinery. May be included in the Commercial Package policy.
Broker - Individual who represents the prospect, instead of the insurance company, in the insurance transaction.
Building and Personal Property Coverage Form - Commercial Property coverage form that covers buildings, the insured’s business personal property and the personal property of others located at the business premises.
Burglary - As defined in Crime insurance forms, the taking of property by a person unlawfully entering or leaving the premises as evidenced by visible signs of forced entry or exit.
Business Auto Coverage Form - One of the Commercial Auto coverage forms; covers a business’s owned, nonowned and hired autos against liability and physical damage losses.
Business Auto Physical Damage Coverage Form - One of the Commercial Auto coverage forms; covers a business’s owned or hired business autos for physical damage only.
Business Income Coverage Forms - Commercial Property coverage forms that pay for loss of income that the insured sustains due to a direct physical loss from a covered peril that forces the insured to suspend operations until the property can be repaired, rebuilt or replaced with reasonable speed. Available with or without Extra Expense coverage.
Business Liability - Liability that arises out of the conduct of a business.
Business Pursuits Endorsement - Homeowner’s policy endorsement that provides Liability coverage for a business conducted away from the residence premises.
Businessowners Policy (BOP) - Package policy designed to provide Property and Liability coverage for small businesses. The insured can choose one of two property forms, but there is only one liability form. Eligibility requirements are more strict than CPP’s.
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Cancellation - Termination of an insurance policy by the insured or the insurance company during the policy period.
Cargo Insurance - Type of Ocean Marine insurance that covers goods while they are in transit over water.
Causes of Loss Form - Separate form used with the Commercial Property coverage part of the Commercial Package policy that lists covered perils and exclusions. Several different versions provide increasingly broader coverage from basic to broad to special. An earthquake form is also available. A Causes of Loss form takes the place of the policy’s "perils insured against" provisions.
Certificate of Insurance - Written form that verifies a policy has been written. Provides a summary of the coverage provided under the policy.
Claim Adjuster - Person employed by or acting on behalf of an insurance company to evaluate and settle insurance claims. The adjuster must determine the cause of loss, whether the loss is covered by the policy, the value of the loss, and the amount of loss payable by the company.
Claims-made Form - Commercial General Liability coverage form that pays for BI or PD losses for which a claim was first made against the insured during the policy period.
Coinsurance - Policy condition that requires an insured to pay part of a loss if the amount of insurance carried on property is less than a specified percentage of the value of the property at the time of loss.
Coinsurance Penalty - The amount not paid by the insurance company because the insured failed to comply with the coinsurance condition.
Collision Coverage - In Auto insurance, a type of Physical Damage coverage that covers loss that occurs when the insured auto strikes another object or vehicle. May also include upset or overturn of the insured auto.
Combined Single Limit - See Single Limit
Commercial Auto Coverage Part - A part of the Commercial Package policy that provides Liability and Physical Damage coverage for a business’s autos, including garage, trucking and motor carrier businesses.
Commercial General Liability (CGL) Coverage Part - A part of the Commercial Package policy that provides Liability coverage for businesses.
Commercial Inland Marine Insurance - See Inland Marine Insurance
Commercial Package Policy (CPP) - Package policy for businesses developed by ISO. Insureds can select two or more of the following coverages to include in the policy: Commercial General Liability, Commercial Property, Commercial Inland marine, Commercial Crime, Boiler and Machinery, Farm, and Commercial Auto. Most commercial risks are eligible for the CPP.
Commercial Property Coverage Part - A part of the Commercial Package policy that provides insurance for a business’s real and business personal property.
Common Policy Conditions - Form that must be included in the Commercial Package policy; it contains conditions that apply to all coverages issued under the CPP.
Comparative Negligence - Law that allows an injured party to collect from another party for a loss, even when the injured party contributed to his or her own loss. Damages are reduced to the extent of the injured party’s negligence.
Compensatory Damages - Damages that reimburse an injured party for losses that were actually sustained. See General Damages and Special Damages.
Competent Parties - One of the requirements of a legal contract; states that for a contract to be valid, it must be made between parties who are considered competent under the law.
Comprehensive Coverage - In Auto insurance, a broad Physical Damage coverage that covers all property losses except collision and those perils or property that are specifically excluded. Also called Other Than Collision Coverage (OTC).
Concealment - The withholding of a material fact involved in the contract on which the insurer relies.
Conditional Contract - A contract hat contains a number of conditions that both parties must comply with. An insurance policy is a conditional contract.
Conditions - Portion of an insurance policy that describes the rights and duties of the insured and the insurance company under the policy.
Condominium Association Coverage Form - Commercial Property coverage form that covers the buildings in a condominium complex. Does not cover the condominium owner’s personal property.
Consequential Loss - See Indirect Loss
Consideration - A characteristic of a legal contract; the thing of value exchanged for the performance promised in the contract. With insurance contracts, the consideration that the insured gives is the premium payment. The consideration that the insurer gives is the promise to pay for certain losses suffered by the insured.
Consultant - Insurance professional who, for a fee, offers advice on the benefits, advantages and disadvantages of various insurance policies. Sells advice, not insurance.
Contract - A legal agreement between two competent parties that promises a certain performance in exchange for a certain consideration.
Contributory Negligence - Common law defense against negligence that states that if an individual contributes to his or to her own loss in any way, then someone else cannot be held liable for the loss.
Cost To Repair - The cost to repair a damaged or destroyed item of property. May be the basis of reimbursement for a loss.
Countersignature - Signature of a licensed agent that, in most states, must appear on the policy to validate the contract.
Coverage Form - Document that contains insuring agreements, coverages, exclusions, and conditions. Must be attached to a policy jacket to make a complete policy. Also called a policy form.
Coverage Territory - Place where coverage under a policy applies.
