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Rate - The basic charge an insurance company sets for various types of insurance.

Reasonable Person Rule - Principle of law that states that each person must behave like a prudent person, following those ordinary considerations that guide human affairs.

Rebating - Giving or offering some benefit other than those specified in the policy to induce a customer to buy insurance. Rebating is illegal in most states.

Reciprocal Company - An unincorporated group of members that share insurance responsibilities with other members. It is managed by an attorney-in-fact.

Reinsurance - Acceptance by an insurer, called a reinsurer, of all or part of the risk of loss of another insurer.

Replacement Cost - The cost to replace a damaged or destroyed item of property, without deduction for depreciation. May be the basis of reimbursement for some losses.

Representation - Statements on an insurance application that the applicant believes are true. A representation is not considered a matter to which the parties contract, so a policy cannot be voided on the basis of a representation.

Retention Limit - In an Umbrella policy, the amount the insured must pay for a loss that is not covered by an underlying policy before the Umbrella will begin to cover the loss. Also called the self-insured retention.

Retroactive Date - Under the claims-made CGL form, a date stipulated in the Declarations as the first date on which an event may occur and be covered by the policy if a claim is filed.

Risk - The chance or uncertainty of loss.

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

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

Scheduled Coverage - Property that is specifically listed in the Declarations and covered for a specific amount. Also called specific insurance.

Scheduled Personal Property Endorsement - Homeowner’s policy endorsement that provides open peril, scheduled coverage for nine optional classes of property.

Self Insurance - Alternative to purchasing insurance where a company or individual assumes the risk of paying for its losses and sets aside the necessary funds to pay for such losses.

Self-Insured Retention - See Retention Limit

Single Limit - One policy limit that applies to both BI and PD losses. May also be called a combined single limit.Solicitor - Insurance professional who sells insurance and collects premiums, but cannot issue or countersign policies.

Special Personal Property Coverage Endorsement - Homeowner’s endorsement used only with the HO-3 form to provide open peril coverage on personal property. Also called the HO-15 endorsement.

Specified Causes Of Loss - One of the Physical Damage coverage options in the Commercial Auto coverage forms; provides more limited coverage than Comprehensive coverage, insuring only against specified perils such as fire, flood or explosion.

Specified Peril Policy - See Named Peril Policy

Speculative Risk - A risk that may result in a loss or gain.

Split Limits - Policy limit that provides separate limits for BI and PD.

Spread Of Risk - Principle of insurance that states that insurers should spread their insured risks over a large geographical area, rather than insuring a large number of people in a small area.

Statute Of Limitations - Law that provides that certain types of suits must be brought within a specified time of the occurrence to be valid under the law.

Stock Company - An insurance company owned by its stockholders. Profits are shared by the stockholders. Policyholders are not entitled to share in company profits.

Subrogation - The transfer to the insurance company of the insured’s right to collect for damages from another party.

Supplementary Payments - Provide extra coverage over and above the insured’s limit of liability. Commonly included are defense costs, first aid expenses, bond premiums, and postjudgment interest.

Surplus Lines Agent - See Excess Lines Agent

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Theft - In Crime Insurance, a broad term encompassing any unlawful taking of property, including burglary and robbery. Usually excludes employee dishonesty and mysterious disappearance.

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

Third Party Loss - A Liability loss.

Tort - A civil wrong for which monetary damages may be provided. Does not include losses arising out of contracts.

Towing and Labor Costs Endorsement - Personal Auto policy endorsement that covers towing and the costs of labor performed at the site the car was disabled.

Trespasser - A person who is on the premises without the owner’s express or implied permission.

Twisting - Illegal activity in which an agent convinces a prospect to cancel existing insurance and buy another policy from the agent, to the detriment of the prospect.