Rick Kinney,
Abandonment Clause: A clause often contained in property insurance homeowner insurance policies stating the insured cannot abandon damaged property to the insurer and demand to be reimbursed for its value.
Accident: A fortuitous, unexpected, un-designed, 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.
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.
Act of God: A natural disaster or force of nature, such as an earthquake, hurricane or flood.
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 defined under the insurance policy of another, but may be added to that policy by endorsement to afford a degree of insurance protection.
Adjustable Exposures: Premiums for some coverage’s (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 the adjustment and/or settlement of a loss.
Additional Living Expenses: A provision in many policies to provide reimbursement for costs above the normal living expenses, incurred because the insured is forced to live away from home while the home is being repaired because of fire or other damage. It applies to such expenses as restaurant meals, hotel rooms, transportation etc. The company, however, is bound only to pay to maintain the insured’s usual standard of living.
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.
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 insured
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 period.
Agreed value: An agreement between the insurer and the named insured that the value or the amount of loss regarding unscheduled and or scheduled personal property, building – dwelling materials item of property equals the property’s value. For some items, such as jewelry and fine arts, the insurer may require an appraisal.
Aleatory contract: A contract whose value to either or both of the parties depends on chance or future events, or where the monetary values of the parties’ performance are unequal. An insurance policy is an aleatory contract because the insurer’s obligation to pay a loss depends on uncertain events, while the insured must pay a fixed premium during the policy period.
All Risk Insurance: Insurance protecting the insured from loss arising from any perils other than those specifically excluded by name. This contrasts with Named Peril insurance, which names the peril or perils insured against.
Allied Lines: Property coverage’s 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: A property insurance policy provision that allows an insured and insurer who cannot reach an agreement on the amount of a loss settlement to each select their own appraiser. The appraisers then select a neutral umpire. Disagreements between the appraisers are settled by the umpire, whose decisions are usually binding on both parties.
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 is 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.
Average clause: When multiple properties are covered by a single policy, an average clause provides that each property is insured in the same proportion that its value bears to the total of all values insured. The clause is used to prevent an insured from underinsuring one of the properties.
Bailee: One who has temporary custody of others property. (Example: dry cleaners.)
Bailees Policy: Inland Marine insurance obtained by a bailee, to cover loss or damage to customer’s property in the bailee’s custody without regard to liability.
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.
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: Is the authority granted by the insurance company who will ultimately assume responsibility for providing coverage, allowing an agent to act on behalf of the company for specific reasons and within prescribed guidelines.
Blanket Insurance: a single amount of insurance applying to more than one coverage item
Boiler and machinery insurance (B&M): Coverage for the failure of a boiler, machinery and electrical equipment (ISO form BM 0025). Such coverage can be extended to include consequential and business interruption losses. Insurance benefits are provided up to the limit per accident in the following order: 1. all property of the insured that is directly damaged by the accident; 2. reasonable costs of temporary repairs and expediting expenses; 3. liability for damage to property of others.
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
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 visible signs 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 Income Insurance: An endorsement that offers coverage which reimburses the insured for loss of earnings due to an interruption in operations caused by a covered peril; available with or without extra expense.
Business Personal Property: Furniture, fixtures (permanently installed), equipment, machinery, merchandise, and all other personal property owned by the insured and used in the insured’s business.
Business owners Policy: A multi-peril, multi-line package policy designed to provide broad property and casualty coverage’s for small businesses.
Cancellation: Termination of an insurance policy in force by a voluntary act of the insured or by insurer for lack of payment, fraud, or any misrepresentation etc.
Capacity: The maximum amount of coverage a company will write on a specific risk.
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
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. In other words 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 coverage’s.
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 coverage’s.
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.
Civil commotion: A general disturbance or uprising of a number of people who threaten or commit acts of violence and destroy property. Civil commotion is an insurable peril under most property insurance policies and is fundamentally the same as riot.
Claim: The assertion of a legal right against an insurer that carries with it a demand for appropriate relief.
Coinsurance clause: A provision in most property and inland marine policies that requires property to be insured at a specified percentage of its full value (usually 80%, 90% or 100%) in exchange for a rate credit. If at the time of a loss it is determined that the insured carried inadequate limits, the loss recovery will be a percentage of the total loss amount, calculated by dividing the actual insured amount by the required amount. Example: A building valued at $200,000 has a 90% coinsurance clause and is insured for $90,000. It suffers a $40,000 loss. The insured would recover $90,000 ÷ (.90 X 100,000) X 40,000 = $20,000 (less any deductible).
Collapse: To fall down or inward; the abrupt failure or imminent fundamental weakening of a wall or foundation of a structure. Collapse is covered in most property policies when it is due to an insured peril. Collapse does not include settling, cracking, shrinkage, bulging or expansion. Some interpretations of collapse would say that all four walls and the roof must be on the ground to be considered and qualify as a collapse.
Consequential damage: Property loss from a peril that is not the immediate cause of loss; an indirect loss (e.g., a business interruption loss, extra expense, lost rent, etc.) arising out of an insured’s inability to use property damaged by another peril. Example: A burglar destroys records of accounts receivable during the burglary, causing further loss because the accounts cannot be collected.
Contract of adhesion: A contract drafted by one party and offered on a take-it-or-leave-it basis or with little opportunity for the offeree to bargain or alter the provisions. Contracts of adhesion typically contain long boilerplate provisions in small type, written in language difficult for ordinary consumers to understand. Insurance policies are usually considered contracts of adhesion because they are drafted by the insurer and offered without the consumer being able to make material changes. As a result, courts generally rule in favor of an insured if there is an ambiguity in policy provisions.
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 coverage 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 premises or a bank premises.
Concealment: The withholding of a material fact from the insurance company which may void the policy.
Concurrent causation: The action of more than one cause to produce a particular harm or loss. The predominant legal rule is that if a loss is caused by both an insured peril and an uninsured peril, coverage is deemed to apply.
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
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 direct loss, 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.
Constructive total loss: Damage to property that does not totally destroy it but renders it valueless to the insured or prevents it from being restored to the original condition except at a cost exceeding its value; therefore, it is deemed a total loss.
Continuous Policy: A policy without an expiration date. One that remains in effect until canceled.
Contract: A legal agreement between two parties promising a certain performance in exchange for a certain consideration.
Contractors Equipment Coverage Form: Part of the Inland Marine Coverage part of the Commercial Package policy. It covers various types of contractor’s mobile equipment.
Countersignature: Signature of a licensed agent or representative on a policy necessary to validate it.
Rick Kinney,
Property Claim Tips, LLC Your Advocate in Property Damage Homeowner Insurance Claims
