glossary 2

Question 1

Jettison

Answer 1

A voluntary action to rid the ship of cargo in order to prevent further damage of Peril.

Question 2

Insurance services Office (ISO)

Answer 2

An organization made up of member companies that analyzes statistics collected from members and then establishes and files standard rates for many lines of insurance. Also develops and files standardized policy forms on behalf of members.

Question 3

Insurance Commissioner

Answer 3

Common title for head of state department of insurance (called “directo” in some states). Insurance is regulated by state law. The Commissioner’s job is to protect the insurance buying public by administering state insurance laws and regulations. The commissioner does not make the laws: he or she enforces them.

Question 4

Instrumentalities of transportation and communication

Answer 4

a category of the nationwide definition that includes several different classes of inland marine, including bridges, tunnels, pipelines, etc.

Question 5

Inland Marine Insurence

Answer 5

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

Question 6

Inherent Vice

Answer 6

a condition or defect that exist within property from the beginning and is a tendency of the property itself. An example of inherent vice is the tendency of Milk to sour. insurance policies usually exclude inherent vice.

Question 7

Indirect loss

Answer 7

Loss that is a result or consequence of a direct Loss.

Question 8

Indemnity

Answer 8

Insurance is designed to restore the policyholder to the same financial condition enjoyed prior to a loss. The intent is to cover the amount of the actual loss only and to avoid paying amounts that allow someone to profit from a loss situation. this is known as the Principle of Indemnity.

Question 9

Imports and exports

Answer 9

a category of the inland and Ocean Marine Nationwide Definition, which is made up of risks eligible for marine insurance.

Question 10

Hull Insurence

Answer 10

In ocean Marine and aviation insurance, insurance against physical damage to plane or ship.

Question 11

Hold Harmless agreement

Answer 11

A contractual arrangement whereby one party assumes the liability inherent in a situation, thereby relieving the other party of responsibility. typically found in contracts such as leases, sidetrack agreements, and easements.

Question 12

Garage Policy

Answer 12

A policy that provides coverage for garage businesses (dealers, service stations, garages, parking lots, etc) includes coverage for liability, physical damage, and garagekeepers Losses arising out of owned, nonowned, and hired autos.

Question 13

Floater Policy

Answer 13

Protection that follows moveable property, covering it wherever it may be, rather than applying only at a fixed location, such as a personal Articles Floater (PAF).

Question 14

Financial responsibility laws

Answer 14

State ;laws that require owners or operators of autos to provide evidence that they have the funds to pay for automobile losses for which they might become liable. insurance is the usual method for providing this evidence to the state.

Question 15

Fiduciary

Answer 15

A person who occupies a position of special trust and confidence. for example, one handling or supervising the affairs or funds of another. insurance producers are considered to be fiduciaries.

Question 16

Fidelity Bond

Answer 16

A class of bonds that guarantees an employees honest discharge of duty.

Question 17

Federal crime Insurance

Answer 17

A federally administered program that makes crime insurance available and affordable to risks that might otherwise have found coverage difficult to obtain.

Question 18

FAIR plan

Answer 18

Fair access to insurance requirements. A program established by law that makes property insurance available and affordable to insureds who might otherwise be uninsurable because of “environmental hazards”

Question 19

Extra Expense insurance

Answer 19

A time element coverage for additional expenses incurred by the insured business to continue operations following a direct loss by a pril insured against.

Question 20

Extended Coverage Endorsement (ECE)

Answer 20

A specific endorsement, attached to a standard Fire Policy, usually providing coverage for windstorm, hail, explosion, rit, civil commotion, aircraft, vehicular damage, volcanic eruption and smoke damage.

Question 21

Experience

Answer 21

the Loss record of an insured, a class of coverage, or an insurance company.

Question 22

Expediting Expenses

Answer 22

A boiler and Machinery coverage that covers the cost of temporary repairs and the costs of speeding up permanent repairs. Examples, express transportation charges.

Question 23

Errors and Omissions

Answer 23

A professional Liability coverage that protects the insured against liability for committing an error or omission in performance of professional duties.

Question 24

Endorsement

Answer 24

A document, agreed to by both parties, that is attached to the policy and modifies or changes the original policy in some way. No change to a policy may become effective approved by a company officer.

Question 25

Employer’s Nonownership Liability

Answer 25

Provides coverage to an employer for liability arising out of an employee’s use of his own auto in the employer’s business. May be included under a business Auto Policy of added to a commercial general Liability.

Question 26

Employers Liability Coverage

Answer 26

Coverage provided under a workers Compensation policy to cover the employer’s liability arising out of employees work related injuries.

Question 27

Earned Premium

Answer 27

That portion of the premium for which policy protection has already been given during the now expired portion of the policy term.

Question 28

Domestic Insurance company

Answer 28

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

Question 29

Dividend

Answer 29

The return of part of the premium paid for a participating policy

Question 30

Direct Writer (Captive or Exclusive producers)

Answer 30

An insurance company that sells its policies through licensed agents who represent the insurer exclusively, rather than through independent local agents. who represent several insurance companies. Direct writing producers are also called, “exclusive or Captive” producers.

Question 31

Direct loss

Answer 31

Loss that is a direct result of a peril, such as a fire.

Question 32

Deductable

Answer 32

Either expressed as a dollar amount or percentage that the insured must pay before the insurer will pay anything on a covered claim. the deductible is usually per loss. after the insured pays the deductible, the insurance company pays the remainder of the covered loss, up to the policy limits.

Question 33

Debris Removal

Answer 33

A coverage provided in many Property Contracts that reimburses the insured for expenses involved in removing debris produced by a loss from a Peril insured against.

Question 34

Custodian

Answer 34

In crime insurance, a custodian is the insured or a regular employee or partner of the insured who has care or control of property within the premises. the term custodian does not include watchman, porter or Janitor.

Question 35

Countersigniture

Answer 35

The signature of a licenses agent, which, in most states, must appear on the policy to validate the contract.

Question 36

Contractual Liability

Answer 36

Provides coverage against liability arising out of an insured’s contractual obligations.

Question 37

Contract

Answer 37

A legal agreement between two parties promising a certain performance in exchange for a certain consideration. to hold up in court, contracts must contain four required elements: Consideration, Offer, Acceptance, and legal Purpose. (COAL). Parties to the contract must aldo have legal Capacity.

Question 38

Contingent Liability

Answer 38

Liability that an insured person or business incurs because of the actions of other (family or employees). Also called Vicarious Liability

Question 39

Contingent Business income

Answer 39

A time Element coverage that protects the insured against indirect Loss that results because of a direct Loss to a Supplier Business, Subcontractor or Manufacturer location.

Question 40

Consideration

Answer 40

a characteristic of a legal contract: the thing of value exchange for the performance promised in the contract. in Insurance, the applicant’s answers and the policy premium paid constitute the consideration.

Question 41

Consequential Loss

Answer 41

Indirect losses that occur as a “consequence” of a direct loss. includes time element coverages, such as coverage for rental value.

Question 42

Compulsory insurance

Answer 42

Any form of insurance which is required by law. in many states, for example. automobile bodily injury liability insurance is compulsory for all owners of automobiles.

Question 43

Comprehensive Personla liability

Answer 43

Non Business Liability exposure of individuals who are insured under this policy. Comprehensive Liability coverage first became available as a separate policy, but was eventually incorporated into Homeowners policies.

Question 44

Competitive State Fund

Answer 44

A State fund writing workers compensation insurance in competition with private insurers.

Question 45

Comparative Negligence

Answer 45

Doctrine that a defendant is liable only for the amount of damages allocated to that defendant in direct proportion to the defendant’s percentage of fault (if not 51% or more at fault, defendant is not held liable).

Question 46

Commerial Package Policy (CPP)

Answer 46

A multi peril,multi line policy that provides a broad spectrum of property and casualty coverages for businesses. In addition to required basic property and liability insurances, the insured may add additional Marine, Boiler, and machinery, lass, Crime, Business auto or Farm coverages.

Question 47

Coinsurance Penalty

Answer 47

In Property insurance, a clause under which the insured shares in losses to the extent that she is underinsured at the time of the loss.

Question 48

*Coinsurance

Answer 48

In property insurance, a clause under which the insured is required to carry a certain percentage of the replacement cost of the property in order to have replacement cost coverage and partial losses paid in full. Coinsurance on personal lines policies is 80%. the coinsurance clause is also called the 80% clause.

Question 49

Caulty insurance

Answer 49

A type of insurance that is primarily concerned with losses cause by injury to persons and legal liability imposed upon the insured for such injury or damage to property of others.

Question 50

Businessowners Policy (BOP)

Answer 50

A commercial package policy designed for certain types of small business, combining property and liability coverages. Very Similar to a commercial Package Policy (CPP)

Question 51

Broker

Answer 51

One who represent an insured in the solicitation, negotiation, or procurement of contracts of insurance, and who may render services incidental to those functions. Broker may also be licensed as agents.

Question 52

Bond

Answer 52

An obligation of the insurance company to protect one against financial loss caused by the acts of others.

Question 53

Blanket Position Bond

Answer 53

Fidelity bond that specifies a single limit of Liability applicable to each employee involved in a loss.

Question 54

Binders

Answer 54

Binders and other temporary insurance contracts may be made orally or in writing. each binder is deemed to include all usual terms of the policy for which it was given, plus endorsements. Life or Disability insurance utilizes conditional receipts instead of binders.

Question 55

Bailee’s Customer Policy

Answer 55

Insurance obtained by a bailee, to cover loss or damage to customers property in the bailees custody, without regard to liability.

Question 56

Bailee

Answer 56

A person who has temporary custody of property belonging to another person. an example of a bailee: the dry cleaners.

Question 57

Audit

Answer 57

A survey of the financial records of the insured conducted to determine exposures, limits, etc. which are needed to calculate the premium. the initial premium is only a deposit.

Question 58

Assigned Risk

Answer 58

There are some applicants that underwriters do not care to insecure, but because of state lar or otherwise, must be provided protection. To become authorized, a casualty company must agree to participate in the assigned Risk Pool and take tur providing Auto Insurance to high risk drivers. Also known as the auto insurance “plan”

Question 59

Appurtenant Structure

Answer 59

A structure belonging to the insured structure, such as a tool shed. Appurtenant structure are provided for the homeowners policy and other dwelling policies. this coverage is often called other structures or outbuildings.

Question 60

Appraisal

Answer 60

If the insured and insurer cannot agree on the amount of loss, either may demand an appraisal. each party will pay its own appraiser and share equally the expenses of the appraisal as well as an umpire selected by the appraisers, if needed. agreement by any two of the three will be binding.

Question 61

All risk Insurance

Answer 61

Insurance protecting the insured from loss arising from any peril other than those specifically excluded by name. this contrast with ames peril insurance, which names the perils insured against.

Question 62

Allied Lined

Answer 62

property coverages that are closely associated with and frequently sold with insurance: dwelling Building and contents form, earthquake insurance, sprinkler Leakage, etc.

Question 63

Aggregate Limit

Answer 63

A type of policy limit found in liability policies that limits coverage to a specified total amount for all losses occurring within the policy period.

Question 64

Admitted Company

Answer 64

A company that meets the state insurance departments standards and is authorized by the director to do business in the state.

Question 65

Adjuster

Answer 65

represents the insurance company and acts for the company in working on agreements as to the amount of a loss and the liability of the company.

Question 66

Additional living expenses

Answer 66

A coverage designed to reimburse the insured for an increase in living expenses necessitated by loss to the dwelling. this indirect loss must be the result of Direct Loss by a covered peril.

Question 67

Additional insured

Answer 67

A person, firm, or corporation other than the named insured on a policy, or a lender named in mortgage clause, who is protected against loss by terms of the policy,

Question 68

Actual cash Value

Answer 68

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 minus Depreciation)

Question 69

Absolute Liability

Answer 69

Liability that arises from an extremely dangerous situation. absolute liability is often found in cases involving explosives. also Known as “strict” liability. for example, you are absolutely liable if u keep a wild anima as a pet.