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insurence glossary > Glossary > Flashcards

Glossary Flashcards

1
Q

XCU Exlusion

A

An exclusion often found in a Commercial General Liability policy that excludes liability for explosions, collapse, or underground hazards.

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2
Q

Workers Compensation Insurence

A

Insurance that covers an employer’s obligations under Workers Compensation laws, which make the employer responsible for stated damages in the event of a work-related injury or illness. Workers compensation coverage also includes separate coverage for Employer’s Liability.

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3
Q

Warranty

A

1) A statement that is guaranteed to be true in all respects..
2) A sworn Statement by the insured attesting to the presence of certain safeguards, such as a sprinkler or burglar alarm system. Breach of this type of warranty may void coverage.

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4
Q

Vicarious Liability

A

Imposed in some states upon a person even though he is not a party to particular occurrence, e.g., the owner of a motor vehicle might be vicariously responsible for injuries even though he is not driving the car at the time of the occurrence.

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5
Q

Vandalism and malicious mischief (VMM)

A

protects property against damage caused by vandals. Maybe added by endorsement to the DP-1 Basic Form, included coverage in many other property forms.

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6
Q

vacancy

A

the absence of people and personal property from a building, not expected to return. property coverage is often restricted when there are long periods of vacancy, especially for the Perils of Vandalism and glass breakage.

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7
Q

Utmost Good Faith

A

A principle of insurance which states that the insurance company must be able to rely on the honesty and cooperation of the insured, and the insured must rely on the company to fulfill its obligations in good faith.

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8
Q

Unoccupancy

A

the absence of person, return expected. Property coverage on a building is sometimes restricted when there are long periods of vacancy, but not unoccupancy.

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9
Q

Uninsured Motorist Coverage (UM)

A

automobile Coverage designed to provide Bodily injury protection for the insured should she be Involved in an accident in which the driver at fault has no insurance to cover the loss.

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10
Q

underwriting

A

the process of evaluating a risk for the purpose of issuing insurance coverage with a proper premium.

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11
Q

*Umbrella liability policy

A

provides broad coverage for a insured liability over and above liability covered by underlying contracts or retention limits.

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12
Q

*Underinsured Motorist Coverage (UIM)

A

coverage on an Auto policy that stacks coverage for an insured onto inadequate coverage of an individual who negligently caused injury to that insured.

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13
Q

Trip Transit Policy

A

an Inland Marine transportation policy, similar to the Annual Transit policy, but designed to cover a specific shipment.

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14
Q

Time element Coverage

A

provides protection for indirect loss that occurs when, following a Direct property loss, there is a time lapse before the property can be used again. Includes Business Income, Contingent Business Income, and Extra Expense.

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15
Q

theft

A

any act of stealing, Theft includes larceny, burglary, and robbery.

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16
Q

*Surplus Lines

A

A voluntary association of individuals, or groups of individuals, who agree to share in insurance contracts. Each individual or “syndicate” is individually responsible for the amounts of insurance it writes. Also known as a “Lloyd’s Association”

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17
Q

Surety Bond

A

A Bond that guarantees that someone will perform faithfully whatever he or she agrees to do or that someone will make an agreed upon payment to another party. Note that in a Surety Bond. there are three parties: The principal, who has agreed to perform the obligation; the obligee, for whose benefit the bond is written, and the Surety, the insurer that provides the bond in consideration for the premium paid

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18
Q

Surety

A

the party (often the insurance company) that agrees to be responsible for the Loss which may result if the principal does not keep his promise.

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19
Q

Supplementary payments

A

Found in most Liability contracts. Supplementary Payments provide “extra” coverage over and above the insured’s limit of liability. Included are first aid, bond premiums, accrued interest on judgments, etc.

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20
Q

Subrogation

A

The transfer to the insurance company of the insured’s right to collect for damages. After paying a claim, the company strands in the place of the insured in suing the negligent party, thus preventing the insured from collecting twice.

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21
Q

*Stock Insurance Company

A

An incorporated insurance company with capital divided into shares and owned by the shareholders. Profits are shared by the stockholders. Policyholders are NOT entitled to share in company profits.

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22
Q

Stated Value Policy

A

insurance contract written to insure an item of property for a specific amount of insurance. Used in insuring hard to value items, such as fine arts.

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23
Q

Speculative Risk

A

A risk that may result in a loss or a gain. Gambling is a speculative risk. Insurance companies insure pure risk, not speculative risk.

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24
Q

Specified Peril

A

Policies that insure against only the Perils named, contrary to all risk policies which cover all perils except those that are excluded. Sometimes called Named Peril Policies.

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25
Q

Solicitor

A

a representative who helps an agent or broker solicit insurance and collect premiums. A solicitor may neither bind nor countersign policies..

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26
Q

Short Rate

A

A percentage penalty charged on insurance, canceled by the insured, before the end of the policy period. Return premium is calculated on a Short-Rate basis, meaning the insurance company keeps a portion of the unearned premium to cover expenses.

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27
Q

Second-Injury Fund

A

A fund established under Workers Compensation laws in most states to help pay any increased compensation that may result when an employee with a previous injury is injured again.

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28
Q

Salvage

A

Property taken over by an insurance company to reduce its loss. The company may dispose of salvage property as it wishes, but on request and proper reimbursement, may return it to the insured.

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29
Q

Safe Burglary Policy

A

A crime insurance policy that is designated to cover burglary of property from a safe or the felonious removal of the entire safe from the premises.

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30
Q

Robbery

A

In crime insurance, the forcible and felonious taking of property by violence or threat of violence from a messenger or custodian.

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31
Q

Risk

A

The uncertainty of loss that exists whenever more than one outcome is possible. (in the area of life insurance, death is certain but time of death is uncertain.)

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32
Q

*Retention Limit

A

In an umbrella Liability policy, the amount the insured must pay for loss not covered by an underlying policy, before the umbrella will begin to cover losses.

33
Q

Representations

A

Facts that the applicant represents as true and accurate to the best of her knowledge and belief.

34
Q

Replacement Cost (R/C)

A

The Cost of replacing property without deduction for depreciation.

35
Q

Rental Value

A

An indirect Property coverage available under the dwelling and Homeowners policies, also available with certain Commercial contracts, that reimburses the insured for rents lost when rented property is damaged by a Peril insured against.

36
Q

Renewal

A

the continuation in full force and effect of a policy that is about to expire

37
Q

removal

A

Process of removing property for the purpose of preserving it from a Peril insured against. Property contracts provide coverage for loss to property during removal. (for example, during a fire, you remove your furniture from your dwelling, exposing it to other risks.)

38
Q

Reciprocal Company

A

An unincorporated group of subscribers that exchange insurance responsibilities with other members, managed by an attorney in fact.

39
Q

Rebating

A

Giving or offering a benefit other than those specified in the policy to induce a customer to buy insurance.

40
Q

Rates and Premiums, Setting

A

The chance of loss (risk) is a combination of the probable frequency of loss and the probable severity of loss, based on accumulated data for similar risks. in the absence of reasonably accurate projections of potential losses, insurance companies would have no basis for setting rates and premiums.

41
Q

Rate

A

The per unit cost of insurance.

42
Q

Pure Risk

A

A risk in which there is no chance of gain, only loss.

43
Q

Protection and Indemnity

A

in Ocean Marine insurance, a form of Liability insurance.

44
Q

Pro Rata Liability Clause

A

Clause in a Fire Policy that provides a method of sharing loss when more than one policy is applicable. Each company covers no more than its share. Alson known as the Other insurance Clause.

45
Q

Pro Rata Cancellation

A

The termination of a contract with premium charge being adjusted in proportion to the exact time the protection has been in force. All unearned premium is returned to the insured.

46
Q

Professional liability

A

Liability arising out of the rendering or failure to render services of a professional nature.

47
Q

Products And Completed Operations

A

A form of General Liability insurance that covers a company against liability arising out of its products (a manufacturer) or its completed operations (a contractor or architect).

48
Q

Principal

A

in Bonds, The Party who promises to do (or not to do) a specific thing.

49
Q

Position Schedule Bond

A

Fidelity Bond that lists covered job categories, each with a separate amount of insurance, rather than the individuals holding those positions. New employees hired in a schedule positions are automatically covered.

50
Q

Personal Lines

A

Insurance coverages intended to protect individuals and their families.

51
Q

Personal injury Coverage

A

liability coverage for third party claims for damages that are other than physical, such as libel, slander, false arrest, wrongful eviction, invasion of privacy, etc.

52
Q

Peril

A

Cause of a potential loss. An insurance policy may name the perils, insured against, or it may be an All Risk form: one that insures against all Perils not specifically excluded in the policy.

53
Q

Performance Bond

A

A surety Bond that Guarantees a job will be completed by the contractor according to contract specifications.

54
Q

Personal Articles Floater (PAF)

A

Personal Inland Marine insurance that provides All Risk coverage on nine optional classes of Personal property: jewelry, furs, cameras, musical instruments, silverware, gold equipment, fine arts, stamp collections and coin collections.

55
Q

Pair and Set clause

A

a Clause found in various Property insurance contracts that states that when part of a set is damaged or destroyed, the insured is not entitled to reimbursement for the entire set. Policies provide various methods for determining the amount of reimbursement. fine arts floaters do not contain clause.

56
Q

Owners and Contractors Protective Liability

A

Part of a commercial general liability policy that protects an owner or general contractor against liability arising out of the acts of contractors or sub contractors. it is also known as “independent contractors Liability” coverage.

57
Q

Othe insurence

A

the existence of another contract covering the same interest and Perils. sometimes called Pro Rata Liability, because the insurers pay claims according to the proportion of premiums paid to each. (remember, you can’t collect in total more than what you lost)

58
Q

Ocean Marine Insurence

A

Marine insurance designed to provide broad coverage for cargo and ships in transit over sea. Includes Cargo insurance, Hull Insurance, and Liability coverage. (Protection and Indemnity).

59
Q

Occupancy

A

type and character od the use of property in question.

60
Q

Obligee

A

in bond, the party to whom the principal makes the promise, and for whose protection the bond is being written.

61
Q

No Fault insurence

A

a form of Automobile insurance mandated by law in many states whereby an insurance company reimburses its insured for auto losses, regardless of fault, and without resort to subrogation.

62
Q

Negligence

A

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

63
Q

Nationwide definition

A

A document designed to categorize and classify risks eligible for ocean or Inland Marine insurance.

64
Q

Name schedule bond

A

Fidelity bond that covers each employee names in the policy schedule for the amount listed in the schedule.

65
Q

Named peril policies

A

Policies that insure against ONLY the perils named, CONTRARY to All Risk Policies. sometimes called Specified Peril policies.

66
Q

*Named Insured

A

Any person, firm, or corporation, or any member thereof, specifically designated by name as insured(s) in a policy, as distinguished from the others who, though unnamed are protected under some circumstances.

67
Q

Mutual insurance Company (insurer)

A

An incorporated insurance company without capital stock, whose governing body is elected by the policyholders. the policyholders own the company and they might share in the success of the company through dividends.

68
Q

Multi Peril Policy

A

Technically, an insurance policy that insures against more than one peril. More commonly, an insurance policy that provides coverage against both property and Casualty perils.

69
Q

Mortgagee rights

A

Rights granted to a mortgagee (lender), under a property contract issued to a mortgagor, by virtue of the mortgagees financial interest in the property.

70
Q

Monopolistic State Fund

A

A state insurance plan that prohibits competition by private carriers, e.g. Workers compensation fund in some states.

71
Q

*Messenger

A

In crime insurance, any regular employee of the insured, who has care or control of the property outside the premises. also includes the insured, a partner, or an officer.

72
Q

Material Fact

A

a fact that, had the company known it,would have cause it to decline the risk or include entirely different provisions than those currently included.

73
Q

Malpractice insurence

A

a form of professional liability insurance used to insure professionals including physicians, dentist, and druggist against their liability for professional misconduct or lack of ordinary skill.

74
Q

Lloyds Association

A

a voluntary association of individuals or groups of individuals, who agree to share in insurance contracts. each individual, “syndicate” is individually responsible for the amounts of insurance it writes. ALso known as “surplus lines”

75
Q

Limits of liability

A

the maximum amount of money the insurance company will pay for a particular loss during a period of time.

76
Q

Liability insurance

A

insures the individual for financial losses that may arise out f the person’s responsibilities to others imposed by law or contract.

77
Q

Liability

A

Broadly, any illegal enforceable obligation. the term is most commonly used in pecuniary (money related) sense.

78
Q

Law of large numbers

A

An insurance company bases its rates on a homogeneous group. Risks are not usually considered insurable unless the insurer has a large enough base of previous loss experience to be able to accurately project future losses. it is the law of Large Numbers that makes accurate predictions of similar risks possible.

insurence glossary (2 decks)

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