Master Insurance Glossary Flashcards
(96 cards)
1
Q
Insurance Policy
A
A contract between the insured party and an insurance carrier.
2
Q
An Insurance Policy consists of what elements?
Hint: 6 Elements
A
- Declarations Page
- Forms
- Endorsements
- Optional Coverages
- Common Policy Conditions
- Glossaries
3
Q
A Declarations Page….
A
Describes the contract
4
Q
A Declarations Page lists…..
Hint: 9 subjects
A
- Issuing Company
- Named Insured and Address
- Policy Number
- Policy Period
- Policy Premium
- Type of Policy
- Amounts and Limits
- Optional Coverages
- Forms and Endorsements
5
Q
On the Declarations Page, the limit under Section 1 applies to:
A
Coverage for sudden accidental loss of the
insured party’s own property.
6
Q
On the Declarations Page, the limit under Section 2 applies to:
A
Liability coverages.
7
Q
Insurance Forms define:
Hint: 3 Subjects plus note
A
- Who or what is covered
- Covered causes of loss
- Qualifications to coverage.
Note: There will always be some forms in a policy that are unique to the state involved because
the insurance industry is state-regulated.
8
Q
Endorsements are….
A
Short insurance forms that can be included
in a policy in order to add to the coverage—
or subtract from it.
9
Q
Optional Coverages are….
A
Provisions within a form or endorsement that
only apply if noted on the declarations page.
Multiple options usually appear in the longer
forms.
10
Q
Common Policy Conditions:
A
The basic provisions that apply to all
insurance coverages in the policy.
examples: conditions for premium payment,
renewal, cancellation
May appear in a longer form or a separate
endorsement.
11
Q
Glossaries:
A
Section of a form that defines key terms and
concepts used.
Glossaries are important because the policy
may define a word more narrowly than its
common usage.
A narrow definition is a way for the carrier to
restrict coverage.
12
Q
Advertising Injury (AI)
A
Liability for injury to reputation.
Due to libel, defamation, invasion of privacy,
or similar injuries, in written or published
form.
13
Q
Aggregate Limit
A
The maximum amount that the carrier will
pay out during the term of the policy.
Common in liability policies.
14
Q
Agreed Amount
A
An endorsement which waives the coinsurance clause (see) in property insurance.
15
Q
Auditable Policies
A
Carrier sets a provisional premium based on
the insured’s expected exposure.
When the coverage year is over the carrier
audits the insured’s accounts to determine
the actual exposure.
Less than expected, insured receives refund.
More than expected, insured pays the
difference.
example: workers’ compensation.
16
Q
Bailee Coverage
A
Also known as receiving room coverage.
Insurance coverage for a party who has
temporary custody of the property of
another.
example: Staff holds deliveries in the office
or at the lobby desk for residents until they
pick them up.
17
Q
Basic Form
A
In commercial property insurance, the
insuring agreement that covers fire,
lightning, riot, explosion, vehicles, smoke,
hail, aircraft, wind, vandalism, and malicious
mischief.
The exposures covered may vary slightly by
carrier.
Not as inclusive as special form.
18
Q
Binding Proposal
A
A proposal where the carrier has given the agent authority to commit the carrier to insuring the stated risk for the stated premium—if the association accepts the proposal.
19
Q
Blanket Coverage
A
In property insurance, one limit and one
deductible apply to all the buildings or units
as a whole—rather than each building or unit
having its own limit and its own deductible.
In fidelity insurance, all employees are
covered as a category—rather than
specifically named individuals or positions.
20
Q
Bodily Injury (BI)
A
Liability for physical injury sickness, or
disease.
21
Q
Broad Form
A
In commercial property insurance, the insuring agreement that covers the exposures in basic form plus some damage from water escape from plumbing systems and certain damage from collapse. The exposures covered may vary slightly by carrier Not as inclusive as special form.
22
Q
Carrier’s Financial Size
A
An insurance carrier’s financial size is an
indicator of its relative capacity to absorb
losses. This capacity is affected by the
geographic regions and types of exposure it
insures.
example: A carrier’s capacity to absorb
losses will be affected if it insures for
hurricane damage in the Southeast.
23
Q
Carrier’s Rating
A
An insurance carrier’s rating is an indicator
of its ability to pay claims.
Its rating is also an indicator of how
aggressively the carrier will respond to its
coverage exposures and claim exposures
with your association.
A rating is also a predictor of the carrier’s
future rate stability and coverage
availability.
24
Q
Claims Made Basis for Coverage
A
A liability policy will cover a loss that is
discovered and reported during the period
the policy is in effect. The event need not
occur during that period.
This is preferred coverage for directors’ and
officers’ insurance and fidelity insurance for
community associations.
25
Coinsurance
A provision in some property policies that
penalizes an insured for not maintaining a
high limit of property coverage— often 80%
to 100% of the total value.
26
Commercial General Liability (CGL)
A part of the commercial package policy (see) that provides insurance coverage for
legal claims arising from bodily injury,
property damage, personal injury, and
advertising injury.
27
Commercial Package Policy (CPP)
A policy that contains property. and liability coverages and possibly other coverages—
hence the name “package policy.”
Modifications to the “package’ are made by
means of endorsements or options (see).
28
Common Policy Conditions
The basic provisions that apply to all
insurance coverages in the policy.
examples: conditions for premium payment,
renewal, cancellation
May appear in a longer form or a separate
endorsement.
29
Condominium Endorsement
Special policy conditions that have become
Endorsement standard for condominium insurance.
Meet the needs of other types of community
associations with similar property insurance
requirements.
Special policy conditions include:
-Waiver of rights of recovery
-Recognition of an insurance trustee
- “No control” provision
-“Other insurance” provision
-Standard mortgage clause
-“Cross liability” clause
30
Contingent Liability
A form of ordinance or building law coverage
that pays for the value of any undamaged
portion of a building when codes require a
building damaged by a covered loss to be
demolished.
Often purchased with increased cost of
demolition (see).
31
Cost of Loss Adjustment
A coverage which reimburses for costs
associated with presenting a claim.
If included in coverage at all, often limited to
a nominal amount.
32
Coverage Trigger
In liability insurance, the trigger is either the
occurrence of an event or the making of a
claim.
33
“Cross Liability” Clause
Permits one party insured under the policy to
bring a claim against another party insured
under the policy.
34
Section 1 Limit on a Declarations Page applies to....
The Coverage for sudden accidental loss of the insured party's own property.
35
Section 2 Limit on a Declarations Page applies to....
Liability Coverages
36
Deductible
The amount that the insured must pay on
each loss before the carrier will make
payment.
37
Defense Outside Limits
Provision that the limit of liability coverage
will not be reduced by the attorney’s fees
related to defense of a claim.
38
Directors and Officers Liability (D&O)
Liability and insurance coverage for wrongful
acts (see) by the association, the board,
officers, and certain other volunteers.
39
Discrimination
Applying special treatment, (generally
unfavorable) to an individual solely on the
basis of a personal characteristic—such as
ethnicity; age, religion, or gender
40
Duty to Defend
Under this provision, the carrier has a duty
to defend against a legal claim, even if it is
groundless, false, or fraudulent.
In turn, the carrier retains the right to settle the claim.
41
Employment Practices Liability
```
Liability and insurance coverage for
employee claims against an employer for
such things as wrongful discharge or
discrimination.
Relatively new form of coverage that is
available.
Different from employer’s liability for
employee injuries—included with workers’
compensation.
```
42
Endorsement
Short insurance forms that can be included
| in a policy in order to add to the coverage—or subtract from it.
43
Environmental Coverage
Insurance coverage for damage caused by
pollutants.
Typically obtained only from carriers
specializing in the coverage.
44
Exclusion
Provision in an insurance policy that
indicates what kinds of loss are not covered.
NOTE: A loss can also be excluded from
coverage by means of a restrictive definition,
limit, or condition.
45
Experience Modified Policies
Applies to large associations.
Used frequently with workers’ compensation.
When a premium is of a certain size, the
carrier applies a modifier which increases
(surcharge) or decreases (discount) the
premium.
The modifier is based on the history of the
association’s claims under that particular
policy.
The same basic concept is known as
Individual Risk Premium Modification (IRPM)
when it is used in other types of policies.
46
Fidelity Coverage
Insurance coverage for the theft of money,
securities, or property by one’s own
personnel.
Coverage often called employee dishonesty
For the community association, this coverage
must insure all persons who handle funds—
whether or not they are compensated by the
association.
47
Firm Proposal
A proposal whose numbers won’t be changed
by the agent—unless the specifications
change.
48
Flood Coverage
Insurance coverage for flood damage to
buildings and contents when a body of water
rises. Water that escapes from plumbing
system or enters a building from above the
surface of the ground is not considered a
flood.
Typically obtained through the National Flood
Insurance Program (NFIP), a Federal
insurance program.
49
Forms
Insurance forms define—
• who or what is covered
• covered causes of loss
• qualifications to coverage.
There will always be some forms in a policy
that are unique to the state involved because
the insurance industry is state-regulated.
50
Glossaries
Section of a form that defines key terms and
concepts used.
Glossaries are important because the policy
may define a word more narrowly than its
common usage.
A narrow definition is a way for the carrier to
restrict coverage.
51
Guaranteed Replacement Cost
A relatively new provision whereby the carrier agrees to replace damaged buildings
after a covered loss even if the cost of doing
so exceeds the limit of building coverage in
the policy.
52
Increased Cost of Construction (ICOC)
A form of ordinance or building law coverage that pays for bringing a building up to
current codes after a covered loss—if the law
requires.
53
Increased Cost of Demolition
A form of ordinance or building law coverage that pays for demolishing an undamaged
portion of a building when the rest was
damaged by a covered loss.
The action must be required by law for
coverage to apply.
Often purchased with loss of value (see).
54
Infrastructure
The fundamental facilities and systems
serving an area.
examples: sidewalks, streets, storm water
systems, underground lawn sprinklers.
55
Inland Marine Coverage
Insurance coverage for means of
transportation, merchandise in transit,
property in the custody of bailees, and a
variety of movable property
examples of movable property: walkie talkies,
tractors
56
Insurable Value Appraisal
An independent service estimates the
| insurable replacement costs of property.
57
Insurance Policy
```
A contract between the insured party and an
insurance carrier that consists of the
following items:
• Declarations Page
• Forms
• Endorsements
• Optional Coverages
• Common Policy
```
58
Insurance Services Office (ISO)
An independent organization supported by insurance carriers.
Services include developing and
disseminating standard insurance forms.
59
Liability Exposure
Possibility of losses due to a person or entity
bringing or threatening to bring a legal claim
against the association because of a legal
wrong it is alleged to have committed or for
which it is supposedly responsible.
Liability claims include:
• Advertising Injury
• Bodily Injury
• Directors & Officers Wrongful Acts
• Employment Practices
• Personal Injury
• Property Damage
60
Loss Control Recommendations
Deficiencies that insurance carriers identify
when they inspect an association’s property
and operations prior to issuing coverage.
Mandatory recommendation—Failure to
comply may mean loss of coverage.
Voluntary recommendation—Noncompliance
will not imperil coverage at the current time.
61
Loss of Value
```
Also known as contingent liability
A form of ordinance or building law coverage
that pays for the value of any undamaged
portion of a building when codes require a
building damaged by a covered loss to be
demolished.
Often purchased with increased cost of
demolition (see).
```
62
Master Policy
A name given to the association’s primary
policy which provides coverage for property
and liability
Now also used to refer to a single policy
insuring several associations.
63
Mechanical Breakdown Coverage
Also know as boiler and machinery coverage.
Insurance coverage for physical damage
caused by certain sudden, accidental events
that originate inside machinery or electrical
equipment.
Also pays for building damage caused by
steam boiler explosions.
64
Net Income Exposure
Possibility of losses that involve a decrease
in association revenues or an increase in
expenses.
65
“No Control” Provision
Preserves coverage for loss caused by an
insured party (such as an owner) acting
outside the control of the association.
66
Occurrence Basis for Coverage
A liability policy will cover an event that occurs during the period the policy is in
effect—even if the event is reported after the
policy has expired.
67
Occurrence Limit
The limit to the amount that the carrier will
pay out under a policy for one incident or
occurrence.
68
Optional Coverages
Provisions within a form or endorsement that
only apply if noted on the declarations page.
Multiple options usually appear in the longer
forms.
69
Ordinance or Building Law Coverage
Following an insured loss to property coverage that pays for construction expenses
incurred because of building laws.
The three coverages included are increased
cost of construction (see), increased cost of
demolition (see), and loss of value (see).
70
"Other Insurance" Provision
The associations master policy is treated as
the primary coverage in the event that a unit
owner and the association carry insurance
for the same property.
71
Pay on Behalf of Insured Parties
The carrier will pay when the claim is
adjudicated
In this situation, the carrier is likely to take
the lead in settlement negotiations.
72
Personnel Exposure
Possibility of losses that result from the
death, disability. retirement, resignation, or
unemployment of association employees.
Under certain circumstances, may apply to
association board members, owners, or
volunteers.
73
Personal Injury (PI)
Liability for injury to reputation because of
something said or done. It does not involve
written or published statements.
Injury may be due to slander, defamation of
character, false arrest, wrongful entry or
eviction, invasion of the right of private
occupancy, malicious prosecution, or willful
detention.
74
Personal Property
Things that are movable—as distinguished
from real property
examples: inventory; furniture, equipment,
supplies, electronic data processing, and
valuable papers and records
75
Policy Limits
The amount of dollar coverage provided for
| each identified area of coverage.
76
Premium
The rate charged for an insurance coverage
77
Property Damage (PD)
Liability for damage to someone else’s
property—or for the loss of use of that
property
78
Property Exposure
Possibility of losses that involve damage to
the insured party’s property—or the loss of
use of that property.
79
Protective Safeguards Endorsement
```
An endorsement that provides a premium
credit for having a protective system.
example: a building sprinkler system
CAUTION: If a system is deactivated without
meeting certain reporting conditions,
coverage may be voided.
example: building sprinkler system
deactivated and fire occurs. Damage would
not be covered.
```
80
Ratable Limit
The limit used to determine the premium for
| a guaranteed replacement cost for buildings.
81
Real Property
Land and whatever is erected or growing on
it, or affixed to it.
examples: trees and buildings
82
Replacement Cost
The amount of money it would cost to
| replace the property at today’s prices.
83
Retroactive Date
A date set in the past by a claims-made
policy to limit the policy’s coverage of past
events.
84
Self-Retained Limit
In an umbrella liability policy, the selfretained
limit operates like a deductible if no
underlying insurance applies
85
Special Form
```
In commercial property insurance, the
insuring agreement that covers every
accidental cause of loss except those
explicitly excluded.
Special form is more inclusive than basic
form and broad form.
```
86
Standard Mortgage Clause
A standard clause which applies if a
mortgage is attached to a unit.
Enables the carrier to make payments to the
mortgage holder and to send notices to the
lender (such as a termination of coverage
notice).
87
Sublimit
Usually a fixed lower limit for a certain type
of property no matter how high the limit of
property coverage is.
example: Coverage for exterior signs is no
more than $500.
88
Superseded Suretyship
A provision that a newly-issued policy
covering employee dishonesty will respond
to a loss committed during a previous policy
term—even though the current policy may
not be a renewal.
Often applies to theft that occurs over a
period of time.
89
Umbrella Liability Coverage
Insurance that provides both additional and broader coverages beyond the limits of the
association’s commercial general liability and
other liability coverages.
90
Underlying Limits or Requirements
The minimum amounts which so-called primary or underlying liability policies must
provide as specified by the umbrella policy in
order for it to pick up where the underlying
policies end.
91
Unit Owner Certificate
```
Statement provided to a unit owner
indicating that the unit is covered by a
master policy.
Proof of insurance coverage for unit
mortgage lenders
```
92
Valuation
The estimated worth or price of something.
93
Vehicle Coverage
Insurance coverage for association-owned
vehicles that must be licensed for highway
use is called commercial automobile
coverage.
Insurance coverage for legal claims arising
out of the use of vehicles that are not owned
by the CA, but are used while acting on its
behalf, is called hired and nonowned
automobile liability insurance.
94
Waiver of Rights of Recovery
Formerly known as waiver of subrogation.
Carrier waives its contractual right to recover
a claim payment from certain parties that
may be responsible for a loss.
The special condominium endorsement
routinely extends this waiver to unit owners.
95
Workers Compensation including Employer's Liability
```
Insurance coverage which pays for the medical bills, lost wages, and certain other benefits due injured employees.
State laws usually mandate this type of
coverage.
Employer’s liability coverage protects
employers from suits brought on behalf of
injured employees to recover damages
separate and distinct from claims for
workers’ compensation benefits.
```
96
Wrongful Acts
Includes negligent acts, omissions or
breaches of duty or errors relating to the
operation of the community association
