Property & Casualty Glossary

Question 1

Absolute liability

Answer 1

Liability that arises from an extremely dangerous situation. Is often found in cases involving explosives. Also known as “strict” liability. For example, you are ______ liable if you keep a wild animal as a pet.

Question 2

Accident

Answer 2

A sudden and unexpected event, occurring at a specific time and place.

Question 3

Actual cash value (ACV)

Answer 3

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)

Question 4

Additional insured

Answer 4

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

Question 5

Additional living expenses

Answer 5

The 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 lost by a covered peril.

Question 6

Adjuster

Answer 6

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 7

Admitted company

Answer 7

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

Question 8

agent/producer

Answer 8

An individual appointed by an insurance company to solicit, negotiate, effect, or countersign insurance contracts on its behalf.

Question 9

Aggregate limit

Answer 9

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

Question 10

Alien company

Answer 10

And insurance company incorporated in a country other than the United States.

Question 11

Allied lines

Answer 11

Property coverages that are closely associated with and frequently sold with fire insurance: dwelling building and contents from, earthquakes insurance, sprinkler leakage, etc.

Question 12

All-risk insurance

Answer 12

Insurance protecting the insured from loss arising from any peril other then those specifically excluded by name. This contrast with named peril insurance, which names the peril or perils insured against.

Question 13

Application

Answer 13

A questionnaire that is filled out by an agent and the prospect seeking insurance. The form contains rating and underwriting information. The applicant is expected to make representations by answering questions to the best of his or her knowledge (truthfully).

Question 14

Appraisal

Answer 14

If the insured and insurer cannot agree on the amount of loss, either may demand a 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 15

Appurtenant Structure

Answer 15

A structure belonging to the insured structure, such as a tool shed. Provided for in the homeowners policy and other dwelling policies. This coverage is often called other structures or outbuildings.

Question 16

assigned risk

Answer 16

There are some applicants that underwriters do not care to Insure, But because of state law or otherwise, must be provided protection. To become authorized, a casualty Company must agree to participate and take its turn providing auto insurance to high risk drivers. Also known as the auto insurance plan.

Question 17

Audit

Answer 17

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 18

Bailee

Answer 18

A person who has temporary custody of property belonging to another person.

Question 19

Bailees customer’s policy

Answer 19

Insurance obtained by A bailee, to cover losses or damage to customers property in the Bailee’s custody, without regards to liability,.

Question 20

Binders

Answer 20

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 endorsement. Life or disability insurance utilizes conditional receipt instead of binders.

Question 21

Blanket position bond

Answer 21

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

Question 22

Bodily injury

Answer 22

Usually defined to include bodily harm, sickness, disease, including required care, loss of services and resulting death.

Question 23

Boiler and machinery policy

Answer 23

Insurance that covers the insured against loss (Liability and Physical Damage) arising out of the use of steam boilers or other machinery may be written as a separate policy or as part of a commercial package policy.

Question 24

Bond

Answer 24

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

Question 25

Broker

Answer 25

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

Question 26

Burglary

Answer 26

As it is defined in crime insurance policies, it is the unlawful taking of property by forced entry into the premises or exit from the premises while the premises are in closed for business. There must be visible evidence of forced entry or exit.

Question 27

Business owners policy (BOP)

Answer 27

A commercial package policy designed for certain types of small businesses, combining property and liability coverages. Very similar to a commercial package policy (CPP)

Question 28

Cancellation

Answer 28

Termination of contract of insurance in force mid term by voluntary act of the insurance company or insured, effected in accordance with the provisions in the contract or by mutual agreement

Question 29

Casualty insurance

Answer 29

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

Question 30

Coinsurance

Answer 30

In the property insurance, a closet 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 loss is paid in full. Coinsurance on personal lines policies is 80%. The coinsurance clause is also called the 80% cause.

Question 31

Coinsurance penalty

Answer 31

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

Question 32

Commercial package policy (CPP)

Answer 32

A multi-peril, multi line policy that provides a broad spectrum of property and casualty coverages for businesses. In addition to the required basic property and liability insurance, the insured me add additional Marine, boiler and machinery, glass, crime, business auto or farm coverages.

Question 33

Comparative negligence

Answer 33

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

Question 34

Competitive state fund

Answer 34

A state fund writing Worker’s Compensation insurance in competition with private insurers.

Question 35

Comprehensive personal liability

Answer 35

Not a 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.