|
|
|
Glossary of Insurance Terms
Use the follwing glossary of insurance terms to better understand your insurance options:
Auto
In the Commercial General Liability coverage part, an auto includes motorized vehicles meant to be used on public roads, but not certain specifically defined mobile equipment.
Avoidable Consequences
Consequences that are caused by lack of care on the part of an individual, and that could have been avoided had the individual exercised proper care. Generally refers to events that occur following a loss as the result of a person’s failure to take steps to prevent the consequences.
Accident
An unforeseen, unintended and expected event.
Accounts receivable insurance
Insurance against loss of revenue that cannot be collected because accounts receivable records are destroyed by an insured peril. Coverage commonly includes any extra expense to recapture records and payment of interest on loans needed to cover the interim period reduction in collections. An insured’s keeping duplicate records in safe storage off premises is a highly recommended risk reduction technique—and the cost of coverage is considerably reduced thereby. Insurance may be arranged to cover electronic records as well as paper.
Actual cash value (ACV)
A method for placing value on property as of the time of its loss or damage. ACV may be determined by market value (the current price for a like item in the same general condition) or replacement cost new less use depreciation (the cost of the same item brand new minus the insured’s contribution to pay for the added life expectancy of the property new property). The insured may generally select whichever method is more favorable. Contrast with replacement cost.
Additional insured
One who qualifies as "insured" under the terms of a policy even though not named as insured. Officers of a corporation may be included as insureds under the terms of a policy written in the name of the corporation.
Bodily Injury
In Commercial General Liability insurance, refers to injuries to a person, as well as sickness, disease and death.
Basic named perils
Covered perils in a property insurance contract: fire, lightning, windstorm, civil commotion, smoke, hail, aircraft, vehicles, explosions and riot.
Casualty insurance
The type of insurance concerned with legal liability for losses caused by bodily injury to others or physical damage to property of others.
Certificate of insurance
A written description of insurance in effect as of the date and time of the certificate. The certificate does not ordinarily confer any rights on the holder, i.e., the issuing insurer does not promise to inform the holder of change in or cancellation of coverage.
Claims-made coverage
A type of public liability insurance that responds only to claims for injury or damage that are brought (to the insurer) during the policy period (or during a designated extended reporting period beyond expiration). The development was in response to "long tail" claims, such as those related to asbestosis injury, carrying over many years and multiple layers of coverage limits. However, most public liability policies are written on an "occurrence" basis, covering injury or damage occurring during the policy period even if a claim is brought months or even years later.
Coinsurance clause
"Coinsurance" refers to the bargain between commercial property owners and the insurance industry. The clause in property policies encourages the property owner to gauge coverage needs by possible, not probable, maximum loss. With $1 million at risk but a probable maximum loss of $100,000, for example, the property owner would probably buy $100,000 insurance and bank on avoiding the larger disaster. The bargain offered by the insurance industry is a reduced rate per $100 of coverage if the owner agrees to buy coverage at a specified relation (80% commonly) to value (to possible maximum loss in other words). If the insured accepts the bargain but events prove the amount of insurance is inadequate to the stated coinsurance percentage, the insured becomes "co-insurer" in the same ratio as the amount of insurance bears to the amount that should have been carried.
Debris removal clause
A consequential coverage commonly included in direct loss policies. For example, fire policies limited recovery for the insured’s cost of removing the debris after a covered fire. Not to be confused with "removal."
Declaration page
That part of a property or liability insurance policy that discloses information pertinent to the coverage promised including names, addresses, limits, locations, term, premium, forms, and so on. The same information, perhaps in a shorthand version, is contained as well in the daily.
Deductible
The part of the loss that is to be borne by the insured; it comes off the top of any payment from the insurer.
Deposit premium
When the price of insurance is tied to fluctuating values or costs that cannot be known until the end of the policy period, inventory or payroll are two common examples, a deposit or provisional premium or estimated premium may be charged at the outset of a policy with final adjustment to come at the end of the term.
Depreciation
A property ages and becomes worn it often loses value and that has to be taken into account in any property insurance that covers loss of actual cash value.
Employers liability insurance
A feature of standard workers compensation policies, this coverage applies to liability that may be imposed on an employer outside the provisions of a worker compensation law.
Employers non-ownership liability
Employers who buy commercial auto coverage on a basis other than "any auto" have this exposure whenever an employee uses his or her own auto on the employer’s behalf.
Employment practices liability
Coverage against allegations of illegal or discriminatory hiring firing practices, sexual harassment of employees, an so on.
First named insured
An insurance policy may have more than one party named as insured. In such cases, the first named insured attends to policy "housekeeping," i.e., pays premium, initiates (or receive notice of) cancellation, or calls for interim changes in the contract. This is spelled out in commercial policies in the "common policy conditions."
Floater
An inland marine form covering movable property wherever located within territorial limits.
Flood insurance
Flood insurance, like earthquake coverage, is usually only of interest to those relatively few whose property is exposed. Consequently, losses among this small group will be high and premiums can be prohibitive. However, in 1968 the Federal government stepped in to help property owners in designated "flood plains" with the National Flood Insurance Act of 1968. Coverage is not only available, but may even be required to obtain financing financing for exposed properties.
Fraud
The intentional perversion of the truth in order to mislead someone into parting with something of value.
Home Owners insurance
An early and hugely successful example of "packaged" property and liability insurance. A mid-twentieth century insurance development was introduction of the so-called "multi-line era" in which insurers became empowered to write both property and liability forms of insurance, making way for the first packaging of these coverages within a single policy.
Insurance
A mechanism whereby risk of financial loss is transferred from individual, company, organization, or other entity to an insurance company.
Insurance policy
The document containing the contract between the insured and the insurer which defines the right and duties of the contracting parties.
Medical malpractice
Type of insurance protecting physicians, surgeons, nurses, and other medical practitioners against claims alleging failure to perform.
Merit rating
A form of auto rating in which an insured’s past experience as well as anticipated experience is taken into account when arriving at a rate.
Minimum premium
An insurer’s lowest charge for an insurance policy.
Misrepresentation
Generally, misstatement of facts made on an application for insurance. May also be misstatement of coverage made by an agent to an insured.
Named insured
The party of parties specifically named as insured in the insurance contract. Others may have claim on the coverage of a policy by way of internal provisions, but any such right is by way of the agreement between the named insured and the insurance company.
Named insured
The individual or organization named in the declaration of an insurance policy as the insured, as opposed to someone who may have an interest in the coverage, but is not named in the policy.
Named Perils
A formal and specific listing of perils covered in a policy providing property insurance. A policy covering for damage by fire is said to cover for "the named peril" of fire.
Personal liability insurance
Insurance for individuals or members of a household offering protection against claims by third parties. (outsiders) alleging bodily injury or property damage due to negligence.
Professional liability
A form of errors and omissions insurance, (sometimes called "malpractice" coverage of errors alleged against those in the healing and legal professions). Arbitrarily it seems, "error and omissions" is the term applied most often to insurance covering liability for mistakes in matters affecting property, i.e., coverage for "Insurance Agents E&O," "Architects E&O while "professional liability" is used in reference to coverages such as "Druggists Professional Liability," Physicians and Surgeons Professional Liability," and "Lawyers Professional Liability."
Property Damage
In the Commercial General Liability coverage forms, refers to physical damage to tangible property and to loss of use tangible property, whether or not physically damaged.
Renters insurance
Term for insurance for the non-owner occupant of a dwelling or apartment.
Risk management
The process of handling pure risk by way of reduction, elimination, or transfer of risk, with the latter commonly achieved through insurance.
Umbrella liability
A liability contract with high limits covering over top of primary liability coverages and, subject to deductible, covering exposures otherwise uninsured.
Underinsured motorists coverage
Coverage for the insured and passengers whenever the at-fault driver in an accident has auto liability insurance with lesser limits than the insured’s. This coverage lies atop "uninsured motorists coverage" or atop the at-fault driver’s low limit automobile liability insurance and provides the insured and passengers with protection equal (usually) to the insured’s own automobile liability cover.
Uninsurable risk
An uninsurable risk is one which is literally uninsurable because loss is certain rather than possible.
Workers Compensation and Employers Liability Insurance
A type of liability insurance not included in the Commercial General Liability coverage part. Workers Compensation makes benefits payable for injuries to, disability or death of an employee without regard to liability. Employers Liability covers the common-law liability of an employer for injuries to an employee. Because these coverages are related specifically to employer-employee relationships, they are not characterized as general liability.
If you currently are seeking any type of insurance, please call Mark at 641-430-0123.
|
|
Mark Dix - Karen Woodhouse - Kristen Bass
Independent Insurance Agents Serving Iowa and Minnesota
Commercial - Life - Auto - Fire Insurance Specialist
|
|
|
Nora Springs Insurance
805 W. Congress
Nora Springs, IA 50458
Office: (641) 749-2505
Cell: (641) 430-0123
Fax: (641) 749-2521
Send us an email
|
|
|
|
|
|
