General Glossary A C D F I N O P S U
Accident
An unplanned event, unexpected and undesigned, which occurs suddenly and
at a definite place. See also Occurrence.
Act of
God
An event arising out of natural causes with no human intervention which
could not have been prevented by reasonable care or foresight. Examples
are floods, lightning, and earthquakes.
Actual
Cash Value
An amount equivalent to the replacement cost of lost or damaged property
at the time of the loss, less depreciation. With regard to buildings,
there is a tendency for the actual cash value to closely parallel the
market value of the property. See also Market Value.
Additional Insured
A person other than the named insured who is protected under the terms
of the contract. Usually, additional insureds are added by endorsement
or referred to in the wording of the definition of "insured" in the
policy itself.
Adjuster
A representative of the insurer who seeks to determine the extent of the
firm's liability for loss when a claim is submitted. Same as Claim
Representative.
Aggregate Limit
Usually refers to Liability Insurance and indicates the amount of
coverage that the insured has under the contract for a specific period
of time, usually the contract period, no matter how many separate
accidents may occur.
All-Risks Insurance
The term "All-Risks Insurance" is used to mean insurance against loss of
or damage to property arising from any fortuitous cause except those
that are specifically excluded. An insurance contract which provides
All-Risks Insurance is an All-Risks policy. Contrast with Named Perils.
Amendment
A formal document which corrects or revises an insurance master policy.
See also Endorsement and Rider.
Cancellation
Termination of a contract of insurance in force by voluntary act of the
insurer or insured in accordance with the provisions in the contract or
by mutual agreement. (G)
Cancellation, Flat
See Flat Cancellation. (G)
Cancellation, Pro Rata
See Pro Rata Cancellation. (G)
Cancellation
Short-Rate. See Short Rate Cancellation. (G)
Certificate of Insurance
(1) A statement of the coverage and provisions of a master contract in
group insurance that is issued to individuals covered in the group. (2)
A form which verifies that a policy has been written and states the
coverage in general, often used as proof of insurance in loan
transactions and for other legal requirements.
Claimant
The person making a demand for payment of benefits.
Commercial Package Policy (CPP)
A commercial lines policy that contains more than one of the following
coverage parts: Commercial Property, Commercial Liability, Commercial
Inland Marine, Commercial Crime, Boiler and Machinery Insurance,
Commercial Automobile Insurance, and Farm Coverage. (G)
Contract
(1) An agreement entered into by two or more persons under which one or
more of them agree, for a consideration, to do or refrain from doing
acts in accordance with the wishes of the other party(s). (2) In
insurance, the agreement by which an insurer agrees, for a
consideration, to provide benefits, reimburse losses or provide services
for an insured. A "policy" is the written statement of the terms of the
contract. (3) An agreement under which an agency or agent does business
with an insurer.
Credit
Report
A confidential report made by an independent individual or organization
that has investigated the reputation and record of an applicant for
insurance.
Deductible
The portion of an insured loss to be borne by the insured before he is
entitled to recovery from the insurer.
Depreciation
A decrease in the value of any type of tangible property over a period
of time resulting from use, wear and tear, or obsolescence.
Flat Cancellation
A policy which is cancelled upon its effective date. Usually under a
flat cancellation no premium charge is made.
Insured
The party to an insurance arrangement whom the insurer agrees to
indemnify for losses, provide benefits for, or render services to. This
term is preferred to such terms as policyholder, policy owner, and
assured. See also Named Insured.
Insured, Named
See Named Insured.
Insurer
The party to an insurance arrangement who undertakes to indemnify for
losses, provide pecuniary benefits, or render services. It is desirable
to use the word "insurer" in preference to "carrier" or "company" since
it is a functional word applicable without ambiguity to all types of
individuals or organizations performing the insurance function. The word
insurer is generally used in statutory law.
Insuring Agreement (or Clause)
That portion of an insurance contract which states the perils insured
against, the persons and/or property covered, their locations, and the
period of the contract.
Named Insured
Any person, firm, or corporation, or any member thereof, specifically
designated by name as the insured(s) in a policy. Others may be
protected as insureds even though their names do not appear on the
policy. A common application of this latter principle is in Automobile
policies where, under the definition of insured, protection is extended
to cover other drivers using the car with the permission of the named
insured.
Nonrenewal
Termination of insurance coverage at an expiration date or anniversary
date. This action may be taken by an insurer who refuses to renew, or by
an insured who rejects a renewal offer.
Notice
of Cancellation
Written notice by an insurer of intent to cancel insurance, or written
notice by an insured requesting cancellation.
Notice
of Loss
Notice to an insurer that a loss has occurred. Notice of loss is a
condition of most policies, and it is frequently required within a given
time and in a particular manner.
Occurrence
An event that results in an insured loss. In some lines of insurance,
such as Liability, it is distinguished from accident in that the loss
does not have to be sudden and fortuitous and can result from continuous
or repeated exposure which results in bodily injury or property damage
neither expected nor intended by the insured.
Policy
The written statement of a contract effecting insurance, or certificates
thereof, by whatever name called, and including all clauses, riders,
endorsements, and papers attached thereto and made a part thereof
Pro
Rata Cancellation
The termination of an insurance contract or bond with the premium charge
being adjusted in proportion to the exact time the protection has been
in force. Contrast with Short Rate Cancellation. (G)
Short Rate Cancellation
A cancellation procedure in which the premium returned to the insured is
not in direct proportion to the number of days remaining in the policy
period. In effect, the insured has paid more for each day of coverage
than if the policy had remained in force for the full term. Contrast
with Pro Rata Cancellation. (G)
Single
Limit
Any insurance coverage which is expressed as a single amount of
insurance, or a single limit of liability. Contrast with Split Limit.
Split
Limit
Any insurance coverage which is expressed in different amounts for
different types of losses. For example, automobile liability of
50/100/50 means bodily injury limits of $50,000 per person, $100,000 per
accident, and a property damage limit of $50,000 per accident. Contrast
with Single Limit.
Subrogation Clause
A clause giving an insurer the right to pursue any course of action, in
its own name or the name of a policy owner, against a third party who is
liable for a loss which has been paid by the insurer. One of its
purposes is to make sure that an insured does not make any profit from
his insurance. This clause prevents him from collecting from both his
insurer and a third party. It is never part of a Life Insurance policy.
Unearned Premium
That portion of the written premium applicable to the unexpired or
unused part of the period for which the premium has been paid. Thus, in
the case of an annual premium, at the end of the first month of the
premium period eleven-twelfths of the premium is unearned.
© 2004 Goodmann Insurance Services, Inc. All rights reserved.
Goodmann Insurance Services
2774 University Ave.
Dubuque, IA 52001
563-556-3232 phone
563-556-1142 fax