A
Abandonment Clause - A policy provision stating the insured cannot abandon damaged property to the insurer for repair or disposal. Even in a total loss, the insured retains responsibility unless the carrier agrees otherwise.
Absolute Liability - Liability imposed regardless of fault or negligence. Often applies to high-risk situations like owning dangerous animals or using explosives.
Accident - A sudden, unexpected, and unintended event causing loss or damage. This is typically the triggering event in a property insurance claim.
Accounts Receivable Coverage Form - Coverage that reimburses the insured for amounts they can’t collect from customers because accounts receivable records were damaged or destroyed in a covered loss.
Actual Cash Value (ACV) - The depreciated value of property at the time of the loss.
• Formula: Replacement Cost – Depreciation = ACV
Used to determine the carrier's payment if the policy is ACV-based.
Actuary - A professional who calculates insurance risks and premiums using statistical methods. Behind the scenes, actuaries help insurance companies determine how much to charge and reserve for various risks.
Adjuster - A person who investigates and determines the value of an insurance claim.
• Independent Adjuster: Hired by carriers
• Staff Adjuster: Works directly for the insurance company
• Public Adjuster: Licensed to represent the policyholder (that’s you)
Adjustment - The process of reviewing a claim, inspecting damages, and determining the amount of the loss to be paid. Involves negotiation, documentation, and sometimes revision.
Admitted Aircraft Liability Coverage - Coverage that pays specific benefits when a passenger is injured or killed in an aircraft accident—regardless of who is at fault. Common in aviation policies.
Affiliated Party - A person or organization with a close relationship to another—like a partner company or corporate officer. In claims, this can become relevant in cases of conflict of interest or financial disclosure.
Agent - A licensed representative of an insurance company who sells and services insurance policies. Agents may be:
• Captive (Exclusive): Represent only one company
• Independent: Sell policies from multiple carriers
Aggregate Limit - The maximum total amount an insurance policy will pay for all claims during a policy period. Once this amount is reached, no further payments are made.
Agreed Value - A pre-set value of property agreed upon by the insurer and insured before the policy is written. Used in place of ACV or RCV in some specialty policies to avoid disputes during a claim.
Agreement of Guiding Principles - An agreement between insurers outlining best practices for handling catastrophic losses, claim coordination, and ethical interactions—especially during large events like hurricanes.
Aircraft Hull Insurance - Covers physical damage to the insured’s aircraft, similar to auto physical damage coverage. Often paired with liability insurance in aviation.
Aircraft Liability Insurance - Provides protection if an insured aircraft causes injury to passengers or damage to property. Similar to auto liability but for aircraft operations.
Airport and Air Meet Liability - Specialty coverage for events at airports or air shows, covering injury or damage arising from aviation exhibitions or public gatherings involving aircraft.
Allied Lines - A group of coverages often packaged with property insurance, such as sprinkler leakage, glass, and earthquake. These are add-ons or endorsements tied to a main fire policy.
All Risk Insurance - Coverage that protects against all perils not specifically excluded. Also called “Open Perils.” If it’s not listed as an exclusion, it’s likely covered.
Annual Transit Policy - Covers property while it is in transit, typically used for businesses that ship goods regularly.
Answer - A formal response by a defendant to a plaintiff’s complaint in legal proceedings.
Application - A formal written request for insurance coverage containing personal and risk information.
Apportionment - Dividing loss or liability among multiple insurers when more than one policy applies to the same claim.
Appraisal Clause - A policy provision that allows disputes over claim value to be resolved through independent appraisers.
Arson - The willful and malicious act of setting fire to property.
Assignment - The legal transfer of policy rights or claim benefits from one party to another.
Assignment Clause - A clause in a policy stating that rights and duties under the policy cannot be transferred without the insurer's consent.
Assumption of Risk Defense - A legal doctrine that bars recovery if the plaintiff voluntarily exposed themselves to a known danger.
Automobile Mechanical Breakdown Insurance - A type of coverage similar to an extended warranty for vehicle components.
B
Bail Bond - A financial guarantee provided to release a defendant from jail, ensuring their appearance in court. Not typically covered by standard insurance policies.
Bailee - A person or entity that receives possession of goods or property from another (the bailor) for a specific purpose, with a duty to return or account for the property.
Bailees Policy - Insurance that protects a bailee (such as a dry cleaner or storage facility) against loss or damage to customers’ property while in their care, custody, or control.
Barratry - In marine insurance, an unlawful or fraudulent act by the ship’s master or crew that causes damage to the ship or cargo, including theft, desertion, or mutiny.
Bid Bonds - A bond that ensures a contractor who wins a bid will enter into a contract and provide performance and payment bonds if required.
Binder - A temporary insurance agreement that provides proof of coverage until a formal policy is issued. It outlines key terms such as limits and covered perils.
Blanket Insurance - A policy that provides coverage for multiple properties or types of property under a single limit, often used for businesses or portfolios.
Blue Sky Bond - A bond required by some state securities regulators as part of compliance with state-level (Blue Sky) investment laws, protecting against fraud.
Bodily Injury - Physical harm, sickness, or disease sustained by a person, including death resulting from any of these conditions. Often referenced in liability coverage.
Bodily Injury Liability - Coverage that pays for injuries to others when the insured is legally responsible. Common in auto and general liability policies.
Boiler and Machinery Coverage Form - A policy that covers sudden and accidental breakdown of covered equipment like boilers, compressors, or generators, including repair or replacement and potential business interruption.
Builders Risk Coverage Form - A specialized form of property insurance that covers buildings under construction, including materials, supplies, and equipment on-site or in transit.
Building and Personal Property Coverage Form - A standard commercial property form providing insurance for buildings, business personal property, and personal property of others at a described location.
Bureau Adjuster - An adjuster employed by a claims bureau or third-party agency who handles claims on behalf of multiple insurers or underwriters.
Burglary - The unlawful forced entry into premises with the intent to commit a theft or crime. Coverage may vary depending on policy terms and security requirements.
Business Auto Coverage Form - Provides coverage for vehicles owned, leased, or used by a business, including liability, physical damage, medical payments, and uninsured motorist protections.
Business Income Form - Insurance that covers loss of income due to a suspension of operations stemming from direct physical loss to covered property by a covered cause.
Business Pursuits Endorsement - An endorsement that extends liability coverage from a homeowner's policy to certain business activities conducted from the home.
Businessowners Policy (BOP) - A comprehensive small business insurance package that typically includes property, liability, and business interruption coverage in one bundled policy.
C
Camera and Musical Instrument Dealers Form - A specialized inland marine coverage form designed to insure the inventory of dealers in cameras and musical instruments, including while on premises, in transit, or on display.
Cargo Liability Coverage - Insurance for motor carriers or freight forwarders that covers loss or damage to cargo while in their possession. Also known as motor truck cargo insurance.
Casualty Insurance - A broad category of insurance that covers liability for bodily injury or property damage to others. It typically excludes life and health coverage.
Causes of Loss Form - A commercial property form that specifies what perils are covered or excluded. It comes in three varieties: Basic, Broad, and Special (all-risk).
Civil Liability - Legal responsibility for injury or damage to another party due to negligent or wrongful acts, resulting in monetary compensation.
Civil Remedies Provision - A legal clause in Florida Statute § 624.155 that allows a policyholder to bring a civil suit against an insurer for bad faith claims handling.
Claim - A formal request to an insurance company asking for payment based on the terms of the policy, due to a covered loss or event.
Claimant - The individual or entity making an insurance claim. This may be the insured, a third party, or a beneficiary under the policy.
Claims-Made Form - A liability policy that provides coverage only if the claim is made during the policy period, regardless of when the event occurred (with possible retroactive coverage).
Coinsurance Clause - A policy provision requiring the insured to carry a certain percentage of insurance relative to the value of the property; penalties apply for underinsurance at time of loss.
Code of Ethics - A formal set of professional standards and ethical expectations that guides the behavior of public adjusters and other licensed professionals.
Collision - Physical damage to a covered auto caused by impact with another vehicle or object. Usually requires separate deductible under auto insurance policies.
Commercial Articles Coverage Form - An inland marine policy form that provides “all-risk” coverage for high-value commercial items such as cameras, musical instruments, or medical equipment.
Commercial Package Policy - A customizable commercial policy that combines two or more coverages, such as general liability and commercial property, into one policy.
Common Law - Legal principles derived from judicial decisions rather than statutes. Common law governs issues like negligence and liability unless overridden by legislation.
Common Policy Conditions - Standard provisions included in many insurance contracts that outline cancellation terms, policy changes, premium audits, and insurer inspections.
Comparative Negligence Rule - A legal doctrine allowing fault to be divided among parties involved in an accident. Damages are reduced based on each party's percentage of fault.
Compensatory Damages - Monetary compensation awarded to restore the claimant to the financial position they were in before a loss. Includes both special (economic) and general (non-economic) damages.
Complaint - A formal document initiating a lawsuit or regulatory grievance. In insurance, also refers to a policyholder's report of dissatisfaction with claims handling or service.
Comprehensive Coverage - Auto insurance that pays for damage not caused by collision, such as theft, vandalism, fire, flood, hail, or contact with animals.
Concurrent Causation - A situation in which a loss results from multiple causes, some covered and some not. Coverage may be limited depending on policy language and state laws.
Conditional Contract - An insurance policy is a conditional contract, meaning the insurer’s obligation to pay depends on the insured meeting certain conditions (like timely reporting or payment of premiums).
Conditions - Policy provisions outlining the rights and duties of both the insured and insurer, including things like duties after a loss, appraisal process, or cancellation rights.
Condominium Association Coverage Form - A commercial property form specifically designed for condominium associations, covering building elements owned jointly by the unit owners.
Consent to Settle Clause - A policy provision that requires the insured’s written permission before the insurer can settle a claim, often found in professional liability policies.
Consequential Loss - Indirect loss that follows a covered event, such as loss of rental income after fire damage. Typically covered under Business Interruption or Loss of Use.
Consideration - A legal requirement for valid contracts. In insurance, it’s the exchange of premium for the insurer’s promise to pay for covered losses.
Contingent Business Interruption - Coverage for income loss resulting from damage to suppliers, distributors, or other dependent properties, even though the insured’s property is unharmed.
Contract of Adhesion - A legally binding insurance contract drafted by the insurer, which the insured must accept as-is. Any ambiguity is interpreted in favor of the insured.
Contributory Negligence - A legal principle where if the claimant is found partially at fault, they may be barred from recovering damages, depending on the state’s laws.
D
Dangerous Instrumentality - A doctrine in Florida law that holds the owner of an inherently dangerous tool (like a vehicle) responsible for any harm it causes when entrusted to another person.
Dealers Drive-Away Collision - Insurance coverage designed to protect vehicles being driven from the point of sale or delivery to a destination, often used by car dealerships.
Debris Removal - A provision in property insurance policies that covers the cost of removing debris after a covered loss, such as fire or storm damage.
Declarations - The section of an insurance policy that lists key details like the policyholder's name, coverage limits, premium, property description, and policy period.
Deductible - The amount the insured must pay out of pocket before the insurance company will pay the remaining covered amount on a claim.
Direct Loss - A loss that results directly and immediately from a covered peril, such as fire damage to a home. Distinguished from indirect or consequential losses.
Disability Insurance - A type of insurance providing income replacement if the insured becomes unable to work due to illness or injury.
Disappearing Deductible - A deductible that reduces over time if no claims are filed or disappears entirely after a certain threshold is met.
Discovery Period - The time period after a policy expires in which claims can still be reported, particularly for crime or fidelity coverage.
Double Indemnity - A clause in life insurance policies that doubles the death benefit if the insured dies due to an accident.
Dread Disease Policy - A policy offering a lump-sum benefit upon diagnosis of specific serious illnesses such as cancer, heart attack, or stroke.
Drive Other Car Coverage - An endorsement added to a commercial auto policy to extend non-owned auto coverage to individuals who drive vehicles not listed on the policy.
Dual Limits - Separate coverage limits for different components of a policy, such as one for bodily injury and another for property damage.
Dwelling Policy - A property insurance policy typically used for rental properties or vacation homes that insures the structure but offers limited personal property or liability coverage.
E
Earthquake Coverage - An endorsement or separate policy that covers damage caused by an earthquake. Standard homeowners and commercial property insurance policies typically exclude earthquake damage unless specifically added.
Electronic Data Processing Coverage - Insurance designed to cover computer hardware, software, and data against perils such as power surges, operator error, virus attacks, and other types of damage not typically covered under standard property policies.
Employee Dishonesty Coverage Form - Also called "fidelity insurance," this protects an employer from financial loss due to fraudulent acts by employees, such as theft of money, securities, or property.
Employers Liability Coverage - Provides protection to an employer against lawsuits filed by employees for job-related injuries or illnesses that aren’t covered by workers’ compensation.
Endorsement - A written amendment or addition to an insurance policy that modifies its terms or coverage. Can be used to add, limit, or exclude coverage.
Equal Shares Clause - A provision in liability insurance policies that requires insurers who share the same risk to contribute equally to a loss until the limit of one policy is exhausted, then the remaining insurers continue equally until the loss is fully paid or all limits are reached.
Equipment Breakdown Insurance - Coverage for the sudden and accidental breakdown of mechanical or electrical equipment. It includes repair or replacement of the damaged equipment and may cover lost income or extra expenses due to the breakdown.
Equipment Dealers Coverage Form - A specialized inland marine policy designed to protect equipment dealers against loss or damage to equipment held for sale, including construction, agricultural, and material-handling equipment.
Estoppel - A legal principle that prevents a party from asserting something contrary to what is implied by a previous action or statement, especially when that representation has been relied upon by another party.
Evidence - Any type of proof legally presented at trial through witnesses, records, documents, or objects used to establish facts in a legal proceeding.
Exemplary Damages - Also known as punitive damages, these are monetary awards intended to punish the defendant for particularly egregious conduct and to serve as a deterrent to others.
Excess Coverage - Insurance that provides protection above the limits of a primary policy or after the primary policy's limits have been exhausted.
Exclusions - Specific conditions or circumstances listed in an insurance policy under which coverage is not provided.
Expediting Expenses - Additional costs incurred to make temporary repairs or speed up permanent repairs after a loss in order to resume operations more quickly. Often covered under boiler and machinery or business interruption policies.
Extended Non-Owned Coverage Endorsement - An endorsement that broadens auto liability coverage to include non-owned vehicles operated by the insured, such as rental cars or vehicles not listed on the policy.
Extended Reporting Period - Also known as tail coverage, it extends the time during which a claim may be reported under a claims-made policy after the policy has expired or been canceled.
Extortion Coverage Form - A type of crime insurance covering losses due to threats of bodily harm, property damage, or kidnapping unless money or other property is surrendered.
F
Farm Coverage Part - A section of a farm insurance policy that provides property and liability coverage for both the personal and commercial aspects of a farming operation, including dwellings, barns, equipment, and livestock.
Farm Liability Coverage Form - A standardized form used in farm insurance policies to cover third-party bodily injury and property damage liability arising from farming activities.
Farm Property Coverage Form - This form provides coverage for physical loss or damage to farm property such as barns, silos, machinery, and livestock.
Fee Adjuster - A licensed adjuster who is contracted and compensated on a per-assignment or fee schedule basis, typically by insurers or firms, to evaluate insurance claims independently.
Fellow Servant Rule - A common law doctrine stating that an employer is not liable for injuries an employee sustains as a result of the actions of a fellow employee while both are engaged in their employment duties.
Fidelity Bond - A form of insurance that protects a business from losses caused by dishonest or fraudulent acts of its employees, such as theft or embezzlement.
Fiduciary - A person or organization that holds a legal or ethical relationship of trust with another party, often responsible for managing money or property for the benefit of another.
Fiduciary Bond - A type of surety bond that guarantees a fiduciary (like an executor or trustee) will act in good faith and fulfill their legal obligations in managing another's assets.
Film Coverage Form - Insurance coverage specifically designed for film production, protecting against loss or damage to film equipment, sets, and footage during production.
Financial Responsibility Law - State-level legal requirements that mandate vehicle owners prove they can pay for damages or liability resulting from auto accidents, typically through insurance.
Fire - A peril covered under most property insurance policies, referring to combustion that emits light and heat and results in damage to insured property.
First-Party Claim - A claim filed by the insured against their own insurance policy for a covered loss, as opposed to a third-party claim which is filed against another person’s policy.
Floater - An insurance policy that provides coverage for movable property, often valuable items like jewelry or electronics, regardless of their location.
Floor Plan Coverage Form - A type of insurance that covers merchandise held for sale under a floor plan agreement, often used by auto dealers and furniture retailers.
Florida Automobile Joint Underwriting Association (FAJUA) - A residual market mechanism created by Florida law to provide auto insurance to high-risk drivers who are unable to obtain coverage in the standard market.
Forgery or Alteration Coverage Form - Provides protection against losses from forged or altered checks, drafts, or other negotiable instruments.
Franchise Bond - A surety bond required of businesses granted the right to operate as a franchise under local or state government regulation, ensuring compliance with franchise laws and obligations.
Franchise Deductible - A type of deductible in which the insurer pays the full amount of a covered loss only if it exceeds the deductible threshold. If the loss is below that threshold, the insurer pays nothing.
Fraud - Any intentional deception or misrepresentation made by a person with the knowledge that it could result in an unauthorized benefit for themselves or another party.
Freight Coverage - Insurance that provides protection for goods while they are being transported from one location to another, often included in inland marine or cargo policies.
G
Garage Coverage Form - A commercial auto form designed for auto dealers, repair shops, or service stations. Combines liability, physical damage, and garagekeepers coverage for autos in the business's care.
Garagekeepers Liability - Covers the insured’s legal liability for loss or damage to customers' vehicles while in their custody for service, repair, storage, or parking.
General Average - A principle in marine insurance where all parties in a sea venture proportionally share losses resulting from a voluntary and successful sacrifice of part of the ship or cargo to save the whole.
General Damages - Non-economic losses awarded in liability claims, such as pain and suffering, emotional distress, and loss of companionship. Contrast with special (economic) damages.
General Liability - Insurance protecting businesses from third-party claims of bodily injury, property damage, and personal/advertising injury. Often a foundational coverage in commercial insurance.
Grace Period - A specified time after a premium due date during which a policy remains in force, even if payment is late. Common in life and health insurance policies.
Guaranteed Renewable - A policy provision ensuring that the insurer must renew the policy if the insured continues to pay premiums. Used in health, disability, and long-term care insurance. Rates may change by class, but coverage cannot be canceled individually.
H
Hangarkeepers Liability - Coverage for aircraft storage or maintenance businesses that insures against damage to customers’ aircraft while in their care, custody, or control.
Hazard - A condition that increases the chance or severity of a loss. Can be physical (e.g., frayed wiring), moral (e.g., intentional fraud), or morale (e.g., careless behavior due to insurance coverage).
Health Insurance - Provides coverage for medical expenses due to illness, injury, or other health conditions. May include preventive care, hospital stays, and prescription drugs.
Health Maintenance Organization (HMO) - A type of managed care health plan offering comprehensive services to members through a network of providers. Requires referrals for specialists and limits out-of-network care.
Homeowners Policy - A personal lines package policy that combines property, liability, and additional living expense coverages for owner-occupied dwellings. Includes multiple policy forms (HO-1 to HO-8).
Hospital Indemnity Insurance - Pays a fixed cash benefit per day (or per incident) when the insured is hospitalized, regardless of actual medical expenses. Often used to supplement traditional health insurance.
Hospitalization Expense Insurance - Covers hospital-related charges such as room and board, surgeries, nursing, and lab services. May be part of a broader medical plan or sold as a standalone product.
Hull Insurance - Covers physical damage to ships, boats, or aircraft. For marine use, it protects the structure and machinery; in aviation, it covers aircraft regardless of who’s at fault.
I
Improvements and Betterments - Permanently installed additions or enhancements made by a tenant to a rental space. These improvements are typically not removable and are covered under the tenant’s policy in the event of a covered loss.
Imputed Liability - Legal responsibility assigned to a person who did not directly cause harm but has a relationship with the party at fault (e.g., employer held liable for an employee’s negligence).
Indemnitor - The party in a contract who agrees to compensate another (the indemnitee) for loss or damage as specified in the agreement.
Indemnity - A contractual obligation of one party to compensate another for loss, damage, or liability. In insurance, it’s the principle that ensures the insured is restored to their pre-loss condition without profit.
Indemnity Bond - A type of surety bond guaranteeing that a party will fulfill a financial obligation or reimburse another party in the event of a loss caused by default or dishonesty.
Independent Adjuster - A licensed professional who investigates and adjusts claims on behalf of insurance companies but is not employed directly by any one insurer. Works on a contract or assignment basis.
Indirect Loss - A secondary loss resulting from a covered direct physical loss. Examples include lost rental income after a fire or additional living expenses following a flood.
Industrial Fire Agent - An individual authorized to sell industrial fire insurance, typically door-to-door or via payroll deduction. This is an outdated term in most jurisdictions.
Inflation Guard Endorsement - A policy add-on that automatically increases property insurance limits to keep up with inflation, helping ensure sufficient coverage in the event of a loss.
Inherent Vice - A quality within property that causes it to deteriorate or damage itself without any external cause. Most insurance policies exclude losses from inherent vice.
Inland Marine Insurance - Covers property in transit over land, certain moveable property, and specialized types of property (e.g., equipment, fine art, builder’s risk). Broader than traditional property insurance.
Insolvency Bond - A type of surety bond guaranteeing the proper handling and distribution of assets when a business or estate becomes insolvent. Typically required in court-supervised proceedings.
Installation Form - A type of inland marine coverage that protects property to be installed—like HVAC units or elevators—during transit, storage, and the installation process.
Installment Sales Floater - Provides coverage for a seller’s interest in property sold on an installment plan. Covers unpaid balances if the property is damaged before the buyer completes payment.
Instrumentalities of Transportation and Communication - Property essential to the movement of goods or communication, such as bridges, tunnels, pipelines, and communication towers. Often insured under inland marine forms.
Insurable Interest - A financial or legal interest in property or a person that would result in a monetary loss if a covered event occurs. Required to enforce a policy at the time of loss.
Insurance - A financial arrangement that transfers risk from an individual or business to an insurer, who agrees to compensate the insured for covered losses in exchange for a premium.
Insurance Service Office (ISO) - An organization that develops standard policy forms, loss costs, and statistical data used by many insurers across the U.S. for underwriting and rate making.
Insuring Agreement / Insuring Clause - The portion of an insurance policy that outlines the insurer’s promise to pay for specific losses, including the perils insured against, subject to the terms, conditions, and exclusions.
Investigation - The process of gathering facts about a reported claim. May involve reviewing documentation, interviewing witnesses, or inspecting damaged property to determine coverage and liability.
J
Jettison - The voluntary throwing overboard of cargo or ship parts to lighten a vessel in an emergency. Covered under marine policies as part of general average.
Jewelers Block - A specialized inland marine policy for jewelers, covering inventory and customers’ property from loss or theft on premises, in transit, or at shows.
Judicial Bond and Bonds Required by Courts - Surety bonds required in legal proceedings, such as appeal bonds, injunction bonds, or guardianship bonds. They ensure compliance with court orders or fiduciary duties.
K
L
Labor and Materials Bond - A bond that guarantees payment to suppliers and subcontractors for labor and materials used in a construction project. Commonly required in public construction contracts.
Law of Large Numbers - A statistical principle stating that the larger the number of exposure units, the more predictable future losses become. This underpins the concept of risk pooling in insurance.
Leasehold Interest Coverage Form - Covers financial losses to a lessee when a lease is terminated early due to property damage, particularly if the lease terms were favorable compared to the market.
Legal Liability - Responsibility under civil law for acts or omissions that cause harm to others. In insurance, it generally refers to coverage for bodily injury or property damage caused to third parties.
Legal Liability Coverage Form - An ISO commercial property endorsement that provides coverage when the insured is legally liable for loss or damage to others’ property in their care, custody, or control.
Liability Insurance - Protects the insured from claims or lawsuits alleging they caused bodily injury, property damage, or other covered harms to third parties.
Liberalization Clause - A clause stating that if the insurer broadens coverage during the policy period without additional premium, the change automatically applies to current policies.
License and Permit Bonds - Surety bonds required by government agencies to obtain certain licenses or permits. They ensure compliance with laws and regulations (e.g., contractor licenses).
Lien - A legal claim or right against property as security for a debt. Must be paid off before the property can be sold or transferred.
Limits of Liability - The maximum amount an insurer will pay for a covered loss under a policy. Can be expressed per occurrence, per person, or as an aggregate.
Liquor Liability Coverage - Covers claims arising from selling, serving, or furnishing alcoholic beverages. Often excluded from general liability and must be purchased separately by bars or restaurants.
Litigation Bond - A bond required by courts during litigation, such as appeal or attachment bonds. It ensures payment of damages or costs if the party posting the bond loses the case.
Loan Receipt - A document acknowledging an insurer’s loan to the insured to cover a loss, which the insured agrees to repay if recovery is made from a third party. Used to preserve subrogation rights.
Loss of Use Coverage - Pays for additional living expenses or lost rental income when a covered loss renders the property uninhabitable or unusable.
Lost Instrument Bonds - Surety bonds used to replace lost financial instruments like stock certificates or promissory notes. Protects the issuer against duplicate redemption if the original is found.
M
Mail Coverage Form - A form used in inland marine insurance to cover property in transit through the postal system. It provides protection against loss or damage while the items are in the custody of the postal service.
Major Medical Insurance - A type of health insurance that covers a large portion of medical expenses from serious illness or injury. It typically includes high maximum benefits and coverage for hospital, surgical, and medical expenses.
Marine Insurance - Coverage that protects goods in transit over water or in storage awaiting shipment. Includes both ocean marine (overseas) and inland marine (land-based shipping and transport).
Material Fact - Any fact that would influence the decision of an underwriter in accepting or rejecting a risk. Failure to disclose a material fact may void a policy.
Medicare Supplement Insurance - A private health insurance policy that helps cover gaps in Medicare coverage, such as co-payments, coinsurance, and deductibles.
Miscellaneous Type Vehicle Endorsement - An endorsement used in auto insurance to provide coverage for vehicles not typically covered under a standard auto policy, such as golf carts or recreational vehicles.
Misrepresentation - A false statement made by an applicant that can affect the insurer’s decision to provide coverage. Material misrepresentation may lead to policy cancellation or claim denial.
Mortgagee - The lender or entity that holds a mortgage on a property and is listed as a loss payee on insurance policies to protect their interest in the property.
Mortgagee Clause - A clause in property insurance policies that ensures the mortgagee (lender) is protected and compensated for losses, even if the insured is denied payment due to breach of contract.
Mortgagee Rights - The legal rights held by a mortgagee to collect compensation from insurance proceeds in the event of a property loss, even if the mortgagor (insured) violates policy conditions.
Motor Truck Cargo Policy - A type of inland marine policy designed to cover the liability of motor carriers for loss or damage to goods in their possession while in transit.
N
Name Schedule Coverage - Insurance that applies only to specifically listed items or individuals named in the schedule of the policy.
Named Nonowner Coverage - Provides liability coverage for an individual who does not own a vehicle but drives other people's cars. Typically purchased to satisfy financial responsibility laws.
Named Peril Policy - An insurance policy that covers only the perils specifically listed. If a peril is not named, it is not covered.
Negligence - The failure to use reasonable care, resulting in damage or injury to another. A key factor in determining liability in property and casualty claims.
No-Fault Insurance - A type of auto insurance where policyholders are compensated by their own insurer for medical expenses and lost wages, regardless of who is at fault in an accident.
Noncancelable - A type of policy that cannot be canceled by the insurer during its term, except for non-payment of premium.
Non-Concurrent Coverage - When two or more insurance policies covering the same risk have different coverage terms or periods. This can lead to gaps or duplication in coverage.
Nuclear Energy Liability Exclusion Endorsement - An endorsement that excludes coverage for liability arising from nuclear energy, nuclear waste, or radiation exposure.
O
Objects Definition Form - A form used in boiler and machinery insurance to clearly identify and describe the specific objects (like boilers, pressure vessels, or HVAC systems) covered under the policy.
Obligee - In surety bonding, the obligee is the party protected by the bond. It’s the person or organization to whom the principal (bonded party) owes an obligation.
Occurrence - An event, including repeated or continuous exposure to substantially the same harmful conditions, that results in bodily injury or property damage during the policy period.
Occurrence Form - A type of liability coverage that responds to claims for incidents that occur during the policy period, regardless of when the claim is filed — even if it's years later.
Ocean Marine Insurance - Covers goods being transported over water and related exposures such as loading/unloading, damage to the vessel, and liability from collisions or environmental impact.
Optionally Renewable - A health insurance policy provision allowing the insurer the option to renew coverage at the end of each term, typically subject to certain restrictions or premium adjustments.
Owners and Contractors Protective Liability (OCP) - A liability policy purchased by contractors for the benefit of a property owner. It covers the owner against claims arising from the contractor’s operations.
P
Partial Loss - A property loss that is not total, meaning only part of the insured property is damaged or destroyed. Payment is made for the extent of the loss rather than the full value.
Particular Average - A marine insurance term for partial loss or damage to a specific shipment that is not shared with other cargo owners or the shipowner — the loss is borne by the cargo owner.
Payment Bond - A surety bond guaranteeing that subcontractors, laborers, and material suppliers on a project will be paid by the contractor or principal.
Peak Season Endorsement - An endorsement added to a business personal property policy to increase the amount of insurance during times of the year when inventory values are at their highest.
Penalty - In bonding, the maximum dollar amount the surety will pay under the bond if the principal fails to meet the obligation.
Percentage Deductible - A deductible that is a percentage of the insured value (often seen in hurricane or earthquake coverage). The insured must pay that percentage before coverage applies.
Performance Bond - A type of surety bond that guarantees a contractor will complete a construction project according to contract specifications.
Peril - A cause of loss such as fire, wind, theft, or flood. Insurance policies either name perils specifically (named peril) or cover all except those excluded (all-risk/open peril).
Perils of the Sea - Risks unique to ocean navigation, including storms, waves, collisions, and other hazards not related to the vessel’s condition or crew negligence.
Personal and Advertising Injury - Covers liability arising from offenses like slander, libel, false arrest, wrongful eviction, or copyright infringement in advertising.
Personal Articles Floater - A policy or endorsement providing coverage for valuable personal items such as jewelry, art, or cameras, often on an all-risk basis.
Personal Auto Policy (PAP) - A standardized policy used to insure private passenger autos for personal use. It includes liability, medical payments, uninsured motorist, and physical damage coverages.
Personal Effects Floater - Provides worldwide coverage for personal belongings such as clothing, luggage, and small electronics — especially while traveling.
Probate Bond - A type of surety bond required by the court for individuals managing the estate of a deceased person (e.g., executors or administrators). It ensures the fiduciary will act in accordance with the law and the terms of the will.
Products and Completed Operations - A form of liability coverage that protects against claims arising from products the insured manufactures or work the insured has completed, after those items are no longer on the insured’s premises.
Professional Liability - Coverage that protects professionals (e.g., doctors, lawyers, architects) against claims of negligence, errors, or omissions made while performing their professional duties.
Proof of Loss - A sworn statement by the insured to the insurer regarding the amount of loss claimed, typically required before payment can be made. Must be submitted within the timeframe outlined in the policy.
Pro Rata Cancellation - When a policy is canceled by the insurer and the unearned premium is returned without penalty, calculated based on the exact number of days the policy was in force.
Protection and Indemnity (P&I) Insurance - A type of marine liability insurance that covers a shipowner’s legal liability for bodily injury, property damage, and pollution caused to others while operating a vessel.
Proximate Cause - The primary cause that sets in motion a chain of events resulting in a loss. In insurance, the proximate cause must be a covered peril for a claim to be paid.
Public Adjuster - A licensed professional who represents policyholders in the preparation, negotiation, and settlement of insurance claims. Public adjusters do not work for the insurance company.
Punitive Damages - Monetary compensation awarded in lawsuits intended to punish the defendant for particularly harmful, reckless, or malicious behavior — typically not covered by insurance.
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R
Representation - Statements made by the applicant for insurance that are believed to be true to the best of their knowledge. If false, and material to the risk, they may void the contract.
Rescission - The cancellation of an insurance policy from its inception, as though it never existed. Commonly used when there is material misrepresentation or fraud in the application.
Reservation of Rights - A notification from the insurer to the insured indicating that coverage for a claim may not apply, pending further investigation. Allows the insurer to investigate without waiving its rights.
Retention Limit - The amount of loss that the policyholder or insurer retains before reinsurance coverage kicks in. In reinsurance contracts, it’s the equivalent of a deductible.
Retroactive Date - The date on a claims-made liability policy that defines how far back in time coverage will apply. Incidents occurring before this date are not covered.
Risk - The possibility of loss or damage. In insurance, it also refers to the person or entity being insured.
Risk Management - The identification, assessment, and prioritization of risks, followed by coordinated actions to minimize, monitor, or control the probability or impact of unfortunate events.
S
Salvage - The residual value of damaged property. Insurers may take ownership of salvaged items after paying a total loss claim to offset their payout.
Scheduled Property - Personal property listed individually in an insurance policy, often with a specific value assigned to each item. Typically used for high-value or unique items.
Self-Insured Retention (SIR) - A dollar amount specified in a liability policy that must be paid by the insured before the insurer will respond to a claim, similar to a deductible.
Short Rate Cancellation - Cancellation of a policy by the insured before its expiration date, where a penalty is applied, and only a portion of the unearned premium is refunded.
Single Limit - A combined limit of liability for bodily injury and property damage under a single dollar amount, as opposed to split limits.
Soft Market - A phase in the insurance underwriting cycle characterized by lower premiums, broader coverage, relaxed underwriting, and increased competition among insurers.
Special Damages - Compensation awarded for specific, out-of-pocket expenses incurred due to a loss, such as medical bills and lost wages.
Stated Amount Policy - An insurance policy in which the insurer agrees to pay the lesser of the insured’s stated value or the actual cost to repair or replace the property.
Statute of Limitations - The legally prescribed time period within which a lawsuit or claim must be filed. Varies by state and type of claim.
Subrogation - The right of an insurer to pursue a third party that caused a loss to the insured, in order to recover the amount paid in the claim.
Supplemental Claim - A claim filed for additional payment after the initial settlement, often due to newly discovered damages or underestimated repair costs.
Surety Bond - A three-party agreement that guarantees the performance or obligations of one party (the principal) to another (the obligee), backed by a third party (the surety).
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Tenants in Common - A form of property ownership in which two or more people own shares in a property. Each tenant’s share can be sold or inherited independently.
Third Party Claim - A claim filed by someone who is not the policyholder but believes they were injured or suffered damages caused by the insured.
Time Element Coverage - Insurance coverage that pays for losses related to the passage of time, such as business income loss or rental income, resulting from a covered property loss.
Total Loss - A condition in which the cost to repair or replace damaged property exceeds its value. Can be actual or constructive, depending on the terms of the policy.
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Umbrella Policy - A type of liability insurance providing additional coverage above and beyond the limits of underlying policies, such as auto or homeowners.
Unilateral Contract - A contract in which only one party (the insurer) makes a legally enforceable promise — to pay for covered losses, provided the insured meets policy conditions.
Uninsurable Risk - A risk that cannot be covered by insurance due to being too speculative, catastrophic, or lacking measurable exposure (e.g., gambling losses, war).
Utmost Good Faith - A foundational insurance principle requiring both parties (insured and insurer) to act honestly and disclose all relevant facts during the application and claims process.
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Valued Policy Law (VPL) - A state statute requiring insurers to pay the full face amount of a policy in the event of a total loss by a covered peril, regardless of the property's actual value at the time.
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Waiver - The voluntary relinquishment of a known right, claim, or privilege. In insurance, a waiver could prevent an insurer from later denying coverage due to a previously overlooked condition.
Warranty - A statement or promise in an insurance contract that certain conditions will be met. Breaching a warranty can void coverage or the entire policy.
Workers' Compensation - Insurance that provides medical and wage benefits to employees injured in the course of employment. Mandated by state law and generally the exclusive remedy for workplace injuries.
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