Definitions
Here you will find an extensive list of definitions for common terms used in the commercial insurance industry. We hope you find this list informative and helpful. An educated customer is our best customer.
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A
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.
Additional living expense insurance
This coverage, found in the broad and special dwelling and homeowners
forms, applies to extra expenses necessitated by the insured’s
inability to reside in the insured dwelling because of a covered loss—for
example, restaurant meals and hotel bills. The amount is the difference
between normal household expenses and the increase.
Adjuster
A person may act either on behalf of the insurance company or the insured
in the settling a claim. Independent adjusters represent the insurance
company on a fee basis; public adjusters represent the insured on a
fee basis.
Admitted company
An insurance company that is licensed (admitted) to conduct business
within a given state.
Admitted market
The range of insurance available through admitted companies.
Advance premium
Relates to a policy premium that cannot be precisely determined until
the end of the term. The advance premium, also called "deposit
premium," is a downpayment on what will be final premium.
Adverse selection
The idea that the greater the likelihood of loss, the more attractive
the idea of buying insurance to cover that loss becomes.
Advertising injury
Claim arising out of slander, libel, copyright infringement, or misappropriation
of advertising ideas. Coverage is provided as part of coverage B of
the commercial general liability policy.
Agent
The term used for one person acting on behalf of another in an insurance
transaction.
Aggregate limit
The maximum amount an insurer will pay under a policy in any one policy
period.
Anniversary date
The anniversary of the original date of issue of a policy as shown in
the declarations.
Annual aggregate deductible
A deductible applied annually to the total amount paid in claims during
a policy period. Claims are generally subject to a per-occurrence deductible;
the aggregate is the limit beyond which no further deductibles are
applied.
Arson
The intentional setting afire of property.
Assigned risk
A risk that may not be generally acceptable to any insurance company
but for which the law says that insurance must be acquired. Personal
auto liability is one such necessary coverage. Insurance companies
doing personal auto business in a state can be required to accept assignment
of a portion of the state’s unacceptable drivers as insureds.
Automobile liability insurance
Insurance in which the insurer agrees to pay all sums for which the insured
is legally obligated because of bodily injury or property damage arising
from the ownership, maintenance, or use of an auto.
Automobile medical payments
Insurance applying to the medical, hospital, or funeral expenses of anyone
injured while on or in an insured automobile. The coverage is not dependent
on liability, being triggered simply by an accident. It may be included
in either the Business Auto Policy or the Personal Auto Policy.