Agent
A licensed individual or organization authorized to sell and service insurance policies for an insurance company.
Aggregate Limit
The maximum dollar amount of coverage in force for a property damage policy or liability policy. This maximum amount can be figured on a per occurrence basis or as a general aggregate for the complete policy term.
Agreed Value
A method of loss valuation where the insured and the insurer list an agreed upon amount to be paid in case of loss. This valuation method is most common in property insurance when insuring valuable artwork, antiques, or classic autos. A professional appraisal is usually required.
Arbitration Clause
A clause in an insurance policy that allows the insured and the insurer to each appoint an arbitrator if they cannot agree upon an appropriate claim settlement. Once the arbitrators have been selected, they in turn appoint an independent umpire. If the arbitrators disagree, then the umpire decides which claims settlement to support. The final decision is binding.
Betterment
A situation that occurs in a loss when an old piece of property is replaced by a brand new item. The insured is put in a better financial position than they were before the loss occurred, and consequentially may have to pay the difference in price for the betterment.
Binder
A short-term agreement that provides temporary insurance coverage until the policy can be issued or delivered.
Broker
A licensed individual or organization who sells and services insurance polices on your behalf.
Broker-agent
A licensed individual who can act as an agent representing one or more insurers, and also as a broker dealing with one or more insurers representing your interests.
Cancellation
The termination of an in-force insurance contract by either the insured or the insurer before its normal expiration date.
Claim
Notice to an insurance company that a loss has occurred that may be covered under the terms and conditions of the policy.
Claim Adjuster
The person who evaluates the damage caused by a covered loss and determines the amount to be paid under the policy terms.
Claims Made
A liability insurance policy where coverage applies to claims filed during the policy period no matter when the loss occurred subject to a retroactive inception date.
Coinsurance
An insurance clause that defines the amount of each loss that the company pays according to the amount of insurance carried, divided by the amount of insurance required. This basic formula relates to a contracted percentage of coverage that must be required to prevent a coinsurance penalty.
Combined Single Limit
When bodily injury liability and property damage liability is expressed as a single sum (limit) of coverage.
Commercial Lines
Insurance coverages for businesses, commercial institutions, and professional organizations, as contrasted with personal insurance.
Commission
A portion of the policy premium that is paid to an agent by the insurance company as compensation for the agent’s work.
Concurrent Causation
Occurs when two or more perils cause a loss. When only one of these perils is covered by the insurance policy, the court generally rules that the entire loss is covered. Many insurance companies have reworded their policies to clarify that only a loss attributed to a covered peril is indeed covered.
Conditions
The portion of an insurance contract that sets forth the rights and duties of the insured and the insurer.
Consequential Bodily Injury
In Workers Compensation, special circumstances can arise when a work-related injury causes some sort of non-work-related injury. (Please see Loss of Consortium, Dual Capacity, and Third Party Over glossary definitions.)
Coverage
Protection that is provided under an insurance policy.
Declarations (DEC) Page
Usually, the first page of an insurance policy that contains the full legal name of the insurance company, the policy number, effective and expiration dates, premium payable, the amount and types of coverage, and the deductibles.
Deductible
The amount of the loss that the insured is responsible to pay before benefits from the insurance policy are payable.
Depreciation
The actual or accounting recognition of the decrease in value of property over a period of time according to a predetermined schedule.
Dual Capacity
In Workers Compensation, an employer may be liable two ways to an employee who incurs bodily injury on the job as a result of using a product or service produced by that employer. The employee is eligible for Workers Compensation benefits and may also sue the employer because of the defectiveness of the injuring product or service.
Earned Premium
The portion of the policy premium paid by an insured that has been allocated to the insurance company’s loss experience, expenses, and profit year to date.
Hazard
A circumstance that increases the likelihood or potential severity of a loss.
Indemnity
In a property and casualty contract, the objective is to restore an insured to the same financial position after the loss that the insured had prior to the loss. In the most basic sense, indemnity is compensation for a loss.
Independent Adjuster
A person or organization that provides claim adjusting services to different insurers on a contract basis.
Insurable Interest
Any interest (most commonly ownership) that a person, company, or corporation has in a subject of insurance such as a business, building, or auto, which can be damaged and may cause the person, company, or corporation financial loss or other tangible deprivation. Generally, an insurable interest must be demonstrated when a policy is issued and must exist at the time of loss.
Insurance
A method of shifting risk from a person, business, or organization to an insurance company in exchange for the payment of premium. The insurance company commits to be responsible for covered losses.
Insured
The policyholder(s) entitled to coverage under an insurance policy.
Insurer
The insurance company who issues insurance and agrees to pay for losses and provide covered benefits.
Insuring Agreement
The portion of an insurance contract that describes what is covered. The insuring agreement usually states the perils insured against, the person(s) and/or property covered, the property locations, and the period of the contract.