Property and Casualty glossary

Giving damaged property to the insurer for full payment, which the standard policy lets the insurer refuse.

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Sudden falling down of a building, covered under limited causes such as hidden decay.

Also called: collapse

See also: Special causes of loss form

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Liability without proof of negligence, applied to ultrahazardous activities and certain defective products.

Also called: strict liability

See also: Negligence

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Protection for qualifying uncollectible balances and related expenses when covered damage destroys customer account records.

See also: Inland marine insurance

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Replacement cost of the property new, less depreciation for age and wear.

Also called: ACV

See also: Replacement cost, Depreciation

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Extra living costs when a covered loss makes the home unfit, included in the DP-2 and DP-3 but not the DP-1.

Also called: ALE; Coverage E

See also: Fair rental value

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An insurer licensed in the state to write insurance there.

Also called: licensed insurer

See also: Surplus lines

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The tendency of people with a higher chance of loss to seek insurance more than average risks do.

Also called: antiselection

See also: Underwriting

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An option suspending property coinsurance for its stated period when the insurer accepts a reported statement of values.

See also: Coinsurance

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A contract in which the values exchanged may be unequal because they depend on an uncertain event.

See also: Contract of adhesion, Conditional contract

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An insurer organized outside the United States.

See also: Domestic insurer, Foreign insurer

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Authority a reasonable person would believe an agent has because of the insurer's actions.

See also: Binder

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A process for settling a dispute over the amount of loss using two appraisers and an umpire.

Also called: appraisal clause

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A way to settle a dispute outside court with a neutral arbitrator. The PAP uses it for UM disputes when both sides agree.

Also called: binding arbitration

See also: Uninsured motorists coverage

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A defense that the claimant knew of a danger and chose to accept it.

Also called: assumed risk

See also: Contributory negligence

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Covers auto dealers, including their garage operations and autos held for sale.

Also called: auto dealers form; garage policy

See also: Garagekeepers coverage

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PAP Part B. Pays medical and funeral expenses from an auto accident incurred within 3 years, regardless of fault.

Also called: Part B; auto med pay

See also: Personal injury protection

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Protection for customers' property held for service or storage against covered damage, beyond coverage based only on the bailee's liability.

See also: Inland marine insurance

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A commercial named perils form that covers a short list of perils, including fire, lightning and windstorm.

Also called: basic form

See also: Broad causes of loss form, Special causes of loss form

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A free ERP: 60 days for claims, extended to 5 years for occurrences reported within 60 days after the policy ends.

Also called: basic ERP; mini tail; midi tail

See also: Extended reporting period

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Guarantees that a winning bidder will sign the contract and provide the required performance and payment bonds.

Also called: bid guarantee

See also: Performance bond

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A temporary agreement giving immediate coverage until the policy is issued or the risk is declined.

See also: Apparent authority

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A fidelity bond that covers all employees automatically. Name schedule and position schedule bonds list specific people or positions.

Also called: blanket fidelity bond

See also: Fidelity bond

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CGL Coverage A. Pays damages the insured must pay because of bodily injury or property damage caused by an occurrence.

Also called: Coverage A (CGL)

See also: Commercial general liability

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Business income and extra expense built into the BOP, paid for actual loss sustained up to 12 months, with a 72-hour wait for income.

Also called: actual loss sustained

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The BOP is for small and medium businesses such as offices, apartments and retailers. Banks, auto dealers, parking lots and most bars are not eligible.

Also called: BOP eligible risks

See also: Businessowners policy

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Automatically raises the BOP business personal property limit, usually by 25 percent, for seasonal inventory peaks.

Also called: seasonal automatic increase

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A commercial named perils form that adds falling objects, weight of snow and water damage to the basic form.

Also called: broad form

See also: Basic causes of loss form, Special causes of loss form

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Property coverage for buildings under construction and qualifying construction materials and supplies.

Also called: Course of construction coverage

See also: Installation floater

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A commercial property form covering insured buildings, business personal property and specified property of others.

Also called: BPP coverage form

See also: Business personal property

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Taking property from inside the premises by someone who enters or leaves by force, shown by visible marks.

Also called: safe burglary

See also: Robbery, Theft

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The ISO commercial auto policy. Uses numbered symbols to show which autos are covered for each coverage.

Also called: BAP; business auto policy

See also: Covered auto symbols

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A provision comparing the carried limit with a required percentage of projected annual net income and operating expenses.

See also: Coinsurance

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Protection for lost net income and continuing normal operating expenses during a covered suspension of business.

Also called: Business interruption insurance

See also: Period of restoration

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A package of property and liability coverage for eligible small and medium businesses, with simplified rating.

Also called: BOP

See also: Commercial package policy, BOP business income

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A business's movable property, such as furniture, equipment and stock, distinct from the building itself.

Also called: BPP

See also: Building and personal property coverage form

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Homeowners liability does not cover injury or damage arising from the insured's business or professional services.

Also called: business exclusion

See also: Home business coverage endorsement, Permitted incidental occupancies

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Excludes damage to property in the insured's care, which should be covered by property or inland marine insurance.

Also called: CCC exclusion; property in care exclusion

See also: Bailees customers coverage

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Time-element protection when a qualifying government action bars access because of covered damage to other property.

See also: Business income coverage

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Defense costs and related expenses in a covered liability suit. Under a homeowners policy they are paid in addition to the liability limit.

Also called: defense costs

See also: Personal liability

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A claims-made form that also requires the claim to be reported to the insurer within the policy period or an extended reporting period.

Also called: claims made and reported

See also: Claims-made form

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Covers claims first made during the policy period for injury that happened on or after the retroactive date.

Also called: claims-made basis; claims-made policy

See also: Retroactive date, Extended reporting period

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A clause that reduces the claim payment if the limit carried is below a stated percentage of the property's value.

Also called: coinsurance clause; coinsurance penalty

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Upset of the auto or its impact with another vehicle or object. Paid under the collision part of PAP Part D.

Also called: collision coverage

See also: Other than collision

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Insurance for a business's loss of money, securities and other property from crimes such as employee theft, robbery and forgery.

Also called: crime coverage; crime insurance

See also: Employee theft, Forgery or alteration

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The ISO policy for a business's liability to others. Coverage A is injury and damage, B is personal and advertising injury, C is medical payments.

Also called: CGL; general liability

See also: Occurrence, Personal and advertising injury

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A contract combining two or more commercial coverage parts with common declarations and conditions.

Also called: CPP

See also: Monoline policy

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Merchandise, raw materials, goods in process and finished goods held by the business.

See also: Business personal property

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A provision restricting covered causes of loss and reducing some payments after a building meets the form's extended vacancy test.

See also: Vacancy

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A rule that reduces a claimant's award by his or her share of fault. Modified versions bar recovery past a set fault percentage.

Also called: pure comparative negligence; modified comparative negligence

See also: Contributory negligence

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A contract in which the insurer's duty to pay depends on the insured meeting certain conditions.

See also: Aleatory contract

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A professional liability provision that requires the insured's consent before the insurer settles a claim.

Also called: consent to settle provision

See also: Hammer clause

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A contract written by one party and accepted as is by the other, so unclear wording is read against the writer.

Also called: adhesion contract

See also: Aleatory contract

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Coverage for mobile construction equipment and tools that move between job sites.

See also: Inland marine insurance

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The CGL excludes liability the insured assumes by contract, except under an insured contract.

Also called: assumed liability exclusion

See also: Insured contract

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A rule that bars a claimant who was even slightly at fault from recovering anything.

Also called: pure contributory negligence

See also: Comparative negligence

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An auto shown in the declarations, a newly acquired auto, a trailer the insured owns, or a temporary substitute auto.

Also called: your covered auto

See also: Newly acquired auto, Temporary substitute auto

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Numbers in the business auto declarations that define which autos each coverage applies to, such as 1 for any auto.

Also called: auto symbols

See also: Symbol 1

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Mechanical, electrical or pressure systems that meet the equipment breakdown form's definition.

See also: Equipment breakdown coverage

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Private coverage for growing crops damaged by hail, often bought alongside federal crop insurance.

Also called: crop hail

See also: Multiple peril crop insurance

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Farm work done for others for a fee. Farm liability excludes it above a small receipts threshold unless an endorsement adds it.

Also called: custom farming exclusion

See also: Farm liability coverage form

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A CGL limit for fire and similar damage to premises the insured rents, which would otherwise be excluded as property in its care.

Also called: fire legal liability; fire damage legal liability

See also: Each occurrence limit

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A Section II additional coverage that pays up to $1,000 at replacement cost for others' property an insured damages, even without legal liability.

Also called: damage to property of others coverage

See also: Section II

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Excludes damage to the insured's own completed work, except when the damaged work or the cause was done by a subcontractor.

Also called: your work exclusion

See also: Products-completed operations hazard

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A homeowners additional coverage for hauling away debris after a covered loss. An extra 5 percent of the limit is available if needed.

Also called: debris removal coverage

See also: Section I

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The part of a policy that names the insured, location, policy period, coverages and limits.

Also called: declarations; dec page

See also: Insuring agreement

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Protection for lost business income caused by covered damage at a supplier, customer or other business the insured relies on.

Also called: Contingent business income

See also: Business income coverage

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The loss in value of property from age, wear and obsolescence.

See also: Actual cash value

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Covers directors and officers for claims of wrongful acts in managing the organization, such as mismanagement or breach of duty.

Also called: D&O

See also: Professional liability

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A garagekeepers option that pays for customer auto damage regardless of the garage's liability and before the customer's own insurance.

Also called: direct primary basis

See also: Garagekeepers coverage

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A crime form that covers loss discovered during the policy period, whenever it happened, with 60 days after the policy ends to discover.

Also called: discovery basis

See also: Loss sustained form

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An exclusion for theft or fraud by the insured, partners or employees.

Also called: employee theft exclusion

See also: Special causes of loss form

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An insurer formed under the laws of the state where it is doing business.

See also: Foreign insurer, Alien insurer

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An endorsement that covers named individuals while driving autos the business does not own, hire or borrow.

Also called: DOC endorsement; drive other car coverage

See also: Business auto coverage form

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An umbrella stepping in as primary coverage, either for a loss underlying policies exclude or after an underlying aggregate is used up.

Also called: drop-down coverage

See also: Umbrella policy

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The steps the insured must take after a loss, such as prompt notice, protecting the property and an inventory.

See also: Proof of loss

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The insurer's obligation to defend the insured in a covered suit, usually paid in addition to the limit and ending when the limit is used up.

Also called: defense obligation

See also: Supplementary payments

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The DP-1, a named perils form covering fire, lightning and internal explosion, with optional extended coverage.

Also called: DP-1

See also: Dwelling broad form, Dwelling special form

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The DP-2, a named perils form with more perils than the basic form and replacement cost available on the dwelling.

Also called: DP-2

See also: Dwelling basic form, Dwelling special form

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Coverage A of a homeowners policy. Insures the house and attached structures, and sets the base for the other Section I limits.

Also called: Coverage A

See also: Other structures, Insurance to value

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A property form for one- to four-family homes that does not require the owner to live there.

Also called: DP form; dwelling fire policy

See also: Dwelling basic form, Dwelling broad form, Dwelling special form

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The DP-3, which covers the dwelling and other structures on an open perils basis.

Also called: DP-3

See also: Dwelling basic form, Dwelling broad form

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The most the CGL pays for all Coverage A and C damages from any one occurrence.

Also called: per occurrence limit

See also: General aggregate limit

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A standard exclusion for earthquake, landslide and similar movement of the ground.

Also called: earthquake exclusion

See also: Flood exclusion

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Adds coverage for earthquake damage, which standard homeowners and commercial property forms exclude as earth movement. Other earth movement stays excluded.

Also called: earthquake coverage

See also: Earth movement exclusion, Earthquake percentage deductible

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An earthquake deductible figured as a percentage of the coverage limit, not of the loss, so it can be large.

Also called: percentage deductible

See also: Earthquake endorsement

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An unintended electrical discharge that can damage equipment and may fall within equipment breakdown protection.

See also: Equipment breakdown coverage

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The four things a claimant must prove: a legal duty, a breach of that duty, actual damages, and proximate cause.

Also called: four elements of negligence

See also: Negligence, Proximate cause

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First-party crime coverage for the employer's loss of money, securities and property stolen by its own employees.

Also called: employee dishonesty

See also: Fidelity bond

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Part Two of the workers compensation policy. Covers suits against the employer that fall outside the exclusive remedy.

Also called: EL; Part Two

See also: Third-party-over action, Workers compensation

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Covers claims such as discrimination, harassment and wrongful termination, which the CGL does not cover.

Also called: EPLI; EPL

See also: Directors and officers liability

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A written change attached to a policy that adds, removes or changes coverage and controls over conflicting form wording.

Also called: rider; policy change

See also: Declarations page

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Damage from a covered peril that follows an excluded one, such as fire after an earthquake. The fire damage is covered.

Also called: resulting loss

See also: Earth movement exclusion

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Protection for direct damage from qualifying mechanical, electrical or pressure equipment failures, rather than ordinary wear.

Also called: Boiler and machinery insurance

See also: Covered equipment

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A provision allowing an insurer to stop breakdown coverage on dangerous equipment by the notice method specified in the policy.

See also: Covered equipment

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Professional liability for non-medical professionals that covers client losses from mistakes or failures in their services.

Also called: E&O

See also: Professional liability

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A legal bar that stops a party from asserting a right it has given up through its own conduct.

See also: Waiver

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Private flood coverage that sits above NFIP limits for owners whose building or contents are worth more than the federal maximums.

Also called: private excess flood

See also: NFIP residential limits

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Adds limits above an underlying policy on the same terms. It does not fill gaps in coverage the way an umbrella can.

Also called: follow form excess; excess policy

See also: Umbrella policy

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A policy provision that removes certain perils, property or losses from coverage.

See also: Insuring agreement, Open perils

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Workers compensation is an injured employee's only remedy against the employer for a covered job injury; the employee gives up the right to sue.

Also called: exclusive remedy doctrine

See also: Workers compensation

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The CGL does not cover injury the insured expected or intended, except bodily injury from reasonable force to protect people or property.

Also called: intended injury exclusion

See also: Intentional tort

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Reasonable extra costs to make temporary repairs or speed permanent repair or replacement after a covered breakdown.

See also: Equipment breakdown coverage

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A factor that adjusts an employer's WC premium by comparing its losses to the average for its class. Below 1.00 lowers premium.

Also called: experience mod; e-mod; experience rating

See also: Premium audit

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One item or person subject to a possible loss, counted when an insurer measures its risk.

Also called: exposure

See also: Law of large numbers

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Protection for qualifying reduced earnings after repairs are complete and operations resume, for a limited recovery period.

See also: Business income coverage

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Extra time after a claims-made policy ends to report claims for injury that happened while it was in force.

Also called: ERP; tail coverage; tail

See also: Basic extended reporting period, Supplemental extended reporting period

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Necessary additional costs after covered damage that help avoid or reduce a business shutdown.

See also: Business income coverage

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Reinsurance negotiated one risk at a time, with each side free to accept or decline.

See also: Treaty reinsurance

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Dwelling coverage that pays rental income lost, less expenses that stop, while the home is unfit to live in.

Also called: Coverage D

See also: Additional living expense

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Under the PAP, a person related to the named insured by blood, marriage or adoption who lives in the household, including a ward or foster child.

Also called: resident family member

See also: Personal auto policy

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ISO form for farm liability: Coverage H for injury and damage, Coverage I for personal and advertising injury, Coverage J for medical payments.

Also called: farm liability

See also: Custom farming

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A package policy for a working farm or ranch that combines farm dwelling, structures and farm personal property with farm liability.

Also called: farmowners policy; farm package policy

See also: Farm liability coverage form

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Coverage G of the ISO farm property form. Insures barns, silos, outbuildings and other farm buildings that are not part of the dwelling.

Also called: barns and outbuildings

See also: Farmowners-ranchowners policy

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Business auto liability does not cover injury to an employee caused by a co-worker, which is left to workers compensation.

Also called: co-employee exclusion

See also: Workers compensation

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The Federal Emergency Management Agency, the federal agency that administers the National Flood Insurance Program.

Also called: Federal Emergency Management Agency

See also: National Flood Insurance Program

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Protects an employer against loss from employee dishonesty, such as embezzlement.

Also called: dishonesty bond

See also: Employee theft, Blanket bond

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A court bond guaranteeing that an executor, administrator or guardian will properly carry out the duties.

Also called: probate bond

See also: Surety bond

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Covers claims that people managing an employee benefit plan breached their duties under ERISA, such as imprudent investments.

Also called: fiduciary liability insurance

See also: Employment practices liability

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A state law requiring drivers to show they can pay for damages they cause, usually by carrying minimum auto liability limits.

Also called: compulsory insurance law; FR law

See also: Out of state coverage

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A homeowners additional coverage, up to $500, for fire department charges the insured owes by contract. No deductible applies.

Also called: fire department charge

See also: Section I

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The party listed first in the declarations, assigned duties and rights such as premium payment and return-premium receipt.

See also: Declarations page

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Under the NFIP, a general and temporary inundation of two or more acres or two or more properties of normally dry land, or a mudflow.

Also called: flooding; NFIP flood definition

See also: Mudflow, Flood exclusion

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A standard exclusion for flood and surface water, which requires separate flood coverage.

Also called: water exclusion

See also: Earth movement exclusion

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The official FEMA map that shows a community's flood zones, including Special Flood Hazard Areas.

Also called: FIRM; flood map

See also: Special Flood Hazard Area

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NFIP coverage generally starts 30 days after purchase. The wait is waived when coverage is bought in connection with making or changing a loan.

Also called: 30-day waiting period

See also: National Flood Insurance Program

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Protection for financed merchandise held for sale, covering the interests of both dealer and lender.

See also: Commercial property stock

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An insurer organized in a different state from the one where it is selling.

See also: Domestic insurer, Alien insurer

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Covers loss from forged or altered checks, drafts and similar instruments drawn on the insured's accounts.

Also called: forgery coverage

See also: Commercial crime coverage

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Coverage for shipping earnings at risk when a covered casualty prevents the carrier from completing transport.

See also: Marine cargo insurance

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Covers damage to customers' autos left in the insured's care for service, repair, parking or storage.

Also called: garagekeepers

See also: Direct primary, Auto dealers coverage form

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The most the CGL pays in a policy period for Coverages A, B and C combined, except products-completed operations.

Also called: general aggregate

See also: Products-completed operations aggregate

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A deliberate, reasonable sacrifice or expense to save a common maritime venture, shared among the benefited interests.

See also: Particular average

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Real but hard-to-measure losses, such as pain and suffering, disfigurement or loss of companionship.

Also called: noneconomic damages

See also: Special damages

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Under the PAP, broken glass is other than collision, but if it breaks in a collision the insured may have it paid as collision.

Also called: windshield coverage

See also: Other than collision, Collision

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Limits the insurer's payment to the amount of a settlement it recommended if the insured refuses that settlement.

Also called: blackmail clause

See also: Consent to settle

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A condition that increases the chance or size of a loss.

See also: Peril, Physical hazard, Moral hazard, Morale hazard

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An accident where the at-fault driver and owner cannot be identified. Counts as uninsured if police are promptly notified.

Also called: hit and run vehicle

See also: Uninsured motor vehicle

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Homeowners form that covers the dwelling and personal property only for a list of broad named perils.

Also called: homeowners broad form

See also: HO-3, Named perils

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The most common homeowners form: dwelling and other structures on an open perils basis, personal property on broad named perils.

Also called: homeowners special form

See also: HO-2, HO-5, Open perils

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Renters form. Covers a tenant's personal property, loss of use and liability, with no coverage on the building itself.

Also called: renters form; renters insurance; tenant form

See also: HO-6

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Homeowners form that covers the dwelling, other structures and personal property all on an open perils basis. The broadest standard form.

Also called: homeowners comprehensive form

See also: HO-3

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Condominium form. Covers the unit owner's personal property, the parts of the unit the owner must insure, loss of use and liability.

Also called: condo form; unit-owners form; condominium unit-owners form

See also: HO-4, Loss assessment

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Homeowners form for older homes whose replacement cost far exceeds market value. Pays to repair with common, functionally equivalent materials.

Also called: modified coverage form

See also: Actual cash value, Replacement cost

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Extends homeowners property and liability coverage to an eligible small business run from the residence.

Also called: home business endorsement

See also: Business pursuits exclusion

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A package policy for an owner-occupied home that combines property coverage (Section I) and personal liability coverage (Section II).

Also called: HO policy; homeowners form

See also: Section I, Section II

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Property coverage for a vessel and its insured machinery and equipment.

See also: Protection and indemnity

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An endorsement that pays reasonable costs to restore an insured's identity and credit, such as notary fees, phone calls and lost wages.

Also called: identity theft coverage

See also: Homeowners policy

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A hull provision extending coverage to specified machinery defects, crew negligence and similar causes beyond basic sea perils.

See also: Hull insurance

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Adds liability coverage to a homeowners policy for small-scale farming tied to the residence, which would otherwise be a business exclusion.

Also called: incidental farming; HO 24 72

See also: Business pursuits exclusion

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NFIP coverage, up to $30,000 on top of the building limit, to elevate, floodproof, move or demolish a damaged building to meet floodplain rules.

Also called: ICC; ICC coverage

See also: Ordinance or law

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An endorsement that raises the dwelling limit by a set percentage over the policy year to keep pace with building costs.

Also called: inflation guard endorsement

See also: Insurance to value

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Property coverage for specialized exposures such as movable equipment, goods in transit and certain communication structures.

See also: Contractors equipment floater

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Coverage for property being installed by a contractor, from qualifying transit through installation and acceptance.

See also: Builders risk

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A financial stake in the property that would suffer a loss if it were damaged or destroyed.

See also: Principle of indemnity

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Carrying a dwelling limit of at least 80 percent of replacement cost so losses are paid at full replacement cost instead of a reduced amount.

Also called: 80 percent rule; replacement cost condition

See also: Replacement cost, Coinsurance

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A contract, such as a lease or an easement agreement, under which liability the insured assumes is covered despite the contractual liability exclusion.

Also called: contractual liability

See also: Contractual liability exclusion

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The part of a policy that states the insurer's basic promise to pay for covered loss.

See also: Declarations page, Exclusion

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A wrong done on purpose, such as assault, battery, libel or trespass. Liability policies generally exclude intended injury.

Also called: intentional act

See also: Tort

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Specialized coverage for a jeweler's inventory and qualifying property of others in its care, subject to policy exclusions.

See also: Inland marine insurance

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The federal law covering seamen who are crew members of a vessel, instead of state workers compensation.

Also called: Merchant Marine Act

See also: Longshore and Harbor Workers Compensation Act

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A doctrine that holds liable the party who had the final opportunity to avoid the accident, even if the other party was also negligent.

Also called: last clear chance doctrine

See also: Contributory negligence

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The principle that actual losses come closer to expected losses as the number of similar exposures grows.

See also: Exposure unit, Underwriting

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A provision that gives current policyholders any coverage broadening the insurer makes without added premium.

See also: Endorsement

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Guarantees that a licensee will comply with the laws and regulations tied to the license.

Also called: license bond; permit bond

See also: Surety bond

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Coverage for bars, restaurants and liquor sellers for injury caused by someone they served. Bought separately because the CGL excludes it.

Also called: dram shop liability

See also: Liquor liability exclusion

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Excludes liability for causing or contributing to intoxication, but only for insureds in the business of making, selling or serving alcohol.

Also called: dram shop exclusion; host liquor exception

See also: Liquor liability

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Coverage for farm animals, usually against named perils such as fire, lightning, windstorm, electrocution and collision in transit.

Also called: livestock insurance

See also: Scheduled farm personal property

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Federal law for dock and harbor workers, such as those loading ships. Added to a WC policy by endorsement.

Also called: USL&H; USL&H Act

See also: Jones Act

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A homeowners additional coverage for the insured's share of an assessment charged by a homeowners or condo association after a covered loss.

Also called: loss assessment coverage

See also: HO-6

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Coverage D of a homeowners policy. Pays extra living costs or lost rent while the home cannot be lived in after a covered loss.

Also called: loss of use coverage

See also: Additional living expense, Fair rental value

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A crime form that covers loss that happens during the policy period and is discovered within one year after it ends.

Also called: loss sustained basis

See also: Discovery form

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Professional liability for physicians and other medical providers.

Also called: medical malpractice

See also: Professional liability

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Federal rule that a building in a Special Flood Hazard Area securing a loan from a federally regulated or insured lender must carry flood insurance.

Also called: mandatory flood purchase; lender flood requirement

See also: Special Flood Hazard Area

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Protection for insured goods against covered loss during a voyage or other transit described by the policy.

See also: Hull insurance

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Earthquake endorsements commonly exclude damage to brick or stone veneer unless the insured adds that coverage.

Also called: veneer exclusion

See also: Earthquake endorsement

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A false statement important enough that it would have changed the insurer's decision or the premium.

See also: Representation

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An option replacing business income coinsurance with a limited payment period after restoration coverage begins.

See also: Monthly limit of indemnity

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A sudden failure of machinery's working parts; ordinary property coverage commonly excludes the failed machine's damage.

See also: Equipment breakdown coverage

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Coverage F of a homeowners policy. Pays injured guests' medical bills regardless of fault, but not the insured's or other household residents'.

Also called: Coverage F

See also: Personal liability

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Federal law requiring contractors on qualifying federal construction contracts to post performance and payment bonds.

Also called: Miller Act bonds

See also: Payment bond

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Equipment such as bulldozers and forklifts. Liability is covered by the CGL, not the business auto form, except when driven on public roads.

Also called: mobile equipment exclusion

See also: Commercial general liability

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A contract containing only one coverage part, such as commercial property alone.

See also: Commercial package policy

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A state where employers must buy workers compensation from the state fund; private insurers cannot write it there.

Also called: monopolistic state fund

See also: Stop gap coverage

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An option limiting each 30-day period's business income payment to a stated fraction of the limit instead of applying coinsurance.

See also: Business income coverage

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Carelessness or indifference toward loss because insurance exists.

See also: Moral hazard, Hazard

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Dishonesty on the part of a person, such as setting a fire or inflating a claim to collect insurance.

See also: Morale hazard, Hazard

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A provision that protects the lender's interest in the property even if the owner breaches the policy.

Also called: mortgagee clause; lender's clause

See also: Mortgagee

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The lender that holds a mortgage on the insured property.

See also: Mortgage clause

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Covers businesses that transport property by auto in their business or for others for hire.

Also called: motor carrier form

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Protection for a motor carrier's legal liability for covered damage to customers' freight in its custody.

See also: Inland marine insurance

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A river of liquid, flowing mud on normally dry land. The NFIP covers it as flood, unlike a landslide, which is earth movement.

Also called: mudslide (NFIP)

See also: Flood, Earth movement exclusion

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Federally backed coverage for lost crop yield from perils such as drought, sold by private insurers through the USDA program.

Also called: MPCI; federal crop insurance

See also: Crop-hail insurance

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An insurer owned by its policyholders, who may receive dividends from excess premium.

Also called: mutual company

See also: Stock insurer, Reciprocal exchange

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Coverage only for the causes of loss the policy lists.

Also called: specified perils

See also: Open perils

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The federal program, run by FEMA, that sells flood insurance to property owners in participating communities.

Also called: NFIP

See also: FEMA, Write Your Own program, Participating community

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Failing to use the care a reasonably prudent person would use, causing harm to someone else.

Also called: carelessness

See also: Elements of negligence, Tort

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A vehicle the named insured gets during the policy period. Liability applies if coverage is requested within 14 days.

Also called: additional auto; replacement auto

See also: Covered auto

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Temporary protection for qualifying newly obtained buildings or business property, subject to limits and reporting deadlines.

See also: Building and personal property coverage form

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The most the NFIP sells for a single-family home: $250,000 on the building and $100,000 on contents. Higher amounts need excess flood.

Also called: NFIP limits

See also: Excess flood insurance

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A state system where each person's own insurer pays injury losses, with limits on suing the at-fault driver.

Also called: no-fault

See also: Personal injury protection

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An auto the insured uses but does not own, such as a rental car. Gets the broadest physical damage coverage on any covered auto.

Also called: rental car coverage

See also: Covered auto

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The party protected by a surety bond, who receives the principal's promise.

Also called: bond beneficiary

See also: Surety bond, Principal

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An accident, including continuous or repeated exposure to the same harmful conditions.

Also called: accident (CGL)

See also: Occurrence form

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Covers bodily injury or property damage that happens during the policy period, no matter when the claim is made.

Also called: occurrence basis; occurrence policy

See also: Claims-made form

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Coverage for any direct physical loss unless the policy specifically excludes it.

Also called: all-risk

See also: Named perils, Exclusion

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Extra cost from enforcing building codes after a loss, which standard forms exclude unless it is bought back.

Also called: building code coverage

See also: Special causes of loss form

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Part Three of the WC policy. Pays benefits required by a state listed in Item 3.C when work begins there.

Also called: Part Three

See also: Workers compensation

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Coverage B for detached buildings such as a garage or shed.

Also called: Coverage B

See also: Dwelling policy

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Physical damage from causes such as fire, theft, flood, glass breakage, falling objects or hitting a bird or animal.

Also called: OTC; comprehensive

See also: Collision

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Limited coverage for specified outdoor items, such as fences, signs and plants, against listed causes of loss.

See also: Building and personal property coverage form

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Automatically raises PAP liability limits to meet another state's financial responsibility or compulsory insurance law.

Also called: out of state provision

See also: Financial responsibility law

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The rule that earlier or side oral agreements cannot change the terms of a complete written contract.

See also: Binder

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A community that has adopted floodplain management rules and joined the NFIP. Flood policies are only available in these communities.

Also called: NFIP community

See also: National Flood Insurance Program

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A partial marine loss borne by the interest owning the damaged property, rather than shared among the voyage's interests.

See also: General average

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Guarantees that a contractor will pay its suppliers of labor and materials, protecting the owner from liens.

Also called: labor and material bond

See also: Performance bond, Miller Act

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Guarantees that a contractor will complete the work according to the contract.

Also called: contract performance bond

See also: Payment bond

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The cause of a loss, such as fire, windstorm or theft.

See also: Hazard

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The policy-defined recovery interval used to measure qualifying business income or extra expense loss.

See also: Business income coverage

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A lasting loss, such as of a finger, where the worker can still do some work.

Also called: PPD

See also: Temporary total disability, Permanent total disability

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A lasting condition that prevents the worker from ever returning to gainful work.

Also called: PTD

See also: Permanent partial disability

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An endorsement that covers limited business use of the home, such as an office, studio or small school, and the related liability.

Also called: incidental occupancy endorsement

See also: Business pursuits exclusion

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CGL Coverage B. Covers listed offenses such as libel, slander, false arrest, invasion of privacy and use of another's advertising idea.

Also called: Coverage B (CGL); advertising injury

See also: Commercial general liability

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The ISO policy for privately owned passenger autos, pickups and vans. Parts A to F cover liability, med pay, UM, physical damage, duties and conditions.

Also called: PAP

See also: Covered auto, Split limits

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Adds homeowners liability coverage for offenses such as libel, slander, false arrest, malicious prosecution and invasion of privacy.

Also called: homeowners personal injury coverage

See also: Personal liability

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No-fault coverage required in some states that pays the insured's own medical bills and lost income regardless of who caused the accident.

Also called: PIP; no-fault coverage

See also: Auto medical payments, No-fault insurance

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Coverage E of a homeowners policy. Pays damages and defense when an insured is legally liable for bodily injury or property damage to others.

Also called: personal liability coverage

See also: Medical payments to others, Business pursuits exclusion

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Coverage C of a homeowners policy. Insures the household's belongings anywhere in the world, usually set at 50 percent of Coverage A.

Also called: Coverage C; contents coverage

See also: Special limits of liability, Personal property replacement cost endorsement

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Property belonging to someone else that is in the insured's care, custody or control and meets the form's coverage terms.

See also: Business personal property

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Changes personal property loss settlement from actual cash value to replacement cost, with no deduction for depreciation.

Also called: replacement cost on contents

See also: Personal property coverage, Actual cash value

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An umbrella for individuals that sits over homeowners and personal auto liability and requires minimum underlying limits on them.

Also called: personal umbrella policy; PUP

See also: Umbrella policy

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A tangible condition of the property that makes a loss more likely, such as faulty wiring.

See also: Hazard

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Where the PAP applies: the United States, its territories and possessions, Puerto Rico and Canada. Mexico is not included.

Also called: coverage territory

See also: Personal auto policy

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CGL Coverage C. Pays medical expenses for injuries from accidents on the insured's premises or operations, regardless of fault, reported within a year.

Also called: Coverage C (CGL); CGL med pay

See also: Commercial general liability

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A review after the policy period that adjusts premium to the actual payroll or other exposure.

Also called: payroll audit

See also: Experience modification

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The party in a surety bond who promises to perform and must repay the surety for any loss it pays.

Also called: obligor

See also: Surety bond, Obligee

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The rule that a property insurance payment should restore the insured to the position held before the loss, no better and no worse.

Also called: indemnity

See also: Insurable interest

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The CGL excludes the cost of recalling, withdrawing or replacing the insured's product or work. Separate recall coverage is needed.

Also called: recall of products, work or impaired property exclusion; sistership exclusion

See also: Products-completed operations hazard

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A separate CGL aggregate limit for injury and damage within the products-completed operations hazard.

Also called: products aggregate

See also: General aggregate limit

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Injury or damage arising from the insured's product or from work it has finished, away from its premises.

Also called: products-completed operations; completed operations

See also: Products-completed operations aggregate

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Covers claims that a professional's services caused harm or financial loss to a client. Usually written on a claims-made basis.

Also called: professional liability insurance

See also: Errors and omissions, Malpractice insurance

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A signed, sworn statement of the amount and cause of a loss that the insured gives the insurer on request.

See also: Duties after loss

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Limited temporary protection for qualifying business personal property away from the described premises.

See also: Business personal property

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A method of sharing a loss among policies in proportion to each policy's limit compared with the total insurance.

Also called: pro rata other insurance; other insurance clause

See also: Coinsurance

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Marine liability coverage for shipowners, including specified injury claims and damage to other property.

Also called: P&I

See also: Hull insurance

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An unbroken chain of events linking the negligent act to the injury or damage.

Also called: direct cause

See also: Elements of negligence

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Using a vehicle to carry people or property for a fee, including ridesharing while logged into the app. Excluded under the PAP.

Also called: livery exclusion; rideshare exclusion

See also: Personal auto policy

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Damages meant to punish gross negligence or willful misconduct, not to compensate. Many policies and states limit coverage for them.

Also called: exemplary damages

See also: Special damages

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An unincorporated group whose members, called subscribers, insure one another through an attorney-in-fact.

Also called: reciprocal; interinsurance exchange

See also: Mutual insurer

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The amount needed to repair or replace property with like kind and quality, with no deduction for depreciation.

Also called: RC

See also: Actual cash value

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A statement made on an application that must be true to the best of the applicant's knowledge.

See also: Warranty, Material misrepresentation

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The home where the named insured lives, shown in the declarations, along with its grounds and other structures.

Also called: described location

See also: Dwelling coverage

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"The thing speaks for itself." Negligence is presumed when an injury would not normally happen without it and the defendant had control.

Also called: the thing speaks for itself

See also: Negligence

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Choosing to bear some or all of a possible loss yourself, as with a deductible.

Also called: risk retention; self-insurance

See also: Risk transfer

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The earliest date an injury can occur and still be covered under a claims-made policy.

Also called: retro date; prior acts date

See also: Claims-made form

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Lowering the chance or size of a loss without eliminating the exposure, such as installing sprinklers.

Also called: loss control

See also: Risk transfer, Retention

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Shifting the financial consequences of a possible loss to another party, usually by buying insurance.

See also: Retention, Risk reduction

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Taking property from a person who has custody of it, by violence or the threat of violence.

Also called: robbery coverage

See also: Burglary, Theft

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Coverage E of the ISO farm property form. Insures farm machinery, livestock and other items listed one by one with their own limits.

Also called: scheduled farm property

See also: Unscheduled farm personal property

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Lists valuable items, such as jewelry or art, for stated amounts on an open perils basis. Removes the special theft limits for those items.

Also called: scheduled personal property; personal articles floater; scheduling

See also: Special limits of liability

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A state fund that pays the extra cost when a worker with a prior impairment suffers a new injury, encouraging employers to hire them.

Also called: subsequent injury fund

See also: Workers compensation

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The property half of a homeowners policy: dwelling, other structures, personal property, loss of use and the additional coverages.

Also called: Section I property coverages

See also: Section II, Homeowners policy

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The liability half of a homeowners policy: personal liability (Coverage E) and medical payments to others (Coverage F).

Also called: Section II liability coverages

See also: Section I, Personal liability, Medical payments to others

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The amount the insured pays first when an umbrella drops down to cover a loss the underlying policies do not cover.

Also called: SIR; retained limit

See also: Umbrella policy, Drop down

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Each insured is treated as if it were the only one insured, except that the limits are shared.

Also called: severability of interests

See also: Commercial general liability

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One liability limit that applies to bodily injury and property damage combined for each accident.

Also called: combined single limit; CSL

See also: Split limits

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A commercial open perils form that covers direct physical loss unless excluded or limited.

Also called: special form

See also: Basic causes of loss form, Broad causes of loss form

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Measurable out-of-pocket losses, such as medical bills and lost wages.

Also called: economic damages

See also: General damages, Punitive damages

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A high-risk flood zone on FEMA maps, with a 1 percent or greater chance of flooding each year.

Also called: SFHA; high-risk flood zone; 100-year floodplain

See also: Flood Insurance Rate Map, Mandatory purchase requirement

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Dollar caps on certain kinds of personal property, such as $200 for money and $1,500 for theft of jewelry, watches and furs.

Also called: special limits; sublimits

See also: Personal property coverage, Scheduled personal property endorsement

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Separate auto liability limits shown as three numbers, such as 50/100/25: bodily injury per person, bodily injury per accident, property damage.

Also called: 50/100/25

See also: Single limit

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Protection for perishable property damaged by a qualifying interruption of refrigeration, power or other covered condition.

See also: Equipment breakdown coverage

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Adding together the UM limits on several vehicles or policies. Many states prohibit it and the standard PAP is written to prevent it.

Also called: stacked limits

See also: Uninsured motorists coverage

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An insurer owned by its stockholders, who receive any dividends.

Also called: stock company

See also: Mutual insurer

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Employers liability for operations in monopolistic states, whose state funds usually do not provide it.

Also called: stop gap endorsement

See also: Monopolistic state, Employers liability

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The insurer's right after paying a claim to recover from the party who caused the loss.

See also: Principle of indemnity

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A provision requiring reasonable efforts to protect insured marine property and providing for qualifying protective expenses.

See also: Duties after loss

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An optional, unlimited ERP bought by endorsement. It must be requested in writing within 60 days after the policy ends.

Also called: supplemental ERP; full tail

See also: Extended reporting period

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Costs paid in addition to the liability limit, such as up to $250 for bail bonds and up to $200 a day in lost earnings for attending trial.

Also called: supplementary payments coverage

See also: Duty to defend

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A three-party guarantee that the principal will perform an obligation for the obligee. The surety pays if the principal fails, then recovers from the principal.

Also called: surety

See also: Principal, Obligee

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Coverage placed with a nonadmitted insurer when admitted insurers will not accept the risk.

Also called: excess and surplus lines; E&S

See also: Admitted insurer

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Any auto. The broadest business auto symbol, used only for liability coverage.

Also called: any auto

See also: Covered auto symbols

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Specifically described autos. A newly acquired auto is covered only if the insured asks within 30 days.

Also called: specifically described autos

See also: Covered auto symbols

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Hired autos only: autos the insured leases, hires, rents or borrows, other than those owned by employees or partners.

Also called: hired autos

See also: Symbol 9

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Non-owned autos only: autos the business does not own or hire that are used in its business, such as employees' personal cars.

Also called: non-owned autos

See also: Symbol 8

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A non-owned auto used while the covered auto is out of service for breakdown, repair, servicing, loss or destruction.

Also called: substitute auto

See also: Covered auto

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The worker cannot work at all for a time but then recovers fully.

Also called: TTD

See also: Permanent partial disability

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Fixtures or alterations paid for by a tenant that become part of a building and cannot legally be removed.

See also: Business personal property

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Any act of stealing, which includes robbery and burglary. Forms that cover theft are broader than those limited to robbery or burglary.

Also called: stealing

See also: Robbery, Burglary

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A suit in which a third party sued by an injured worker turns around and sues the employer. Covered by employers liability.

Also called: third party over

See also: Employers liability

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An initial waiting interval during which otherwise qualifying time-element loss is not payable.

See also: Period of restoration

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A civil wrong, other than a breach of contract, for which a court can award damages.

Also called: civil wrong

See also: Negligence, Intentional tort

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Structures such as bridges, tunnels, pipelines and towers that are eligible inland marine subjects.

See also: Inland marine insurance

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Pays for temporary transportation after a covered loss, $30 a day up to $900 in the 2018 PAP. For theft, it starts after 48 hours.

Also called: rental reimbursement

See also: Other than collision

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An agreement under which a reinsurer automatically takes a share of a whole class of the insurer's business.

See also: Facultative reinsurance

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A homeowners additional coverage for landscaping lost to certain named perils, up to $500 per item. Windstorm is not one of those perils.

Also called: landscaping coverage

See also: Section I

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Liability coverage that sits above underlying policies to add high limits, and can drop down to cover some claims they exclude.

Also called: umbrella; umbrella liability

See also: Self-insured retention, Excess liability policy

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Pays when the at-fault driver has insurance but not enough to cover the insured's injuries, up to the insured's UIM limit.

Also called: UIM

See also: Uninsured motorists coverage

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The primary liability policies an umbrella sits above. If they lapse, the umbrella pays only what it would have paid had they been in force.

Also called: underlying policies; scheduled underlying insurance

See also: Umbrella policy

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The process an insurer uses to evaluate, select and price the risks it accepts.

See also: Adverse selection

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PAP Part C. Pays damages for bodily injury an insured is legally entitled to recover from an at-fault driver who has no insurance.

Also called: UM; UMBI

See also: Uninsured motor vehicle, Underinsured motorists coverage

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Optional coverage in some states for damage to the insured's car caused by an uninsured driver.

Also called: UMPD

See also: Uninsured motorists coverage

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A vehicle with no liability coverage, less than the state minimum, an insolvent insurer, or a hit-and-run driver who cannot be identified.

Also called: uninsured vehicle

See also: Uninsured motorists coverage, Hit-and-run

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Coverage F of the ISO farm property form. Insures farm equipment, supplies and produce on a blanket basis under one limit.

Also called: blanket farm personal property

See also: Scheduled farm personal property

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Protection for specified losses when a covered event at an off-premises utility interrupts the insured's service.

See also: Spoilage coverage

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A condition in which a dwelling has no contents and no one living there, which can limit coverage for some perils.

Also called: vacant dwelling

See also: Dwelling policy

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A form requiring periodic reports of changing property values so insurance can track fluctuating inventory.

See also: Commercial property stock

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Responsibility for someone else's negligence, such as an employer for an employee acting within the scope of the job.

Also called: imputed liability

See also: Negligence

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A covered peril in property forms for direct eruption damage, such as lava or ash. Tremors from an eruption fall under earth movement.

Also called: volcanic action

See also: Earth movement exclusion

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The voluntary giving up of a known right.

See also: Estoppel

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A statement guaranteed to be true, so a breach can void coverage.

See also: Representation

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An endorsement that covers water backing up through sewers or drains or overflowing a sump, which the base homeowners form excludes.

Also called: sewer backup coverage; water back-up; sump overflow

See also: Flood exclusion

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Part D does not pay for damage due and confined to wear and tear, freezing, mechanical or electrical breakdown, or road damage to tires.

Also called: mechanical breakdown exclusion

See also: Collision

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Insurance that pays benefits required by state law to employees injured on the job, without regard to fault.

Also called: workers comp; WC

See also: Exclusive remedy, Employers liability

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Private insurers sell and service NFIP flood policies under their own names, while the federal program keeps the form, rates and risk.

Also called: WYO; Write Your Own; WYO company

See also: National Flood Insurance Program

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Where a state lets an applicant decline UM coverage, the refusal usually must be in writing and kept in the insurer's file.

Also called: UM rejection form; UM waiver

See also: Uninsured motorists coverage

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Under the ISO commercial earthquake and volcanic eruption endorsement, events within 168 hours (seven days) count as one loss.

Also called: 168-hour rule

See also: 72-hour clause

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Under the homeowners earthquake endorsement, all shocks within 72 hours count as one earthquake, so one deductible applies.

Also called: 72-hour rule

See also: 168-hour clause

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