Personal Lines Insurance Glossary Definitions ||
ANSWERED WITH ABSOLUTE ACCURACY.
Abandonment Condition correct answers A condition often contained in property insurance
policies that states the insured cannot abandon damaged property to the insurer and demand to be
reimbursed for its full value.
Absolute (Strict) Liability correct answers Liability imposed by law on those participating in
certain activities that are considered especially hazardous; a person involced in such operations
may be held liable for the damages of another even though the individual was not negligent
(Ex. wrecking ball crane operator, animals like boa constrictor/lion)
Accident correct answers A loss that occurs at a specific time and place
Accounts Receivable Insurance correct answers Filed commercial inland marine form that
insures against loss the insured suffers because of an inability to collect from customers when
accounts receivable records are damaged or destroyed.
Actual Cash Value (ACV) correct answers The cost to replace an item of property at the time of
loss, less an allowance for depreciation; often used to determine the amount of reimbursement
for a loss.
Replacement Cost - Depreciation = ACV
Additional Coverages (Coverage Extensions, Other Coverages, Extended Coverages) correct
answers Supplemental insurance that coverages that apply only in certain circumstances, have
reduced or separate limits of liability, or require the insured to meet certain requirements before
they are applicable.
Additional Insured correct answers An individual or company, in addition to the insured, who is
listed in the declarations.
(Ex. A mortgage company that has an insurable interest in the property insured.)
Additional Insured - Lessor Endorsement correct answers Commercial auto endorsement used to
make leased vehicles considered owned vehicles for coverage purposes.
Adhesion Contract correct answers A contract where one party has more power than the other
party in drafting the contract; an insurance policy is an adhesion contract - the insurer is the one
with more power.
Adverse Selection correct answers The tendency of insureds with a greater-than-average chance
of loss to purchase insurance.
,Agency correct answers Principles governing the authority of any agent that represents a
principal.
Agent correct answers An individual or organization that legally represents another; a state-
licensed professional who represents the insurance company in the sale and servicing of
insurance; the direct link between insurance company and policy holder.
Aggregate Limit correct answers Type of policy limit found in liability policies that limits
coverage to a specified total amount for all losses occurring within the policy period.
Agreed Value Condition (Stated Amount Condition) correct answers Condition found in some
property insurance policies that stipulates a certain value that will meet the coinsurance
requirement; if the policy limit equals or exceeds this amount, the insured will not be assessed a
coinsurance penalty.
Aleatory Contract correct answers A contract that is contingent on an uncertain event (a loss); an
insurance policy is an aleatory contract.
Alien Company correct answers An insurance company incorporated in a country other than the
United States that is doing business in the United States.
A.M. Best Company correct answers Organization that rates the financial stability of insurance
companies doing business in the United States.
Apparent Authority correct answers Legal doctrine that states that an agent has whatever
authority a reasonable person would assume she has.
Application correct answers Questionnaire filled out by an agent and the prospect who is seeking
insurance; the form contains information used to underwire and rate the policy.
Appraisal Condition correct answers Policy condition that outlines a procedure for when the
insured and insurer disagree on the amount of a loss - the insured and insurer each select an
appraiser; the two appraisers select an umpire; if the appraisers cannot agree on the amount of
loss, the umpire is consulted; the amount agreed to pay by any two of the three parties is the
amount paid for the loss.
Appurtenant Structures correct answers Buildings of lesser value that are on the same premisses
as the main building insured under a property policy
Arbitration Condition correct answers Policy condition that is similar to the appraisal condition;
may be used to resolve other areas of disagreement besides those regarding the value of loss.
Assessment Mutual Company correct answers Mutual insurance company that charges members
a pro-rata share of losses at the end of each policy period
, Assignment Condition correct answers Condition in insurance policies that specifies that the
policy cannot be transferred to another unless the company consents to the transfer in writing.
Assumption of Risk correct answers Defense against the liability based on the common law
principle that a person who knowingly exposes himself to danger or injury assumes the risk of
loss and cannot hold another person responsible for the loss.
Authorized Insurer (Admitted/Approved) correct answers Company that meets a state insurance
department's standards and is authorized to do business in that state.
Automatic Increase in Insurance Endorsement correct answers Dwelling policy endorsement that
provides an annual increase in the Coverage A amount of 4%, 6%, or 8%
Automobile Insurance Plan correct answers A state-sponsored plan that provides automobile
insurance to those who are uninsurable under standard auto insurance policies.
Best's correct answers Organization that rates the financial stability of insurance companies
doing business in the US.
Binder correct answers Oral or written statement that provides immediate insurance protection
for a specified period; designed to provide temporary coverage until a policy is issued or denied.
Blanket Insurance correct answers Type of insurance policy that covers more than one item of a
property at a single location or one or more items of property at multiple locations.
Bodily Injury (BI) correct answers Defined in most policies to include injury, sickness, disease,
and death resulting from any of these at any time.
Broad Theft Coverage Endorsement correct answers Dwelling policy endorsement that covers
theft, attempted theft and vandalism, and malicious mischief resulting from theft; property is
covered while it is on and off the premises.
Broker correct answers Individual who represents the prospect, instead of the insurance
company, in the insurance transaction.
Business Pursuits Endorsement correct answers Homeowners policy endorsement that provides
liability coverage for a business conducted away from the residence premises.
Cancellation correct answers Termination of an insurance policy by the insured or the insurance
company during the policy period.
Casualty Insurance correct answers Line of insurance that includes a wide variety of unrelated
coverages, including liability, auto, workers' compensation, aviation, crime, and surety bonds.
Certificate of Insurance correct answers Written form that verifies a policy has been written;
provides a summary of the coverage provided under the policy.
ANSWERED WITH ABSOLUTE ACCURACY.
Abandonment Condition correct answers A condition often contained in property insurance
policies that states the insured cannot abandon damaged property to the insurer and demand to be
reimbursed for its full value.
Absolute (Strict) Liability correct answers Liability imposed by law on those participating in
certain activities that are considered especially hazardous; a person involced in such operations
may be held liable for the damages of another even though the individual was not negligent
(Ex. wrecking ball crane operator, animals like boa constrictor/lion)
Accident correct answers A loss that occurs at a specific time and place
Accounts Receivable Insurance correct answers Filed commercial inland marine form that
insures against loss the insured suffers because of an inability to collect from customers when
accounts receivable records are damaged or destroyed.
Actual Cash Value (ACV) correct answers The cost to replace an item of property at the time of
loss, less an allowance for depreciation; often used to determine the amount of reimbursement
for a loss.
Replacement Cost - Depreciation = ACV
Additional Coverages (Coverage Extensions, Other Coverages, Extended Coverages) correct
answers Supplemental insurance that coverages that apply only in certain circumstances, have
reduced or separate limits of liability, or require the insured to meet certain requirements before
they are applicable.
Additional Insured correct answers An individual or company, in addition to the insured, who is
listed in the declarations.
(Ex. A mortgage company that has an insurable interest in the property insured.)
Additional Insured - Lessor Endorsement correct answers Commercial auto endorsement used to
make leased vehicles considered owned vehicles for coverage purposes.
Adhesion Contract correct answers A contract where one party has more power than the other
party in drafting the contract; an insurance policy is an adhesion contract - the insurer is the one
with more power.
Adverse Selection correct answers The tendency of insureds with a greater-than-average chance
of loss to purchase insurance.
,Agency correct answers Principles governing the authority of any agent that represents a
principal.
Agent correct answers An individual or organization that legally represents another; a state-
licensed professional who represents the insurance company in the sale and servicing of
insurance; the direct link between insurance company and policy holder.
Aggregate Limit correct answers Type of policy limit found in liability policies that limits
coverage to a specified total amount for all losses occurring within the policy period.
Agreed Value Condition (Stated Amount Condition) correct answers Condition found in some
property insurance policies that stipulates a certain value that will meet the coinsurance
requirement; if the policy limit equals or exceeds this amount, the insured will not be assessed a
coinsurance penalty.
Aleatory Contract correct answers A contract that is contingent on an uncertain event (a loss); an
insurance policy is an aleatory contract.
Alien Company correct answers An insurance company incorporated in a country other than the
United States that is doing business in the United States.
A.M. Best Company correct answers Organization that rates the financial stability of insurance
companies doing business in the United States.
Apparent Authority correct answers Legal doctrine that states that an agent has whatever
authority a reasonable person would assume she has.
Application correct answers Questionnaire filled out by an agent and the prospect who is seeking
insurance; the form contains information used to underwire and rate the policy.
Appraisal Condition correct answers Policy condition that outlines a procedure for when the
insured and insurer disagree on the amount of a loss - the insured and insurer each select an
appraiser; the two appraisers select an umpire; if the appraisers cannot agree on the amount of
loss, the umpire is consulted; the amount agreed to pay by any two of the three parties is the
amount paid for the loss.
Appurtenant Structures correct answers Buildings of lesser value that are on the same premisses
as the main building insured under a property policy
Arbitration Condition correct answers Policy condition that is similar to the appraisal condition;
may be used to resolve other areas of disagreement besides those regarding the value of loss.
Assessment Mutual Company correct answers Mutual insurance company that charges members
a pro-rata share of losses at the end of each policy period
, Assignment Condition correct answers Condition in insurance policies that specifies that the
policy cannot be transferred to another unless the company consents to the transfer in writing.
Assumption of Risk correct answers Defense against the liability based on the common law
principle that a person who knowingly exposes himself to danger or injury assumes the risk of
loss and cannot hold another person responsible for the loss.
Authorized Insurer (Admitted/Approved) correct answers Company that meets a state insurance
department's standards and is authorized to do business in that state.
Automatic Increase in Insurance Endorsement correct answers Dwelling policy endorsement that
provides an annual increase in the Coverage A amount of 4%, 6%, or 8%
Automobile Insurance Plan correct answers A state-sponsored plan that provides automobile
insurance to those who are uninsurable under standard auto insurance policies.
Best's correct answers Organization that rates the financial stability of insurance companies
doing business in the US.
Binder correct answers Oral or written statement that provides immediate insurance protection
for a specified period; designed to provide temporary coverage until a policy is issued or denied.
Blanket Insurance correct answers Type of insurance policy that covers more than one item of a
property at a single location or one or more items of property at multiple locations.
Bodily Injury (BI) correct answers Defined in most policies to include injury, sickness, disease,
and death resulting from any of these at any time.
Broad Theft Coverage Endorsement correct answers Dwelling policy endorsement that covers
theft, attempted theft and vandalism, and malicious mischief resulting from theft; property is
covered while it is on and off the premises.
Broker correct answers Individual who represents the prospect, instead of the insurance
company, in the insurance transaction.
Business Pursuits Endorsement correct answers Homeowners policy endorsement that provides
liability coverage for a business conducted away from the residence premises.
Cancellation correct answers Termination of an insurance policy by the insured or the insurance
company during the policy period.
Casualty Insurance correct answers Line of insurance that includes a wide variety of unrelated
coverages, including liability, auto, workers' compensation, aviation, crime, and surety bonds.
Certificate of Insurance correct answers Written form that verifies a policy has been written;
provides a summary of the coverage provided under the policy.
