PROPERTY AND CASUALTY DEFINITIONS 2024

The settlement of an insurance claims dispute by the use of a neutral third party or parties Appraisal The transfer of a policy to another party. Often done when commercial property is sold to a new owner. Assignment Property insurance that insures against a list of 11 perils (the number may vary depending on the insurer) Basic Form An agreement by a producer to provide temporary property or liability coverage, usually while waiting for the customer to complete an application form. Binder A property policy that adds 5 perils to the list of 11 perils covered under a Basic Form Policy. This is a named peril policy. Broad Form The commercial property policy for larger businesses. Building and Personal Property (BPP) The illegal taking of property from a locked building after business hours. Burglary A commercial policy covering the indirect loss of income following a loss. Business Income Policy Termination of a policy during the policy period. Cancellation A broad term which includes all of the policy types that may be sold with a Casualty License-in most states, this includes auto, liability, work comp, commercial crime, and surety bonds. Casualty Insurance A summary of the policy coverage given to a third party to show that a coverage is in effect. Certificate of Insurance A policy that pays according to the coverage in effect in the year the claim is made rather than according to the coverage in effect at the time of the loss. Professional Liability policies are usually written on a Claims Made basis, while other liability policies are written on an Occurrence Basis. Claims Made Basis The policy provision which states that if the Insured has less than a specified amount of coverage (usually 80%), the Insurer will not fully cover a partial loss. Coinsurance Clause A bundling of commercial policies-we save paper and money due to a common conditions section. Commercial Package Policy (CPP) A person who is capable of entering into an insurance contract. Such a person must be sane, sober, and of age of majority. (age 15 in most states. Competent Party Physical damage insurance that covers all property losses except collision. Also known as "Other than Collision" Comprehensive Coverage Intentionally hiding the truth or intentionally telling only a partial truth. Concealment The part of the policy containing the details of the policy, including the duties of the insured. Conditions Section The provision in an E&O policy or Employment Practices Liability Policy requiring the Insured's consent prior to any claim settlement. Consent to Settle Provision Something of value given by each party in a contract. Consideration The "dec sheet" is the first page of the policy and includes the "fill-in-the-blanks" information obtained by the producer, including the names of the parties, the description of the covered property, the policy's limit of liability, the duration of the policy, the amount of the premium, and the amount of the deductible. Declarations Section The amount of loss that the insured myust pay before the policy will begin to pay. Deductible Damage to property from a covered peril (as contrasted with an Indirect losswhich refers to loss of income that results from the loss. Property policies typically cover Direct Losses and exclude Indirect losses. Direct loss The section of a Work Comp policy covering the employer for claims made by the injured worker's family members Emplyers Liability An addition which changes the original policy (also known as a Rider or and Extension). Endorsement the new name for the Boiler policy. Equipment Breakdown Property or a peril not covered by a policy. Exclusion A boiler policy's coverage for the expense of temporary repairs. Expediting Expenses Commercial property coverage to pay for the extra cost of continuing a business after a loss. Extra Expense Policy A federal law protecting consumers when businesses obtain consumer reports. Fair Credit Reporting Act What an item would sell for in the marketplace. This is extremely difficult to ascertain which is why Insurers prefer to cover insured property on a Replacement Cost, Actual Cash value, or Agreed Value basis. Property Insurers do not use Fair Market Value to pay property claims. Fair Market Value A contract sold by a Surety Producer to cover employee Dishonest insurance policy. For our purposes, Fidelity Bonds and Employee Dishonesty policies are used interchangeably. Fidelity Bond The person listed first on thhe Declarations as an Insured-this person usually has the total control over the policy decisions. First Named Insured A policy sold by an Inland or Ocean Marine Insurer. Floater A broad term used to refer to an Insured's misrepresentation or concealment. Fraud A fire which is not covered by a property policy because the fire was intentionally started and is burning where it was intended (such as a candle on the dinning room table.) Friendly Fire A federal law which protects consumer privacy and which encourages the state to adopt uniform licensing standard. Gramm-Leach-Bliley Act Any factor that increases the likelihood that a peril will occur. For example, an open can of gasoline stored next to a furnace. Hazard A fire which was not intended to cause the resulting damage. Property insurance policies cover hostile fires but will not cover friendly fires. Hostile Fire Being made whole but not coming out ahead by insurance. Indemnification The provision in a surety bond requiring the Principal indemnify the Surety for any loss. Indemnity Agreement A financial loss that occurs as a result of a direct loss. For example, a business loses income after a fire destroys the building. Most property policies cover fires (direct losses) but do not cover indirect losses unless additional coverage is purchased. Indirect Loss