AK Property & Casualty key terms

A financial stake in the person or property insured such that the insured would suffer a real economic loss if the covered event occurred. In property insurance it must exist when the loss happens.

The concept that insurance should restore an insured to approximately the same financial position held before a loss, never better. It explains why property claims are paid on an actual cash value or replacement cost basis.

The mutual duty of the insurer and the applicant to deal honestly and disclose facts that would affect the underwriting decision. Concealment or misrepresentation by either side can affect the contract.

An agreement drafted by one party, the insurer, and offered to the other on a take-it-or-leave-it basis. Because the insured has no bargaining power over wording, ambiguities are generally resolved against the insurer.

An agreement in which the amounts exchanged depend on chance and may be unequal. The insured pays a modest premium, while the insurer may pay a large claim or nothing at all.

The insurer's right, after paying a covered claim, to pursue the party that caused the loss and recover the amount paid. It supports indemnity by preventing the insured from collecting twice.

The specific event or cause of loss that triggers coverage, such as fire, windstorm, theft, or collision. Policies either list covered perils or insure against all risks except stated exclusions.

A condition that increases the likelihood or severity of a loss from a given peril. Examples include faulty wiring, icy steps, or storing gasoline near a furnace.

A hazard created by dishonesty or intentional conduct, such as staging a fire to collect insurance money. Insurers counter it through underwriting questions, policy exclusions, and claim investigation.

Insurance bought by an insurer to shift part of its risk to another insurer. It protects the ceding company from unusually large or catastrophic losses and lets it write more coverage.

A statistical principle that as the number of similar exposure units grows, actual losses tend to approach the predicted average. It underlies rate making and the insurer's ability to spread risk.

The cost to replace damaged property minus depreciation. It reflects the property's value at the time of loss and is the default valuation in many dwelling and commercial property policies.

The cost to repair or rebuild damaged property with new materials of similar kind and quality, without subtracting depreciation. Payment may be capped by the policy limit and often requires actual repair or replacement.

A property policy condition requiring the insured to carry limits equal to a stated percentage of the property's value. If the limit falls short at the time of loss, the claim payment is reduced proportionally.

A property form that covers only the causes of loss specifically listed, such as fire, lightning, windstorm, hail, and vandalism. The insured must show that the loss resulted from a listed peril.

A property form that covers all causes of loss except those specifically excluded. Also called special form, it places the burden on the insurer to prove that an exclusion applies.

Pays for lost net income and continuing normal operating expenses, such as rent or payroll, when a covered property loss suspends operations. It usually applies during the period of restoration.

Coverage for extra costs caused by building codes or zoning rules after a loss, such as demolition or rebuilding to current code. Standard property forms limit or exclude these costs unless endorsed.

Coverage for water damage from rising water, such as river overflow, storm surge, or mudflow, which most homeowners and commercial property forms exclude. In the United States it is often written through the National Flood Insurance Program.

A formal, often sworn statement the insured submits to the insurer documenting the amount and circumstances of a claim. Policies set a deadline for filing it and may require supporting records.

Failure to use the degree of care a reasonable person would use under similar circumstances, resulting in harm. A liability claim generally requires duty, breach, causation, and damages.

An accident or continuous exposure to harmful conditions that causes bodily injury or property damage during the policy period. Liability policies using this trigger cover injury whenever it happens, subject to policy terms.

A liability policy that covers claims first reported during the policy period, regardless of when the injury happened, as long as the retroactive date is respected. It differs from occurrence coverage.

The most an insurer will pay for all covered claims under a coverage during a policy period, in addition to any per-occurrence limits. Once it is exhausted, no further claims are paid.

A person or organization, such as a landlord or general contractor, added to another party's liability policy for protection arising from that relationship. Coverage is usually limited to the named insured's operations.

Liability coverage for offenses such as libel, slander, invasion of privacy, and wrongful eviction, as distinct from bodily injury or property damage. General liability forms give it separate limits and exclusions.

Physical harm, sickness, disease, or death sustained by a person. Liability policies define the term carefully because coverage for bodily injury is separate from coverage for property damage.

A legal doctrine that reduces an injured person's recovery in proportion to their own share of fault. Some states bar recovery entirely when the plaintiff's fault exceeds a stated percentage.

Pays reasonable medical expenses for injuries to others, or to the insured and passengers in auto policies, regardless of fault, up to a stated limit. It resolves minor injury claims without litigation.

Auto coverage that pays the insured's damages when the at-fault driver has no liability insurance or has limits too low to cover the loss. It may also respond to hit-and-run accidents.

A statutory system that pays medical benefits and wage replacement to employees injured on the job, regardless of fault, while limiting the employee's right to sue the employer. Employers buy coverage or qualify as self-insured.

A license issued by a state insurance department allowing an insurer to transact insurance business in that state. An insurer holding one is referred to as an admitted insurer.

An insurer authorized by the Alaska Division of Insurance to do business in the state. Admitted insurers follow rate and form filing rules and participate in the state guaranty association.

Insurance placed with a nonadmitted insurer when admitted insurers will not offer the coverage. A licensed surplus lines broker must generally document a diligent search before placing the risk.

The state credential required to sell, solicit, or negotiate insurance. Alaska issues licenses by line, such as property and casualty, and requires continuing education and compliance with insurance statutes.

A producer's obligation to hold premiums and other funds belonging to clients or insurers in trust and to account for them properly. Commingling or misappropriation can lead to license discipline.

Offering part of a producer's commission, or anything of value not stated in the policy, to persuade a person to buy insurance. It is an unfair trade practice prohibited in Alaska and most states.

Inducing a policyholder to lapse or surrender a policy through misleading or incomplete comparisons, in order to sell a replacement policy. It is treated as an unfair trade practice.

A set number of days after policy delivery during which the buyer may cancel for a full premium refund. Alaska requires this right for certain life and annuity products rather than most property and casualty policies.

A statutory entity that pays certain claims of insolvent admitted property and casualty insurers, up to set limits. Life and health insurance claims are handled by a separate guaranty association.

The state agency that regulates insurers, producers, and rates in Alaska. It licenses companies and agents, reviews policy and rate filings, investigates complaints, and enforces insurance statutes and regulations.