AL Property & Casualty key terms

A license issued by the Alabama Department of Insurance that authorizes an insurer to transact insurance business in the state; without it the insurer is non-admitted and generally may not be sold to Alabama consumers.

Insurance placed with an insurer not licensed in Alabama, used only after admitted insurers decline or cannot cover the risk; the broker must hold a special license and the coverage is not backed by the guaranty fund.

A statutory pool funded by member insurers that pays covered claims of policyholders of insolvent admitted Alabama insurers, subject to statutory caps and deductibles, so the public is not left unprotected.

Offering any part of an agent's commission, or anything of value not stated in the policy, as an inducement to buy insurance; it is an unfair trade practice prohibited under Alabama law.

A financial stake in the person or property insured such that the insured suffers a genuine economic loss if the event occurs; it must exist at policy inception for property and at the time of loss for liability.

The concept that insurance should restore the insured to roughly the same financial position held before the loss, no better and no worse, which is why recovery is limited to the actual amount of loss.

The mutual duty of applicant and insurer to deal honestly and disclose accurate material information, because the insurer relies on what the applicant reveals to decide whether and on what terms to insure.

The tendency for people with the highest likelihood of loss to seek or keep insurance more eagerly than low-risk people, which pushes premiums up unless underwriting separates the groups.

Waiver is the voluntary surrender of a known policy right; estoppel prevents the insurer from later asserting that right when the insured relied on the waiver to their own detriment.

The insurer's right, after paying a claim, to step into the insured's shoes and pursue the party that caused the loss, which holds down premiums and prevents the insured from recovering twice.

A property provision requiring the insured to carry limits of at least a stated percentage of the property's value; if the insured is underinsured, recovery for a partial loss is reduced proportionally.

The measure of recovery equal to the cost to replace damaged property with new property of like kind and quality, minus depreciation; it is the default valuation method in many property forms.

A valuation method that pays the cost to repair or replace damaged property with new material of comparable quality, without subtracting depreciation, usually subject to policy limits and conditions.

The amount of each loss the insured must absorb before the insurer pays; deductibles reduce small claims, lower premium, and may apply per occurrence, per location, or as a percentage.

A policy provision that decides how a loss is shared when two or more policies cover the same property, often through pro rata contribution, excess coverage, or primary-and-excess ordering.

The most widely used homeowners form, covering the dwelling and other structures on an open-peril basis for risk of direct physical loss while personal property receives broad named-peril coverage.

The homeowners coverage that insures household contents and personal belongings both at and away from the residence, typically written at a percentage of Coverage A with special sublimits for certain items.

Homeowners coverage that pays additional living expenses when a covered peril makes the residence uninhabitable, and fair rental value when a rented portion of the home cannot be used.

The homeowners section that pays sums the insured becomes legally obligated to pay for bodily injury or property damage to others, plus medical payments to others and defense costs.

A property form for residences that are not owner-occupied or do not qualify for homeowners coverage, insuring the dwelling and its contents under basic, broad, or special forms.

Commercial property coverage that replaces lost net income and continuing normal operating expenses, including payroll, during the period reasonably needed to resume operations after a covered loss.

The commercial property form that insures against all risks of direct physical loss except those specifically excluded, placing the burden on the insurer to show that an exclusion applies.

Specific coverage insures described property at one location with its own limit; blanket coverage applies a single limit across multiple locations or property categories, giving flexibility when values shift.

Failure to exercise the care a reasonable person would use under similar circumstances; a claimant must prove duty, breach of duty, causation, and damages to recover in a liability claim.

Legal responsibility imposed on one party for the acts of another, such as an employer for an employee's negligent acts within the scope of employment, even without personal fault.

An accident, including continuous or repeated exposure to substantially the same general harmful conditions, that results in bodily injury or property damage during the policy period.

Liability harm such as libel, slander, wrongful eviction, infringement of copyright or slogan, and invasion of privacy, defined separately from bodily injury and property damage in liability forms.

The most a liability policy will pay for all covered losses other than products-completed operations during the policy period; some forms restore it by endorsement.

Coverage with its own aggregate for bodily injury or property damage arising out of the insured's products or completed work away from the insured's premises after relinquishment.

Auto coverage paying the insured for injuries caused by a driver with no liability insurance or by a hit-and-run driver; Alabama law requires insurers to offer it unless the named insured rejects it.

Split limits state separate maximums for bodily injury per person, bodily injury per accident, and property damage; a combined single limit provides one total amount per accident for all such damage.

Business auto coverage for liability arising from vehicles the business rents or borrows and from employees' personal cars used in company business, filling a gap left by owned-auto symbols.

The rule that statutory workers' compensation benefits are the employee's sole recovery from the employer for a work-related injury, barring a tort suit in exchange for no-fault benefits.

A number produced by comparing an employer's past loss experience with the average for its classification, applied to workers' compensation premium so safer employers pay less.

The section of a workers' compensation policy in which the insurer promises to pay all benefits the state law requires for covered employee injuries, without a dollar limit.

A policy giving excess limits above underlying auto, general liability, and employers liability coverage, plus a self-insured retention that lets it drop down over certain gaps in the underlying program.

Crime coverage that pays for money, securities, or other property stolen by employees, usually written on a discovery basis with limits per loss and, optionally, per employee.

Coverage for loss caused by the accidental breakdown of covered mechanical, electrical, or pressure equipment, including damage to the equipment itself and resulting business interruption.