CA Property & Casualty key terms

A financial stake in the property or person insured, so the insured genuinely loses money or value when a covered event happens; in property insurance it must exist at the time of loss.

The idea that a property claim payment should put the insured back in roughly the same financial position as before the loss, never a better one, so insurance cannot become a source of profit.

The mutual duty of applicant and insurer to be honest and to reveal facts that would affect the underwriting decision; concealment, material misrepresentation, or false warranties can void the policy.

A policy written by the insurer and presented to the buyer on a take-it-or-leave-it basis; because the insured had no say in the wording, ambiguities are usually resolved against the insurer.

An agreement in which the amounts exchanged by the parties are unequal and depend on chance, because the insured pays a set premium while the insurer may pay nothing or a large claim.

The insurer's right, after paying a covered loss, to stand in the insured's place and recover from the negligent party that caused the damage, which helps hold down future premiums.

The specific event that causes a loss, such as fire, windstorm, theft, or collision; a policy states which perils it covers, either by naming them or by insuring all risks except those excluded.

Dishonesty or bad character in an insured that increases the chance of loss or the size of a claim, as when someone deliberately burns property to collect the insurance.

The tendency for people most likely to have losses to buy or keep insurance more eagerly than low-risk people, which can drive an insurer's claim costs above what its rates assumed.

The dominant cause that sets in motion an unbroken chain of events producing a loss; without it the loss would not have happened, even though other factors contributed.

A settlement measure equal to the cost to repair or replace damaged property minus depreciation, reflecting what the item was worth immediately before the loss rather than the price of a new one.

A settlement measure that pays what it costs today to repair or replace damaged property with similar kind and quality, with no deduction for depreciation, usually once the property has actually been replaced.

A property condition requiring the insured to carry a limit equal to a stated percentage of the property's value; when the limit falls short, the claim is reduced in proportion to the shortage.

The portion of each covered loss the insured absorbs before the insurer pays anything; it removes small claims from the system and lowers the premium charged.

Homeowners coverage that pays the extra cost of temporary housing and meals, and sometimes lost fair rental income, when a covered loss makes the residence uninhabitable.

A homeowners endorsement listing specific valuable items such as jewelry, furs, or cameras, giving each its own limit, broader perils, and often no deductible.

A policy provision protecting a lender's interest in the building, entitling the lender to loss payment up to its interest and to notice if the policy is cancelled or not renewed.

Optional property coverage that pays the extra cost of rebuilding to current building codes, plus demolition of the undamaged portion and the reduced value of the undamaged remainder.

Commercial property coverage that replaces the net income a business loses while shut down by a covered loss and pays extra expenses incurred to keep operating or reopen sooner.

Failure to use the care a reasonable person would use, established by showing a legal duty, a breach of that duty, actual harm, and a close causal connection between the breach and the harm.

A doctrine that reduces an injured claimant's recovery by his or her own percentage of fault; California follows pure comparative fault, so a partly responsible plaintiff can still collect.

Liability assigned to one party for the acts of another, such as an employer being responsible for an employee's negligent acts committed within the scope of the job.

Liability imposed without proof of carelessness, as with defective products or ultrahazardous activities, where a manufacturer or activity sponsor may pay simply because harm resulted.

Money awarded to make an injured person whole, covering economic losses like medical bills, repair costs, and lost wages, and non-economic losses like pain and suffering.

Money awarded to punish truly outrageous conduct and discourage others from doing the same; California generally treats such awards as uninsurable, so liability policies usually exclude them.

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

A liability policy that covers claims first made or reported during the policy period no matter when the injury happened, subject to a retroactive date before which no coverage applies.

The maximum an insurer will pay for all covered claims combined during a single policy period, in addition to the per-occurrence limit, after which coverage stops for the term.

Auto coverage paying the insured's damages when an uninsured, underinsured, or hit-and-run driver causes the crash; California requires it unless the named insured rejects it in writing, and limits cannot exceed the liability limits.

California's statewide elected official who heads the Department of Insurance, licenses insurers and producers, holds hearings, and enforces the Insurance Code and its regulations.

A California broker holding a special license that allows placement of coverage with nonadmitted insurers when no admitted insurer will write the risk, after documenting a diligent search.

In California, a producer who acts for the applicant rather than the insurer in arranging coverage, though the broker is usually paid by commission from the insurer.

A producer's responsibility to hold money belonging to clients or insurers in a trust account, keep accurate records, and never mix those funds with personal or business money.

Giving an applicant something of value not stated in the policy, such as part of the commission, to induce a purchase; California prohibits it as an unfair trade practice in most lines.

Regulated claim handling conduct, such as misrepresenting policy terms, unreasonable delay, or denying a claim without a reasonable basis, listed in California's Insurance Code and Fair Claims Settlement Practices Regulations.

A 1988 California ballot measure that made property and casualty rates subject to prior approval by the Commissioner, mandated good driver discounts, and limited personal lines cancellations and nonrenewals.

California limits cancellation of personal auto and homeowners policies in force more than 60 days to nonpayment of premium, fraud, or a substantial increase in hazard, and requires written notice.

A state-created association that provides basic property coverage to owners who cannot obtain it in the voluntary market, serving as California's insurer of last resort for fire and allied perils.

A publicly managed but privately funded entity that writes residential earthquake policies in California; participating insurers must offer it alongside homeowners coverage and share the risk.

A statutory association that pays covered claims of insolvent admitted property and casualty insurers up to set limits, funded by assessments on member insurers.