Casualty-Only key terms

A financial stake in the subject of insurance such that the insured suffers genuine loss if the covered event occurs. It must exist at policy inception for property coverage and at the time of loss for life coverage.

The rule that a property claim payment restores the insured to roughly the same financial position held before the loss, no better and no worse. It prevents profit from loss and underpins actual cash value settlement.

The mutual duty of applicant and insurer to deal honestly and disclose material facts. Breach by the applicant can allow the insurer to rescind the policy or deny a claim.

A false statement of fact on an application that would have influenced the insurer's decision to issue coverage or set its price. Materiality, not intent, usually determines the remedy.

The intentional withholding of a fact the applicant has a duty to disclose. Unlike an innocent omission, concealment generally gives the insurer grounds to void the contract.

The increased likelihood of loss arising from an insured's character, attitudes, or financial desperation rather than from the physical nature of the risk. Heavy debt or prior suspicious claims are warning signs.

Carelessness or indifference toward loss because insurance exists, such as leaving keys in an unlocked car. It differs from moral hazard, which involves dishonest intent.

The tendency for applicants with above-average loss potential to seek or retain coverage more eagerly than low-risk applicants. Underwriters counter it with classification, exclusions, and pricing tiers.

The statistical principle that observed results converge on expected values as the number of similar independent exposures grows. It lets insurers predict aggregate losses reliably even though individual losses are unpredictable.

The policy section listing named insureds, policy period, limits, deductibles, covered locations or vehicles, and premium. It personalizes the contract and controls how other provisions apply.

The core promise of the policy, stating which perils or occurrences are covered and the scope of the insurer's obligation. Exclusions and conditions then narrow or qualify that promise.

A policy provision that removes specified perils, property, persons, or losses from coverage. Reading the insuring agreement together with its exclusions is essential to determine whether a claim is covered.

A property provision requiring the insured to carry limits at least equal to a stated percentage of property value, commonly 80 percent, or face a reduced claim payment. The penalty formula divides insurance carried by insurance required.

The amount of each loss the insured absorbs before the insurer pays. It reduces small claims and premium, and may apply per occurrence, per vehicle, or per location.

An accident, including continuous or repeated exposure to substantially the same harmful conditions. Liability policies generally respond to bodily injury or property damage arising from an occurrence, not from intended acts.

The standard liability form covering premises, operations, products-completed operations, personal and advertising injury, and medical payments. Coverage A applies to third-party bodily injury and property damage claims.

The CGL exposure for injury or damage arising from a product or completed work away from the insured's premises. It is a separate aggregate limit in most general liability policies.

A person or organization added to a liability policy by endorsement, receiving protection for liability arising from the named insured's work. Contractual risk transfer often requires this status.

A short document summarizing coverage in force at a moment in time, used as proof for contracts and vendors. It is not a policy and confers no coverage or rights on the holder.

CGL coverage for offenses such as libel, slander, wrongful eviction, and infringement of advertising ideas, without requiring bodily injury or property damage. Knowing exclusions, such as knowing violation of rights, apply.

The standard form insuring owned, and in some cases borrowed or rented, passenger vehicles for liability, medical payments, uninsured motorist, and physical damage. Coverage follows the insured person and the described auto.

The commercial auto form using numbered symbols to designate which autos are covered, from any auto to hired or nonowned only. It also defines who is an insured for each covered auto.

Liability coverage for vehicles the business rents or borrows and for employee-owned autos used in company business. It fills a gap when the employee's personal policy is inadequate or excludes business use.

Coverage for the insured's injuries caused by a driver with no liability insurance, often including hit-and-run and underinsured drivers where state rules allow. It is first-party in nature but fault-based.

Liability limits stated as three figures, such as 100/300/50, representing per-person bodily injury, per-accident bodily injury, and property damage maximums. They contrast with a single combined single limit.

One total dollar limit applying to all bodily injury and property damage from a single accident, regardless of how many claimants. It offers flexibility compared with split limits.

Statutory no-fault coverage paying medical costs and wage replacement to employees injured at work, regardless of fault. In exchange, employees generally give up the right to sue the employer for negligence.

The doctrine that statutory workers' compensation benefits are an injured worker's sole recovery from the employer for a work injury. Intentional harm and certain exceptions may fall outside it.

A payroll-based multiplier reflecting an employer's past loss experience relative to peers in the same classification. A factor above 1.00 raises premium; below 1.00 reduces it.

Part Two of the workers' compensation policy, covering the employer's liability for work injuries that fall outside statutory benefits, such as third-party actions over. Limits are usually stated per accident, per employee, and in aggregate.

Property coverage replacing lost net income and continuing normal operating expenses during the period needed to restore operations after a covered loss. It responds to the interruption, not to the damaged property itself.

The time reasonably required to repair or replace damaged property with similar quality and speed, beginning after the loss and ending when operations resume. It sets the duration of business income payments.

Coverage for reasonable costs to avoid or minimize business interruption, such as temporary relocation or expedited equipment. It can pay even when total income loss is reduced by the extra spending.

A property endorsement under which the insurer waives coinsurance in exchange for a limit the insured and insurer agree represents full value. The insured must accept a stated value at inception.

A settlement measure usually equal to replacement cost minus physical depreciation, though market value or other methods may apply. It reflects what the damaged item was worth just before the loss.

A settlement basis paying what it costs to repair or replace damaged property with new property of similar kind and quality, without deducting depreciation. It typically requires insurance to full replacement value.

Crime coverage for loss of money, securities, or other property caused by employee dishonesty, including theft, forgery, and computer fraud where endorsed. It usually sits on a discovery basis with a stated limit per loss.

A bond guaranteeing the honesty of named employees, paying the employer for proven dishonest acts up to the penal sum. It differs from insurance in that a surety may seek reimbursement from the wrongdoer.

Coverage triggered by the date a loss is discovered rather than the date it occurred, provided the bond or policy was in force then. Crime forms commonly use this basis, making long-tail employee theft claims possible.

Property coverage for goods in transit, movable equipment, and property at temporary locations, rooted historically in ocean marine. It follows the property rather than a fixed location.

Coverage for a business holding or working on others' property, such as repair shops and warehouses, for its liability for damage to that property. Limits often apply per customer and per occurrence.

A written notice telling the insured that the insurer will investigate and defend while preserving the right to deny coverage later. It protects the insurer from waiving defenses through continued handling.

The liability insurer's obligation to provide legal counsel and pay defense costs for covered claims, often broader than the duty to indemnify. Defense may continue even when only some allegations are covered.

An insurer's unreasonable failure to investigate, evaluate, or pay a valid claim, or an improper denial. It can expose the carrier to extra-contractual damages beyond policy limits.

The insurer's right to pursue a responsible third party after paying a claim, recovering from that party and holding the proceeds for the insured's uninsured portion. It prevents double recovery.

Statutorily defined acts such as misrepresenting policy provisions, failing to investigate promptly, or offering far less than a reasonable evaluation. Regulators may impose penalties and market conduct scrutiny.

Inducing a policyholder to lapse or surrender coverage through misleading comparisons or false statements about benefits. It is a prohibited unfair trade practice in most states.

Grouping exposures with similar expected loss costs so each group pays a rate reflecting its own experience. Valid classifications must be based on measurable differences in loss potential.

Incurred losses and loss adjustment expenses divided by earned premium over a period. It measures underwriting performance before other expenses and profit.