CO Property & Casualty key terms

A financial stake in the person or property being insured, meaning the insured would suffer a real economic loss if the insured event occurred. For property insurance, it must exist at the time of the loss.

The rule that an insured should be restored to roughly the same financial position as before a loss, no better and no worse, so claim payments are limited to the value of the actual loss.

The mutual duty of the insurer and the applicant to be honest and to reveal all facts that would matter to the other side when a policy is applied for and issued.

An insurance contract in which the amounts the parties exchange are unequal and depend on chance; the insured pays premiums and may collect a large claim payment or nothing at all.

A policy written by the insurer and offered to the buyer on a take-it-or-leave-it basis; because the insurer controls the wording, ambiguous language is generally interpreted against the insurer.

After paying a claim, the insurer's right to step into the insured's shoes and pursue the party that caused the loss, recovering what it paid and preventing the insured from collecting twice.

The statistical idea that as the number of similar, independent exposures grows, actual losses come closer to the predicted average, which lets insurers forecast losses and set premiums.

The tendency of people who expect to have claims, or who face higher-than-average risk, to buy or keep insurance more often than low-risk people, which can push up costs for the whole group.

A false or misleading statement on an insurance application that would have affected the insurer's decision to issue the policy or the premium charged, and may let the insurer rescind coverage.

A property policy that covers only the causes of loss listed in the policy, such as fire, lightning, windstorm, or theft; damage from any cause that is not listed is not covered.

A property policy covering risks of direct physical loss to the described property except causes that are specifically excluded, so the insurer must show an exclusion applies before denying a claim.

A loss settlement method equal to the cost to replace damaged property minus depreciation, reflecting what the property was worth just before the loss occurred.

A loss settlement method that pays the cost to repair or replace damaged property with new property of similar kind and quality, with no deduction for depreciation, subject to policy limits.

A requirement that the insured carry at least a stated percentage of the property's value; if the limit is lower when a loss occurs, the claim payment is reduced in proportion to the shortfall.

A policy provision protecting a lender that holds a mortgage on insured property, giving it notice of cancellation and the right to receive loss payments up to the amount still owed.

Homeowners coverage that pays the extra cost of temporary housing, meals, and similar expenses when a covered loss makes the home unfit to live in, usually for a stated time period.

Commercial property coverage that replaces a business's lost net income and continuing normal expenses, such as payroll or rent, while operations are interrupted by a covered loss.

Coverage for extra costs when a covered loss forces rebuilding to current building codes, including demolition and the lost value of an undamaged portion of the building that must come down.

A property condition in which a building is empty and not used for its intended purpose, which restricts or removes coverage for perils such as vandalism, glass breakage, and water damage.

Coverage for loss from rising or overflowing water, such as a river or tidal surge, written separately through the National Flood Insurance Program or a private insurer because standard property policies exclude flood.

An accident, including continuous or repeated exposure to substantially the same harmful conditions, that causes bodily injury or property damage during the policy period; the standard trigger for general liability coverage.

A liability policy that covers claims first made against the insured during the policy period, no matter when the injury or damage happened, often limited by a retroactive date.

General liability coverage for bodily injury or property damage that happens away from the insured's premises and arises from products the insured sold or work it completed.

The most a general liability policy will pay for all covered claims in a policy period combined, apart from products-completed operations claims, which are subject to their own separate aggregate.

The maximum a liability policy will pay for any single occurrence or accident, regardless of how many people are injured or how many claims are presented against the insured.

Auto liability limits shown as three amounts: the most paid per person for bodily injury, per accident for all bodily injury, and per accident for property damage.

Auto coverage that pays the insured's injuries, and sometimes property damage, when the at-fault driver has no liability insurance or has limits too low to cover the loss.

Auto coverage that pays reasonable medical and funeral expenses for the insured and passengers after an accident, regardless of who caused it, up to the stated limit.

The rule that statutory workers compensation benefits are an injured employee's only remedy against the employer for a work-related injury, in exchange for no-fault, prompt payment of benefits.

A rule that reduces an injured person's recovery by their own percentage of fault and, in many states, bars recovery entirely when that fault reaches or exceeds a set threshold.

A policy that pays liability claims above the limits of underlying auto, homeowners, or general liability policies, and may also cover some losses those underlying policies exclude.

The state agency within the Department of Regulatory Agencies that licenses insurers and producers, reviews rates and policy forms, handles consumer complaints, and enforces Colorado insurance law.

An authorization from the Colorado Division of Insurance allowing a person to solicit, negotiate, or sell insurance in the state; it must be renewed and kept in good standing to remain valid.

An insurer's written authorization for a producer to act as its agent; the insurer notifies the Colorado Division of Insurance when the appointment begins or ends.

Mixing premiums or claim funds held for others with a producer's own money or other accounts, which Colorado prohibits because those funds must be kept in trust and accounted for separately.

Colorado requires licensed producers to complete 24 approved credit hours every two years, including at least 3 hours of ethics, before the license may be renewed.

A producer specially licensed in Colorado to place coverage with insurers not authorized in the state when admitted insurers will not write the risk, following state placement and disclosure rules.

Conduct banned by Colorado insurance law, such as misrepresenting policy terms, unfairly denying or delaying claims, or making unfair distinctions among similar risks, punishable by fines or license action.

The least liability coverage Colorado drivers must carry: $25,000 per person and $50,000 per accident for bodily injury, plus $15,000 per accident for property damage.

A residual market program that offers basic property insurance to Colorado owners who cannot obtain coverage from admitted insurers in the voluntary market, often because of location or loss history.