DC Property & Casualty key terms

A genuine financial stake in the person or property insured, so that the insured suffers a real economic loss if a loss occurs. In property insurance it must exist at the time of loss or the claim is unenforceable.

The concept that insurance should restore an insured to roughly the same financial position held before a loss, no better and no worse. Recovery is limited to the amount of loss, subject to policy limits.

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

Authority an insurer deliberately grants a producer in writing or orally, usually through the agency agreement. Acts performed within that stated authority bind the insurer.

Authority a customer reasonably believes a producer has because of the insurer's words or conduct. An insurer can be bound by acts a reasonable person would assume were authorized, even without express grant.

An insurer not licensed (admitted) in the state that may write coverage when admitted insurers decline the risk. Licensed surplus lines brokers place such business under specific eligibility and disclosure rules.

A property policy condition requiring the insured to carry at least a stated percentage of the property's value, often 80 percent. If the insured falls short at the time of loss, the claim payment is reduced proportionally.

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 and produces a lower payment than replacement cost.

The cost to repair or replace damaged property with new property of comparable kind and quality, with no deduction for depreciation. Payment is often limited to actual cash value until replacement is actually completed.

A homeowners form that insures the dwelling and other structures on an open-peril (special) basis while personal property is covered for named perils only. It is the most widely used homeowners form.

The homeowners coverage part that insures the insured's personal property both at and away from the residence premises, subject to the perils, special limits and maximum amounts stated in the form.

Homeowners coverage that pays additional living expense when the residence cannot be lived in because of a covered loss, and pays fair rental value when a rented portion becomes uninhabitable.

A commercial property form that covers risks of direct physical loss unless the loss is specifically excluded. The insurer, rather than the insured, must show that an exclusion applies.

Pays the insured's lost net income plus continuing normal operating expenses during the period reasonably needed to resume operations after a covered loss at the described premises.

Pays reasonable additional costs an insured spends to keep operating or to reopen quickly after a covered loss, such as renting temporary space, equipment or extra help.

A policy or endorsement that follows movable property wherever it travels, such as jewelry, tools, cameras or musical instruments, usually on an open-peril basis with stated limits per item.

Crime coverage that pays for loss of money, securities or other property caused by employee theft, forgery or similar dishonest acts, usually subject to a per-loss limit and a deductible.

Failure to use the degree of care a reasonable person would use in similar circumstances. A liability claim requires a duty owed, a breach of that duty, proximate cause and actual damages.

A rule that reduces an injured claimant's recovery in proportion to the claimant's own share of fault. Pure and modified versions differ on whether a claimant may recover anything at all.

Money awarded to make an injured party whole. It includes special damages such as medical bills and lost wages, and general damages such as pain, suffering and disfigurement.

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

The most an insurer will pay for all covered claims under a policy during a single policy period. It applies in addition to, and caps, the per-occurrence limit.

The personal auto policy part that pays damages an insured is legally liable for because of bodily injury or property damage arising out of owning or using a covered auto.

Coverage that pays an insured's damages when an at-fault driver carries no liability insurance or carries limits too low to pay the loss, up to the coverage limit purchased.

A system in which an injured person's own auto insurer pays medical and related expenses regardless of who caused the accident, with statutory restrictions on suing the at-fault driver.

A state law requiring motorists to prove they can pay for damages they cause, typically through liability insurance, a bond or a cash deposit, often triggered by a violation or accident.

Pays for damage to the insured auto caused by striking another object or by overturning, regardless of fault, after the deductible is applied and up to the policy limit.

The commercial general liability form that covers bodily injury and property damage from occurrences taking place during the policy period, regardless of when the claim is later reported.

Commercial general liability coverage for bodily injury or property damage arising out of the insured's products or completed work away from the premises, after the work has been finished.

Commercial general liability coverage for listed offenses such as libel, slander, wrongful eviction, invasion of privacy and infringement of advertising ideas, as those offenses are defined in the form.

Liability coverage that pays above the limits of scheduled underlying policies and may also drop down to cover some exposures those policies exclude, after any required self-insured retention.

A dollar amount the insured must pay on a claim before umbrella or excess coverage responds. It commonly applies where no underlying policy covers the loss at all.

The principle that statutory workers' compensation benefits are an employee's sole remedy against the employer for a work-related injury, replacing most negligence lawsuits by the employee.

A license issued by the District of Columbia Department of Insurance, Securities and Banking that authorizes a person to sell, solicit or negotiate insurance in the District.

An insurer's authorization of a licensed producer to act as its agent. Insurers must file appointments with the DC regulator and keep them in force while the producer writes business for the company.

An insurer's ending of a producer's appointment because of misconduct or other fault. The insurer must notify the DC regulator of terminations, and for-cause terminations are reported and can affect the producer's record.

A producer's obligation to hold premiums and client money in trust, keep those funds separate from personal or business funds, and account for and remit them promptly and accurately.

Conduct prohibited in the business of insurance, such as misrepresentation, twisting, unfair claim settlement practices and illegal inducements, enforced by the DC insurance regulator through penalties and license action.

Offering or giving something of value not stated in the policy, such as cash, gifts or commission splits, to persuade a buyer to purchase insurance. It is an illegal inducement in DC.