HI Property & Casualty key terms

A financial stake in the person or property insured such that the insured would suffer a real economic loss if a loss occurred. It must exist when property insurance is written and when a loss happens.

The idea that insurance should put the insured back in roughly the same financial position held before a loss, no better and no worse, so a claim can never become a source of profit.

A mutual duty of honesty and full disclosure between insurer and applicant. Material facts must be revealed, and concealment or material misrepresentation can allow the insurer to rescind coverage.

A policy drafted by the insurer and offered to the buyer on essentially a take-it-or-leave-it basis. Because the insured has no real bargaining power, ambiguous wording is generally construed against the insurer.

An agreement in which the values exchanged are unequal and depend on chance. The insured pays a set premium but may collect far more than that, or nothing at all, depending on whether a loss occurs.

The insurer's right, after paying a covered loss, to step into the insured's shoes and pursue recovery from the party that caused the damage, preventing double recovery by the insured.

The tendency of higher-risk applicants to buy or keep coverage more eagerly than lower-risk ones. Left unchecked, it pushes losses above the assumptions used to set rates.

The actual cause of a loss, such as fire, windstorm, theft, or collision. Policies either list covered perils by name or cover all perils except those specifically excluded.

The dominant, unbroken cause that sets a chain of events in motion and produces a loss without an independent intervening cause. It is used to decide whether a loss falls within coverage.

The cost to replace damaged property minus depreciation, reflecting what the property was worth at the time of loss. It is the default valuation method in many property policies.

A valuation method that pays to repair or replace damaged property with new property of similar kind and quality, with no deduction for depreciation, usually subject to the policy limit.

A property provision requiring the insured to carry limits equal to a stated percentage of the property's value. If the insured carries less, a proportional penalty reduces the amount paid on a partial loss.

A property form that covers all causes of loss except those specifically excluded, which shifts the burden to the insurer to show that an exclusion applies. It contrasts with named-perils forms.

Coverage that pays the extra cost of temporarily living elsewhere, and sometimes lost rental income, when a covered loss makes the insured home unfit to occupy.

A policy provision that protects a lender with an interest in the property, giving it notice of cancellation or nonrenewal, loss payment to the extent of its interest, and the right to pay premium.

Coverage that replaces a business's lost net income and continuing normal expenses during the period operations are shut down by a covered loss, until the business can resume.

Coverage that pays the extra cost of rebuilding to current building codes, or of demolishing undamaged portions of a structure, when those costs arise from a covered loss and would otherwise be excluded.

A separate deductible, often stated as a percentage of the dwelling limit rather than a flat dollar amount, that replaces the standard deductible when a loss is caused by a named hurricane.

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

Liability imposed without any proof of negligence, commonly applied to defective products, abnormally dangerous activities, and certain animal-related injuries.

Legal responsibility placed on one party for the acts of another, such as an employer being held liable for an employee's negligent acts committed within the scope of employment.

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.

A liability policy that responds to claims first made and reported during the policy period, no matter when the injury happened, usually limited by a retroactive date.

Coverage for offenses such as libel, slander, wrongful eviction, or infringement of advertising ideas, which are treated separately from bodily injury and property damage.

Coverage that pays reasonable and necessary medical expenses for others injured on the insured's premises or by the insured's operations, up to a stated limit and without regard to fault.

A person or organization other than the named insured that is given coverage under the policy by endorsement, frequently because a contract requires it.

An auto system in which each injured person's own insurer pays medical and wage-loss benefits after a crash regardless of who caused it. Hawaii requires motorists to carry personal injury protection.

Auto coverage that pays the insured's damages for injuries caused by a driver who carries no liability insurance, and in many policies by a hit-and-run driver.

The authorization a person must hold from the state to solicit, negotiate, or sell insurance in Hawaii, obtained by meeting prelicensing education, examination, and background requirements.

The license issued by the Hawaii Insurance Division that allows an insurer to transact insurance business in the state. Operating without one is unlawful.

The state agency, part of the Department of Commerce and Consumer Affairs, that regulates insurers, producers, rates, and policy forms, and is headed by the Insurance Commissioner.

A producer specially licensed to place coverage with nonadmitted insurers when no admitted insurer will write the risk, after documenting a diligent search of the admitted market.

A residual-market property insurer that makes basic property coverage available to owners in areas, such as lava zones, where the voluntary market offers little or no coverage.

A statutory entity that pays covered claims of policyholders of insolvent property and casualty insurers doing business in Hawaii, subject to statutory limits and exclusions.

Offering anything of value not stated in the policy, such as cash, gifts, or paying part of a premium, to induce a sale. Hawaii treats it as a prohibited unfair trade practice.

Prohibited claims conduct such as misrepresenting policy terms, failing to investigate promptly, or offering a grossly inadequate settlement. Violations can lead to penalties and license action.

The rule that a producer holds premiums in trust for the insurer, must account for and remit them promptly, and may not commingle them with personal or general business funds.

Approved credit hours a Hawaii producer must complete each renewal cycle to keep a license active, covering required subject areas such as ethics as well as general insurance topics.