ID Property & Casualty key terms

A license issued by a state insurance department permitting an insurer to transact specified lines of insurance in that state; it must be maintained and can be suspended or revoked for violations.

A state-issued credential authorizing a person to solicit, negotiate, or sell insurance; renewal typically requires continuing education, a background check, and compliance with state rules.

An insurer's written authorization for a producer to act as its agent for specified lines; the insurer usually files the appointment with the state insurance department.

A specially licensed producer who places coverage with nonadmitted insurers when admitted insurers decline the risk; the broker must follow state eligibility and disclosure rules.

A producer license issued by a state where the licensee does not reside, typically obtained through reciprocity; the producer must still follow that state's laws and appointment rules.

A lawful, substantial economic relationship in the subject matter such that the insured would suffer genuine financial loss from its damage, destruction, or liability; it must exist at the time of loss.

The concept that insurance should restore the insured to approximately the same financial position as before a loss, without creating a profit or incentive to cause loss.

The principle requiring both insured and insurer to deal honestly and to disclose all material facts that could affect the underwriting or handling of the risk.

A specific cause of loss, such as fire, windstorm, theft, or collision; policies identify which perils are covered and which are excluded.

A condition or situation that increases the likelihood or severity of a loss from a given peril, such as faulty wiring, icy steps, or poor housekeeping.

The dominant, effective cause that sets in motion an unbroken chain of events leading to a loss; it determines whether coverage applies when multiple causes combine.

The insurer's legal right, after paying a claim, to pursue recovery from the third party responsible for the loss; it supports indemnity by preventing double recovery by the insured.

The tendency of applicants with higher-than-average risk to seek or retain insurance more eagerly than low-risk applicants, which can destabilize rates unless underwriting and pricing controls are used.

A property valuation method that pays the cost to replace or repair damaged property minus depreciation, reflecting its value at the time of loss.

A property valuation method that pays the cost to repair or replace damaged property with new property of like kind and quality, without deducting for depreciation.

A required insurance-to-value percentage; if the insured carries less than that percentage of the property's value, a penalty reduces the claim payment proportionally.

Pays the increased cost of temporary housing, meals, and similar necessities while the insured home is uninhabitable because of a covered loss.

Pays the extra cost to repair or rebuild according to current building codes or ordinances, including demolition and increased construction costs.

Replaces lost net income and continuing normal expenses while a business is unable to operate because of a covered property loss.

A single policy limit that applies to two or more properties, locations, or coverage items, rather than a separate specific limit for each.

A liability policy covering third-party claims for bodily injury, property damage, and personal or advertising injury arising from the insured's premises, operations, products, or completed work.

An accident or continuous exposure to substantially the same harmful conditions that causes bodily injury or property damage during the policy period; the standard trigger for most liability policies.

A liability policy that covers claims first made against the insured during the policy period, regardless of when the injury occurred, often subject to a retroactive date.

The maximum amount an insurer will pay for all covered claims combined during a policy period, in addition to any per-occurrence limit.

Covers liability for bodily injury or property damage occurring away from the insured's premises and arising from the insured's products or completed work.

Covers liability for offenses such as libel, slander, false arrest, invasion of privacy, and infringement of advertising ideas, as defined in the policy.

Pays an insured's damages for bodily injury or, in some states, property damage caused by a motorist who has no liability insurance.

State law prohibiting deceptive or unfair acts in insurance, such as misrepresentation, twisting, rebating, and improper claim practices; regulators may impose penalties and cease-and-desist orders.

Inducing a policyholder to lapse, surrender, or replace an existing policy through misleading or incomplete comparisons of benefits, terms, or costs.

Offering or giving an applicant something of value not stated in the policy, such as cash or gifts, to induce the purchase of insurance; generally prohibited by state law.

A statutorily created entity that pays covered claims of policyholders of insolvent insurers, up to specified limits, and is funded by assessments on member insurers.

The part of a policy that identifies the insured, the policy period, the property or operations covered, the limits, and the premium.

The section of a policy that states the core promise to pay for covered losses or defend claims, usually describing the scope of coverage and triggering conditions.

Policy provisions that identify losses, perils, or situations that are not covered, thereby limiting the scope of the insuring agreement.

Policy provisions that set out the duties and obligations of the insured and insurer, such as notice of loss, proof of loss, and cooperation in defense.

A written amendment attached to and made part of a policy that adds, deletes, or alters coverage, limits, or terms; it takes precedence over conflicting policy language.

An insurance contract in which the parties exchange unequal amounts depending on chance; the insured pays a premium and may receive far more or far less in claim benefits.

A contract drafted mostly by one party, the insurer, and offered on a take-it-or-leave-it basis; ambiguities are generally construed against the drafter.

A false statement of fact in an insurance application that would influence the insurer's decision to issue coverage or set its terms; it may allow rescission or denial.

The voluntary and intentional relinquishment of a known right under the policy; once waived, the insurer may be prevented from later enforcing that right.