IL Property & Casualty key terms

The state agency that regulates the Illinois insurance industry; it licenses insurers and producers, reviews policy forms and rates, examines company finances and market conduct, and enforces the Illinois Insurance Code.

A license issued by the Illinois Department of Insurance that authorizes an insurer to transact insurance business in the state; selling insurance without one is an unauthorized insurance violation.

Coverage placed with an insurer not licensed in Illinois when admitted insurers decline the risk; it must be placed through a specially licensed surplus line producer after a documented diligent effort to find admitted market coverage.

A required Illinois credential that lets a person sell, solicit or negotiate insurance; obtaining it involves prelicensing education, a state exam, an application and background check, plus ongoing continuing education.

A producer's legal obligation to hold premiums and returned premiums in a fiduciary capacity, keep them in a trust account, and never commingle them with personal or business funds.

Improper claim handling prohibited by Illinois law, such as denying or delaying payment without a reasonable investigation, failing to explain a denial, or offering far less than the claim is worth.

A state-mandated fund, financed by member insurers, that pays covered claims of policyholders of insolvent Illinois-authorized insurers, subject to statutory limits and per-claim deductibles.

A financial stake in the person or property insured such that the insured benefits from its continued existence and suffers a loss from its damage; in property insurance it must exist at the time of loss.

The core idea that insurance should restore an insured to roughly the same financial position as before a loss, no better and no worse, which is why recovery is capped by the actual loss and the policy limit.

A mutual duty on insurer and applicant to deal honestly and disclose material facts; breaches include misrepresentation, concealment and warranty violations, and can allow the insurer to rescind coverage.

An insurance policy drafted by the insurer and offered on a take-it-or-leave-it basis; because the insured has no bargaining power, ambiguous wording is generally construed against the insurer.

An agreement in which the dollar amounts exchanged are unequal and depend on chance; the insured pays a modest premium and may later receive a much larger claim payment, or nothing at all.

The amount of a covered loss the insured must absorb before the insurer pays anything, which lowers premium and discourages small, costly-to-handle claims.

Replacement cost of damaged property minus depreciation, often approximated by fair market value; used when a policy settles losses on an actual cash value basis rather than replacement cost.

The amount needed to repair or replace damaged property with new property of similar kind and quality, without deducting for depreciation; usually limited by the policy limit and conditioned on repair or replacement.

A property policy condition requiring the insured to carry insurance equal to a stated percentage of the property's value; if the limit is lower, each loss payment is reduced proportionally.

Failure to use the degree of care an ordinary, reasonable person would use, resulting in unintended injury or damage; a claimant must prove duty, breach, causation and damages.

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 coverage trigger for most liability policies.

Auto liability limits written as three numbers, such as 25/50/20, meaning the most paid per injured person, per accident for all injuries, and per accident for property damage.

First-party no-fault medical, wage-loss and related benefits for the insured and passengers after an auto accident, regardless of fault; required in no-fault states and optional in Illinois.

Coverage that pays the insured's own injury damages when a negligent driver has no liability insurance or has limits too low to pay the claim; Illinois insurers generally must offer it.

First-party auto coverage that pays reasonable and necessary medical and funeral expenses for the insured and passengers injured in a covered accident, regardless of who caused the accident.

Physical damage coverage for damage to the insured auto caused by striking another vehicle or object, or by overturning, subject to the deductible shown on the declarations.

Coverage for auto damage from causes other than collision, such as fire, theft, vandalism, hail, flood or animal strikes; commonly called comprehensive coverage.

An Illinois law requiring vehicle owners to maintain liability insurance at minimum limits to register and operate a vehicle, with penalties such as license and registration suspension for violations.

The most common homeowners policy: it covers the dwelling and other structures on an open-perils basis while personal property is covered for named perils, plus personal liability and medical payments to others.

The homeowners section covering the insured's personal property both on and away from the residence premises for named perils, with special dollar limits on items such as jewelry, cash and silverware.

Pays the extra costs of temporary housing and living expenses, plus lost fair rental value, when a covered loss makes the residence premises unfit to live in.

Homeowners liability coverage that pays sums the insured becomes legally obligated to pay because of bodily injury or property damage to others caused by an occurrence, plus defense costs.

Pays reasonable medical expenses for non-residents injured on the insured location or by the insured's personal activities, without regard to fault and without any lawsuit being filed.

A property-only policy for rented homes, non-owner-occupied dwellings and other residential risks that do not qualify for homeowners coverage; it has no liability section and uses DP forms.

Pays the loss of net income and continuing normal operating expenses when a covered property loss suspends business operations, until the business is restored, usually within a stated period of months.

The core commercial property form covering the building, the insured's business personal property, and improvements and betterments made by an insured tenant, at or near the described premises.

A commercial policy covering premises, operations, products and completed operations liability, and personal and advertising injury; written on an occurrence or claims-made basis with per-occurrence and aggregate limits.

A liability policy that responds to claims first made in writing during the policy period, plus any extended reporting period, regardless of when the injury or damage actually happened.

The maximum an insurer will pay for all covered claims during a policy period, separate from any per-occurrence limit; once the aggregate is exhausted, no further coverage applies.

Excess liability coverage that pays above the limits of underlying auto, general liability or employers liability policies and may cover some losses excluded below, after a self-insured retention.

The rule that statutory workers compensation benefits are an employee's only remedy against the employer for a work-related injury, replacing tort lawsuits except for limited statutory exceptions.

Statutory benefits for work-related injury or disease: medical care, temporary and permanent disability income, rehabilitation, and death benefits for dependents, paid without regard to fault.

Part Two of a workers compensation policy that covers the employer's legal liability for work injuries falling outside the statutory benefit system, such as certain third-party or dual-capacity suits.