III IC-99 key terms

A mutual duty requiring both applicant and insurer to deal honestly and disclose material facts, so the insurer can judge the risk and the insured can rely on the promise of coverage.

A false or misleading statement of fact that would have changed the insurer's decision to issue the policy or the terms and price it offered.

Intentional silence about a fact the applicant knows is important to the underwriting decision, treated much like a material misrepresentation when discovered.

A financial stake in the preservation of a person or property such that loss would cause genuine economic harm; it must exist at policy inception and, for property, at the time of loss.

The rule that a property claim payment restores the insured to roughly the financial position held before the loss, without allowing profit from the event.

A settlement measure equal to replacement cost minus depreciation, reflecting what the damaged item was worth immediately before the loss.

A valuation basis that pays what it costs today to repair or rebuild with like kind and quality, usually without deducting depreciation, often subject to policy limits and conditions.

A property provision requiring the insured to carry coverage equal to a stated percentage of value; failing that, claims are reduced in proportion to the shortfall.

A property form in which insurer and insured fix the insured value in advance and waive the coinsurance penalty, typically used for hard-to-value or high-value items.

The amount of each loss the insured absorbs before the insurer pays, which reduces premium and discourages small claims.

A stated amount the insured funds itself before a liability policy responds, common in commercial programs; unlike a deductible, the insurer may have no duty to defend within it.

A liability policy triggered by injury or damage that happens during the policy period, regardless of when the claim is later reported.

A liability policy covering claims first made against the insured during the policy period, usually combined with a retroactive date and an extended reporting period.

An optional or built-in window after a claims-made policy expires during which the insured may still report claims for wrongful acts occurring before expiration.

The earliest date of a covered wrongful act under a claims-made policy; acts committed before that date are excluded even if the claim is made during the term.

A policy promise or condition the insured must satisfy exactly; a breach may suspend or void coverage depending on the policy language and governing law.

An agreement that never had legal effect, as where fraud or lack of insurable interest removes the basis for enforcement from the outset.

Failure to use the care a reasonable person would exercise in similar circumstances, the core test for most third-party liability claims.

A doctrine that reduces a claimant's recovery in proportion to the claimant's own share of fault, and bars recovery entirely in some jurisdictions when that share is large.

An unbroken chain of causation linking the insured's act or omission to the injury or damage, without which the loss would not have occurred.

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

Exposure arising from the condition or operation of a location the insured owns, leases, or occupies, owed to visitors, tenants, and the public.

Exposure for injury or damage caused by goods the insured manufactured, sold, handled, or distributed, including failure-to-warn and design-defect theories.

Liability exposure for work the insured has finished and turned over, distinct from ongoing operations, and often separately limited or excluded in commercial general liability forms.

A party other than the named insured granted coverage under the policy, typically by endorsement, often because a contract requires it.

A short document evidencing that a policy exists and summarizing limits, dates, and named insureds; it conveys no coverage rights on its own.

Temporary written or oral evidence of coverage issued before the policy is produced, binding the insurer on the agreed terms from a stated effective date.

The authority a reasonable third party believes an agent holds because of the insurer's words or conduct, even if the agent was not actually granted it.

The obligation of an agent or broker to act in the client's best interest and to hold premiums or funds in trust, putting the client's interest ahead of personal gain.

Offering part of a commission or other inducement to a buyer to win business; prohibited in most jurisdictions as unfair competition.

Inducing a policyholder to lapse or surrender existing coverage through misleading comparisons in order to sell a replacement policy.

Sale of new life or annuity coverage that displaces existing coverage, triggering disclosure and comparison duties for the producer under market-conduct rules.

The standard requiring a recommended product to fit the buyer's needs, objectives, and financial situation, documented at the point of sale.

Coverage placed with an unauthorized insurer when admitted carriers decline the risk, permitted only through licensed surplus lines brokers under state eligibility rules.

An insurer licensed by the state to transact business there, subject to its rate, form, and solvency regulation and backed by the state guaranty fund.

The license issued by a state insurance department permitting an insurer, or a producer, to conduct insurance business in that jurisdiction.

Incurred losses and loss adjustment expenses divided by earned premium, a core measure of underwriting performance and pricing adequacy.

Loss ratio plus expense ratio; a figure above 100 percent indicates an underwriting loss before investment income is considered.

A method that adjusts an employer's or group's premium up or down based on its own past loss history relative to similar risks.

A personal lines endorsement listing specific valuables with individual limits and broader perils, often without a deductible.

Excess liability coverage above the limits of homeowners and auto policies, which may also fill gaps for some personal liability exposures.

The insurer's right, after paying a claim, to pursue the responsible third party and recover the amount paid, taking over the insured's legal claim.

Property remaining after a loss that the insurer may take, sell, or allow the insured to retain, with its value credited against the claim payment.

A risk management technique in which the organization knowingly keeps a loss exposure and funds it, rather than transferring it to an insurer.

Shifting the financial consequences of a loss exposure to another party, most commonly by purchasing insurance or by contract.