COI Diploma key terms

The possibility of loss or harm, or the uncertainty about outcomes. In insurance, risk is the chance an event will cause financial damage to a person or organization.

A situation offering only the chance of loss or no loss, with no possibility of gain. Insurers typically cover pure risk, such as fire damage, rather than speculative risk.

A situation that involves the possibility of loss, gain, or no change, such as investing in a business venture. Commercial insurance generally does not cover speculative risk.

Any condition or activity that presents a chance of financial loss. Identifying loss exposures is a core step in risk management and in choosing appropriate insurance coverage.

A risk management choice to keep the financial consequences of a loss rather than transfer them. Deductibles and self-insured retentions are common forms of planned retention.

Shifting the financial consequences of a loss to another party, most commonly through an insurance policy or a contractual indemnity provision. Transfer does not eliminate the underlying exposure.

A contractual promise by one party to cover the losses or liabilities of another. Indemnity clauses often drive requirements for insurance and additional insured status.

The amount an insured must pay out of pocket before the insurer pays a covered claim. Deductibles reduce premium and represent a form of retained risk.

A specified amount an insured pays toward a loss before any coverage applies, often used with large commercial programs. It differs from a deductible in how it interacts with limits and defense.

A legitimate financial stake in the person or property insured, such that a loss would cause real harm. Insurable interest is required for a valid insurance contract.

The section of a policy that names the insured, lists policy periods and limits, identifies covered locations or operations, and states the premium. It is the primary source for certificate data.

The policy section that states the core promise to pay for covered losses, describing what is covered and the broad circumstances of coverage. It works with exclusions and conditions.

A policy provision that removes or limits coverage for specified causes of loss, activities, or property. Exclusions narrow the insuring agreement and must be read with endorsements.

Policy provisions that set out duties and rules the insured and insurer must follow, such as notice of loss, cooperation, and premium payment. Breaching a condition can affect coverage.

A written amendment attached to a policy that adds, removes, or changes coverage. Endorsements override the standard form and are essential when verifying coverage details.

The maximum amount an insurer will pay under a policy or coverage part. Limits may apply per occurrence, per claim, or in the aggregate, and each basis affects available protection.

The most an insurer pays for any single covered occurrence or accident. Multiple claimants from one event generally share this single limit.

The maximum total an insurer pays for all covered claims during a policy period, typically applying to products-completed operations and general aggregate coverages. Once exhausted, no further payment is due.

The person or organization specifically identified on the declarations page as insured. The named insured holds policy rights and duties that additional insureds generally do not share.

An accident or continuous exposure to harmful conditions that results in bodily injury or property damage during the policy period. Occurrence-based coverage responds regardless of when a claim is reported.

A broad liability policy covering third-party bodily injury, property damage, personal and advertising injury arising from business operations. It forms the backbone of most commercial liability programs.

CGL coverage for bodily injury or property damage arising from products sold or work completed away from the premises. It typically carries its own aggregate limit.

CGL coverage for offenses such as libel, slander, wrongful eviction, and infringement of advertising ideas, not involving bodily injury or property damage. It is subject to its own limits and exclusions.

A liability policy that covers claims first made against the insured during the policy period, often requiring a retroactive date. Reporting and extended reporting provisions are critical.

The earliest date from which covered wrongful acts are eligible under a claims-made policy. Claims arising from acts before this date are generally excluded.

A document summarizing insurance coverage in force at a point in time, used to evidence coverage to another party. It is not a policy and does not confer coverage or amend the contract.

A widely used standard certificate of liability insurance form summarizing insureds, insurers, policy types, limits, and dates. It includes disclaimers that it does not amend or extend coverage.

A standard commercial insurance application form that collects applicant business details used by insurers for underwriting. It is not itself proof of coverage.

A person or organization granted insured status under another party's policy, usually by endorsement and often required by contract. The scope of protection depends on the endorsement's wording.

An endorsement that extends insured status to another party, often with limits on scope such as ongoing operations or the named insured's negligence. Wording varies significantly among forms.

An agreement by an insurer to give up its right to recover claim payments from a responsible party. Contracts often require this waiver, and it must be confirmed by endorsement.

An insurer's right to pursue recovery from a third party that caused a loss after paying the insured. Waivers of subrogation limit this right by agreement.

Wording requiring a specified policy to respond first, without contribution from other coverage, often required in contracts. The exact effect depends on the endorsement used.

Documentation showing that insurance exists, such as a certificate, declarations page, or endorsement copy. The policy itself remains the controlling legal document.

The process of checking that a contractor or vendor's insurance meets contractual requirements, including limits, endorsements, and dates. It includes tracking renewals and cancellations.

A policy provision or endorsement requiring the insurer to notify a specified party in advance if coverage is cancelled. Contracts often mandate a set number of days' notice.

A false or misleading statement of a fact that affects an insurer's decision to issue coverage or set terms. It can lead to rescission or denial of a claim.

The principle that insurance parties must deal honestly and disclose material facts. It underpins duties of disclosure and fair dealing in underwriting and claims.

A professional liability exposure arising from negligent acts, mistakes, or failure to perform professional duties. For certificate issuers, it can include issuing inaccurate or unauthorized certificates.