MA Property & Casualty key terms

A person's genuine financial stake in property or a life, such that damage or loss would cause a real economic loss. It must exist when property coverage is purchased and at the time of loss, or the claim is not payable.

The principle that insurance should restore an insured financially to roughly the position held before a loss, no better and no worse. It explains why payments are capped by the value of the damaged property rather than by the limit alone.

After paying a claim, the insurer takes over the insured's legal right to recover that money from the party who caused the loss. It prevents double recovery by the insured and shifts the cost to the responsible party.

The mutual duty of applicant and insurer to deal honestly and disclose all facts that would affect the decision to insure or the terms offered. Breach can let the other side rescind the contract.

An insurance policy is drafted by the insurer and offered to the buyer on a take-it-or-leave-it basis, with no negotiation of wording. Because the insured had no voice in drafting, ambiguities are generally read in the insured's favor.

A contract in which the values exchanged are unequal and depend on chance: the insured pays a modest premium and may collect a large claim payment, a small one, or nothing at all during the policy term.

The part of a policy naming the insured, describing the covered property or operations, and showing the policy period, limits, deductibles, and premium. It personalizes the contract and is read together with the forms.

The section of a policy containing the insurer's core promise, identifying which perils, losses, or liabilities are covered, for whose benefit, and subject to what limits. Exclusions and conditions then narrow or qualify that promise.

A commercial property provision requiring the insured to carry insurance equal to a stated percentage of the property's value; if coverage falls short, each claim is reduced in proportion. It discourages deliberate underinsurance.

The amount of each loss the insured absorbs before the insurer pays anything. It can be a flat dollar figure or a percentage of the limit, and it lowers premium in exchange for retaining small losses.

A valuation method that pays replacement cost minus depreciation, reflecting what the damaged or destroyed property was worth in its used condition at the time of loss. Many property forms apply it unless replacement cost is chosen.

A valuation method paying what it costs today to repair or rebuild with similar materials and quality, without deducting for depreciation, usually limited by the policy limit and conditioned on actually repairing or replacing.

A formal, often sworn statement the insured submits describing the date, cause, and amount of a loss and supporting it with records and receipts. Policy conditions set a deadline, and failure to comply can bar payment.

Failure to use the care a reasonable person would use in similar circumstances, resulting in unintended harm. A claimant generally must prove a duty of care, a breach of that duty, causation, and actual damages.

The legal responsibility of an owner or occupier for injuries caused by unsafe conditions or activities on the property. The level of care owed often depends on whether the injured person was an invitee, licensee, or trespasser.

Liability imposed without any proof of carelessness, typically for abnormally dangerous activities or defective products. The injured party need only show the injury and its connection to the activity or product.

Legal responsibility of one party for the negligent acts of another, most commonly an employer held liable for an employee's conduct within the scope of employment. It does not require the employer to have been personally at fault.

Money awarded to make an injured party whole, covering economic losses such as medical bills, repair costs, and lost wages, plus non-economic losses such as pain, suffering, and loss of enjoyment of life.

An accident, including continuous or repeated exposure to substantially the same harmful conditions, that causes injury or damage during the policy period. It is the trigger for coverage under occurrence-form liability policies.

Liability coverage that responds to claims first made or reported during the policy period, no matter when the injury happened, usually limited by a retroactive date and an extended reporting option.

No-fault auto coverage paying medical expenses, lost wages, and similar costs for the insured and passengers hurt in a crash, regardless of who caused it, up to the policy limit and subject to exclusions.

The minimum liability coverage Massachusetts requires on every registered private passenger auto: $20,000 per person and $40,000 per accident for bodily injury, plus $5,000 for property damage. Operating without it can bring fines, surcharges, and suspension.

Massachusetts' merit rating system that awards credits for clean driving records and applies surcharges for at-fault accidents and moving violations, adjusting the premium charged for compulsory auto coverages.

The state's residual market mechanism that assigns drivers who cannot obtain auto insurance in the voluntary market to participating insurers, so that required coverage remains available to them.

Massachusetts law prohibiting unfair or deceptive acts and practices in the business of insurance, including unfair claim settlement practices such as unreasonable delay or low offers, enforced by the Division of Insurance.

A licensed agent's or broker's obligation to hold premiums and other funds belonging to insurers or clients in trust, account for them accurately, and keep them separate from personal or business funds.

A statutory fund that pays certain covered claims of policyholders of insolvent Massachusetts insurers, within per-claim limits and subject to statutory exclusions, so covered losses are not left unpaid.

Twisting is persuading a policyholder to drop coverage through misleading or incomplete comparisons; rebating is offering part of the commission or another inducement not stated in the policy. Both are prohibited trade practices.

The most widely used homeowners form, covering the dwelling and other structures against risks of direct physical loss except those excluded, while household personal property is covered only for listed named perils.

A homeowners-style policy for renters that insures personal property against named perils and adds personal liability and additional living expense coverage, but provides nothing for the building itself.

A form for condominium owners covering personal property, liability, and limited building items such as fixtures, cabinets, and improvements inside the unit, coordinated with the association's master policy.

The homeowners section insuring household contents and belongings, usually for named perils and subject to special sub-limits on categories such as jewelry, silverware, cash, and business property.

Pays necessary additional living expenses when a covered loss makes the residence unfit to live in, or fair rental value if the home was rented, for the reasonable time needed to repair or relocate.

Pays reasonable medical expenses for guests and others injured on the insured premises or by the insured's activities, up to a modest limit, without any finding of fault and without a lawsuit being filed.

Auto coverage paying the insured's damages for injury caused by a driver with no insurance or by a hit-and-run driver. Massachusetts requires it on private passenger auto policies and lets the insured also buy underinsured motorist coverage.

The standard commercial liability policy covering third-party bodily injury and property damage caused by an occurrence during the policy period, plus personal and advertising injury, with defense costs generally outside the limits.

CGL coverage for bodily injury or property damage occurring away from the insured's premises and arising out of products sold or work completed, typically subject to its own annual aggregate limit.

A package policy for eligible small and mid-sized businesses that combines commercial property and general liability, often with built-in business income coverage, simplified rating, and optional endorsements.

Pays the insured's lost net income and continuing normal operating expenses, including payroll, during the period reasonably required to restore operations after a covered property loss at the described premises.

The basic, broad, and special forms that define which perils are covered on commercial property: basic and broad list specific named perils, while special covers risks of direct physical loss unless specifically excluded.