NC Property & Casualty key terms

A financial stake in property or a person such that loss or damage would cause the insured a measurable economic loss. It must exist at the time of loss for property insurance.

The idea that insurance should restore an insured to approximately the same financial position held before a loss, no better and no worse. It supports actual cash value, replacement cost, and recovery limits.

A mutual duty of honesty and full disclosure between insurer and applicant. Concealment or material misrepresentation can allow the insurer to rescind a policy or deny a claim.

The tendency for people with higher-than-average risk to seek or retain insurance more eagerly than low-risk people. Insurers counter it with underwriting, exclusions, and appropriate pricing.

A statistical principle holding that as the number of similar exposure units increases, actual loss experience tends to approach expected loss experience. It helps insurers predict losses and set rates.

The insurer's right, after paying a claim, to pursue the responsible third party for reimbursement. It prevents the insured from collecting twice and helps hold the at-fault party accountable.

The dominant, direct, and efficient cause of a loss, without which the loss would not have occurred. Coverage often depends on whether a covered peril is the proximate cause.

A specific event or cause of loss, such as fire, windstorm, theft, or collision. Policies list covered perils and exclusions that define what events trigger coverage.

A condition that increases the likelihood or severity of a loss from a peril. Examples include faulty wiring, icy sidewalks, or careless habits.

A licensed entity that gathers loss data and files proposed rates and rating rules for many property and casualty lines in North Carolina. The Commissioner of Insurance reviews and may disapprove filings.

The elected state official who regulates the insurance industry, licenses producers and companies, reviews rates and forms, and enforces insurance laws in North Carolina.

A license issued by the North Carolina Department of Insurance that authorizes an insurer to transact specified lines of insurance in the state. Operating without it is illegal.

Coverage placed with an eligible nonadmitted insurer when admitted insurers decline or cannot provide the needed coverage. North Carolina rules require a diligent search and specific disclosures before placement.

The requirement that individuals and agencies selling, soliciting, or negotiating insurance in North Carolina hold a valid license from the Commissioner, complete prelicensing education, and meet continuing education rules.

Prohibited insurance business acts such as misrepresentation, false advertising, unfair claim settlement, rebating, and coercion. North Carolina law allows penalties and remedies for these practices.

A residual market pool, often called the Beach Plan, that provides property insurance in designated coastal areas where admitted insurers may limit or avoid wind coverage.

North Carolina law requiring drivers to maintain liability insurance and show proof of financial responsibility, with penalties such as license and registration suspension for violations.

A valuation method equal to replacement cost minus depreciation, reflecting the property's value at the time of loss. It is common in personal and commercial property policies.

A valuation method that pays the cost to repair or replace damaged property with new property of similar kind and quality, without deducting depreciation, subject to policy limits and conditions.

The homeowners policy section that insures the dwelling and attached structures on the residence premises. The limit is usually based on replacement cost and is shown on the declarations page.

The homeowners policy section covering the insured's personal belongings, both on and off the residence premises, subject to special limits and exclusions for certain categories of property.

Homeowners coverage that pays extra costs to live elsewhere and lost fair rental income when a covered loss makes the residence uninhabitable, subject to time and dollar limits.

Failure to exercise the degree of care a reasonable person would use under similar circumstances. Liability insurance responds when the insured's negligent acts cause bodily injury or property damage to others.

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

A liability policy that covers claims first made against the insured during the policy period, regardless of when the incident occurred, often with a retroactive date and extended reporting period.

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

Homeowners coverage that pays reasonable medical expenses for nonresident guests injured on the insured premises or by the insured's activities, regardless of fault, subject to a limit.

Auto coverage that pays the insured for bodily injury or property damage caused by a driver who has no insurance or cannot be identified, as required or offered under North Carolina law.

Auto coverage that responds when an at-fault driver has liability insurance but limits too low to pay the insured's damages. It may be stacked with the at-fault driver's coverage.

A property policy provision requiring the insured to carry insurance equal to a specified percentage of the property's value. If underinsured, the insured shares the loss through a reduced claim payment.

Commercial property coverage that replaces lost net income and continuing normal operating expenses when a covered loss interrupts the business, typically during a period of restoration.

Commercial coverage that pays reasonable costs to avoid or minimize business interruption after a covered loss, such as temporary relocation or expedited repairs, beyond normal operating expenses.

Commercial property coverage for the insured's furniture, fixtures, machinery, equipment, stock, and similar movable property used in the business, both at and away from the described premises.

A commercial property form that covers risks of direct physical loss unless the loss is specifically excluded or limited. It is broader than basic and broad causes of loss forms.

A broad liability policy for businesses covering bodily injury, property damage, personal and advertising injury, and medical payments arising from premises, operations, products, and completed work.

Commercial general liability coverage for bodily injury or property damage occurring away from the insured's premises and arising from products sold or work completed by the insured.

The maximum amount a commercial general liability policy will pay for all covered claims during a policy period, other than claims subject to the products-completed operations aggregate.

Liability coverage for offenses such as libel, slander, wrongful eviction, and infringement of advertising ideas, as defined in the policy, rather than for physical bodily injury or property damage.

Coverage required by North Carolina law that pays statutory benefits to employees for work-related injury or disease, plus employers liability for related lawsuits.

Coverage for liability and physical damage arising from business-owned, hired, or non-owned autos used in the insured's business, including symbols that define which autos are covered.