NJ P&C key terms

A financial stake in the person or property being insured, meaning the policyholder would suffer a real economic loss if a covered event occurred. In property insurance it must exist at the time of loss.

The idea that an insurance payment should restore the policyholder to roughly the same financial position held before the loss, no better and no worse, so no one profits from a claim.

A duty on both insurer and applicant to deal honestly and disclose material facts. Applicants must not conceal information the insurer would use to decide whether to accept or price the risk.

An agreement drafted by the insurer and offered to the applicant on a take-it-or-leave-it basis. Because the insured has no say in the wording, ambiguous language is generally read in the insured's favor.

The insurer's right, after paying a claim, to pursue the party that caused the loss and recover those payments. It prevents the insured from collecting twice and shifts cost to the responsible party.

The specific event or cause of loss a policy covers, such as fire, windstorm, theft, or collision. Policies either list covered perils or, in open peril forms, cover all risks except those excluded.

A condition that increases the chance or severity of a loss. Physical hazards are tangible conditions, moral hazards involve dishonest intent, and morale hazards involve carelessness or indifference.

The cost to replace damaged property minus depreciation, reflecting what the property was worth at the time of loss. Many property policies use this method unless replacement cost coverage is added.

The amount needed to repair or rebuild damaged property with new materials of similar quality, with no deduction for depreciation. Payment may be withheld until repairs are actually completed.

A property provision requiring the insured to carry coverage equal to a stated percentage of the property's value, often 80 percent. Carrying less reduces the claim payment proportionally.

A policy form that covers all causes of loss except those specifically excluded, sometimes called special form. The insurer bears the burden of showing that an exclusion applies to the loss.

The amount of a covered loss the policyholder must absorb before the insurer begins paying. Higher deductibles lower the premium because the insurer handles fewer small claims.

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

Liability imposed without proof of carelessness, based on the nature of an activity or product. Examples include keeping wild animals, blasting operations, and selling defective products.

Physical harm, sickness, disease, or death sustained by a person. In liability policies the term usually includes resulting care costs but not emotional distress that has no physical symptoms.

Injury to a person's reputation or rights rather than to the body, such as libel, slander, invasion of privacy, wrongful eviction, or false arrest. It is usually covered separately from bodily injury.

Liability limits written as three numbers, such as 100/300/50, showing the most paid per person for bodily injury, per accident for bodily injury, and per accident for property damage.

The most common homeowners form. It insures the dwelling and other structures on an open peril basis, while household contents are covered for named perils such as fire, theft, and windstorm.

The homeowners coverage that protects the insured's household contents and personal belongings, both at the residence and, within stated limits, while the insured is away from home.

Homeowners coverage that pays extra living expenses, such as hotel and restaurant costs, when a covered loss makes the residence unfit to live in. It may also pay fair rental value.

Homeowners coverage that pays amounts the insured becomes legally obligated to pay because of bodily injury or property damage to others caused by the insured's activities or premises.

An addition to a homeowners policy that lists specific valuable items, such as jewelry or art, for broader coverage, often with no deductible and limits higher than the standard contents limit.

No-fault medical and wage-loss coverage for the insured and passengers hurt in an auto accident, paid regardless of who caused the crash. New Jersey requires it on private passenger auto policies.

Coverage that pays the insured's damages when the at-fault driver has no liability insurance or has limits too low to cover the loss. It can also respond to hit-and-run accidents.

Auto coverage that pays for damage to the insured vehicle caused by hitting another vehicle or object, or by overturning. A deductible usually applies and the coverage is optional.

Auto coverage for vehicle damage from causes other than impact, such as fire, theft, vandalism, hail, flood, or animal strikes. Many insurers call it comprehensive, and a deductible applies.

The part of an auto policy that pays damages the insured becomes legally responsible for because of bodily injury or property damage caused by an auto accident, plus related defense costs.

A packaged policy for small and mid-sized businesses that combines property coverage, general liability, and often business income, written on simplified forms with built-in limits.

Commercial coverage that replaces lost net income and continuing expenses when a covered property loss forces a business to suspend or slow operations, usually during a restoration period.

General liability coverage for bodily injury or property damage arising from products the insured sold or from completed work away from the premises, such as a finished installation.

A person or organization, such as a landlord or general contractor, added to another party's liability policy so it receives protection for claims arising from the named insured's work or premises.

A state-required system that pays medical costs and wage replacement to employees injured on the job, regardless of fault, and bars most injured workers from suing the employer.

Excess liability coverage that sits above auto, general liability, and employers liability policies, paying after those limits are used up and sometimes filling gaps in underlying coverage.

Coverage for sudden accidental damage to covered machinery and equipment from causes such as electrical arcing, motor burnout, or pressure rupture, along with resulting business income loss.

Coverage for loss from rising water, mudflow, or water that overflows onto normally dry land. Property policies usually exclude it, so it is bought through the National Flood Insurance Program or private insurers.

A low-cost New Jersey policy for drivers eligible for federal Medicaid, providing limited emergency medical treatment after an auto accident and a small death benefit, but no liability or collision coverage.

The state's assigned risk plan, which places drivers who cannot obtain coverage in the voluntary market with insurers that must accept them and charge approved rates.

A New Jersey entity funded by insurers that pays certain unpaid claims of insolvent property and casualty insurers, protecting policyholders and claimants up to statutory limits.

A residual market program that provides basic property insurance to New Jersey owners who cannot get coverage in the voluntary market because of the location, age, or condition of the property.

Insurance placed with an insurer not licensed in New Jersey when admitted carriers decline the risk. Surplus lines brokers must follow state eligibility and disclosure rules, and guaranty fund protection is limited.