PA Property & Casualty key terms

An insurance company authorized by the Pennsylvania Insurance Department to transact business in the state. It must satisfy solvency, rate filing, and market conduct rules, and its policies are backed by the state guaranty association.

A carrier not licensed in Pennsylvania that may write coverage for risks admitted insurers decline, typically placed through specially licensed surplus lines producers. Policyholders generally have no guaranty association protection.

An official review of an insurer's or producer's sales, underwriting, claims handling, and recordkeeping practices to test compliance with state insurance law. Findings can lead to fines, corrective orders, or license action.

Offering any part of a commission, premium, or other valuable inducement to a buyer to encourage the purchase of insurance. It is illegal in Pennsylvania unless the inducement is stated in the policy and offered to all similar buyers.

Inducing a policyholder to lapse, surrender, or replace coverage through misleading or incomplete comparisons of policies, usually to earn a new commission. It is treated as an unfair trade practice.

A deceptive or anti-competitive act defined by state insurance law, such as misrepresentation, false advertising, rebating, twisting, or unfair claim settlement. Violations can result in fines, cease-and-desist orders, and license revocation.

A financial stake in the person or property insured such that the insured would suffer a genuine economic loss if a loss occurred. For property coverage it must exist when the policy is written.

The rule that a property insurance payment should restore the insured to the same financial position held before the loss, no better and no worse. It prevents an insured from profiting from a loss.

The insurer's right, after paying a claim, to step into the insured's shoes and pursue recovery from the party that caused the loss. It also prevents the insured from collecting twice for the same damage.

An insurance policy drafted by the insurer and offered to the buyer on a take-it-or-leave-it basis. Because the insured has no part in writing it, ambiguities are generally interpreted in favor of the insured.

The mutual duty of insurer and applicant to deal honestly and disclose all facts material to the risk. A material misrepresentation by the applicant may allow the insurer to rescind the policy.

Temporary evidence of insurance, oral or written, that provides coverage before the policy is issued. It is subject to the same terms and conditions that will appear in the final policy.

Waiver is the voluntary surrender of a known policy right. Estoppel bars an insurer from later enforcing that right when the insured reasonably relied on the insurer's conduct to their own detriment.

The dominant, unbroken cause that sets in motion the events leading to a loss. Coverage usually depends on whether a covered peril was the proximate cause of the damage.

Failure to use the degree of care a reasonable person would exercise in similar circumstances. A liability claim requires duty, breach of that duty, causation, and resulting damages.

The homeowners coverage that pays to repair or rebuild the dwelling on the residence premises, including structures attached to it, up to the limit shown in the policy.

Homeowners coverage for personal belongings such as furniture, clothing, and appliances, both at and away from the residence. It is usually written on a named perils basis with special dollar limits on certain categories.

Homeowners coverage that pays additional living expenses, such as temporary housing and meals, when a covered loss makes the home uninhabitable. It can also pay lost fair rental value.

The most common homeowners policy. It insures the dwelling and other structures against risks of direct physical loss unless excluded, while personal property is covered only for listed named perils.

A homeowners form for renters that insures personal property, personal liability, and loss of use. It provides no building coverage because the landlord insures the structure.

A loss valuation method equal to the cost to replace damaged property minus depreciation. It reflects the used value of the property at the time of loss.

A loss valuation method that pays what it costs today to repair or rebuild damaged property with new materials of like kind and quality, with no deduction for depreciation.

A property policy condition requiring the insured to carry limits equal to a stated percentage of the property's value. If the insured carries less, the claim payment is reduced in proportion to the shortfall.

A policy provision that protects a lender's interest in insured property. It entitles the mortgagee to loss payments and to advance notice of cancellation or nonrenewal.

Coverage for damage from rising water, mudflow, or waves. Standard homeowners and commercial property policies exclude it, so it is usually purchased through the National Flood Insurance Program or a private carrier.

A liability policy form that covers injury or damage that takes place during the policy period, no matter when the claim is reported, as long as the policy was in force at the time of the occurrence.

A liability form that responds to claims first made or reported during the policy period, provided the wrongful act happened on or after the retroactive date. An extended reporting period may lengthen the reporting window.

General liability coverage for bodily injury or property damage arising from the insured's products or completed work away from the premises. It usually carries its own aggregate limit.

General liability coverage for offenses such as libel, slander, invasion of privacy, wrongful eviction, and infringement of advertising ideas. It is separate from bodily injury and property damage coverage.

Coverage that pays reasonable medical and funeral expenses for injuries to others on the insured's premises or arising from the insured's operations. Payment is made without regard to fault and without a lawsuit.

A policy that provides limits above underlying auto, general liability, and employers liability coverage and can also drop down to cover certain losses the underlying policies exclude or do not cover.

Auto coverage that pays the insured's bodily injury damages caused by a hit-and-run driver or by a driver who carries no liability insurance, up to the limit selected.

Coverage that pays statutory benefits, including medical care, disability income, and death benefits, to employees injured on the job regardless of fault, plus liability protection for related injury lawsuits.

The state agency that licenses insurers and producers, reviews rates and policy forms, examines financial condition and market conduct, and enforces Pennsylvania's insurance laws.

A statutory entity funded by member insurers that pays covered claims of policyholders of insolvent property and casualty insurers, up to limits set by law, when the insurer cannot pay.

A residual market program, formally the Pennsylvania Property Insurance Placement Facility, that offers basic property insurance to owners who cannot obtain coverage in the voluntary market because of location, age, or condition of the property.

Pennsylvania's statute requiring owners and drivers to maintain specified auto coverages. It sets tort option rules, uninsured and underinsured motorist requirements, and penalties for driving without coverage.

A choice under Pennsylvania auto law in which the insured gives up most rights to sue for non-economic pain and suffering damages in exchange for lower premiums. Exceptions apply for serious injury and certain offenses.

The lowest auto liability limits a Pennsylvania driver may carry: $15,000 per person and $30,000 per accident for bodily injury, plus $5,000 for property damage.

The state statute requiring employers to provide no-fault benefits to employees injured or made ill by their work. It is administered by the Department of Labor and Industry and backed by mandatory insurance or self-insurance.