VA Property & Casualty key terms

The principle that the more similar exposure units an insurer covers, the more closely actual losses will match predicted losses. This predictability lets insurers set rates that are adequate, not excessive, and not unfairly discriminatory.

The tendency for people with the greatest probability of loss to seek or keep insurance more eagerly than lower-risk people. Insurers counter it through underwriting, exclusions, and rating so premiums reflect expected losses.

A financial stake in the person or property insured such that a loss would cause real economic harm. In property insurance it must exist at the time of loss, since otherwise there is nothing to indemnify.

The principle that insurance should restore an insured to roughly the same financial position held before a loss, no better and no worse. It is why property claims are limited by actual value and profit from loss is not allowed.

The mutual duty of insurer and applicant to deal honestly and disclose material facts. Breach may involve misrepresentation, concealment, or warranty violation and can give the insurer grounds to void or rescind coverage.

The cost to repair or replace damaged property with property of like kind and quality, minus depreciation. It is the standard valuation method in many property forms and is usually lower than replacement cost.

The amount needed to repair or replace damaged property with new property of similar kind and quality, with no deduction for depreciation. Payment is often limited to the policy limit until repair or replacement is actually completed.

A property condition requiring the insured to carry insurance equal to a stated percentage of the property's value, commonly 80 percent. If the limit is lower, each loss is paid in the proportion the carried limit bears to the required amount.

The insurer's right, after paying a claim, to pursue the legally liable third party for the amount paid. It helps hold wrongdoers accountable and keeps insureds from collecting twice for the same loss.

Coverage for the extra cost of repairing or rebuilding in compliance with current building codes, and sometimes for the reduced value of an undamaged portion that must be demolished. Homeowners forms typically limit it to a small percentage.

The homeowners form for owner-occupied dwellings. The dwelling and other structures are covered for risks of direct physical loss unless excluded, while personal property is covered only for listed named perils.

The tenants form. It covers the tenant's personal property on a named-peril basis, along with personal liability and loss of use, but provides no coverage for the building itself because the tenant does not own it.

The condominium unit-owners form. It covers personal property, liability, and building items inside the unit that the association's master policy does not insure, such as improvements and betterments, plus limited loss assessment coverage.

Also called loss of use. It pays necessary increases in living expenses, and fair rental value lost, while the residence is uninhabitable because of a covered loss, typically for a stated time limit.

A property form for dwellings such as rental houses or homes under renovation that do not qualify for homeowners coverage. It covers the dwelling and personal property for named perils and usually includes no liability coverage.

Commercial coverage that replaces net income lost and continuing ordinary expenses, such as rent and utilities, while a business is shut down by covered damage to property. It commonly includes extra expense coverage.

The time allowed for business income payments. It begins when the covered damage occurs, or after a stated waiting period, and ends when the property is or should be repaired with reasonable speed.

Coverage on buildings under construction, including materials, supplies, and equipment intended to become part of the structure. It usually ends when the building is complete and accepted by the owner.

A branch of coverage for property that moves or is transported, such as goods in transit, motor truck cargo, and fine arts. It grew from ocean marine and frequently involves a bailee holding property of others.

Failure to use the care a reasonable person would use under similar circumstances. A liability claim generally requires duty, breach of that duty, proximate cause, and actual damages.

A rule that reduces an injured person's recovery by his or her own percentage of fault, and may bar recovery entirely when that fault exceeds a stated threshold. Most states use some version; Virginia does not.

A defense barring an injured claimant from any recovery if the claimant's own negligence contributed in even a small way to the injury. Virginia follows this strict rule, subject to narrow exceptions such as last clear chance.

Legal responsibility for the negligent acts of another person, based on a relationship such as employer and employee. An employer can be liable for an employee's negligence committed within the scope of employment.

The personal auto policy's bodily injury and property damage liability coverage. It pays damages an insured becomes legally liable to pay because of an auto accident, plus defense costs, up to the stated limits.

Personal auto coverage paying reasonable medical and funeral expenses for the insured and passengers, regardless of who caused the accident, up to the limit. It is a no-fault benefit paid without a liability determination.

Coverage that pays an insured's damages caused by a driver with no insurance, a hit-and-run driver, or, in the underinsured version, a driver whose limits are too low. Virginia requires insurers to offer it.

Physical damage coverage for the insured auto when it overturns or strikes another object or vehicle, paid after the deductible. Damage from fire, theft, or vandalism falls under other than collision coverage instead.

Commercial coverage for damage to customers' autos left in the insured's care, such as at a repair shop or parking lot. It can be written as legal liability only or as direct coverage.

Numbers entered on the business auto declarations that state which autos are covered, from any auto to owned, hired, or nonowned autos only. They also determine whether liability, physical damage, or both apply.

Occurrence forms cover injury or damage that happens during the policy period, whenever the claim is later filed. Claims-made forms cover claims first made during the policy period, subject to a retroactive date.

General liability coverage for bodily injury or property damage caused by the insured's products or completed work away from the insured's premises. It applies after the work is finished or the product leaves the insured's control.

A policy providing limits above the insured's underlying auto, general liability, and employers liability policies, and sometimes filling gaps in that underlying coverage. It may apply a self-insured retention to uncovered claims.

The rule that workers compensation benefits are the employee's only remedy against the employer for a work-related injury, replacing a lawsuit. Intentional acts and some other situations fall outside that protection.

A number, often prepared by a rating bureau, comparing an employer's past losses with the average for its classification. A factor above 1.00 raises the workers compensation premium and one below 1.00 lowers it.

The state agency, part of the State Corporation Commission, that licenses insurers and producers, reviews policy forms and rates, examines company finances, and handles consumer complaints about insurance in Virginia.

A statutory entity funded by member insurers that pays covered claims of policyholders of insolvent property and casualty insurers, up to statutory limits, so Virginia claimants are not left entirely unpaid.

A producer licensed to place coverage with nonadmitted insurers when no admitted insurer will write the risk. The broker must first make a diligent effort in the admitted market and follow Virginia placement and disclosure rules.

An insurer's authorization, filed with the Virginia Bureau of Insurance, that lets a licensed producer act as its agent. A producer generally may not submit business for an insurer that has not appointed him or her.

Offering a client something of value not stated in the policy, such as cash or free services, to induce the purchase of insurance. It is an illegal unfair trade practice in Virginia and most other states.