WA Property & Casualty key terms

Washington's state agency that licenses insurers, producers, and adjusters, approves policy forms and rates, investigates complaints, and enforces the state's insurance laws. It is headed by the elected Insurance Commissioner.

The portion of the Revised Code of Washington containing the state's insurance code, setting rules for insurer solvency, producer licensing, policy forms, trade practices, and consumer protections.

The Washington Administrative Code chapter defining unfair or deceptive claim settlement practices, such as failing to acknowledge a claim or denying it without a reasonable investigation. Insurers must follow it when handling claims.

A license issued by the Insurance Commissioner allowing an insurer to transact insurance business in Washington. Insurers without one are unauthorized and generally cannot be used except through surplus lines.

The insurer's written authorization, filed with the state, that lets a licensed producer sell insurance on that insurer's behalf. A producer generally cannot submit business for an insurer without a valid appointment.

Coverage placed with a nonadmitted insurer when no authorized Washington insurer will write the risk. It must be placed through a licensed surplus lines broker, and the state guaranty association does not back it.

A statutory entity funded by member insurers that pays covered claims of policyholders when an admitted Washington insurer becomes insolvent. It does not cover surplus lines or unauthorized insurers and pays only up to statutory limits.

Offering a prospective insured part of the producer's commission, or anything of value not stated in the policy, to induce a sale. Rebating is an unfair trade practice and is illegal in Washington.

A financial stake in the person or property insured such that the insured would suffer a real economic loss if a loss occurred. It must exist at policy inception for property insurance.

The idea that insurance should restore the insured to roughly the same financial position as before a loss, no better and no worse, subject to policy limits and deductibles.

The principle that both insurer and insured must deal honestly and disclose all material facts. A breach can allow the other party to void the contract or deny a claim.

An insurance contract where the amounts exchanged are unequal and depend on chance; the insured pays premiums, but the insurer pays only if a covered loss occurs.

An insurance policy drafted by the insurer and offered on a take-it-or-leave-it basis. Ambiguities in the wording are generally interpreted against the insurer that wrote them.

The insurer's right, after paying a claim, to pursue the party that caused the loss and recover those payments. It helps prevent the insured from collecting twice for the same loss.

The tendency of higher-risk people or businesses to seek or keep insurance more than lower-risk ones. Insurers combat it through underwriting, rating classes, and policy design.

The part of a policy that identifies the insured, the covered property or operations, the policy period, limits, deductibles, and premium. It is the first place to check what a policy covers.

The policy section that states the insurer's core promise: what perils or losses are covered and for how much, subject to the policy's conditions and exclusions.

A clause requiring the insured to carry insurance equal to a stated percentage of property value, often 80%, to receive full payment of a partial loss. Carrying less results in a reduced claim payment.

The cost to replace damaged property minus depreciation, reflecting its value at the time of loss. Policies vary, and some use market value or another formula instead.

The cost to repair or replace damaged property with new property of similar kind and quality, without deducting depreciation. Payment is usually limited to the policy limit.

Homeowners coverage that pays extra costs, such as temporary housing and meals, when a covered loss makes the residence uninhabitable, plus lost fair rental value in some cases.

A policy provision that protects a lender's interest in insured property, requiring notice of cancellation or loss and paying the lender ahead of the borrower up to the amount owed.

Commercial property coverage that replaces lost net income and continuing normal expenses when a covered loss shuts down or slows business operations during the period of restoration.

Coverage for loss from rising water, such as overflow of inland or tidal waters, which homeowners and commercial property policies exclude. It is usually bought separately through the National Flood Insurance Program or a private insurer.

Failure to use the degree of care a reasonable person would use under similar circumstances, resulting in unintended injury or damage. A claim requires duty, breach, causation, and damages.

The Washington rule that reduces an injured person's recovery by their own percentage of fault, no matter how great that percentage, rather than barring the claim entirely.

Legal responsibility imposed on one party for the acts of another, such as an employer being held liable for an employee's negligent act within the scope of employment.

Liability imposed without proof of negligence, such as for defective products or abnormally dangerous activities, when the defendant's conduct caused the harm.

The legal duty of a property owner or occupier to keep the premises reasonably safe and to warn of hazards. The duty owed varies with the visitor's status as invitee, licensee, or trespasser.

A liability policy that covers claims first made against the insured during the policy period, regardless of when the injury occurred, usually subject to a retroactive date.

The insurer's obligation, broader than its duty to pay, to provide a legal defense for the insured against claims potentially covered by the policy, even if the claim is groundless or exaggerated.

A standard policy for personal vehicles with parts for liability, medical payments or PIP, uninsured motorists, damage to your auto, and duties after an accident.

Washington auto coverage that pays medical expenses, lost wages, and similar costs for the insured and passengers after an accident, regardless of who caused it, up to the policy limit.

Protection when an at-fault driver has no insurance or not enough insurance. Washington insurers must offer underinsured motorist coverage, and the insured must reject it in writing to decline.

The financial responsibility minimums required of Washington drivers: $25,000 per person and $50,000 per accident for bodily injury, plus $10,000 for property damage.

A standard liability policy covering a business's liability for bodily injury, property damage, and personal and advertising injury, with separate limits for premises and products-completed operations.

A package policy for small and medium businesses that combines commercial property and general liability coverage, often with business income and extra expense, under a single policy.

Washington's state-run workers' compensation system that pays medical and disability benefits for work injuries. Most employers must buy coverage from the Department of Labor and Industries or qualify to self-insure.