Insurance Glossary


Abandonment Surrender to the insurer of all interest in insured property after an event insured against has occurred. Not permitted under most property insurance contracts. Applies to property, or physical dam- age coverages, in Fire, Marine and Auto Insurance.

Abandonment condition A condition often contained in property insurance policies that states that the insured cannot abandon damaged property to the in- surer and demand to be reimbursed for its full value.

Absolute liability Type of liability imposed by law on those participating in certain activities that are considered especially hazardous; a person involved in such operations may be held liable for the damages of another even though the individual was not negligent

Accident A sudden unexpected event, identifiable in time and place. In some policies, the definition of accident has been broadened to mean the same as occurrence.

Accident and Health A type of insurance that protects against loss resulting from personal accident or sick- ness. It is written by both casualty and life companies.

Accounts Current A statement furnished monthly to agents showing all business written and canceled during the previous month. Used by agents to remit the premiums due the company, less commissions.

Accounts receivable insurance Filed commercial inland marine form that insures against loss the insured suffers because of an inability to collect from customers when accounts receivable records are damaged or destroyed.

Act of God An event that is caused by the forces of nature, without human intervention, and that could not have been prevented by reasonable care, e.g., flood, lightning, earthquake, hurricane, etc.

Actual cash value (ACV) The cost to replace an item of property at the time of loss, less an allowance for depreciation; often used to determine the amount of reimbursement for a loss.

Actual Cash Value An amount which limits the company’s payment to the actual cash value of an item at the time of loss or damage. Usually includes a deduction for depreciation.

Actuary A technical expert on insurance, particularly versed in the mathematics of insurance, including the calculation of premiums, policy reserves and other values.

Additional coverages Supplemental insurance cover- ages that apply only in certain circumstances, have reduced or separate limits of liability, or require the insured to meet certain requirements before they are applicable; also called coverage extensions, other cover- ages, and extended coverages.

Additional insured an individual or company, in addition the insured, who is listed in the declarations; an example is a mortgage company that has an interest in the property insured.

Additional insured-Lessor endorsement commercial auto endorsement used to make leased vehicles considered owned vehicles for coverage purposes.

Adhesion contract A contract where one party has more power than the other party in drafting the contract; an insurance policy is an adhesion contract-the in-surer is the one with more power.

Adjuster A person, usually a salaried employee, who settles or adjusts claims.

Adjustment The process of determining the amount of a loss followed by settlement of the claim.

Admitted Company (or Insurer) An insurer licensed under the law of a state to do business in that state.

Admitted insurer See Authorized insure.

Adverse selection the tendency of insureds with a greater-than-average chance of loss to purchase insurance.

Advance Premium A deposit premium paid by the insured which may later be adjusted up or down, following an audit of the insured’s records (i.e., payroll, inventory, sales receipts).

Agency Principles governing the authority of any agent that represents a principal.

Agency Department An insurance company department in charge of agents and agencies. The agency department is responsible for supervising of agents.

Agent An individual or organization that legally rep- resents another; a state-licensed professional who represents the insurance company in the sale and servicing of insurance; the direct link between the insurance company and the policyholder.

Agent, Exclusive An agent of a specific insurance company with the responsibility for selling insurance. Usually paid by commission. Represents only one company.

Agent, Nonexclusive An agent in business for himself or herself, selling insurance for many different companies. Paid by commission on sales.

Aggregate limit Type of policy limit found in liability policies that limits coverage to a specified total amount for all losses occurring within the policy period.

Agreed amount policy See Valued policy.

Agreed value condition Condition found in some property insurance policies that stipulates a certain value that will meet the coinsurance requirement; if the policy limit equals or exceeds this amount, the insured will not be assessed a coinsurance penalty; also called stated amount condition.

Aleatory contract A contract that is contingent on an uncertain event (a loss); an insurance policy is an aleatory contract.

Alien company an insurance company incorporated in a country other than the United States that is doing business in the United States.

A.M. Best Company Organization that rates the financial stability of insurance companies doing business in the United States.

Annual transit policy Nonfiled commercial inland marine transportation form that insures a property owner’s incoming or outgoing shipments of goods during a year.

Annual Statement The company’s yearly financial report to insurance departments issued at the close of the year. This ance departments and is made according to a form agreed upon by the supervising authorities.

App A short term for application which is an order received from an agent for the writing of a policy.

Apparent authority Legal doctrine that states that an agent has whatever authority a reasonable person would assume she has.

Applicant A person who fills out and signs a written application for insurance.

Application A questionnaire providing space for information to be used to determine the insurance coverage required, as well as the acceptability of the insurance risk and the amount of premium. A questionnaire which must be filled in, when required, by the person seeking insurance. It gives the company full information about the proposed subject of insurance and the person to be insured, for the purpose of determining whether the company will issue the policy. In some types of insurance, it becomes part of the policy.

Apportionment Where more than one insurance contract covers a loss, the determination of extent to which each contract covers.

Appraisal Determination of the value of property, or of the extent of damage, usually by impartial experts. Provided for by a clause in some types of insurance contracts.

Appraisal condition Policy condition that outlines a procedure for when the insured and insurer disagree on the amount of a loss-the insured and the insurer each select an appraiser; the two appraisers select an umpire; if the appraisers cannot agree on the amount of loss, the umpire is consulted; the amount agreed to by any two of the three parties is the amount paid for the loss.

Appreciation Rise in value or price. Increase in worth or value.

Appurtenant structures Buildings of lesser value that are on the same premises as the main building insured under a property policy; they are usually covered by the policy.

Arbitration Clause Clause of policy that provides for mediation to resolve areas of disagreement between the insured and the insurance company, the insurance company and a third party in the case of liability insurance, or two or more insurance companies when other insurance is involved.

Arbitration condition Policy condition that is similar to the appraisal condition; may be used to resolve other areas of disagreement besides those regarding the value of a loss.

Arson The willful and malicious burning of property, sometimes with the intent of defrauding insurance companies.

Assigned Risk A driver or owner who cannot qualify for insurance in the regular market. This driver must get coverage through a state assigned risk plan which specifies that each company must accept a proportion- ate share of poor risk applicants. Premiums are generally higher, and coverage is restricted.

Assignment The transfer of one’s interest in an insurance contract to another; in many kinds of insurance, valid only with the consent of the insurer; the transfer, after an event insured against, of one’s right to collect an amount payable under an insurance contract.

Assignment condition Condition in insurance policies that specifies that the policy cannot be transferred to another unless the company consents to the transfer in writing.

Assessment mutual company Mutual insurance company that charges members a pro-rata share of losses at the end of each policy period. See Mutual company.

Assumption of risk Defense against liability based on the common law principle that a person who knowingly exposes himself to danger or injury assumes the risk of loss and cannot hold another person responsible for the loss.

Assured Synonym for insured (i.e., one who has insurance). Specifically, one who has an insurance policy, a policyholder. The term is outdated. Insured is the preferred term.

Attorney-In-Fact An individual who is given the of transacting stated kinds of business for another by a written contract, called a power of attorney. Used most often in insurance to define the powers of the person who operates a “reciprocal exchange” or “interinsurance exchange.”

Attractive Nuisance A dangerous place or instrumentality attractive to children. The owner of an “attractive nuisance” has the legal duty of taking unusual care to guard children from it.

Authorized insurer Company that meets a state insurance department’s standard and is authorized to do business in that state; also called an admitted insurer.

Automatic increase In Insurance Endorsement Dwelling policy endorsement that provides an annual in- crease in the Coverage A amount of 4%, 6%, or 8.

Automobile insurance plan A state-sponsored plan that provides automobile insurance to those who are un- insurable under standard auto insurance policies.

Aviation hull insurance Insurance that provides cover- age for physical damage to aircraft.

Aviation liability insurance Insurance provided for owners of aircraft that covers liability for bodily in- jury, injury to passengers, and property damage; also provides medical payments coverage.




Bailee One who has custody of the property of another. Bailees “for hire” have certain responsibilities to care for the property of others.

Bailee’s customer policy Nonfiled commercial inland marine form obtained by a bailee to cover loss or damage to customers’ property in the bailee’s custody without regard to liability.

Bailment Delivery of property by the owner to someone else to be held for some special purpose and then re- turned to the owner.

Barratry Illegal acts committed willfully by a ship’s master or crew for the purpose of damaging the ship or cargo-includes hijacking, abandonment, and embezzlement; this peril is covered in ocean marine insurance.

Basic Limits Certain minimum amounts of liability to be covered by insurance. It is customary to quote premiums in terms of these minimum amounts.

Best’s Organization that rates the financial stability of insurance companies doing business in the United States.

Bid bond Type of surety bond that guarantees that if a contractor’s bid is accepted, the contractor will enter a contract and provide the required performance bond.

Bill of lading Standardized contract of carriage issued by common carriers to the business for which it is ship- ping goods.

Binder Notification from an agent that insurance has been affected and is immediately in force; used in certain cases to protect a policyholder when it is not possible to issue a policy or endorse the old policy immediately. A temporary agreement that the policy is in effect.

Blanket insurance Type of insurance policy that covers more than one item of property at a single location or one or more items of property at multiple locations.

Blanket position bond Fidelity bond that covers losses arising from the dishonesty of one or more employees acting separately or in collusion; provides a single limit of liability applicable to each employee involved in a loss.

Boat owner’s policy See Watercraft package policy

Bodily Injury Injury to the body of a person. The term is usually specifically defined in the policy, and these individual definitions have variations.

Bodily injury (BI) Defined in most policies to include injury, sickness, disease, and death resulting from any of these at any time.

Boiler and machinery insurance Insurance that covers the insured for losses arising out of the use of steam boilers or other machinery or equipment; may be included in the commercial package policy.

Broad theft coverage endorsement Dwelling policy endorsement that covers theft, attempted theft and vandalism, and malicious mischief resulting from theft; property is covered while it is on or off the premises.

Broker A term generally used to describe one who places business with more than one company, and who has no exclusive contract requiring that all business first be offered to a single company. Unlike the agent, who is considered to represent a company, the broker usually is considered to represent the insured.

Budget Payments A method of paying premiums by installments.

Builders risk coverage form One of the commercial property coverage forms; covers commercial, residential, or farm buildings that are under construction.

Builders risk reporting form Optional form used with the commercial property builders risk coverage form; allows insured to purchase a smaller amount of insurance that gradually increases as the value of the building under construction increases.

Building and personal property coverage form Commercial property coverage form that covers buildings, the insured’s business personal property, and the personal property of others located at the business premises.

Burglary As defined in crime insurance forms, the taking of property by a person unlawfully entering or leaving the premises as evidenced by visible signs of forced entry or exit.

Business auto coverage form One of the commercial auto coverage forms; covers a business’s owned, non- owned, and hired autos against liability and physical damage losses.

Business auto physical damage coverage form One of the commercial auto coverage forms; covers a business’s owned or hired business autos for physical damage only.

Business income coverage forms Commercial property coverage forms that pay for loss of income that the insured sustains due to a direct physical loss from a covered peril that forces the insured to suspend operations until the property can be repaired, rebuilt, or replaced with reasonable speed; available with or without extra expense coverage.

Business income from dependent properties Broad form commercial property coverage form designed for insureds whose business income is dependent on the ongoing operations of other businesses they do not own.

Business liability Liability that arises out of the conduct of a business.

Business pursuits endorsement Homeowners policy endorsement that provides liability coverage for a business conducted away from the residence premises.

Businessowners policy (BOP) Package policy designed to provide broad property and liability coverage for small businesses; eligibility requirements are stricter than the CPP’s.




Camera and musical instruments dealer’s coverage form Filed commercial inland marine form written to cover camera and musical instruments dealers; covers the insured’s stock in trade as well as customer property in the insured’s care, custody, or control.

Cancellation Termination of an insurance contract before the end of the policy period, by the insured or insurer, usually in accordance with provisions in the contract.

  • Flat Cancellation of an insurance contract as of its date of inception, without premium charge.
  • Pro Rata Termination of an insurance contract or bond, with the premium charge then adjusted in proportion to the exact time the protection has been in force.
  • Short-Rate Cancellation of an insurance contract at the request of the insured, with return to the insured of less than the proportion of the premium that is payable upon pro rata cancellation.

Capital The accumulated, permanent resources a company gets from owners and customers; the value of the portion of assets that a company owns and that are not restricted by obligations to creditors.

Cargo insurance Type of ocean marine insurance that covers goods while they are in transit over water.

Carrier An insurance company, or, in transportation insurance, a railroad, trucker or other transporter of goods.

Casualty insurance Line of insurance that includes a wide variety of unrelated coverages, including liability, auto, workers’ compensation, aviation, crime, and surety bonds.

Catastrophe An event which causes a loss of extraordinarily large values.

Causes of loss form Separate form used with the commercial property coverage part of the commercial package policy that lists covered perils and exclusions; several different versions provide increasingly broader coverage from basic to broad to special; a causes of loss form takes the place of the policy’s perils insured against provisions.

Certificate of insurance Written form that verifies a policy has been written; provides a summary of the coverage provided under the policy.

Claim A demand by an individual or corporation to recover under a policy of insurance for loss arising out of events covered by the policy. Claims are referred to the insurance company for handling on behalf of the insured in accordance with the contract terms. A demand for payment under an insurance contract or bond. The estimated or actual amount of a loss.

Claim adjuster Person employed by or acting on behalf of an insurance company to evaluate and settle insurance claims; the adjuster must determine the cause of loss, whether the loss is covered by the policy, the value of the loss, and the amount of loss payable by the policy.

Claimant One who makes a claim.

Claims-made Form Commercial general liability cover- age form that pays for Bl or PD losses for which a claim was first made against the insured during the policy period.

Class rating See manual rating.

Client The customer. The person who buys the insurance.

Code A number assigned to represent some characteristic of a risk. Shown on the daily report and the basis of most statistical work, e.g., a number for each state, a number for each occupancy class, a number for type of policy, etc.

Coinsurance Policy condition that requires an insured to pay part of a loss if the amount of insurance carried on property is less than a specified percentage of the value of the property at the time of loss.

Coinsurance penalty the amount not paid by the insurance company because the insured failed to comply with the coinsurance condition.

Coinsurer An insured or insurer that shares losses under a coinsurance arrangement.

Combined Ratio A measure of the extent to which premium income covers a company’s losses and expenses, determined by adding together a company’s loss ratio and its expense ratio.

Collision coverage in auto insurance, a type of physical damage coverage that covers loss that occurs when the insured auto strikes another object or vehicle; may also include upset or overturn of the insured auto. Combined ratio the sum of the loss ratio and the expense ratio; a ratio of 100% is the breakeven point; a ratio below 100% indicates an underwriting profit; a ratio above 100% indicates a loss; see Loss ratio and expense ratio.

Combined single limit See Single limit.

Commercial articles coverage form Filed commercial inland marine form that covers photographic equipment or musical instruments used commercially.

Commercial auto coverage Part A part of the commercial package policy that provides liability and physical damage coverage for a business’s autos, including garage, trucking, and motor carrier businesses.

Commercial blanket bond Type of fidelity bond that covers loss arising from the dishonesty of one or more employees acting separately or in collusion; the limit of liability applies separately to each loss, regardless of the number of employees involved.

Commercial crime coverage Part A part of the commercial package policy that covers various crime exposures of businesses.

Commercial general liability (CGL) coverage Part A part of the commercial package policy that provides liability coverage for businesses.

Commercial inland marine insurance See Inland marine insurance.

Commercial Lines Insurance designed for businesses, institutions, or organizations.

Commercial package policy (CPP) The insurance ser- vices office (ISO) commercial lines policy that contains two or more lines of insurance or two or more coverage parts; it will include some forms and/or endorsements that are common to all lines of insurance or coverage parts, as well as the individual forms and endorsements required for the individual coverages selected; the CPP can include almost any commercial coverage the insured might need, with the exception of ocean marine, aviation, and workers’ compensation insurance; most commercial risks are eligible for the CPP.

Commercial property coverage Part A part of the commercial package policy that provides insurance for a business’s real and business personal property.

Commercial property floater risks Category of the nationwide definition that includes several commercial inland marine forms, such as Bailee’s customer forms, equipment forms, business floaters, and dealers’ policies.

Commercial umbrella policy See Umbrella policy.

Commission A percentage of the premium paid to an agent or broker in return for business procured by the agent.

Common policy declarations Form that must be included in the commercial package policy; contains information about the insured that applies to all coverages issued under the CPP.

Comparative negligence Law that allows an injured party to collect from another party for a loss, even when the injured party contributed to her own loss. Damages are reduced to the extent of the injured party’s negligence.

Compensatory damages Damages that reimburse an injured party for losses that were sustained; see General damages and Special damages.

Competent parties One of the requirements of a legal contract; states that for a contract to be valid, it must be made between parties who are considered competent under the law.

Competitive state fund Method of providing workers’ compensation coverage in some states; employers may either purchase insurance from a private insurance company or from a state fund.

Completion bond Type of surety bond that guarantees that when contractors borrow money to fund construction projects, the project will be carried out and the work will be delivered free and clear of liens or encumbrances.

Comprehensive coverage in auto insurance, a broad physical damage coverage that covers all property losses except collision and those perils or property that are specifically excluded; also called other than collision coverage (OTC).

Concealment Withholding of material facts from the insurer in negotiating an insurance contract or in making a claim.

Concurrent Insurance under two or more contracts, all the terms of which are identical, except that they may vary in amount or policy dates.

Concurrent causation A situation where two or more perils act concurrently (at the same time or in sequence) to cause a loss; some courts ruled that losses from concurrent causation are covered even when one of the perils that contributed to the loss is excluded under the policy; these rulings led property insurers to revise policy language to clarify the intent of the policy.

Conditional contract A contract that contains several conditions that both parties must comply with; an insurance policy is a conditional contract.

Conditions That portion of the insurance contract which outlines the duties and responsibilities of both the insured and the insurer.

Condominium association coverage form Commercial property coverage form that covers the buildings in a condominium complex; does not cover the condominium owner’s personal property.

Condominium commercial unit-owners coverage form Commercial property coverage form that may only be purchased by owners of commercial condominiums; covers the condominium’s contents, including business personal property and the personal property of others.

Consequential Loss See Indirect Loss.

Consideration A characteristic of a legal contract; the thing of value exchanged for the performance promised in the contract; with insurance contracts, the consideration that the insured gives is the premium payment; the consideration that the insurer gives is the promise to pay for certain losses suffered by the insured.

Consultant Insurance professional who, for a fee, offers advice on the benefits, advantages, and disadvantages of various insurance policies; sells advice, not insurance.

Contract A legal agreement between two competent par- ties that promises a certain performance in exchange for a certain consideration.

Contract bonds Category of surety bonds that guarantee the fulfillment of contractual obligations; includes bid bonds, labor and materials bonds, performance bonds, payment bonds, supply bonds, and completion bonds.

Contractors equipment floater Nonfiled commercial inland marine form that covers the heavy machinery, equipment, and tools a contractor uses in business.

Contribution by equal shares Type of other insurance condition found in liability policies; it calls for all insurers to contribute equally up to the limit of the policy having the smallest limit, whereupon that company stops paying; the other companies share in the remainder of the loss until the loss is paid in full or all policy limits are exhausted.

Contribution by limits See Pro rata other insurance.

Contributory Negligence The act or omission to act on the part of one person, which, when taken with the act or omission of another, sometimes called a tortfeasor, can be considered a contributing cause of the accident or injury complained of.

Corrections The act of changing a policy by endorsement, adding, or canceling coverages, or changing the policy terms.

Countersignature The signature of the insurer’s representative which is usually required to validate an insurance policy.

Court bond Type of surety bond used to settle legal arguments that do not involve monetary damages.

Cover An insurance contract.

Coverage The guarantee against specific losses provided under the terms of a policy of insurance. Coverage is frequently used interchangeably with the word “protection.” It is used synonymously with the word “insurance.”

Coverage extensions See Additional coverages.

Coverage form Document that contains insuring agreements, coverages, exclusions, and conditions; must be attached to a policy jacket to make a complete policy; also called a policy form.

Coverage part Combination of forms and endorsements used to provide a particular commercial coverage; the forms and endorsements available under each coverage part can be used to issue a policy covering a single line of insurance or combined to provide a commercial package policy.

Coverage trigger Event that activates (triggers) cover- age under a commercial general liability coverage form Under the occurrence form, the coverage trigger is bodily injury or property damage that occurs during the policy period; under the claims-made form, the trigger is BI or PD that occurs on or after the retroactive date, if any, for which a claim is first made against an insured during the policy period.

Credit Report A report obtained from a professional reporting company on the financial, physical, and moral status of an insured or applicant.

Custodian As defined in crime insurance forms, an insured, partner, or employee who has care and custody of insured property within the premises; does not ap- ply to watchpersons or janitors.




Damages Monetary compensation awarded by a court to an injured party.

Declarations Page That portion of the insurance contract which contains such information as: name and address of the insured, description of the property, coverage, and premium amounts.

Deductible A certain dollar amount, specified in some property insurance policies, beyond which insurance protection begins. The insured assumes the loss up to the limit of the deductible amount; then the company pays any loss over that amount.

Defense costs Legal expenses incurred by the insurer to defend suits brought against insureds; defense costs are paid in addition to payments for Bl or PD claims.

Definitions Section of an insurance policy that clarifies the meaning of certain terms used in the policy.

Degree of care Extent of legal duty owed by one person to another; also called standard of care.

Deposit premium Premium paid at the beginning of the policy period that is based on an estimate of what the final premium will be; this premium is adjusted based on reports submitted by the insured to the insurer; also called an estimated premium.

Difference in conditions insurance (DIC) Type of commercial property policy that covers most insurable perils but excludes basic fire and extended coverage perils.

Diminution of value an actual or perceived loss of an auto’s resale or market value that results from a direct, accidental loss.

Direct Loss Loss that is the direct result of a peril. Com- pare to Indirect Loss.

Direct Response A marketing method that involves no agents. Insurance is sold directly to the public by soliciting responses by mail or other form of advertisement. Also, a company that uses this method of marketing.

Direct response system Insurance company that sells insurance through the mail or over the phone; no agents are involved.

Direct Writer An agent who represents only one company, or a company that employs such agents. See also Agent, Exclusive.

Directors and officer’s liability insurance (D&O) Type of errors and omissions policy written for directors and officers of corporations who may be sued as individuals by stockholders.

Disability Inability to carry on one’s normal occupation due to personal injury or illness.

Disability Income A health insurance coverage which pays a specified monthly benefit in the event the insured is unable to work due to injury or illness.

Disability insurance Line of insurance that protects the insured against loss of income resulting from injury or sickness.

Discovery form Commercial crime form that covers losses that are sustained at any time and discovered either during the policy period or up to 60 days after the policy expires; the discovery period for losses related to employee benefit plans extends for up to one year after policy expiration.

Dividend A dividend on insurance contracts is the refund of that part of the premium paid at the beginning of the year which still remains after the company has set aside the necessary reserve and made deductions for claims and expenses. The dividend may also include a share in the company’s investment, mortality, and operating profits.

Doctrine of reasonable expectations Legal principle that provides that an insurance policy includes coverages that an average person would reasonably expect it to include, regardless of what the policy provides.

Domestic company Insurance company doing business in the state in which it is incorporated.

Domestic Insurer This term is used to describe an insurer within its state of domicile.

Domestic shipments Category of the nationwide definition that includes coverage for cargo in transit over land.

Draft An instrument having the external characteristics of a check but differing in that the bank is authorized to transfer check funds on presentation of the instrument. They may transfer draft funds only when the draft has been accepted by the drawer and acknowledged by acceptance of the instrument as valid.

Drive other car (DOC)-Broadened Coverage For Named Individuals Endorsement Commercial auto endorsement that extends the definition of a covered auto to include autos the named insured does not own, hire, or borrow while being used by the person named in the endorsement.

Duties following loss Condition found in property- casualty policies that explains the insured’s responsibilities after a loss occurs.

Dwelling policy Policy that provides property coverage to individuals and families; covers dwellings, other structures, personal property, and fair rental value; some versions also cover additional living expense; the unendorsed policy does not provide liability coverage.

Dwelling under construction endorsement Dwelling policy endorsement used to provide provisional limits of liability for dwellings under construction; the limits of liability increase as construction of the building progresses.




Earned Premium That portion of the premium which represents coverage already provided. Each day that an insurance policy is in force would be a day of earned premium.

Earthquake insurance Insurance that covers damage to structure, its contents, or both as the result of an earthquake, available as a separate policy and as an endorsement to the dwelling, homeowners, and commercial property policies.

Effective Date The starting date of a policy; the time at which the insurance protection begins.

Electronic data processing equipment floater Nonfiled commercial inland marine policy that provides open peril coverage for computer hardware, computer soft- ware, and data that is owned by the insured or in the insured’s care, custody, or control. Breakdown cover- age, extra expense, and business interruption cover- age may also be included.

Employees as additional insureds endorsement Endorsement used with the business auto coverage form that covers employees while they are using an auto not owned, hired, or borrowed by the business in the business or personal affairs of the named insured.

Employers liability coverage Coverage included in the Workers’ Compensation and Employers Liability policy that covers the employer’s liability at common law arising out of employees’ work-related injuries and occupational diseases.

Employers Liability A policy that covers employers who may be liable if, through their negligence, employees have been injured. Workers’ Compensation pays the worker whether the employer has been negligent or not. Injury must be incurred in the course of employment.

Employment practices liability insurance Type of policy that covers a business’s losses arising out of wrongful termination, discrimination, sexual harassment, and other employment-related practices.

Endorsement An amendment in writing (including printing or stamping) added to and made a part of the insurance contract for the purpose of changing the original terms- either to restrict or expand coverage.

Equipment breakdown protection coverage form Title of ISO coverage form used to write what is tradition- ally called boiler and machinery insurance. See Boiler and machinery insurance.

Equipment dealer’s coverage form Filed commercial in- Land marine coverage form that covers mobile equipment and construction equipment dealers; covers the insured’s stock in trade as well as customer property in the insured’s care, custody, or control.

Estimated premium See Deposit premium.

Estoppel Principle that states that if one intentionally or unintentionally creates the impression that a certain fact exists, and an innocent party relies on that impression and is injured as a result, the guilty party may be legally prohibited from asserting that the fact does not exist.

Excess electronic equipment endorsement Personal auto policy endorsement that allows an insured to add coverage for tapes, records, and disks used with electronic media and to increase the limit of insurance for electronic equipment that is permanently installed in an area of the auto not normally used for installing this equipment.

Excess insurance When two or more policies or cover- ages apply to the same loss, the one that applies only after the limits of the primary coverage have been exhausted.

Excess lines agent Agent licensed by the state to handle the placement of business with nonadmitted insurers; also called surplus lines agent.

Exclusions Section of an insurance policy that lists property, perils, persons, or situations that are not covered under the policy.

Exclusions That portion of the insurance contract which specifies the losses not protected by the policy.

Exclusive agent an agent who markets insurance for a single company; also called captive agent.

Exclusive remedy doctrine One of the precepts upon which the workers’ compensation system was founded; stipulates that the only means available to employees to receive compensation from employers for injuries covered by workers’ compensation laws is through the benefits mandated by those laws.

Exemplary damages See Punitive damages.

Expense Ratio A measure of a company’s expenses determined by dividing the company’s expenses by its written premiums.

Expense ratio Ratio that indicates the cost of doing business; it is calculated by dividing the amount of underwriting expenses by the amount of written premium.

Experience A record of premiums and losses; the basis upon which future rates are predicted.

Experience modification factor in experience rating, the factor applied to reduce the premium when loss experience is better than expected.

Experience rating Type of merit rating that determines premium based on previous loss experience.

Expiration The date on which the insurance protection on a policy will end, e.g., coverage will cease on an annual policy at the end of 12 months from the effective date.

Expiration Notice A form sent to an agency (by the company) or to a named insured (by the agency) indicating that a policy is due to expire on a certain date. The form is often returned as an order for renewal of the policy.

Exports Category of the nationwide definition that includes risks eligible for ocean marine insurance.

Exposure A condition or situation that presents a possibility of loss.

Express authority Legal doctrine that states that an agent has the authority specifically given to the agent, either orally or in writing, by the principal.

Extended coverages See Additional coverage.

Extended nonowned coverage-Vehicles furnished or available for regular use endorsement Personal auto policy endorsement that eliminates most exclusions applicable to autos that are furnished or available for the regular use of the named insured or family members.

Extended reporting period (ERP) Period of time pro- vided by the claims-made commercial general li- ability coverage form during which coverage will be provided for claims made after the expiration date of the policy if certain conditions are met; the basic ÉRP runs 60 days and can be extended to five years; the supplemental ERP runs for an unlimited duration, but is available only by endorsement for an additional premium.

Extortion-Commercial entities endorsement Endorsement used with the commercial crime policy that covers loss of money, securities, and other property when surrendered away from the premises as a result of a threat to do bodily harm to the insured, an employee or a relative of either who is being held captive.

Extra expense coverage forms Commercial property coverage form that covers additional expenses incurred by the insured business to continue operations following a direct loss by a peril insured against.




Face Amount The total amount or principal amount of insurance provided by an insurance policy. The term derives from the fact that the amount of insurance is usually indicated on the first page or “face” of the policy.

Fair access to insurance requirements (FAIR) plan Program established by law that makes property insurance available to insureds who might otherwise be uninsurable in the standard market.

Fair Credit Reporting Act Federal law that allows consumers who are denied insurance because of information contained in a credit report to be notified and allowed to obtain the information used in the report from the reporting agency.

Face Sheet A transcript of the daily report which shows the coverages carried by the insured, statistical coding, and record of a claim.

Farm coverage Part of the commercial package policy that provides property and liability insurance to farmers for both their personal and business expo- sures.

Federal Employers Liability Act (FELA) Federal law that provides benefits to injured railroad workers who are exempt under state workers’ compensation laws.

Fellow servant rule Common law defense against li- that allowed employers to escape liability for injury to an employee if another employee’s careless- ness had contributed to the loss.

Fidelity and Surety Bonds Insurance against dishonesty of employees. Guarantees the faithful administration of assets or the proper performance of contracts.

Fidelity bond Class of bonds that guarantees an employee’s honest discharge of duty; written to protect an insured from dishonest acts by employees.

Fiduciary Person who stands in a special relationship of trust to another person.

Fiduciary bond Type of surety bond that guarantees that a fiduciary will fulfill its obligations set forth by law.

Fiduciary liability policy Insurance that protects people who manage private pension and employee benefit plans against liability for violation of the federal ERISA law.

Field Representative or Field Manager An employee who travels a given territory and calls on agents in the interest of the company. Sometimes called a Special Agent or Sales Manager.

Field underwriting Selection of clients by the agent in accordance with company standards.

File and use Method of rate and form ratification used by some state insurance departments that allows a company to begin using forms or rates as soon as they are filed by the department; the department eventually reviews the filing and officially accepts or rejects it. Filed form Standardized inland marine form that can be written under the commercial inland marine cover- age part of the commercial package policy.

Film coverage form Filed commercial inland marine form that covers exposed motion picture film until production is complete and positive prints are made.

Financial responsibility laws State laws that require owners or operators of autos to provide evidence that they have the funds to pay for automobile losses for which they might become liable. Insurance is the usual method for providing this evidence to the state. First-named insured First person listed in the declarations as an insured; the first-named insured may have a higher level of duties or rights under the policy.

First party loss Property insurance loss.

Flat cancellation Cancellation of a policy by the insured or the insurance company on its effective date.

Fleet Policy A policy which provides insurance for several vehicles owned by one insured: or, in marine insurance, a number of ships of one owner.

Floater Insurance policy that covers property wherever it is located

Floater Policy A policy under the terms of which protection follows movable property, covering it wherever it may be, for example, a policy on tourist’s luggage.

Flood insurance See National Flood Insurance Program.

Floor plan coverage form Filed commercial inland marine form that covers stock that is subject to a floor plan arrangement, where a dealer borrows money from a lender with which to pay for merchandise.

Foreign company an insurance company doing business in a state other than the one in which it is incorporated.

Foreign Insurer This term is used to describe an insurer domiciled in another state.

Fraternal Benefit Society An incorporated society or order, without capital stock, that is operated on the lodge system and is conducted solely for the benefit of its members and their beneficiaries and not for profit; Fraternal benefit societies offer insurance that is available only to members.

Fraternal Organization A society or order operated for the benefit of its members and their beneficiaries, not for profit.

Fraud Deception or artifice used to deceive or cheat. In insurance it is understood to be related to misrepresentation and concealment. Proof of willful fraud is grounds for voiding a policy.

Freight insurance Type of ocean marine insurance that protects the insured against the loss of shipping costs.

Functional replacement cost Method to determine reimbursement for some losses, particularly those to antique, ornate, or custom construction; the damaged property is repaired or replaced with less expensive, but functionally equivalent, materials.

Furniture and Fixtures The contents of a building, excluding merchandise for sale or during manufacture (stock) and machinery. Fixtures are attached to the building.




Garage coverage form Commercial auto coverage form that provides liability, garage keepers, and physical damage coverages for vehicle dealers, including dealers that have repair operations on the business premises.

Garage keepers insurance Coverage that is part of the garage coverage form; covers a garage risk’s legal li- ability for customers’ autos in the care, custody, or control of the garage; at the insured’s option and for an additional premium, can also apply without regard to fault.

General Agent An agent who supervises other agents in each territory and acts as an exclusive agent in this territory.

General average loss Ocean marine term used to indicate a partial loss resulting from a sacrifice of cargo to save remaining property (jettison); each party shares in the loss in proportion to his total interest in the property being transported.

General conditions form Separate form that lists the conditions that apply to a policy.

General damages Type of compensatory damages that reimburse the injured party for such things as pain and suffering and disfigurement.

Glass Insurance Coverage for damage to glass caused by breakage or by chemicals accidentally or maliciously applied.

Grace Period The period, following the due date of the policy premium, during which the payment of the premium will continue the policy in force and during which the policy is in full force and effect. The length of the grace period varies with several factors.

Guest Laws State legislated provisions that the right of action of an injured guest passenger against the driver of an automobile is subject to proof that the driver was guilty of “willful and wanton” negligence. Apart from such laws, the guest passenger would have the same rights as any other member of the public and only be required to prove “ordinary” negligence. Not all states have “guest laws.”




Hazard Anything that increases the chance of loss.

Health insurance Line of insurance that protects the insured against financial loss due to medical bills.

Hired and nonowned auto liability endorsement Businessowners policy endorsement used to cover hired or nonowned autos used by the business.

Hired Car Coverage Insurance protection for the insured liability incurred while using automobiles hired from another firm or organization. The auto may be driven by an employee or a hired driver.

Hold harmless agreement Contractual arrangement where one party assumes the liability of a situation and relieves the other party of responsibility.

Home day care coverage endorsement Homeowners policy endorsement used to provide coverage for home day care businesses.

Homeowners policy Personal multiline policy for homeowners that includes both property and liability coverages; there are different forms that provide varying degrees of property coverage; liability cover- age is the same in all forms.

Hull insurance Ocean marine insurance that provides coverage for physical damage to the ship.




Implied authority Authority given by the principal to the agent that is not formally expressed or communicated.

Implied warranties in ocean marine insurance, warranties that are not written into the policy, but have become a part of the policy by custom.

Imports Category of the nationwide definition that includes risks eligible for ocean marine insurance.

Incidental occupancy A business conducted in a dwelling used primarily as a residence with no other businesses operating on the same premises; individual insurers have specific guidelines about the types of incidental businesses permitted, but examples include business or professional offices and private schools or instructional studios.

Incurred Losses Losses or claims which the company has paid or for which it has become liable, or paid losses plus reserves for a certain period, minus unpaid reserves at the end of the previous period.

Indemnification A principle of insurance which states that the individual should be restored to the approximate financial position occupied prior to the loss.

Indemnity Principle of insurance that provides that when a loss occurs, the insured should be restored to the approximate financial condition he occupied be- fore the loss occurred, no better or no worse.

Indemnity, Principle of Replacement, repair, or payment of value of a loss; to return the person to be indemnified to the financial condition which existed before the loss. Not to be confused with legal damages, which frequently go beyond indemnity. Independent Adjuster One who adjusts losses on behalf of companies but is not on their payroll. The independent adjuster is paid by fee for each loss adjusted, as distinguished from a company adjuster who is paid a regular salary by one company.

Independent agent Agent who represents many insurance companies, rather than a single company; also called a nonexclusive agent.

Indirect Loss Loss that is a result or consequence of a direct loss; also called a consequential loss.

Individual named insured endorsement Commercial auto endorsement that provides coverage similar to that provided under the personal auto policy to family members of the named insured while using any auto.

Inland Marine A class of insurance developed from ocean cargo heritage. Covers property which is mobile in nature. Policies include transit hazards and generally provide “open perils” coverage. Examples: personal property floaters, contractor’s equipment, bailees’ customers.

Inland marine insurance Form of insurance originally designed as an extension of ocean marine coverage to insure transportation of goods over land; today it covers a variety of portable property, in addition to goods in transit; available as personal or commercial insurance; commercial inland marine insurance can be included in the commercial package policy.

Inspection The investigation of certain risks which may be made by independent inspection firms or by the company before issuance or during the term of the policy.

Installation policy Nonfiled commercial inland marine policy that covers loss to machinery, equipment, building materials, and supplies in transit to or being used with or during the course of installation, testing, building, renovating, or repair.

Installment Premium One of several payments made by an insured until the entire policy premium is paid in full.

Instrumentalities of transportation and communication Category of the nationwide definition that includes a variety of forms closely related to transportation or communication, such as bridges, pipelines, and television towers.

In Suit Claims involved in a lawsuit filed by a claimant against the insured.

Insurability, Requirements for Insurance theory states that before something is insurable it must meet the following requirements:

  1. There must be enough people involved.
  2. It must be a definite loss.
  3. Loss must be accidental.
  4. Potential loss must be large.
  5. Cost of the insurance must be “affordable.”
  6. Loss must be calculable.
  7. Loss must not be catastrophic.
  8. Risk must be a pure risk.

Insurable interest Any actual, lawful, and substantial economic interest in the safety or preservation of the subject of the insurance from loss or destruction or financial damage or impairment.

Insurance Contract or device for transferring the risk of loss from a person, business, or organization to an insurance company that agrees, in exchange for a premium, to pay for losses through an accumulation of premiums.

Insurance Commissioner Head official of a state insurance department; may also be called an Insurance Director or Insurance Superintendent.

Insurance department State department charged with controlling insurance matters within the state.

Insurance guaranty association State funds created by law that pay claims of insurers domiciled in that state that become insolvent; funds are generated by making assessments against other insurers operating in the state.

Insurance Services Office (ISO) An organization established for the benefit of its member insurance companies and other subscriber companies. ISO gathers statistics, provides loss costs, drafts policy forms and coverage provisions, and conducts inspections for rate-making purposes.

Insured The person purchasing the insurance policy from the insurance company.

Insured contract Term used in the CGL and businessowners liability forms to describe contracts for which contractual liability coverage is available under the policy, such as leases, sidetrack agreements, and elevator maintenance agreements; also called incidental contract.

Insurer The insurance company. The one who issues the insurance policy.

Insuring Agreements That portion of the insurance contract which states those perils insured against-the coverage afforded by the policy.

Interline endorsement an endorsement that modifies two or more lines of insurance.

Intervening cause an independent action that breaks the chain of causation and sets in motion a new chain of events; when this occurs, the intervening cause becomes the proximate cause; can serve as a common law defense against liability.

Investigation The adjuster’s activity in checking the manner in which damage occurred, securing the facts in connection with an accident, checking cars or other property damaged.

Invitee A person invited onto a premise for some purpose involving potential benefit to the property owner.




Jettison A voluntary action to rid a ship of cargo to prevent further damage or peril. Jettison is a covered peril in ocean marine policies.

Jewelers block coverage form Filed commercial inland marine form for jewelers that covers the insured’s stock in trade and the property of others while it is on or off the premises.

Joint Insurable Interest Two or more parties with a financial interest in an item of property.

Joint ownership coverage endorsement Personal auto policy endorsement that allows the policy to be is- sued to two or more persons who live in the same household or two or more individuals who are related in another way besides husband and wife.

Jones Act Federal law that allows members of ships’ crews to sue their employer/ship owner at common law for injuries caused by the employer’s/ship owner’s negligence.

Judgment Rating One of the oldest forms of determining rates. The rate is determined without the benefit of extensive loss experience or statistical information. The best judgment of the rater is used to set the cost of the insurance.

Judicial bond Category of surety bond that guarantees that the principal will fulfill certain obligations set forth by law-includes fiduciary bonds and court bonds.






Law of Large Numbers The theory of probability that is the basis of insurance: the larger the number of risks or exposures, the more closely will the actual results obtained approach the probable results that would be expected from an infinite number of exposures.

Legal Liability Liability imposed by law, as opposed to liability arising from an agreement or contract.

Legal liability coverage form Commercial property coverage form that covers the insured for liability arising out of negligent damage to the property of others while it is in the insured’s care, custody, or control.

Legal purpose One of the characteristics of a legal con- tract; means that contracts are only enforceable if they are not obviously illegal, immoral, or against the public good.

Liability Insurance Insurance which agrees to pay on behalf of the policyholder sums the insured becomes legally required to pay to others as the result of negligence. May cover bodily injury to another or damage to property of another or both.

Liability Losses Losses an individual might suffer as a result of negligence which results in damage to the property of others. Damage for which the individual is legally liable.

Liberalization condition Condition found in property insurance contracts that provides that if the insurer broadens coverage under a policy form or endorsement without requiring an additional premium, then all existing similar policies or endorsements will be construed to contain the broadened coverage.

License, Agents Certification, issued by a state department of insurance, that an individual is qualified to solicit insurance applications for the period covered. Usually issued for a period of one year, it is renewable on application without necessity of the individual’s periodic repetition of the original qualifying requirements. Each agent should carefully study the licensing laws and regulations of the state in which the agent does business.

License and permit bond Type of surety bond that is sometimes required in connection with the issuance of licenses by government agencies. They guarantee that the person who posts the bond will comply with all applicable laws pertaining to their activities.

Licensee Person on the premises with the property owner’s consent but for the sole benefit of the visitor.

Life insurance Insurance that pays a stipulated sum to a designated beneficiary upon the death of the insured; protects the insured’s beneficiary against the financial consequences of the insured’s premature death.

Limitations Policy language that eliminates or reduces coverage under certain circumstances or when specified conditions apply.

Limit of coverage, limit of insurance, limit of liability See Policy limit.

Liquor liability coverage form CGL coverage form that provides coverage for liquor liability excluded by standard CGL policies for those who are in the business of manufacturing, distributing, selling, serving, or furnishing alcoholic beverages.

Livestock coverage form Farm coverage form used to provide separate coverage for livestock.

Lloyd’s Association A voluntary association of individuals or groups of individuals who agree to share in insurance contracts. Each individual or “syndicate” is individually responsible for the amounts of insurance it writes.

Longshore and Harbor Workers’ Compensation Act coverage endorsement Endorsement used with the Workers’ Compensation and Employers Liability policy that covers the additional benefits required by federal law for maritime workers injured while working on navigable waters or shore-site areas.

Loss In insurance it means the amount the insurer is required to pay because of a happening against which it has insured. A happening that causes the company to pay. Also refers to the overall financial result of some operation, as opposed to “profit.” The basis for a claim for indemnity or damage under terms of an insurance policy. Any diminution of the quality, quantity, or value of property.

Loss Control Specialist/Engineer Persons trained in safety work who call on the insurance purchaser to make corrective recommendations that may help to avoid injury to employees of the insured or to the general public. Also called loss control personnel.

Loss cost Factor used in figuring insurance rates that represents how much an insurance company needs to collect to cover expected losses.

Loss payable condition See Mortgage condition.

Loss provisions General term used to describe policy conditions that specify what the insured and insurer must do after a loss.

Loss ratio Method used to determine an insurance company’s success in covering current losses out of current premium income; determined by dividing incurred losses by earned premium.

Loss sustained during prior insurance condition Condition found in loss sustained version of the commercial crime forms that allows losses that occurred during a prior policy period to be covered under the current policy if certain conditions are met.

Loss sustained form Commercial crime form that covers losses that are sustained during the policy period and discovered either during the policy period or up to one year after the policy expires.




Mail coverage form Filed commercial inland marine form that covers property in transport by registered mail, first class mail, certified mail, or express mail.

Malpractice insurance Term used to describe professional liability insurance issued to medical professionals or institutions.

Manual A publication containing underwriting rules, classification, and premium rates for a given type of insurance. May be contained in a computer rather than on printed pages.

Manual Rates Refers to the cost of insurance protection as quoted in the rating manual. It may also refer to those rates developed by the application of a recognized rating plan.

Manual rating Method of premium determination that uses rates based on collected statistics. The rates, which apply per unit of insurance, are published in manuals; also called class rating.

Market value the amount property could be sold for at the time of loss. May be used to determine the amount of reimbursement for a loss.

Material fact A fact that would cause an insurer to de- cline a risk, charge a different premium, or change the provisions of the policy that was issued.

MCS-90 endorsement Endorsement attached to the trucker’s coverage form to provide public liability coverage.

Medical Payments A coverage, written in connection with auto insurance, which provides medical expenses for the insured, family members and passengers when they are injured accidentally from riding in a car covered by the insured’s policy or for the insured and family members when struck by an auto. In case of death from such injury, funeral expenses may be included.

Merit Rating A method for determining the future cost of an insurance policy by charging an amount based upon experience for that risk.

Messenger As defined in crime insurance forms, an insured, partner, or employee who has care and custody of insured property outside the premises.

Minimum Premium The lowest amount of premium required to issue certain policies. Anything less than the minimum would not even cover the company’s expense of handling the policy.

Miscellaneous type vehicle endorsement Personal auto policy endorsement that provides coverage for vehicles that are usually excluded by the policy, such as motorcycles, motor homes, golf carts, mopeds, and other recreational vehicles.

Misrepresentation To make written or verbal statements that are untrue or misleading, either on the part of the applicant in describing the risk or, on the part of an insurer or agent, regarding the policy terms.

Mobile agricultural machinery and equipment coverage form Farm coverage form that provides separate coverage for a farmer’s mobile agricultural machinery and equipment.

Mobile equipment endorsement Commercial auto endorsement that makes mobile equipment considered a covered auto for coverage purposes.

Mobile home insurance Coverage that protects both a mobile home structure and its contents; some companies have mobile home package policies that provide property and liability insurance for owners of mobile homes. In addition, there is a mobile homeowner’s endorsement that can be attached to a HO-2 or HO-3 to modify coverage for mobile homeowners.

Monoline company Insurance company that writes a single line of insurance.

Monoline Policy An insurance policy that includes coverage from one line of insurance.

Monopolistic state fund Method of providing workers’ compensation coverage used in some states; employers must purchase workers’ compensation insurance from a state fund; private insurance companies are not allowed to compete.

Moral hazard Hazard created by an individual who would be willing to create a loss situation on purpose just to collect from the insurance company.

Morale Hazard The hazard present in an insuring situation if the insured, through carelessness or because of his or her own irresponsible actions, creates a loss.

Mortgagee The party loaning money toward the purchase of personal property. Most commonly, a bank or other loaning institution.

Mortgagee Clause A clause in an insurance contract making the proceeds payable to a named mortgagee, as interest may appear, and stating the terms of the contract between the insurer and the mortgagee.

Mortgage condition Condition found in property insurance policies that specifies the rights and duties of the mortgagee under the policy; also called the loss payable condition.

Mortgagee rights Rights granted to a mortgagee under a property contract issued to a mortgagor by virtue of the mortgagee’s financial interest in the property.

Mortgagor The party borrowing money to purchase property.

Motor Carrier Act of 1980 Federal regulation that requires truckers and other commercial carriers to certify they can meet financial obligations if they become liable for injury or damage arising from their trucking operations.

Motor carrier coverage form Commercial auto cover- age form that is an alternate to the trucker’s coverage form; it can be used to cover anyone who transports property by auto in a commercial enterprise.

Motor truck cargo policy Nonfiled commercial inland marine policy that protects a carrier against its li- ability for damage to domestic shipments in its custody.

Multiline company Insurance company that writes more than one line of insurance.

Multiline policy See Package policy.

Mutual Company One which has no capital stock, is owned by the policyholders, is managed by a board of directors chosen by the policyholders, and usually issues participating insurance only.

Mysterious disappearance Vanishing of property with no explanation.




Name schedule bond Type of fidelity bond that covers loss only from named employees.

Named Insured The person designated in the policy as the insured as opposed to someone who may have an interest in a policy but is not named in it. Usually includes a spouse if a resident of the same household.

Named nonowner coverage endorsement Personal auto policy endorsement that provides coverage for the use of nonowned autos to individuals who do not own a car.

Named peril policy Insurance policy that insures only against perils specifically listed in the policy; also called specified peril policy.

National Association of Insurance Commissioners (NAIC) Organization made up of individual state insurance commissioners whose purpose is to pro- mote uniformity in regulation by drafting model laws and regulations.

National flood insurance program Program run by the federal government that makes flood insurance available to eligible communities at subsidized rates; includes coverage for both buildings and personal property.

Nationwide Definition Document that categorizes and classifies risks that are eligible for ocean or inland marine insurance.

Negligence Failure to do what a reasonably prudent individual would ordinarily do under the circumstances of a case or doing what a prudent person would not have done. Negligence may be caused by acts of omission, commission, or both.

No benefit to bailee condition Condition found in some property insurance contracts that states that a bailee is not covered under an insured’s policy while the bailee has possession of the insured’s property.

No-Fault Insurance Any insurance coverage in which individuals are indemnified for their own losses by their insurance company, regardless of fault. Most frequently refers to coverage for an insured’s medical expenses in states with no-fault laws.

Nonadmitted insurer Company that is not authorized to do business in a state; also called an unauthorized insurer.

Nonconcurrency Situation that exists when the same property is covered by more than one policy, but the policies are not identical as to the extent of cover- age provided.

Nonexclusive agent See Independent agent.

Nonfiled form Type of commercial inland marine form that is not standardized and cannot be included in the commercial inland marine coverage part of the commercial package policy.

Nonownership Automobile Liability A coverage protecting the insured against liability incurred by employees while driving an automobile not owned or hired by the policyholder. Usually the employee is driving his or her own car on business for the insured.

Nonparticipating Policy A type of policy which does not return to the insured the excess premium over the amount required for losses or other expenses incurred in the issue of the policy. Normally issued by stock companies.

Nonrenewal Decision made by an insured or insurance company to not continue coverage for another policy period after the current policy period expires.

Nonreporting policy Type of insurance policy for which a flat premium is charged every time the policy is renewed.

Not Taken A policy that has been issued but not accepted by the insured and, therefore, is canceled.




Obligee in bonds, the party to whom the principal makes the promise and for whose protection the bond is written.

Occupational Disease Coverage A coverage which pays benefits for diseases arising out of or in the course of employment, as opposed to ordinary diseases to which the public is exposed.

Occurrence Coverage on an “occurrence” basis is generally considered to differ from coverage on an “accident” basis in that “occurrence” connotes gradual or accumulative damage without regard to exact time or place, whereas “accident” refers to instantaneous dam- age, identifiable as to time and place. In other words, “occurrence” may be defined as an event, or repeated exposure to conditions, which unexpectedly cause injury during the policy period.

Occurrences form Commercial general liability coverage form that covers bodily injury or property damage that occurs during the policy period, regardless of when the claim is made.

Ocean marine insurance Insurance designed to provide broad coverage for cargo and ships in transit over sea; includes cargo insurance, hull insurance, freight insurance, and protection and indemnity insurance.

Offer and acceptance One of the elements of a legal contract; means that a contract must involve two parties: one who makes an offer and another who accepts the offer; also called agreement.

Open competition Method of rate and form regulation used by some state insurance departments that allows insurance companies to compete openly with the forms and rates they select, subject only to requirements of adequacy and nondiscrimination.

Open peril policy Insurance policy that protects the insured from losses caused by any peril that is not specifically excluded by the policy; also called all risk and special coverage.

Optional limits transportation expenses coverage endorsement Personal auto policy endorsement that allows the insured to select the daily and maximum limits of coverage provided for transportation and loss of use expenses.

Ordinance or law coverage endorsement Endorsement used with the commercial property coverage part to provide coverage for demolition costs and increased construction costs required or regulated by law or ordinance.

Other coverages See Additional coverages.

Other insurance condition Policy condition that sets out how any other insurance that applies to the same loss will affect reimbursement under the policy; see Contribution by equal shares, Excess insurance, Primary insurance, and Pro rata other insurance.

Other than collision coverage (OTC) See Comprehensive coverage.

Outboard motor and boat insurance Insurance against physical damage to boats; usually provided by inland marine forms.

Owners and contractor’s protective liability coverage form Commercial general liability coverage form that covers claims caused by the negligence of a con- tractor or subcontractor hired by the insured.




Package Policy A combination of coverages of two or more separate policies in one contract. Must include basic property and liability insurance. May also include various other casualty and property coverages.

Pair or set condition Loss settlement condition found in property insurance contracts that states that when part of a set is damaged or destroyed, the insured will not be reimbursed for the value of the entire set; various methods are used to determine the amount of reimbursement.

Parcel post policy Nonfiled commercial inland marine policy that covers mail sent by parcel post.

Partial Loss Loss involving less than all the values insured or calling on the policy to pay less than its maximum amount.

Participating Policy A type of policy which distributes to the policyholder a portion of the excess premium not necessary to pay for losses or other expenses incurred in the issue of the policy. Normally issued by mutual companies.

Particular average loss in ocean marine insurance, any partial loss that does not arise from a general sacrifice of property (jettison).

Payment bond Type of surety bond that guarantees bills for labor and materials will be paid to the contractor as they are due; also called labor and materials bond.

Payment Plans Various convenient plans for paying premiums by installments. Not available on all policies.

Peak season endorsement Endorsement attached to the commercial property coverage part to provide increased coverage during seasons of the year when the insured’s inventory is at higher levels than usual.

Performance bond Type of surety bond that guarantees that jobs will be completed by the contractor according to the contract specifications.

Peril This term refers to the causes of possible loss, such as fire, windstorm, explosion, etc.

Perils of the sea Perils to which property in transit by water is exposed; includes unusual action of wind or waves, stranding, lightning, collision, and sinking.

Permitted incidental occupancies endorsement Homeowners policy endorsement that covers the insured’s business activities conducted on the residence premises.

Personal articles form Personal inland marine form that provides scheduled coverage for nine optional classes of personal property: jewelry, furs, cameras, musical instruments, silverware, golf equipment, fine arts, stamp collections, and coin collections.

Personal auto policy Auto policy that provides property and liability coverage for both owned and nonowned autos used, maintained, or operated by the insured and her family members.

Personal contract One of the characteristics of an insurance contract; means that an insurance contract insures a person, not property.

Personal effects form Personal inland marine form that covers an insured’s personal belongings, such as bag- gage, while traveling.

Personal injury Injury other than bodily injury arising out of such things as libel, slander, false arrest, wrongful entry, violation of privacy, and malicious prosecution.

Personal injury endorsement Homeowners policy endorsement that modifies the definition of bodily injury to include personal injury.

Personal inland marine insurance See Inland marine insurance.

Personal liability and medical payments to others endorsement Endorsement to the dwelling policy that provides liability coverage like that provided by Section II of the homeowner’s policy; may also be purchased as a separate policy.

Personal Lines Insurance coverages that protect individuals and their families.

Personal property form Personal inland marine form that provides open peril coverage for personal property.

Personal property floater risks Category of the nation- wide definition that includes risks eligible for personal inland marine insurance.

Personal property replacement cost endorsement Homeowners policy endorsement that adds replacement cost coverage for personal property.

Personal umbrella policy See umbrella policy.

Personal yacht insurance Type of personal watercraft policy written for large pleasure boats.

Physical Hazard A hazard, which is created by the condition, occupancy, or use of the property itself.

Physicians and surgeon’s equipment form Filed commercial inland marine form that covers medical instruments on and off the premises and furniture and fixtures at the doctor’s office against direct physical loss.

Policy The document issued to the insured by the company: the policy states the terms of the insurance contract.

Policy form See Coverage form.

Policy jacket Document used to assemble an insurance policy; contains general conditions or the declarations page, but provides no coverage in and of itself; a policy form must be attached to make it a complete policy; also called a skeleton policy.

Policy limit Maximum amount the insurance company will pay for a particular loss or for losses sustained during a period; also called limit of coverage, limit of insurance and limit of liability.

Policy period the date and time specified in the declarations for when coverage begins and ends.

Policy territory Place where coverage under a policy ap- plies.

Pollution liability coverage extension endorsement Commercial general liability endorsement that provides coverage for BI and PD claims arising out of pollution losses; excludes coverage for pollution clean-up costs.

Pollution liability coverage form CGL coverage form that provides certain pollution coverages that are excluded under the standard CGL; includes coverage for pollution clean-up costs.

Pollution liability-limited coverage form CGL cover- age form that provides certain pollution coverages that are excluded under the standard CGL; does not include coverage for pollution clean-up costs.

Position schedule bond Fidelity bond that covers specifically named positions in the company, rather than the individuals who hold these positions.

Post-judgment interest Interest accruing on a judgment after an award has been made, but before payment is made by the insurance company; usually covered as a supplementary payment in liability policies.

Power of Attorney The written instrument by which the authority of one person to act in the place and instead of another as attorney-in-fact is set forth. Authority given a person or corporation, called an attorney-in-fact, to act for and obligate another to a specified extent.

Preferred Risk A class of risk considered to be particularly desirable.

Prejudgment interest Interest awarded to compensate a third party for interest he might have earned if compensation had been received at the time of injury or damage, rather than at the time of judgment.

Premises and operations Business liability exposure arising out of the business location or the activities of the business; covered under the CGL.

Premium An amount of money paid to an insurance company in return for insurance protection.

Premium audit Survey of the insured’s financial records to gather information used to calculate the premium, such as exposures and limits.

Premium Notice A reminder sent to policyholders by an insurance company to give notice of the approaching date of a premium payment.

Primary insurance When two or more coverages or policies apply to the same loss, the one that pays first, up to its limit of liability or the amount of the loss, whichever is less.

Principal In bonds, the party who promises to do or not do a specific thing; in agency law, the person or company being represented.

Prior approval Method of rate and form ratification used by some state insurance departments that requires a company to obtain official approval before using new forms or rates

Producer General term used to describe someone who sells insurance, such as an agent, broker, or solicitor.

Products and completed operations Business liability exposure arising out of defects in the company’s products or completed operations; covered by the CGL.

Professional liability Liability arising out of rendering or failing to render services of a professional nature.

Professional liability policy Insurance coverage issued to a professional that covers the rendering or failing to render services of a professional nature; policies are tailored to fit specific occupational needs.

Prohibited Risk A risk which a company will not insure.

Proof of Loss A statement signed by the policyholder making formal claim against the company for damage to or loss of the property insured.

Property Damage A coverage protecting the legal liability of the policyholder for damage on account of injury to, or destruction of, property, subject to certain exclusions.

Property insurance Line of insurance that includes many types of coverages designed to handle the risk that a person will suffer financial loss because some- thing she owns is damaged or destroyed.

Property Losses Losses an individual might suffer which can be characterized as loss of the article itself, loss of income from the use of the property, or extra expense incurred due to loss of property.

Pro-Rata Cancellation A system of canceling a policy before it expires and returning to the policyholder an amount of premium proportional to the unexpired days of the policy. Cancellation by the insurance company.

Pro rata other insurance Method of handling insurance when more than one coverage applies to a loss; each coverage pays a portion of the loss in proportion to the relationship its limit of liability bears to the total limit of liability under all applicable insurance; also called contribution by limits.

Protection and indemnity Form of ocean marine liability insurance that covers a variety of types of liability, such as damage to cargo through negligence and damage to other property or another boat resulting from collision.

Protective safeguards endorsement Businessowners policy endorsement that requires the insured to maintain fire or security service on specified property as a condition of the policy.

Proximate cause an action that, in a natural and continuous sequence, produces a loss.

Public official bonds Type of surety bond furnished by principals who are elected or appointed to fill positions of trust that guarantee their faithful and honest performance in office.

Punitive damages Type of damages intended to punish the defendant and make an example out of her to discourage others from behaving the same way; also called exemplary damages.

Pure risk A risk in which there is no chance of gain, only loss.

Pure Risk A risk that involves the possibility of loss only, not the possibility of gain.




Quotation A summary of coverages and premiums pro- posed by an agent to a prospective client.




Rate The premium charge for specific coverage for the regular policy period. The cost of a unit of insurance for a specified period.

Rating The determination of the premium to be charged for coverage on a risk. Based upon risk characteristics and the actuarial calculations regarding the chance of loss.

Reasonable person rule Principle of law that states that each person must behave like a prudent person following those ordinary considerations that guide human affairs.

Rebating The granting of any form of inducement, favor or advantage in cost or benefit to the purchaser of a policy not available to all under the standard policy terms. Rebating in some states is a penal offense for which both the agent and the person accepting the rebate can be punished by fine or imprisonment, with the agent also subject to revocation of license.

Reciprocal company an unincorporated group of members that share insurance responsibilities with other members; it is managed by an attorney-in-fact.

Reciprocal Insurance Insurance provided by subscribers at a reciprocal exchange. Each subscriber agrees to become liable for a portion of the losses and expenses of all subscribers and authorizes the attorney-in-fact to affect this exchange of insurance with the other subscribers.

Reimbursement Recovered payments-in-error, overpayments, or contributions from a third party or his or her insurance company which are credited to the coverage involved in a claim originally paid. Reinsurance Acceptance by an insurer, called a reinsurer, of all or part of the risk of loss of another insurer.

Rejection The refusal of an application for insurance.

Release Written acknowledgment stating that all obligations past, present, or future arising out of a particular accident or occurrence have been fulfilled. Signing by the claimant generally relieves the company and insured of any further obligation.

Renewal Continuation of an insurance contract beyond the original date of expiration, by endorsement, certificate, or new contract.

Renewal Certificate A certificate indicating that a policy has been renewed or extended for another term.

Repair cost the cost to repair a damaged or destroyed item of property. May be the basis of reimbursement for a loss.

Replacement Cost Coverage of household destruction up to the policy face value, with no deduction for depreciation. This is generally included in a homeowners-type policy or may be added to a fire policy.

Reporting policy Type of policy that does not charge a flat premium; the insured pays a deposit premium, then submits periodic reports to the insurer showing the status of the factors on which the premium is based; from these status reports, premiums are calculated and charged against the deposit.

Representation Statements on an insurance application that the applicant believes are true; a representation is not considered a matter to which the parties con- tract, so a policy cannot be voided on the basis of a representation.

Reserve A sum set aside to meet future obligations. Amount of reserve varies with different types of claims as well as with differences in severity of claims.

Residual market insurance Insurance that is not ordinarily available from private insurers and may be provided by the government; examples include flood insurance, which is provided by the federal government, and workers’ compensation benefits, which may be provided by state funds.

Retention limit in an umbrella policy, the amount the insured must pay for a loss that is not covered by an underlying policy before the umbrella will begin to cover the loss; also called the self-insured retention.

Retroactive date Under the claims made CGL form, a date stipulated in the declarations as the first date on which an event may occur and be covered by the policy if a claim is filed.

Retrospective rating Type of merit rating that bases the insured’s premium on losses incurred during the policy period.

Return Premium A refund to the policyholder, caused by cancellation, rate reduction, reduction in amount of insurance, or similar reasons, of part of the premium previously paid.

Rider Synonymous with Endorsement. Common to life insurance, but in fire-casualty normally used in the Bond Department only.


  1. Any chance of loss.
  2. The individual or property to which the insurance policy relates.
  3. Technically, the degree or percentage of chance that a given contingency will occur.
  4. The odds.
  5. A peril insured against.
  6. The subject of insurance, whether a person or thing.

Risk retention group Insurance company formed by several organizations to cover those organizations liability loss exposures; risk retention groups are exempt from most state laws that govern insurance companies.

Robbery In crime insurance, the taking or attempted taking of property by one who has caused or threatened to cause bodily harm, or committed a witnessed, obviously unlawful act.

Running down clause Provision found in ocean marine hull policies that provides protection if the ship owner is held liable for the negligent operation of the vessel in damaging another ship.




Salvage The property in which an insurance company secures an ownership interest as a result of paying a claim for total loss or damage based on the true value of the property in its undamaged state or before the loss occurred.

Schedule rating Type of merit rating that applies a system of debits or credits to reflect characteristics of a particular insured.

Scheduled coverage Property that is specifically listed in the declarations and covered for a specific amount; also called specific insurance.

Scheduled personal property endorsement Homeowners policy endorsement that provides open peril, scheduled coverage for nine optional classes of property.

Self-insurance Alternative to purchasing insurance where a company or individual assumes the risk of paying for its losses and sets aside the necessary funds to pay for such losses.

Self-insured retention See Retention limit.

Service bureau Organization that gathers, pools, and analyzes statistics from its member insurance companies to establish loss costs used to determine insurance rates.

Short Rate A method of figuring the return premium when a policy is canceled by the insured. A portion of the unearned premium is kept by the company for expenses.

Short Term A policy term of less than one year.

Signs coverage form Filed commercial inland marine form that insures businesses against loss to neon, fluorescent, automatic, or mechanical electric signs and lights.

Single limit One policy limit that applies to both BI and PD losses; may also be called a combined single limit.

Skeleton policy See Policy jacket.

Solicitor Insurance professional who sells insurance and collects premiums but cannot issue or countersign policies.

Special coverage See Open peril policy.

Special damages Type of compensatory damages that reimburse the injured party for direct and specific expenses involved in the loss, such as medical expenses and lost wages.

Special Risk Risks of a certain type or amount of premium. Normally includes all risks developing over $10,000 year-end premium.

Specific insurance See Scheduled coverage.

Specified Causes of Loss One of the physical damage coverage options in the commercial auto coverage forms; provides more limited coverage than com- prehensive coverage, insuring only against specified perils such as fire, flood, or explosion.

Specified peril policy See Named peril policy. Speculative risk A risk that may result in a loss or gain.

Split limits Policy limit that provides separate limits for Bl and PD.

Spoilage endorsement Endorsement used with the building and personal property and condominium commercial unit-owners commercial property cover- age forms; it adds coverage for the insured’s perish- able stock-personal property that must be maintained under controlled conditions to protect it from loss or damage.

Spread of risk Principle of insurance that states that insurers should spread their insured risks over a large geographical area, rather than insuring a large number of people in a small area.

Standard & Poor Organization that rates the financial stability of insurance companies doing business in the United States.

Standard of care See Degree of care.

Stated amount condition See Agreed value condition.

Stated Amount of Coverage A certain amount of policy limit, written in the policy, as opposed to actual cash value. Under such a policy the company pays the actual cash value, but not more than the amount stated, in the event of a total loss.

Statute of limitations Law that provides that certain types of suits must be brought within a specified time of the occurrence to be valid under the law.

Stock Company A form of insurance company organization with the following characteristics:

  1. The company is owned by the stockholders.
  2. Dividends are returned to the stockholders.
  3. Stockholders elect the management of the company.
  4. A policyholder does not need to be a stockholder to purchase insurance.

Subrogation The transfer of one person’s lawful claim, demand or right to another person or company. In the case of insurance, this principle of law has been incorporated in all policies. The insurance company, upon payment of a loss to the insured, is entitled to the insured’s legal and equitable rights against third parties. These rights are only those related to the loss, and the company is only entitled to the extent of the loss payment.

Supplemental extended reporting period See Extended reporting period.

Supplementary Payments Provide extra coverage over and above the insured’s limit of liability; commonly included are defense costs, first aid expenses, bond premiums, and post-judgment interest.

Supply bond Type of surety bond that guarantees that a supplier will furnish supplies, products, or equipment at an agreed-upon time and price.

Surety In bonds, the party (often the insurance company) that agrees to be responsible for loss that may result if the principal does not keep his promise.

Surety bond Bond that guarantees that someone will perform faithfully whatever she agrees to do or that someone will make an agreed-upon payment to an- other party.

Surplus The difference between what a company owns (assets) and what it owes (liabilities).

Surplus lines agent See Excess lines agent.

Suspense A term used when correspondence is placed in abeyance for a specified number of days or placed in a file for reference at a later time, so that the originator can again write the addressee if previous correspondence has not been answered.




Terrorism Risk Insurance Act of 2002 Federal law designed to ensure that insurance coverage for terrorism losses under commercial lines policies will be available and affordable; it requires insurers to pay a specified amount for terrorism losses in a given calendar year; once that limit is reached, the federal government will reimburse insurers 85% of insured losses that exceed the limit.

Theatrical property coverage form Filed commercial inland marine form that covers scenery, props, and costumes used by a theater group in a specific production.

Theft In crime insurance, a broad term encompassing any unlawful taking of property, including burglary and robbery.

Third party loss A liability loss.

Time element coverage Coverage for the loss of business income over a period of time that results from direct physical loss.

Tort A civil wrong for which monetary damages may be provided; does not include losses arising out of con- tracts.

Total Loss

  1. Loss to the insured of the entire value of goods or other property by destruction, damage, or deprivation.
  2. Loss entailing the payment of the face amount of an insurance contract.
  3. Property damaged to the extent that the cost of repairs exceeds the market value less the salvage value.

Towing and labor costs endorsement Personal auto policy endorsement that covers towing and the costs of labor performed at the site the car was disabled.

Trailer interchange insurance A coverage provided under the truckers and motor carrier coverage forms; covers damage to a specific trailer under the policy of the trucker who has possession of the trailer at the time of loss, provided that: the trucker is liable for the damage under a written interchange agreement, and the damage is caused by a covered peril.

Trespasser A person who is on the premises without the property owner’s express or implied permission.

Trip transit policy Nonfiled commercial inland marine policy that covers a single shipment of goods.

Truckers coverage form Commercial auto coverage form written specifically for the trucking industry.

Twisting The practice of using misrepresentations to induce a policyholder in one company to lapse, forfeit or surrender insurance for the purpose of taking out a policy in another company. It is generally classified as a misdemeanor.




Umbrella policy Type of policy that provides broad coverage for an insured’s liability over and above liability covered by an underlying contract; may also cover losses that are excluded by the underlying policy; available as personal or commercial insurance.

Umpire When a company and a loss claimant are unable to agree on the amount of loss the company should pay, the terms of many policies provide that each party selects an appraiser. If the two appraisers cannot agree on an amount, the two appraisers select an umpire. The decision of any two is binding on both the company and the claimant.

Unauthorized Insurer An insurer which is not authorized to do business in a given state.

Underinsured motorists coverage Auto coverage that pays the difference between the insured’s actual damages for bodily injury and the amount of liability insurance carried by the at-fault driver; may be added to the personal or commercial auto policy by endorsement.

Underwrite To scrutinize a risk and decide on its eligibility for insurance. To insure.

Underwriter Individuals or corporations who insure. More commonly, officials of an insurance company whose duty it is to scrutinize risks offered for insurance and decide upon their acceptability.

Underwriting Insurance company function that involves researching and evaluating insurance applicants to decide which ones are acceptable to the company as insureds.

Underwriting expenses One of the components used to calculate the expense ratio; includes all costs re- quired to acquire and maintain a book of business, such as expenses for commissions, salaries, and other administrative and regulatory costs.

Unearned Premium That portion of the premium which covers the unexpired part of the policy term.

Unfair discrimination Applying different standards to insureds that have the same risks of loss.

Unilateral contract A type of contract that is one sided; an insurance policy is one sided because only the insurance company is legally bound to perform its part of the agreement.

Uninsured An individual decides to personally assume all losses. Does not have insurance protection.

Uninsured motorists coverage Automobile coverage designed to provide protection for the insured if she is involved in an accident in which an uninsured motorist is at fault; uninsured motorists include those who do not carry insurance, motorists whose insurance does not meet the state’s minimum financial responsibility laws, drivers whose insurance companies are insolvent, and hit-and-run drivers who cannot be identified.

Unoccupancy the absence of people from a premise; property coverage is often restricted if there are long periods of unoccupancy.

Use and file Method of rate and form ratification used by some state insurance departments that requires insurance companies to file rates and forms within a certain period of time after they are first used.

Utility services-Direct damage coverage endorsement Businessowners policy endorsement that covers loss or damage to property caused by an interruption in water, communication, or power service; for coverage to apply, the property must be listed on the endorsement and the utility equipment must be dam- aged by a covered cause of loss.

Utility services-Time element coverage endorsement Businessowners policy endorsement that covers loss of business income and extra expense that occurs because of an interruption in water, communication, or power service; for coverage to apply, the property must be listed on the endorsement and the utility equipment must be damaged by a covered cause of loss.

Utmost good faith A characteristic of insurance con- tracts meaning that the insurance company must be able to rely on the honesty and cooperation of the insured, and the insured must rely on the company to fulfill its obligations.




Vacancy The absence of both people and property from a premise; property coverage is often restricted when there are long periods of vacancy.

Valuable papers and records insurance Filed commercial inland marine form that provides coverage for valuable papers such as manuscripts, blueprints, records, and other printed documents.

Valuation Method used by the insurance company to determine the appropriate payment for a loss.

Valued policy Policy written for a specified amount that lists the value of the insured property as agreed to by both the insured and the insurer; this amount is used to value losses; also called an agreed amount policy.

Valued Policy Laws A law, in some states, which specifies that in the event of a total loss, an individual should receive payment in the full amount of the policy, regardless of the theory of indemnification.

Value reporting endorsement Endorsement used with the commercial property coverage part to provide coverage based on the actual values of property at certain locations at specific times.

Vandalism Damage done maliciously. Also called “malicious mischief.”

Vandalism and malicious mischief (V&MM) Coverage provided in many property insurance policies that protects property against damage caused by vandals.

Vicarious liability Liability that a person or business incurs because of the actions of others, such as family members or employees; also called imputed liability.

Voluntary compensation endorsement Endorsement used with the workers’ compensation and employer’s liability policy that adds coverage for employees who are excluded from the state’s workers’ compensation law.




Waiver The agreement not to enforce a right or privilege.

Waiver The intentional relinquishment of a known right.

Warehouse to warehouse clause Provision found in ocean marine cargo policies that extends coverage for the cargo from its point of origination to its point of destination.

Warranty A specific agreement between the insured and the insurer that becomes a part of the insurance policy; a breach of warranty can void the policy.

Watchperson As defined in crime insurance forms, someone retained specifically by the insured whose sole duty is to have care and custody of property in- side the premises.

Watercraft endorsement Homeowners policy endorsement that provides coverage for BI or PD arising out of the use of watercraft.

Watercraft package policy Package policy that provides property, liability, and medical payments coverage for losses arising out of the ownership, maintenance, or use of watercraft.

Workers’ Compensation Coverage required by state law against compensation to workers who are injured on the job, regardless of whether or not the employer has been negligent.

Workers’ Compensation and Employers Liability Policy Insurance that covers an employer’s obligations under workers’ compensation laws, which make the employer responsible for stated damages in the event of a work-related injury or illness; also covers the insured’s liability for work-related injuries under common law.

Writings The amount of gross premiums that is written.

Written premium One of the components used to calculate the expense ratio; it is the gross amount of premium income on the company’s books, which includes both earned and unearned premium.