Property & Casualty Licensing

Assignment

A clause that specifies that transferring the policy to another will not be valid unless the insurer consents in writing.

Garage Insurance

A combination of coverages designed for those in the business of: servicing, selling, repairing, and parking. Also includes general liability, garage-keepers, and physical damage for these risks.

Loss Sustained Form

A commercial crime form that covers the losses that actually occurred during the policy period and discovered up to 1 YEAR after the policy expiration.

Hazard

A condition that increases the likelihood of a loss from a covered peril such as a wet floor, swing set, swimming pool, or a trampoline.

Insurance

A contract in which one party agrees to pay another if a loss occurs under specific circumstance.

Certificate of Insurance

A document prepared by an insurer or producer as evidence of property or casualty insurance coverage.

Blanket Position Bonds

A fidelity bond that applies separately to each employee AND the employee and position are not specifically listed.

Fidelity Bonds

A form of insurance that protects the insured for losses caused by the dishonest acts of its employees.

Flood

A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or two or more properties (at least one of which is yours) from overflow of inland or tidal waters, unusual rapid accumulation of runoff of surface waters from any source, or mudflow. Also a collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood.

Coinsurance

A method of encouraging the insured to accept the responsibility of insuring for the amount close to the value of the property. Coinsurance is primarily used in commercial policies and values vary from 80 to 100 percent.

Homeowners Insurance

A multi-line or package policy consisting of property and liability coverage to protect against economic loss to residence and household personal property and legal liabilities arising from residences and personal activities.

Deductible

A portion of the loss that the insured must pay before the insurance company pays their portion. Almost all property policies have a deductible. Most liability policies do not have a deductible.

Automated Property Loss Underwriting System or A-PLUS

A report that gives records of auto or homeowner losses.

Blanket Coverage

A single amount of coverage that applies to two or more coverage items.

Discrimination

A violation of a person's civil rights.

Named Peril

Actual peril named as covered by the insurance policy.

Excess Liability Insurance

All other insurance must be exhausted before the policy applies. Coverage when policy limits are insufficient for an insured's needs.

Appraisal

An expert assesses the property and estimates its value.

Mutual Insurer

An incorporated insurer that does not have stockholders.

Aleatory Contract

An unequal transfer of value between the two parties involved.

Negligence

Another name for intentional tort. Its when someone becomes LIABLE to another.

CGL Occurrence Form

Applies to BI and PD that OCCUR DURING the policy period regardless of when a claim is made. Triggered by damage or injury that occurs during the policy period, even if the claim is made after the policy expired.

Loss Assessment

Assessments against the insured by an association of property owners.

Actual Cash Value (ACV)

Basis on which most basic property policies are settled. It is the current cost to replace the item minus depreciation.

Bodily Injury

Bodily harm, sickness, or disease resulting in death sustained by a person.

Inland Marine Insurance

Coverage for cargo traveling over land instead of sea.

Name Schedule Bonds

Covers each employee listed on the policy schedule. An amount will be listed for each employee.

General Liability Policy

Covers liability arising from premises, general operations (ongoing and after completion), and products manufactured or sold.

Commercial Blanket Bonds

Covers the losses of dishonesty of one or more employees acting either together or separately. The position and employee are specifically listed in the schedule.

Money

Currency, coins, and bank notes in current use and having a face value. It also includes traveler checks, register checks, and money orders held for sale to the public.

Insuring Agreement

Describes what the policy covers, losses for which the insured will be indemnified, the perils insured against, and the type of property being covered.

Conservation Bond

Designed for those whom are appointed to manage and preserve property other than estates of decedents, such as guardian of a minor.

Indirect Loss

Economic loss which flows as a consequence of the direct loss.

Bureau of Motor Vehicles (BMV)

Federal agency that reports (MVR-motor vehicle reports) past traffic violations or speeding.

Data Security Breach

Fees, costs, fines, penalties and other expenses incurred by the insured which are related to or disclosure of another person's or organization's confidential or personal information. This includes patents, trade secrets, processing methods, customer lists, financial information, credit card information or any other type of non-public information.

Bonds

Guarantee that people will do what they promise and are a key element in many business agreements.

Fiduciary Bond

Guarantees performance of a person appointed by a court, will, or deed, or other financial matters of another.

Judicial Bond

Guarantees that the principal with fulfill obligations set forth by law. They are usually required by a judge.

Completion Bond

Guarantees that when a contractor borrows money for a construction project, that project will be completed without any liens.

Contributory Negligence

If the person who is accusing another of negligence did cause loss due to their own negligence.

Fault System

Illinois is a "fault" system when it comes to determining financial responsibility. The system requires the person at fault to compensate anyone who suffered harm as a result of the accident.

Absolute Liability aka Strict Liability

Imposed on an individual whose specific actions or failure to act result in a third party bodily injury or property damage loss.

Indemnity Contract

Indemnity is when one party is put back in the same financial condition they were before the loss. Never profit from a loss. The principle of indemnity states when a loss occurs, the insured should be restored to the same financial condition before the loss. No more or no less.

Alien

Insurance Company formed under the laws of a country other than the United States.

Domestic Insurer

Insurance Company incorporated or formed in Illinois.

Foreign

Insurance Company incorporated or formed in any other state but Illinois.

Coinsurance or Proportional Replacement Cost Formula

Insurance carried (did) / Insurance required (should) x amount of loss = Amount of Reimbursement

Mysterious Disappearance

Is not defined in the policy but it is a term that is used in the insurance industry. The term refers to the unexplained absence of covered property without any evidence of theft. Mysterious disappearance is not a crime, but some policies will cover this type of loss.

Concealment

Is when the insured intentionally fails to reveal relevant facts to the insurer.

Binders

Issued by the agent giving the insured immediate protection until the policy is issued. Binders are known as temporary insurance and can be oral or written.

Contractual Liability

Liability assumed under a contract or agreement.

Liability Policy Limits - Split

Liability limit expressed in two figures.

Liability Policy Limits - Single

Maximum amount paid to any one accident or occurrence.

Insurable Interest

Must exist at the time of loss and the insured would suffer economic loss.

Contract Bonds

Normally required by law for construction projects for public entities.

Conditional Contract

Obligation of insurer to perform that may depend on the insured satisfying certain conditions.

Mobile Equipment

Off-road and unlicensed vehicles (bulldozers, forklifts, vehicles on crawler treads) used solely on the insured's or adjacent premises, and those that provide mobility to permanently attached specialized equipment.

Indemnitor

One who agrees to reimburse the surety from any loss it may suffered from having bonded the principal.

Loss Payee

One who has an interest in the vehicle, such as a bank or finance company.

Insured

One who is legally liable and therefore contracts insurance with an insurer.

Obligee

One who is to be guaranteed that the principal will perform. The obligee will receive payment from the surety if the principal defaults.

Contract of Adhesion

Parties have unequal bargaining power such as the insured cannot negotiate the terms of the insurer.

Compensatory Damages

Payment for the ACTUAL losses that occurred.

Direct Loss

Physical harm to tangible property.

Liability Insurance

Policies that pay on behalf of the insured all sums the insured becomes legally obligated to pay as damages. It is referred to as a third party claim.

All Risk (aka Open Perils)

Protection for the insured from loss arising from any peril other than those perils specifically excluded in the policy.

Cyber Liabilty

Protects the business, whether the act is intentional or unintentional, from liability, repairing, or replacing computer systems, cost of notifying clients, and lawsuits.

Named Insured

Referred to as "you" and "your" in the Homeowners Policy and includes resident spouse in the PAP policy.

License Bond

Required by a public body to guarantee licensee will operate in conformity with laws, protect public against harm from unfair practices business practices, and guarantees the proper collection and payment of taxes.

Insolvency Bond

Required of persons appointed to conserve remaining assets and protect and protect creditors such as receivers and trustees.

Governmental Action

Seizure or destruction of property by order of a governmental authority.

Forgery

Signing the name of another person or organization with intent to deceive.

Arbitration

Similar to appraisal but not just limited to just the value of a loss, it can be used in areas of disagreements between the two parties.

Consideration

Something of value exchanged for the promise made in the policy. The promise is the company's agreement to indemnify the insured after a loss.

Liberalization

States that when the insurer adopts a revision that would broaden coverage in other similar policies, then the insured receives the benefit of such broadened coverage without additional premium.

Bid Bond

Surety guarantees that if the bid is accepted, the bidder will enter into a contract and will satisfy further bonding requirements. If the bidder cannot perform the work, the bond will pay the difference between his bid and the next highest bidder.

Diminish Value

The actual or perceived loss in market value, resell value which results from a direct or accidental loss.

CGL Claims-Made Form

The filing of the claim (not the actual occurrence) triggers the current insurer's liability.

Custodian

The insured or any of the insured's partners or members or any employee while having care and custody or property inside the premises EXCLUDING any person while acting as a watchperson or janitor.

Application

The insured's offer.

Exclusions

The losses that are not covered by the insurance policy.

Damages

The money amount assigned to the final determination of negligence.

Conditions

The obligations, duties, and responsibilities of both parties to the insurance contract. Written specific to each policy, such as options for settling physical damage claims, subrogation, and cancellation/non-renewal.

Bailor

The one who owns the property.

Bailee

The one who receives the property.

Collision

The upset (simple rollover) of your covered auto or non-owned auto or impact with another object or vehicle.

Market Value

The value the property can be sold for at the time of loss.

Fair Credit Reporting Act

This act protects consumers by notifying them when their information is being used and removing outdated information.

Gramm-Leach-Bliley Act

This act protects the privacy of insureds and requires insurers to safeguard customer's records and information and protect any unauthorized access to their records. The insurer cannot disclose any of the customer's personal information to a non-affiliated third party and give the customer the option to opt-out of sharing personal information.

Maintenance Bond

This bond is required if the principal is responsible after completion of the project for faulty work or defective materials.

Named Non-Owner Policy

This is for the individual who does not own a vehicle, but regularly drives a vehicle that is either rented or borrowed. If the individual buys a vehicle, the Named Non-owner policy will automatically cover that new vehicle for 14 days or until a PAP is issued, whichever comes first. Named Peril: Actual peril named as covered by the insurance policy.

Comprehensive Loss Underwriting Exchange (CLUE)

This report is largely issued by Lexis/Nexis and it contains information regarding claims and gives the applicant an "insurance score".

Competent Parties

Those that are not minors, under the influence, or mentally incompetent.

Family member

To include relatives, wards, and foster children in the named insured's house.

Business

Trade, profession, or occupation.

Declarations

Usually found at the front of the policy and contains information such as name of the insured, insured's address, coverage amount (limit of liability or limit of insurance), premium amount, property that is being insured.

Lender Interest

Varies from policy to policy. Virtually all property insurance covering real property provides for naming mortgagees and gives them special protection such as: • Advanced notice of cancellation • Protected even if insured is prevented from recovery • Allowing mortgagee to continue payments on policy even if insured fails to do so

Non-reporting Basis-Contract

When a flat premium is charged each time the policy is renewed.

Liability Policy Limits - Aggregate

When a limit is applied which represents the total insurance coverage that will be paid for the policy term.

Comparative Negligence

When both parties have caused the loss, the courts will use what is called comparative negligence. It allows the damages to be reduced taking in consideration the accuser's own negligence that contributed to the cause of loss or damage.