Insurance Terms and Related Concepts

market value

A method of valuing a loss based upon the amount a willing buyer would pay to a willing seller for the property prior to the loss.

agreed value

A property policy with a provision settled on by the insurer and insured as to the amount of insurance that represents a fair valuation for property at the time the insurance is written.

accident

A sudden, unplanned and unexpected event, NOT under the control of the insured, resulting in injury or damage that is neither expected or intended.

stated value

An amount of insurance scheduled in a property policy that is not subject to any coinsurance requirements in the event of a covered loss.

vacancy

An insured structure in which no people have been living or working and no property has been stored.

unoccupancy

An insured structure in which no people have been living or working but some property has been stored there.

negligence

Failure to use the care that a reasonable, prudent person would have taken under the same or similar circumstances.

peril

The causes of loss insured against in an insurance policy.

subrogation

The insurer's legal right to seek damages from third parties, after it has reimbursed the insured for a loss.

law of large numbers

The larger the number of people with a similar exposure to loss, the more predictable actual loss will be.

indemnity

A provision in an insurance policy that states that in the event of loss, an insured or beneficiary is permitted to collect only to the extent of the financial loss.

blanket insurance

A single property insurance policy that provides coverage for multiple classes of property at one location, or for one or more classes of property at multiple locations. All insured properties are written for one total amount.

absolute liability

Imposed on defendants engaged in hazardous activities, such as harboring wild animals or using explosives.

certificate of insurance

Written evidence showing that an insurance policy has been issued

actual cash value

current replacement cost less depreciation

hazard

Conditions or situations that increase the probability of an insured loss occurring.

occurrene

Includes losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither expected nor intended.

loss

The reduction, decrease or disappearance of value of the person or property insured in a policy, caused by a peril.

risk

The uncertainty or chance of loss occurring.

vicarious liability

Transfers liability for one person to another person who would probably have a greater ability to pay.