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Insurance Term Glossary



Dealers Drive-Away Coverage: A coverage which can be added to the Garage policy by endorsement. It eliminates the exclusion regarding coverage for autos being driven or transported from point of purchase or distribution to destination, if such points are more than 50 miles apart.


Debris removal clause: Insurance coverage for the expense of removing debris that results from a loss covered by the policy if the limit of insurance is insufficient to cover both the amount of direct loss and the added cleanup. Many property policies provide an additional $5,000 for each insured location. Higher limits must be purchased separately.


Declarations: The page of an insurance contract that indicates the name of the policyholder, the insurance company, the period of coverage, what is covered (property, liability) under the contract.


Declination: Rejection of an application for insurance by the insurer.


Deductible: Usually, a dollar amount the insured must pay on each loss to which the deductible applies. The insurance company pays the remainder of each covered loss up to the policy limits. See also Franchise, Percentage and Straight.


Depreciation: Decrease in the value of any type of tangible property over a period of time resulting from use, wear and tear and obsolescence.


Deviating Company: An insurance company which varies (deviates) from bureau rules, rates or forms.


Direct Bill: The bill for the premium is produced by the insurance company and sent directly to the policyholder. The policyholder then pays the insurance company directly.


Direct Damage Loss: A loss involving value of tangible property which is physically damaged.


Direct Loss: Any financial loss that results directly from an insured peril


Direct Writer: An insurance company that secures its business either through the direct selling system (its own employees) or the exclusive agency system (captive).


Directors' and Officers' Liability Insurance: The protection of corporate directors and officers from liability arising out of errors in judgement, duty breachments, and any wrongful acts related to their organizations


Disability Income Insurance: Line of insurance which includes coverages that are designed to protect the insured against a loss of income resulting from injury or sickness.


Discovery Period: A period of time, in Crime insurance, during which losses that occurred during the policy period but are discovered during the "Discovery Period" will be covered.


Documentation: Supporting evidence or proof as to what has been done and the reason therefore.


Domestic Insurer: An insurance company formed under the laws of the state in which the insurance is written.


Draft: A form of payment, almost like a check.


Draft Authority: Authority granted to the agent by the insurance company to handle small claims and issue drafts within prescribed limits.


Dwelling Policy: An allied lines policy which provides coverage for the dwellings and personal property of individuals and families against fire and additional perils.


Earned Premium: That portion of the written policy premium applicable to the expired, or used, part of the period for which the premium has been charged.


Earthquake Coverage: Available under the Commercial Package policy. Requires the Coverage of Loss form - Earthquake.


Economic Loss: An estimated total cost, insured and uninsured, of mishaps (such as: vehicle accidents, work accidents, and fires); including such factors as property damage, funeral expenses, wage loss, insurance administration costs, and medical, hospital and legal costs.


Effective Date: The beginning of the policy term, usually 12:01 a.m. of the date shown.


Electronic Data Processing Coverage: Inland marine insurance designed to cover computer hardware and software.


Employee Dishonesty Coverage Form: Part of the Commercial Crime Coverage part of the Commercial Package policy, it covers loss resulting from dishonest acts of employees. This coverage is excluded under other Crime insurance forms. Formerly this coverage was provided under Fidelity bonds or combination policies that included Fidelity bonds.


Employers Liability Coverage: Coverage provided under a Workers Compensation policy to cover the employer's liability arising out of employee's work-related injuries.


Endorsement: A document which is attached to the policy and modifies or changes the original policy in some way.


Equal Shares Clause: An insurance clause which states that when the insured has other insurance, the loss payment made by the company will be based on the number of applicable policies, not on their limits.


Equipment Dealers Coverage Form: An Inland Marine form which provides all risk coverage for mobile agricultural and construction equipment owned by or in the care of an equipment dealer.


Errors and Omissions Insurance: A form of insurance that indemnifies the insured for any loss sustained because of an error or oversight on his part.


Estoppel: A legal principle that when an individual represents a material fact to another, who alters his position in reasonable reliance on the representation, the first may not deny that the condition or fact exists. Examples: An insurer may be estopped from denying a claim submitted after the policy expired if the insurer (or its agent) acted as though the policy had been or would be renewed.


Excess and Surplus Insurance: Markets Facilities which have the capability to provide coverage that cannot be obtained in the standard markets.


Excess Carrier: One who provides coverage over primary or underlying limits.


Excess Coverage: Coverage which applies only after limits of primary insurance have been exhausted. See Primary Insurance.


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


Exclusive Agency System: An insurance distribution system within which agents sell and service insurance under contracts that limit representation to one or more insurers under common management and which reserve to the insurer the ownership, use, and control of policy records and expiration data.


Exemplary Damages: Damages awarded to make an example of the wrongdoer.


Expediting Expenses: Expediting Expenses - A Boiler and Machinery coverage that covers the cost of temporary repairs and the costs of speeding up permanent repairs, i.e., over-time, or express transportation charges.


Experience: A statistical compilation of premiums and losses which establishes the loss record of an insured or of a type of insurance written.

Experience Modification Factor: Used in workers compensation rating to reflect the degree to which a particular employer has experience that is better or worse that expected for that industry


Experience Rating: Process of determining the premium rate for a group risk, wholly or partially on the basis of that group's experience


Expiration Date: The date that coverage ceases to be provided by an insurance policy.


Exposure: The state of being subject to the possibility of loss.


Extended Reporting Period: A period of time provided by the Claims-Made Commercial General Liability Coverage form during which coverage will be provided for claims made beyond the expiration date of the policy if the coverage part is (1) canceled or not renewed or (2) if the insurer renews or replaces the Coverage part with insurance that has a retroactive date later than the date shown in the Declarations, or with an Occurrence form. The Basic ERP runs five years. The Supplemental ERP has unlimited duration but is available only by endorsement for an extra charge.


Extortion Coverage Form: A Commercial Crime form that covers all types of property when surrendered away from the premises as a result of a threat to do bodily harm to the insured or employee, or an invitee of either, while they are being held captive, or allegedly being held captive.


Extra Expense Insurance: Covers additional expenses incurred by the insured business to continue operations following a direct loss by a peril insured against. One of the Commercial Property Coverage forms that can be included in a Commercial Package policy.


Face Amount: The amount of insurance provided by a policy, usually found on its face.


False Pretense Coverage: Coverage that can be added to a Garage policy by endorsement to insure a dealer against loss from voluntarily parting with a covered auto by trick or scheme or from acquiring an auto from someone who does not have title.


Fair Market Value: The price that a willing buyer would pay and a willing seller would accept in an arm's length transaction in a competitive (i.e., not monopolistic) market. Same as Market Value.


Farm Coverage part: Part of the Commercial Package policy, the Farm Coverage Part provides both property and liability forms that can be used to provide farm coverage on either a monoline or package basis.


Farm Liability Coverage Form: A form that is a part of the Farm Coverage Part and is designed to provide liability coverage for farm operations.


Farm Property Coverage Form: A form that is part of the Farm Coverage part and provides seven separate property coverages designed specifically for farms.


Federal Crop Insurance: Comprehensive Insurance coverage with rates that are subsidized by the federal government for unavoidable crop losses


Fidelity Bond: A class of bonds which guarantees an employee's honesty. Today this coverage is generally provided through Employee Dishonesty insurance.


Fiduciary Bond: A Judicial bond commonly used to bond fiduciaries: guardians, administrators, trustees and executors, or persons appointed by a court to manage the property of others. See Judicial bond.


File: A collection of information on a specific subject or person.


Film Coverage Form: An Inland Marine Coverage form that provides all-risk coverage for exposed motion picture film, including sound recordings and magnetic or video tapes that have been properly recorded until the first full quota of positive prints or film have been made.


Financial Responsibility Law: State law which requires 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.


Fire: Combustion accompanied by a flame or glow, which escapes normal confines to cause damage
First Party Insurance: A loss which applies to the insured's own property or person and thus involves only the insurer and the insured.


Flat Cancellation: The cancellation of a recently written insurance contract without charge to the insured.


Floater Policy: Coverage on goods of a mobile nature, whatever their location.


Flood: An overflowing of a body of water onto normally dry land or an unusual rise in the level of inland or tidal waters.


Flood Insurance: Coverage against loss resulting from rising water


Floor Plan Coverage Form: An Inland Marine Coverage form that provides all risk coverage for merchandise for sale that has been financed.


Florida Joint Underwriting Association: A market source for persons who are unable to purchase Auto insurance through normal channels. It is a syndicate of all licensed companies in Florida that write Auto insurance, with direct operations performed in their behalf by a group of servicing carriers.


Forgery or Alteration Coverage Form: A Commercial Crime form that covers loss from forgery or alteration of checks, drafts, promissory notes or similar instruments.


Form: An insurance document such as a policy, endorsement, rider or application.


Franchise Bond: A Surety bond that may be required by a public body when it awards a franchise.


Franchise Deductible: A deductible that specifies that no payment will be made until loss equals or exceeds a prescribed amount; then the loss is paid in full.

Fraud: A false statement intended to deceive the insurer and induce it to part with something of value or surrender a legal right. May void a policy.


Freight Coverage: An Ocean Marine coverage that provides protection for the vessel owner in the event that freight charges are not paid.


Full Coverage: Often means all the coverage that is available. It usually applies in connection with Automobile Insurance to include damage to the automobile as well as liability protection. It also can mean coverage without deductibles applicable.


Functional replacement cost: Property insurance policies sometimes provide for loss adjustment on the basis of functional replacement cost, which is the minimum cost to replace the damaged property with property that performs the same functions, though it may be less expensive than the original. Example: A brick warehouse may be replaced with a concrete tilt-up building that functions the same and is less expensive.


Garage Coverage Form: A coverage form that is part of the Commercial Auto Coverage Part and which provides coverage for garage businesses (dealers, service stations, garages, parking lots, etc.). Includes coverage for liability, physical damage and garagekeepers losses arising out of owned, nonowned and hired autos.


Garagekeepers Liability: A coverage which is part of the Garage coverage form. Covers a garage risk's legal liability for customers autos in the care, custody or control of the garage. At the insured's option, can also apply without regard to fault, for an additional premium.


General Average: An 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 their total interest in property being transported.


General Liability: A category of insurance which includes most of a business's liability exposures. Exposures covered include premises and operations, products and completed operations, contractual liability, and contingent liability.


Glass Coverage Form: One of the Commercial Property forms that can be included in the Commercial Package policy. Includes glass specified in a schedule and may include the value of lettering or ornamentation on the glass.


Grace Period: In Health insurance, a period during which the policy will remain in force, if unpaid by the premium due date. Florida law specifies the required length of the grace period.


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