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Insurance Term Glossary



Hangarkeepers Liability: A form of aviation bailee insurance that covers the insured's liability for damage to aircraft stored for safekeeping.


Hazard: Something that increases the chance of loss. For instance, faulty wiring is a hazard because it increases the chance of a fire loss.


Hold Harmless Agreement: A contractual arrangement whereby one party assumes the liability in a given situation, thereby relieving the other party of responsibility.


Homeowners Policy: A personal multiple line contract incorporating both property and liability coverages. Several different forms provide varying degrees of protection.


Hull Insurance: In Ocean Marine and Aviation insurance, insurance against physical damage to plane or ship.
Improvements And Betterments: Permanent alterations which a tenant makes to the rented property which will not be removed when the tenant leaves.


Increased hazard: A provision in a property insurance policy that releases an insurer from its obligations under its policy if a loss is caused by a hazard increased by any means within the insured's control or knowledge. Increased hazards must be materially greater than those contemplated when the policy was issued. Example: A moving and storage company begins using its warehouse to store explosives and combustible chemicals.


Indemnitor: In a Surety agreement, one who agrees to reimburse the surety for any loss it may suffer from having bonded the principal.


Indemnity: A principle of insurance which provides that when a loss occurs, the insured should be restored to the approximate financial condition occupied before the loss occurred, no better, no worse.


Indemnity Bond: A License bond which holds the government harmless from injuries or damages caused by the principal's activities.


Independent Insurance Agent: One who represents more than one company, sells and services the insurance solely on a commission or fee basis under contract, and is recognized to own the business produced.


Indirect Damage: Loss resulting as a consequence of physical damage to property.


Indirect Loss: Loss which is a result or consequence of a direct loss.


Inflation Guard: A property insurance option which provides that the policy limits will increase a certain percentage at regular intervals, for instance, annually.


Inherent vice: A quality within an object, material or property that results in its tending to deteriorate or destroy itself. Inherent vice is excluded by most property insurance policies. Example: The spoilage of fruit during storage or shipping would be excluded from a property policy. The destruction of unspoiled fruit by a fire, on the other hand, would be covered.


Inland Marine Insurance: A form of insurance originally designed as an extension of marine coverage to insure transportation of goods over land. Today, it covers, in addition to goods in transit, a variety of portable property.


Insolvency Bond: Fiduciary bonds that are required of persons appointed to conserve remaining assets and protect creditors.


Installation Form: An uncontrolled Inland Marine form that covers property in transit and at premises where an installation is to be made.


Instrumentalities Of Transportation And Communication: A category of Inland Marine insurance covering such property as bridges, tunnels, pipelines, etc.


Insurable Interest: Any actual, lawful and substantial economic interest in the safety or preservation of the subject of the insurance from loss, destruction or pecuniary damage or impairment. A claim may be paid only when an insurable interest exists.


Insurance: A contract whereby one undertakes to indemnify another or pay or allow a specified amount or a determinable benefit upon determinable contingencies.


Insurance Service Office (ISO): An organization made up of member companies, which collects and analyzes statistics collected from members and then establishes and files standard rates for many lines of insurance. Also develops standardized forms.


Insurance to value: Insurance coverage written at or near the value of the insured property; or the ratio that the amount of the insurance purchased bears to the value of the insured property.


Insured: Also referred to as the policyholder. The person, business or other entity that is covered by the policy.


Insured peril: The danger to a property against which it is insured; a cause of loss that invokes coverage under a policy. For example, fire, explosion, wind and vandalism are insured perils under a typical property insurance policy.


Insurer: The insurance company.


Insuring Agreement: The section of an insurance policy which states which losses will be indemnified, what property is covered, which perils are insured against.


Intellectual property: A form of intangible property consisting of documented, written or recorded knowledge, ideas, discoveries, product names, and problem-solving techniques. Ownership is usually established by a copyright, patent, or trademark.


Jewelers Block: An all risk Inland Marine form for retail jewelers that covers the insured's stock in trade and the property of others, while at the insured's premises, in transit and elsewhere.


Judicial Bond and Bonds Required By Courts: See Fiduciary bonds and Court bonds.


Keep Out Program: This is a common term used by the F.R.P.C.J.U.A to allow insurers to take policies out of the F.R.P.C.J.U.A. before policies are issued giving the insured an admitted carrier for their homeowner's insurance


Labor and Materials Bond: See Payment bond.


Lapse: A policy becoming invalid because of failure to pay the premium on time.


Leasehold Interest Coverage Form: A form which belongs to the Commercial Property Coverage part of the Commercial Package policy; It covers a tenant for certain losses following damage to the premises from a covered peril, such as tenant's loss of a favorable lease or loss of remaining value of improvements or betterments made by a tenant.


Legal Liability: Rules of law dictate that a person must pay for damages done to another.


Legal Liability Coverage Form: This form belongs to the Commercial Property Coverage part of the Commercial Package policy. It covers the insured for negligently damaging property owned by others, but in the insured's care, custody or control.


Lessee: The person to whom a lease is granted, commonly called the tenant.


Lessor: The person granting a lease, commonly called the landlord.


Liability Insurance: Insures the individual for financial losses which arise out of the person's responsibilities to others imposed by law or contract.


Liability Limits: The amount (limits) of protection the insured receives in a liability insurance policy.


Liberalization Clause: A policy condition found in many standard policies which states that if the insurer adopts a revision that would broaden coverage without additional premium within some period of time prior to the policy period or during the policy period, the insured receives the benefit of such broadened coverage.


License And Permit Bonds: A category of Surety bond which covers a wide variety of occupations and operations, and which are often required as a condition of doing business.


Limits of Liability: The maximum amount of insurance the insurance company will pay for a particular loss, or for a loss during a period of time.


Line: 1) A particular line of insurance. 2) Various types of insurance written for a property owner. 3) The amount of insurance paid under a liability policy.


Liquor Liability Coverage: This form belongs to the Commercial General Liability coverage part of the Commercial Package policy. It covers liquor liability which is excluded from the standard CGL forms for those who are in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages.


Lloyds: An unincorporated form of insurance carrier comprised of individual underwriters responsible for the liabilities they assume.


Loss: Generally: 1) The reduction in value of the insured's property. 2) The amount sought in his claim. 3) The amount paid under a liability policy.


Loss assessment coverage: Property insurance (ISO form CP 04 19) for a condominium unit owner, covering assessments charged by a condominium association for a loss to the property. The policy pays the amount of the assessment, if the loss is caused by an insured peril.


Loss of Use Coverage: Under the Homeowners contract, covers the insured's increased cost of living after loss and rental value of any portion of the dwelling which is rented out.


Loss Ratio: The percentage of losses in relation to premiums. For example, a 60% loss ratio would mean that there were 60 cents in losses for each $1.00 of premium.


Losses Incurred: The total losses, paid or reserved, sustained by the insurer during a particular period.


Lost Instrument Bonds: A category of Surety bonds issued in situations where a principal loses valuable securities or other papers and requests issuance of duplicates. Should the lost instruments turn up and be redeemed by the holder, the issuer of the instrument would be reimbursed.


Lost Policy Release: A statement signed by the insured releasing the insurance company from all liability under a lost or mislaid contract of insurance.


Mail Coverage Form: A part of the Commercial Inland Marine Coverage part of the Commercial Package policy. It provides all risks coverage for valuable contents of mail.


Marine Insurance: Marine Insurance - A form of insurance primarily designed to cover property in transport over land or sea.


Minimum Premium: The lowest premium for which a policy may be issued.


Misrepresentation: Statement of something that is known to be untrue.


Moral Hazard: A condition of morals or habits that increases the probability of a loss from a peril insured against.


Morale hazard: An increase in the hazards presented by a risk arising from the insured's indifference to loss because of the existence of insurance. Example: An insured fails to repair faulty wiring, believing it is less expensive to pay insurance premiums than to pay an electrician.


Mortgagee: One who has a lender's interest in real property.


Mortgagee clause: An endorsement attached to a fire or other direct damage policy that covers mortgaged property, specifying that the loss reimbursement will be paid to the mortgagee as the mortgagee's interest may appear; that the mortgagee's rights of recovery will not be defeated by any act or neglect of the insured; and giving the mortgagee other rights, privileges, and duties.


Mortgagor: One who has secured a loan from a mortgagee, usually the property owner, and thus the insured under a property policy.


Multiple Line Insurance: The combination of two separate lines of insurance into a single policy. Often referred to as package insurance.


Mutual Insurance Company: A cooperative form of insurance company owned by and operated for the benefit of the policyholders.


Named Insured: Any person, firm, or corporation designated by name as the specific insured in a policy.


Named Perils Policy: A policy specifying only those perils to be insured against, in contrast to a policy that insures all perils not specifically excluded.


Named Schedule Coverage: A type of Employee Dishonesty insurance that covers loss only from named employees.


Negligence: The failure to exercise that degree of care that the law requires to protect others from an unreasonable risk of harm. The failure to act as a prudent person would have acted under similar circumstances.


Net Line: The amount of coverage a company will accept as its maximum.


Noncancelable: A type of Health insurance policy which the company may not cancel, but must renew to a certain age with no change in premium. Affords the greatest degree of continuation protection to the insured.


Nuclear Energy Liability Endorsement: A mandatory endorsement which must be included with the Commercial General Liability coverage part of the Commercial Package policy. In general, it excludes all hazards related to nuclear energy.


Objects Definition Form: Part of the Boiler and Machinery Coverage part of the Commercial Package policy. Defines the objects covered by the Boiler and Machinery Coverage form in great detail.


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


Occupancy: The type and character of the use of the property and the entity therein.


Occurrence: In liability policies, generally defined to be an accident, including continuous or repeated exposure to substantially the same general harmful conditions.


Occurrence Form: A Commercial General Liability Coverage form with a coverage trigger that states that coverage applies only to bodily injury or property damage which occur during the policy period, regardless of when claim is made.


Ocean Marine Insurance: Marine insurance designed to provide broad coverage for cargo and ships in transit over sea. Includes Cargo insurance, Hull insurance, and liability coverage (Protection and Indemnity).


Optionally Renewable: A type of health insurance that cannot be canceled during the policy term, but for which the company reserves the right to nonrenew the policy at expiration.


Owners And Contractors Protective Liability: A form of Liability insurance which protects an owner or general contractor against liability arising out of the acts of independent contractors or subcontractors. May be issued to the independent contractor or subcontractor, or may be issued directly to the owner or general contractor.


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