A. INSURANCE UNDERWRITING
Underwriting is the process through which an individual or institution takes on financial risk for a fee. The term underwriter originated from the practice of having each risk-taker write their name under the total amount of risk they were willing to accept for a specified premium.
B. PROPERTY INSURANCE
Property insurance grants coverage for real and personal property against loss or damage from perils and consequential loss.
C. CASUALTY INSURANCE
Casualty insurance protects a person from financial loss arising from bodily injury or property damage to others arising out of: operation of a motor vehicle; workers’ compensation injuries; ownership of property; personal activities; burglary, robbery, and theft; boiler and machinery losses; malpractice; and business activities.
D. PERSONAL LINES
This category refers to insurance for families and individuals. Examples include homeowners and personal auto policies.
E. COMMERCIAL LINES
This category refers to insurance for businesses of any size, including professionals and commercial enterprises. Examples include commercial general liability and business auto policies
F. SURPLUS LINES
A surplus insurance line insures risks that ma be unavailable in the standard market because of unusual characteristics, such as aviation, product, earthquake, or professional exposures. These risks fall beyond the capacity of standard insurers.
G. RISK, EXPOSURE, PERILS, HAZARD, LOSS
Risk is defined as the uncertainty of financial loss. Similar to risk, exposure is the actual condition or situation that presents a possibility of loss. Perils are the happenings or events that cause a loss. A hazard is a condition that increases the chance of a loss occurring. A hazard may trigger a loss or may lead to the occurrence of a peril. Loss is defined for insurance purposes as: unintended, unforeseen damage to property; injury; or the amount the insurance company is obligated to pay for personal injury.
H. LOSS VALUATION
Replacement Cost is the amount necessary to replace damaged property at day’s cost — that is, replacing lost or damaged property with like kind and quality.
Actual Cash Value (ACV) is the replacement cost (RC) minus a deduction for depreciation (D) due to wear and tear or obsolescence (ACV = RC - D). Actual cash value is not the same as market value.
Agreed Value, or stated value, represents the value of the described property agreed upon by both the insurer and the insured. At the time of a loss, the property’s value is the agreed value.
I. COINSURANCE
Provision that penalizes the insured's loss recovery if the limit of insurance purchased by the insured is not equal to or greater than a specified percentage (commonly 80 percent) of the value of the insured property. In commercial property insurance policies, it is sometimes possible to avoid the possibility of a coinsurance penalty with an Agreed Value provision.
J. PROPERTY DAMAGE
As defined in the general liability policy, physical injury to tangible property including resulting loss of use and loss of use of tangible property that has not been physically injured.
NOTICE: These glossary definitions provide a brief description of the terms and phrases used within the insurance industry. These definitions are not applicable in all states or for all insurance and financial products. This is not an insurance contract. Other terms, conditions and exclusions apply. Please read your official policy for full details about coverages. These definitions do not alter or modify the terms of any insurance contract. If there is any conflict between these definitions and the provisions of the applicable insurance policy, the terms of the policy control. Additionally, this informational resource is not intended to fully set out your rights and obligations or the rights and obligations of the insurance company, agent or agency. If you have questions about your insurance, you should contact your insurance agent, the insurance company, or the language of the insurance policy.