Accelerated Benefits Rider: An adjustment (rider) to a life insurance policy that allows for the early payment of some portion of the policy’s face amount should the insured suffer from a terminal illness or injury.
Accidental Death Benefit Rider: An adjustment (rider) to a life insurance policy that provides for payment of an additional cash benefit when death occurs by accidental means. This amount depends on the value of the policy.
Accidental Death Insurance:An Insurance policy that provides payment if the insured’s death occurs as a results from an accident.
Accounts Receivable Coverage: Covers loss of sums owed to the insured by its customers that are uncollectible due to damage by an insured peril to accounts receivable records
Admiralty: Refers to the common law of the sea, enforced by the federal Courts. Seamen have certain rights and remedies against their employers under Admiralty Law, if injured on the job or during a voyage.
Advertising Injury: General liability coverage that insures against libel, slander, invasion of privacy, copyright infringement and misappropriation of advertising in connection with the insured’s advertising of its goods or services
Agent: An authorized representative of an insurance company.
Agreed Value: When the agreed value option is used the coinsurance requirement is removed and the insurer agrees to cover loses for it’s agreed value. As an example, the insured has property insured for $100,000 and the agreed value is also $100,000, if a loss occurs, any loss up to $100,000 is covered at 100% When this option is used the insured and the insurance company agree on the value of the property before the policy is issued. This option is usually assigned to one-of-a-kind property.
Backdating: Making the effective date of a policy earlier than the date of application. Backdating is often used to make the age of the applicant lower than it actually was at the time of application so that he/she can get a lower premium. State laws often set limits to this.
Base Flood Elevation (BFE): The elevation shown on the Flood Insurance Rate Map for Zones AE, AH, A1-A30, AR, AR/A, AR/AE, AR/A1-A30, AR/AH, AR/AO, V1-V30, and VE that indicates the water surface elevation resulting from a flood that has a one percent chance of equaling or exceeding that level in any given year.
Basic Cause of Loss Form:Property coverage for named perils: Fire, Lightening, Explosion, Smoke, Windstorm, Hail, Riot, Civil Commotion, Aircraft, Vehicles, Vandalism, Sprinkler Leakage, Sinkhold Collapse and Volcanic Action
Binder: A temporary insurance policy that expires at the end of a specific time period or when a permanent policy is written. A binder is given to an applicant for insurance during the time it takes the an insurance company to complete the policy paperwork.
Bodily Injury by Accident Limit: The most an insurer will pay under Part Two of a Workers’ Compensation Policy for claims arising out of any one accident, regardless of how many employee claims arise out of the accident
Bodily Injury by Disease-Policy Limit : The most an insurer will pay under Part Two of a Workers’ Compensation Policy employee bodily injury by disease claims during the policy period regardless of the number of employees who make such claims
Bond:A written agreement in which one party, the surety, guarantees the performance or honesty of a second party, the principal (obligor), to the third party (obligee) to whom the performance or debt is owed
Brands and Labels Endorsement: Property insurance coverage that allows the insured to remove labels from damaged goods or mark the items as ‘salvage,’ provided the goods are not damaged in the process
Broad Causes of Loss Form: Property coverage for the named perils: Fire, Lightening, Explosion, Smoke, Windstorm, Hail, Riot, Civil Commotion, Aircraft, Vehicles, Vandalism, Sprinkler Leakage, Sinkhole Collapse, Volcanic Action, Breakage of Building Glass, Falling Objects, Weight of Snow, Ice or Sleet, Water Damage (in the form of leakage from appliances) and Collapse from Specified Causes
Coinsurance Provision: An insurance provision for property coverages in which the policyholder must carry an amount of insurance that is at least equal to a set percentage of the value of the property in order to receive full payment of a loss
Collapse: Collapse of a building and collapse of personal property within a building due to specified causes (such as weight of snow, ice or rain). Does not include collapse due to design error or due to faulty workmanship or materials if the collapse occurs after construction is complete
Commercial General Liability Policy (CGL): A coverage which protects business organizations against liability claims for bodily injury and property damage. Those claims may be the result of events at your place of business, from your business operations, the products or services you make or do, communications or advertisements your business broadcasts
Conditional Receipt: Given to policy owners when they pay a premium at the time of the application. These receipts bind the insurance company, provided your policy is approved, but are subject to any other conditions stated on the receipt.
*Contestable Clause: A provision in an insurance policy setting forth the conditions or time period under which the insurance company may contest or void the policy. After this time has lapsed, typically two years, the policy cannot be contested. Example: Suicide.
*Coverage: Coverage is just another term for Insurance. It can be used to mean either the dollar amounts of insurance purchased ($500,000 of liability coverage), or the type of loss covered (coverage for theft).
Data Processing or EDP Coverage: All risk property insurance for electronic data processing equipment (computers), computer programs and data including mechanical breakdown, electrical injury and changes in temperature and humidity
Death on the High Seas: (DOHSA) covers any death occurring beyond 3 nautical miles from the shore of any State. Only the personal representative of the deceased individual can bring a DOHSA action, and that action is pursued on behalf of, or for the benefit of the decedent’s spouse, child(ren), parent or other financially dependent relative. DOHSA actions only provide for the recovery of monetary damages and does not provide for recovery of non-pecuniary damages.
Damages under DOHSA are determined based upon the actual or projected value of the financial benefit that would have been received from the decedent. Under this theory, dependent children can recover for the value of the care and guidance they would have received from the decedent parent. A spouse can recover for the actual value of the financial contribution the decedent would have made to the family had he lived, less any amount determined to have provided for the care and maintenance of the decedent personally. Therefore, the recovery can be reduced by the amount of resources deemed to provide for the consumption and needs of the decedent had he lived.
A simplified method of determining the needs or consumption of the decedent is to take equally apportion the family income to each member and deduct that equal portion from the projected income to account for the decedent’s anticipated expenditure.
The DOHSA does not provide for a loss of consortium or loss of society claim, however, the spouse can recover for the monetary value of the household services the decedent would have provided. This portion of recovery is based on the number of hours the beneficiaries would have expected to receive in services from the decedent and calculated based upon an hourly rate for those services projected out for the decedent’s life expectancy.
DOHSA generally does not provide for “survival” causes of action. The exception to this rule applies when a party sustains an injury on the high seas and dies during the pendency of a personal injury action being pursued in federal court in admiralty.
Decreasing Term Insurance: Term life insurance on which the face value slowly decreases in scheduled steps from the date the policy comes into force to the date the policy expires, while the premium remains level. The intervals between decreases are usually monthly or annually.
Defense Base Act: This federal Defense Base Act extends the provisions of the Longshore and Harbor Workers’ Compensation Act to contractors performing work at oversees military bases, and to various public works contracts performed outside the continental U.S. For example: employees working oversees for the American Red Cross providing welfare services for the Armed Forces.
Driver Other Car Endorsement: An endorsement that can be added to an automobile policy that gives protection while the insured designated in the endorsement is driving a car other than the one named in the policy
Electrical Damage or Injury Exclusion: An exclusion usually contained in property insurance policies eliminating coverage for damage to electrical appliances caused by artificially generated currents, except for ensuing fire or explosion
Employers Liability Coverage: Part 2 of the Workers’ Compensation policy which pays on behalf of the employer all sums that the employer becomes legally obligated to pay because of bodily injury by accident or disease sustained by any employee of the insured arising out of and in the course of his employment by the insured
Fine Arts Coverage: Property insurance for works of art
Fire Department Service Charge Coverage: Coverage in a property insurance policy for charges incurred by the insured from a fire department for their services in fighting a fire
Flood Coverage: Coverage for damage to property caused by flood. Flood can be defined as a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is the policyholder’s property) from:
–Overflow of inland or tidal waters; or
–Unusual and rapid accumulation or runoff of surface waters from any source; or
–Mudflow;or 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 as defined above
Garage Liability Insurance: Insurance coverage for the legal liability of automobile dealers, garages, repair shops and service stations for bodily injury and property damage arising out of their business operations
Garagekeepers Coverage: Provides coverage to owners of storage garages, parking lots and body and repair shops for their liability of damage to automobiles left in their custody for safekeeping or repair
General Aggregate Limit: The maximum amount of insurance payable during the policy period for losses (other than those arising from the products – completed operations hazards as covered under the standard commercial general liability policy)
Graded Premium Policy: A type of whole life policy designed for people who want more life coverage than they can currently afford. They pay a lower premium rate that increases gradually over the first three to five years and then remains constant over the life of the policy.
Guaranteed Term: A form of renewable term insurance that remains in force as long as the premiums are paid on time. With guaranteed term insurance, the insurance company cannot terminate the policy during the term.
Hired Automobile: An automobile whose exclusive use has been temporarily given to another for a monetary sum or other consideration. The business auto definition of ‘hired autos,’ however, includes autos borrowed except those borrowed from employees or partners
Host Liquor Liability: Liability coverage for hosts of business or social functions arising out of the serving or distribution of alcoholic beverages by a party not engaged in this activity as a business enterprise
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Improvements and Betterments: Additions or changes made by a lessee at his own expense to property that may not legally be removed. Usually covered under the tenants property coverage
Incontestable Clause: A clause in a policy providing that a policy has been in effect for a given length of time (two or three years), the insurer shall not be able to contest the statements contained in the application. In life policies, if an insured lied as to the condition of his health at the time the policy was taken out, that lie could not be used to contest payment under the policy if death occurred after the time limit stated in the incontestable clause.
Incurred Losses: The amount of paid claims and loss reserves within a particular period of time, usually a policy year. Customarily computed as losses incurred during the period, plus outstanding losses at the end of the period, less outstanding losses at the beginning of the period
Independent Adjuster: A claims adjuster who provides adjustment services to insurance companies but is not employed by them
Independent Contractor: An individual or company who has agreed, in writing, with another party to perform a job or function on behalf of that party
In-Rem: GL coverage endorsement extending coverage for suits filed against the value of a thing (Vessel) seeking for the recovery of damages; where the insured has a contractual obligation to defend the suit on a 3rd party claim. The suit must cite the unseaworthy condition of the vessel as proximate cause of the damages. In the absence of this endorsement, an in rem suit could result in an injunction preventing the vessel from leaving port until the suit is settled. In rem coverage is now part of the maritime coverage endorsement rather than a separate endorsement.
Insurance: A formal social device for reducing risk by transferring the risks of several individual entities to an insurer. The insurer agrees, for a consideration, to pay for the loss in the amount specified in the contract.
Jones Act: A federal law that extended the Federal Employer’s Liability Act (FELA) to give injured seamen the right to sue their employer in federal Admiralty courts for their work-related injuries. For additional information please click here
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Limited Pay Policy: A type of whole life insurance designed to let the policyholder pay higher premiums over a specific time period such as 10 or 20 years so that they won’t have to pay any premiums for the rest of his or her life.
Longshore and Harbor Workers’ Compensation Act: A federal law that provides workers’ compensation benefits to employees of a vessel injured in maritime employment – usually in loading, unloading, repairing or building a vessel – but not applicable to crew members. For additional Information please CLICK HERE
Loss: The amount an insurance company pays for damages under the terms of a policy
Lost Policy Release: A signed statement by the named when the insured wishes to cancel the policy, but has lost or mislaid the policy, which releases the insurance company from all liability or losses
Maintenance and Cure: Maintenance is a maritime term for room and board. Maintenance constitutes the daily payment that would be necessary to pay a seaman for room and board which would otherwise be furnished aboard the vessel. Maintenance begins on the date on which a seaman departs the vessel, not the date of the injury or illness. Attorneys often dispute the amount of maintenance which has been traditionally paid. The local maintenance rate is typically set at $20 to $30 per day. The courts generally refuse to award higher rates, although there is are legitimate arguments for a higher maintenance standard.
Maintenance continues until a seaman reaches maximum medical cure, regardless of whether or not the seaman remains disabled and unable to return to work as a seaman.
Cure can be defined as medical expenses paid by a shipowner to a seaman disabled by illness or injury. These payments are made until the seaman reaches maximum medical cure, or until the individual’s condition has stabilized. Basically, cure is a seaman’s right to medical treatment. While the injured seaman has a duty to mitigate his or her medical expenses, the seaman’s employer has the burden of proving that any medical costs of treatment by a seaman has been excessive or unnecessary.
Marina: A property or premises that provides waterfront facilities for recreational boating activities, typically launching, docking, storing, fueling and incidental servicing of boats. For additional information CLICK HERE
Maritime: Generally means “pertaining to the sea”. In connection with the USL&H Act, “maritime” work means work that meets the “situs” and “status” tests, including building and repairing ships, loading and unloading ships, construction or repair of structures that enable waterborne commerce, and other work on or near navigable waters in support of waterborne commerce. Also references work in connection with the Jones Act.
Medical:A document completed by a physician or another approved examiner and submitted to an insurer (insurance company) in order to provide medical information. This is usually done to determine insurability (or lack of insurability) or is sometimes done in relation to a claim.
Medical Expenses: Reasonable charges for medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, prosthetic devices, and funeral expenses. What is considered reasonable is outlined in a policy.
Medical Payments, Auto: Coverage, which is optional, under an auto policy to pay for medical expenses for bodily injury caused by an auto accident, regardless of fault. Coverage for persons other than the named insured and his or her family members is typically restricted to circumstances when they are occupants of the insured auto
Medical Payments, General Liability: A general liability coverage that reimburses others, regardless of fault, for medical or funeral expenses incurred as a result of bodily injury or death sustained by an accident
MEL: “Marine Employers Liability” coverage, often provided under a P & I policy or monoline, to protect the employer against his liabilities under the Jones Act and Admiralty law for injury to his employed seamen. Known as “Maritime Coverage” when provided as an endorsement to a Workers’ Compensation Insurance Policy.
Mexico Coverage: Coverage which is sometimes provided under automobile policies for the operation of an insured motor vehicle within Mexico, usually limited to a stated number of miles from the U.S. border
Monopolistic State Funds: States or Jurisdictions where an employer must obtain workers’ compensation insurance from a state fund or qualify as a self-insurer, as is allowed in five of the states: North Dakota, Ohio, Washington, West Virginia, Wyoming, Puerto Rico and the U.S. Virgin Islands
Mortgage Clause: Property insurance provisions granting protection for the mortgagee named in the policy. It establishes that loss to mortgaged property is payable to the insured and to the mortgagee named in the policy
National Flood Insurance Program: A federally funded program established to make flood insurance available to properties located in participating
communities National Flood Insurance Program: A federally funded program established to make flood insurance available to properties located in participating communities
Nonadmitted Insurer: An insurance company that is not licensed to do business in a specific state. The insurers may write coverage through an excess and surplus lines broker that is licensed in these jurisdictions
Nonowned Automobile: In commercial auto policies, coverage for autos that are used in connection with the named insured’s business but are neither owned, leased, hired, rented or borrowed by the named insured. The term specifically applies to vehicles owned by employees and used for company business
Nonsubscription:A Workers’ Compensation term used in Texas that refers to employers who choose to be out of the workers’ compensation system. Firms that are proven negligent in causing a worker’s injury, can be held liable in tort, since nonsubscribing employers waive the traditional common law defenses available to employers subject to workers’ compensation laws
Ownership: All rights, benefits and privileges under life insurance policies are controlled by their owners. Policy owners may or may not be the insured. Ownership may be assigned or transferred by written request of current owner.
Occurrence: A continual, gradual or repeated exposure to substantially the same general harmful conditions. General liability policies insure liability for bodily injury or property damage that is caused by an occurrence
Personal Injury: A General Liability coverage for insurable offenses that cause harm, other than bodily injury, such as false arrest, detention or imprisonment, malicious prosecution, wrongful eviction, slander, libel and invasion of privacy
Personal Injury Protection (PIP): An automobile insurance coverage mandated by law in some states. The statutes typically require insurers to provide or offer to provide first-party benefits for medical expenses, loss of income, funeral expenses and similar expenses without regard to fault
Premises-Operations:A category of hazard ordinarily insured by a general liability policy which is composed of those exposures to loss that fall outside the defined ‘products-completed operations hazard,’ including liability for injury or damage arising out of the insured’s premises or out of the insured’s business operations while such operations are in progress
Pro Rata Cancellation: The cancellation of an insurance policy with the return premium being the full proportion of premium for the unexpired term of the policy, without penalty for early cancellation
Product: Items manufactured, sold, handled, distributed or disposed of by the named insured or others involved with the named insured in the course of their business. Includes containers, parts and equipment, product warranties and provision of or failure to provide instructions and warnings
Products Completed Operations: General Liability coverage for liability arising out of the insured’s products or business operations conducted away from the insured’s premises once those operations have been completed
Professional Liability: Coverage designed to protect professionals such as physicians and real estate brokers, against liability incurred as a result of errors and omissions in performing professional services
Re-entry Option: An option in a renewable term life policy under which the policy owner is guaranteed, at the end of the term, to be able to renew his or her coverage without evidence of insurability, at a premium rate specified in the policy.
Representation: Statements made by applicants on their applications for insurance that they represent as being substantially true to the best of their knowledge and belief but that are not warranted as exact in every detail.
Saturation Diving: Saturation diving is based on the principle that the pressure of the dissolved gas in the blood and tissues is the same as that of the gas in the lungs. Basically, a diver goes down to a depth, perhaps 300 feet, and remains there until no more gas can dissolve in the tissues — the tissues are saturated with nitrogen. Once the saturation point has been reached, the time required for decompression will be the same no matter how much longer the diver stays at that depth, whether it be a minute, an hour, a day or a week. This principle has been used for divers who live and work in undersea habitats
Seaman: A Seaman, as defined in the Jones Act, is intended to be taken in its broadest scope, having a much broader definition than is traditionally associated with the word “Seaman”. First off, a Seaman is not classified as a labourer. Instead, a Seaman is intended to include any person that furthers the mission of a vessel while assigned to that vessel or to a fleet of vessels.
In fact, a Jones Act, does not even need to be serving on an American ship. Anyone whose duties are maritime in nature, and performs those duties on a vessel, or in commerce, and in navigable waters, is classified as a Seaman under the Jones Act. This can be applicable even if the individual is not onboard a vessel at the time of injury. Employees serving onboard restaurant boats, tankers, freighters, jack-up rigs, semi-submersibles, towboats, tugboats, supply boats, lay barges, barges, fishing vessels, casino boats, and others, regardless of whether or not those boats are moored at port, can be classified as Seamen under the Jones Act, so long as the boat is in navigation during hours of operation.
Secondary Beneficiary: An alternate beneficiary designated to receive payment, usually in the event the original beneficiary predeceases the insured.
Stop Gap Coverage: In five states, workers compensation insurance is provided by a state fund, rather than by private insurance. The state fund is the exclusive source of workers compensation insurance in these states. North Dakota, Ohio, Washington, West Virginia, and Wyoming have monopolistic state funds. (Nevada recently abolished its state fund, and private insurers can now provide workers compensation insurance there.) Employers liability insurance is not offered by these state funds. Employers in these states need insurance protection for those claims or suits by employees that fall outside the immunity provided to employers under workers compensation statutes. To fill this gap, “stop gap” coverage is needed. Stop gap coverage provides a form of employers liability insurance for employers who do not have the coverage because they operate in a so-called monopolistic state. Coverage for defense costs is typically included.
Surplus Lines Insurance: Insurance written by insurers not licensed in the states where the risks are located and placed with such insurers under the surplus line laws of the various states. Before such placements can be made through specially licensed surplus line agents and brokers, state laws generally require evidence reported before some predetermined future date (‘sunset’)
Term Insurance: Protection during limited number of years; expiring without value if the insured survives the stated period, which may be one or more years but usually is five to twenty years, because such periods usually cover the needs for temporary protection.
Third Party Owner: A policy owner who is not the prospective insured. The policy owner and the insured may be, and often are the same person. If for example, you apply for and are issued an insurance policy on your life, then you are both the policy owner and the insured and may be known as the policy owner-insured. If, however, your mother applies for and is issued a policy on your life, then she is the policy owner and you are the insured.
Transit Coverage: Coverage on the insured’s property while in transit from one location to another, over land
Umbrella Liability Policy: A policy designed to provide additional protection against catastrophic losses covered under liability policies, such as the business auto policy, commercial general liability policy, watercraft and aircraft liability policies and employers liability coverage. It provides excess limits when the limits of the underlying liability policies are used up by the payment of claims and it drops down and picks up where the underlying policy leaves off when the aggregate limit of the underlying policy in question is exhausted by the payment of claims. It also provides protection against some claims not covered by the underlying policies, subject to a self-insured retention
Underinsured Motorists Coverage: Provides coverage for bodily injury, and in some states property damage, for losses incurred by an insured when an accident is caused by a motorist who does not have sufficient insurance limits
Underwriter: Company receiving premiums and accepting responsibility for fulfilling the policy contract. Also, company employee who decides whether the company should assume a particular risk; or the agent who sells the policy
Universal Life: An interest-sensitive life insurance policy that builds cash values. The premium payer has control over how the policy is structured. He has the flexibility to eliminate the premiums (essentially pay up the policy and pay no more premiums) or have the premiums continue for life. It is a matter of juggling three variables: the assumed interest rate, the cash value and the premium payment plan. The policy is interest-sensitive, and if interest rates change from the assumed interest, it will affect the other two variables. In the past, many Universal Life Policies were structured assuming a higher interest rate then was actually received, therefore, most of them have under performed. If you have a Universal Life Policy, you should have it evaluated to see if it needs to have the premiums adjusted to get it back on track. A fourth variable that has not been a factor but could be in the future, and the owner should be aware of, is the Mortality variable. Universal Life policies are usually structured assuming current mortality rates. The insurance companies reserve the right to change those rates.
Unseaworthiness: Unseaworthiness is a term found in case law that refers to any unsafe condition occurring on a “vessel” that causes an injury. The duty to provide a seaworthy vessel is a longstanding function of General Maritime Law. It is the duty of the owner of the “vessel” to provide a safe place to work and violation of that duty can give rise to a claim or lawsuit by a worker who is injured due to the unseaworthiness of the vessel. The word “vessel” is in quotations because the definition is not limited to a ship or boat. There is a broad legal definition of “vessel” that includes offshore oil rigs and production platforms, barges with no motors or sleeping quarters, helicopters, moored casino boats and company transportation on land.
USL&H: Means the United States Longshore and Harbor Workers Compensation Act, a federal law in many respects like any state’s Workers’ Compensation law, except that it only applies to employers and employees engaged in maritime work. For additional information CLICK HERE
Utility Service Interruption Coverage:Coverage for the loss to an insured due to lack of incoming electricity which was caused by damage from a covered cause of loss, such as a fire or windstorm, to property away from the insured’s premises – usually the utility generating station. Also referred to as ‘off-premises power coverage’
Vacancy Provision: Property insurance provision found in commercial property policies that restrict coverage in connection with buildings that have been vacant for a specified number of days, usually 60 days
Valuable Papers and Records Coverage : Coverage that pays the cost to reconstruct damaged or destroyed valuable papers and records and usually includes almost all forms of printed documents or records except money or securities; data processing programs, data and media are usually excluded
Waiver of Premium: Rider or provision included in most life insurance policies exempting the insured from paying premiums after he or she has been disabled for a specified period of time, usually six months.
Wharfinger’s Legal Liability: Operators of commercial piers or wharves require coverage for specific protection for their unique needs. Wharfinger protection extends to: loss or damage to the property of others in the care, custody, and control of the Wharfinger; including tugs and tows, barges, their cargo and equipment; wreck removal.
Whole Life Insurance: Life insurance that is kept in force for a person’s whole life as long as the scheduled premiums are maintained. All Whole Life policies build up cash values. Most Whole Life policies are guaranteed as long as the scheduled premiums are maintained. The variable in a Whole life Policy is the dividend which could vary depending on how well the insurance is doing. If the company is doing well and the policies are not experiencing a higher mortality than projected, premiums are paid back to the policy holder in the form of dividends. Policyholders can use the cash from dividends in many ways. The three main uses are: it can be used to lower or vanish premiums, it can be used to purchase more insurance or it can be used to pay for term insurance.
Workers’ Compensation: Protection which provides benefits to employees for injury or contracted disease arising out of and in the course of employment. Most states have laws which require such protection for workers and prescribe the length and amount of such benefits provided