Insurance Terminology and Concepts, Exams of Advanced Education

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Accident Insurance ✔✔Covers expenses associated with a covered accident and can extend to ambulance and emergency room expenses, intensive care, and hospital costs. Accident insurance also provides for loss of income, and a death benefit if injuries prove fatal Accumulated Depreciation ✔✔The total decrease in an item's value over a period of time. Formula: (annual depreciation x number of years used). Subtract this number from the item's replacement cost to get its actual cash value (ACV). Acreage Reporting Date ✔✔In crop insurance, the deadline for providing the insurer with an acreage report, which is used to determine the amount of coverage needed and the premium charged for a particular crop. Actual Cash Value (ACV) ✔✔A valuation method used by insurers to reflect an item's current market value right before being damaged or destroyed. Formula: (replacement cost - accumulated depreciation) Actual Production History ✔✔A history of a farmer's crop yields over a multi-year period, which is used to determine the normal production level of a farm. Adhesion ✔✔Characteristic of an insurance contract. Means that one party (the insurer) sets the terms, and the other (the policyholder) can "take it or leave it. Adjusted Gross Revenue (Crop Insurance) ✔✔Narrowest (and least expensive) form of crop revenue insurance. Insures farm revenue as a whole instead of individual crops. Guarantees a percentage of the insured farm's average revenue. Adjuster ✔✔An agent who, for compensation, processes insurance claims. The adjuster investigates the damages, evaluates the claim, and makes a fair and equitable settlement based on the insurance contract. Can represent either the insured or the insurer. Adjuster - Emergency ✔✔Adjusters who are temporarily licensed by the insurance commissioner to handle claims during

catastrophes or emergencies that produce an overwhelming number of claims in a short period of time. Adjuster - Independent ✔✔Self-employed adjusters who contract with multiple insurers at the same time. Paid on a commission or fee-plus-expenses basis for each claim. Also called: Fee Adjuster, Bureau Adjuster. Adjuster - Public ✔✔An adjuster who is hired to represent the claimant and help determine a fair indemnification. Usually specializes in appraisals and negotiation. Paid commission, usually a percentage of final settlement. Adjuster - Staff ✔✔Salaried employee of one insurance company who can work locally, regionally, or nationally. Also called: Company Adjuster Advance Payment Settlement ✔✔A settlement option that lets the insurer offer some financial relief to the claimant before the claim has been fully settled. The insurer makes advance payments to the claimant, which are then subtracted from the final settlement amount. Often used when a claimant suffers bodily injury and is unable to work. Agency Authority ✔✔The agent's authority to act on behalf of someone else (the principal), usually an insurer. This authority is derived from the agent's contract with the principal. It can be apparent, express, or implied Agency Authority - Apparent ✔✔Indirect authority that the agent can reasonably be assumed to have, based on appearances. If an adjuster is equipped to represent an insurer (with the insurer's permission), then an individual can assume that the adjuster has the authority to act on the insurer's behalf. Agency Authority - Express ✔✔Authority that is expressly given to the agent in writing. Allows the agent to act on behalf of the principal. Agency Authority - Implied ✔✔Authority that an agent possesses by implication of her behavior, regardless of whether this authority is granted in writing. For example, a person portraying herself as a representative for an insurance company, even though she is not employed by that company.

Agent (Insurance) ✔✔Someone who has received authority from an insurer to sell or service insurance policies. Agreed Value ✔✔A valued policy in which the insurer and the insured agree to a specific value for an item, appraised at the inception of the policy. Often used to insure items whose value is difficult to quantify, such as antiques or fine art. Also called a Guaranteed Value policy. Agreement ✔✔One of the four requirements of a legally binding contract. All parties involved must agree to the terms of the contract. Can also refer to a binder, which is the preliminary substance of a contract. Agricultural Producer ✔✔A business that grows, harvests, and sells crops for profit. Aleatory ✔✔A characteristic of an insurance contract. Means "depending on an unknown future event." An insurance contract will only pay IF and WHEN covered damages occur. Neither party knows how much the contract will end up paying when they enter into the contract. Answer ✔✔In liability cases, the defendant's response to a complaint. There are three possible answers: 1) accept complaint and pay for damages, 2) deny the complaint, or 3) accept the complaint with a right to insert evidence into the case. Annual Depreciation ✔✔An item's replacement cost divided by the number of years in its expected lifespan. Annual Transit ✔✔An uncontrolled inland marine form that covers loss of goods in transit. It applies to all of the insured's shipments during the year. Appraisal ✔✔A dispute resolution method which allows the claimant and the insurer each to select an appraiser. The two appraisers in turn select an umpire. The appraisers then work together to determine a settlement amount. If they cannot agree, the umpire steps in. Agreement by any two of the three is binding. Arbitration ✔✔A dispute resolution method in which the opposing parties each submit their evidence to a mutuallyagreed-

upon and neutral third party, called an arbitrator. The arbitrator reviews the positions of each opposing side and makes a final and legally binding decision. Arbitrator ✔✔The mutually-agreed-upon and neutral third party in an arbitration who reviews the positions of each opposing side before making a final and legally binding decision. Artificially Generated Current ✔✔Also called "artificial current." A peril covered in some property insurance policies. It includes sudden and accidental damage from any electrical current, except currents that are naturally generated, such as lightning or static electricity. Auto Policy ✔✔Insurance policy designed to protect the policyholder while owning, occupying, or operating a vehicle. Usually combines liability coverage and property coverage into one policy. Automobile ✔✔In insurance policies, automobile generally means any vehicle designed for use on public roads. Automobile No-Fault Laws ✔✔Laws in effect in some states that require any owner of a vehicle to purchase no-fault insurance; that is, insurance that indemnifies the insured, regardless of who was at fault in an accident. No-fault laws also restrict the insured's right to sue the at-fault party. Aviation ✔✔Aviation insurance combines hull insurance for the aircraft and liability insurance for any damage to others' property or to people who are not passengers. Average Weekly Wage (AWW) ✔✔The average amount of income that an employee earns each week while able to perform normal job duties. When an employee is injured on the job, his workers' compensation income benefits will depend on his AWW before the injury. Bailee ✔✔An individual or company that receives the property of someone else for a special purpose and returns the property after use. Bailee Coverage ✔✔Reimburses a bailee's customer for damage to the customer's property while in the bailee's control

Binder ✔✔A temporary contract provided by an insurer, which ensures coverage until the complete, permanent policy is issued Black Lung Benefits Act ✔✔Federal program that provides monthly payments and medical treatments to coal miners who become totally disabled from black lung disease or pneumoconiosis Bodily Injury (BI) ✔✔Physical damage to someone's person. Liability insurance covers bodily injury that the insured might cause to another person through negligence. Boiler & Machinery ✔✔Insurance coverage designed to indemnify a business for damages to, and damages by, boilers, machinery, motors, generators, and a variety of other electrical devices and appliances. Bond ✔✔A contract wherein one party guarantees the performance of a third party. Bonds involve three parties: (1) the surety agrees to pay the second party, (2) the obligee, if the third party, (3) the principal, neglects to carry out an obligation it has to the obligee. Breach of Product Warranty ✔✔The failure or falsehood of a stated promise of a product stipulation Business Auto Policy (BAP) ✔✔Provides property damage and liability insurance for automobiles used by a business Business Floater ✔✔Inland marine coverage form designed for items that are excluded from most property contracts, such as accounts receivable records, manuscripts, blueprints, etc. Business Interruption Coverage ✔✔Commercial insurance form designed to indemnify a business if a covered peril leads to lost profits or revenue. The most common type of Time Element Insurance. Business Personal Property ✔✔Moveable property used for business Cancellation and Nonrenewal Condition ✔✔Establishes when and how the insurer or the insured can terminate an active insurance contract. The

policyholder can cancel at any time by giving a written notice. Typically, the insurer may only cancel the policy for a few specific reasons, and it must give written notice of the cancellation or non-renewal anywhere between 10 and 60 days in advance Capitation ✔✔An arrangement in which an insurer pays a certain healthcare provider up front, and in return, the healthcare provider agrees to treat all of that insurer's members. Catastrophe ✔✔An occurrence or a sequence of occurrences that causes enormous property losses. Catastrophes are normally uninsurable by private insurers Cause of Loss ✔✔A form included in a commercial package policy or a commercial property policy that lists the causes of loss against which the insured property is covered. Certificate of Insurance ✔✔An official document that contains the details of an insurance policy. It typically lists the insurance company, the named insured, what is covered, and the dates of the policy period, among other things. Policyholders may be required to present their certificate as proof that insurance coverage is in effect. Commercial General Liability (CGL) ✔✔A policy that protects a business against damages and injuries it may cause to third parties Civil Law ✔✔Observes court cases of one citizen charging another citizen for damages caused by tort. Differs from criminal law. Claim ✔✔The request for settlement that the policyholder files with an insurer after she experiences a loss Claims-Made Form ✔✔A liability policy in which the insurer covers claims that are filed during the policy period, no matter when the loss occurred. The opposite of an occurrence form. Claims Management ✔✔The practice of the insurance adjuster of managing a claim by processing it in a prompt and effective manner from the time the claim is filed until a settlement is reached, while adhering to all local and federal laws.

Claimant ✔✔One who files a claim with an insurer for a loss Coarse Grains ✔✔A provision in crop insurance that covers reduction in crop quality, as well as crop-yield losses. Coarse grains are corn, grain sorghum, and soybeans Code of Ethics ✔✔A set of governing professional standards of conduct, usually created by regulatory bodies or government regulatory agencies. These standards may also be formally codified with statutes. Coercion ✔✔The practice of forcing another party to behave in an involuntary manner (whether through action or inaction) by use of threats, intimidation, or some other form of pressure or force. Coinsurance ✔✔A property insurance provision that requires the policyholder to carry adequate coverage (typically at least 80% of the property's value). If a property does not meet this requirement (i.e. if it is underinsured), the insurer applies a penalty on claims for partial losses. The penalty requires the policyholder to pay a percentage of the claim, depending on how underinsured the property is. To calculate: divide the actual coverage by the coinsurance requirement and then multiply that by the loss. In health insurance, coinsurance refers to the portion of a covered claim that the insured is responsible for paying out-ofpocket, after the deductible has been paid. Coinsurance Payment (Health Insurance) ✔✔A percentage of the total health care expenses that the insured must pay. Commerce ✔✔The exchange or transport of goods or property Commercial ✔✔Having to do with commerce or business activity in general Commercial Crime Insurance ✔✔Commercial insurance that covers employee dishonesty and theft by employees or others. Commercial Lines ✔✔A variety of insurance coverages that protect those involved in the business of creating, selling,

displaying, evaluating, or shipping, etc. Examples include: business owner's policy (BOP); commercial property; commercial general liability (CGL); workers' compensation (WC); professional liability, errors and omissions (E&O); and employment-related practices liability. Commercial Property Floater ✔✔A means of protecting a business' property that is not in one fixed location. Includes domestic shipments, instrumentalities of transportation and communication, and commercial property floater risks. Common Crop Insurance Policy ✔✔A single uniform policy that combines crop revenue coverage, revenue assurance, income protection, and indexed income protection Common Law ✔✔Based on court decisions and customs when statutory law does not provide an answer; creates precedent. Compensatory Damages ✔✔Money awarded in civil court for tangible and intangible damages caused by a policyholder. There are two types: general and special Compensatory Damages - General ✔✔Money awarded for the emotional losses of the plaintiff that will continue after the trial date. These are a subjective value and are determined by the court. Compensatory Damages - Special ✔✔Money awarded for the exact value of the physical damage caused to the plaintiff up to the trial date. This is an objective value determined by receipts and medical bills Competence ✔✔One of the four qualifications of a legally binding contract. All parties must be competent, with the necessary legal and mental capacity. Complaint ✔✔A complaint initiates a civil lawsuit by one person (the plaintiff) requesting financial relief from damages caused by someone else (the defendant). Concealment ✔✔The act of withholding relevant material facts from an insurer

Conditionally Renewable Policy ✔✔A policy that gives the insurer the option to cancel coverage only if certain stated conditions are met. Conditions ✔✔The section of a policy that qualifies or limits an insurer's promise to pay or perform. Consideration ✔✔One of the four qualifications of a legally binding contract. All parties must bring something of value to the contract. Contract ✔✔An agreement entered into voluntarily by two parties or more with the intention of creating a legal obligation. Contribution by Equal Shares ✔✔Each policy pays an equal share of the loss up to the lowest policy limit. If the loss is not fully covered, the process is repeated among the remaining insurers with available coverage. As each policy limit is reached, the remaining portion of the loss is split equally between the insurers with available coverage until the loss is either fully covered or all of the policy limits have been reached. Controlled Line Floaters ✔✔Standardized forms provided by a bureau and filed with the state. These forms disclose the rates being charged and can be used as both general property floaters (such as "personal effects" or "personal property") and specific property floaters that break down covered property by type. Copayment ✔✔The amount a policyholder must pay each time she accesses the benefits of a health insurance policy. Coverages ✔✔The amount and extent of protection provided by an insurance policy. Crime ✔✔An offense against the state or federal government, or a breach of law, for which the offender must make satisfaction to the public Criminal ✔✔Someone who has been convicted of a criminal act in a court of law. Crop Hail Insurance ✔✔A form of crop yield insurance that is usually provided by private insurers without government subsidy. It offers named-peril protection on an acreage basis

Crop Insurance ✔✔Insurance coverage designed to protect a farmer's financial investment in his crops. Covers losses to a crop's profitability. Crop Revenue Insurance ✔✔Crop insurance that combines crop-yield insurance and price insurance to protect against losses to crop value. Crop Yield Insurance ✔✔Crop insurance that covers physical losses to actual crops. Damages - General ✔✔Intangible losses, such as pain and suffering or mental anguish. See also: "Punitive Damages." Damages - Special ✔✔Tangible, financial losses that can be documented Dangerous Instrumentality Doctrine ✔✔States that anyone involved in the use of inherently dangerous products or machines is held 100% liable for their own damages Declaratory Judgement Action ✔✔As an alternative dispute resolution before litigation, the court can clarify the legal relationship and the rights of both parties: the claimant and the principal. Does NOT decide how to resolve the case. Declarations Page ✔✔Also called the Dec page. First page of a policy, which provides a summary of the contract; includes names of insured, addresses, coverage limits, policy period, etc. Declined Coverage ✔✔Takes place when an insurance company rejects an application for coverage Deductible ✔✔The amount the policyholder must pay out-of-pocket before the insurance company will pay the remaining costs. There are three types: fixed, franchise, and percentage Deductible - Fixed ✔✔One specific, predetermined amount that a policyholder must pay out-of-pocket before his policy coverage kicks in Deductible - Franchise ✔✔The policyholder only pays if the total damages come out to less than his deductible. If the cost of damages equals or exceeds the deductible, the insurer pays the full amount and the policyholder pays

nothing Deductible - Percentage ✔✔A deductible that is calculated as a percentage of the value of the insured risk Defamation ✔✔Damage to another's name or reputation, whether by libel (which is in print) or by slander (which is in speech). Default Judgement ✔✔A judgment entered by the court against a party who fails to present his case or defense in a civil action. Most commonly, this applies when the defendant fails to show up and answer the claim brought against him, so the court decides in favor of the plaintiff. Definitions ✔✔Page in policy that gives specific limited meaning to terms used in policy Depreciation ✔✔A decline in value of property caused by wear or loss of usefulness, usually measured by a specific formula. Diligence and Dispatch ✔✔An adjuster should act with speed and care in completing the adjusting process. Failure to settle a claim in a timely manner can result in disciplinary action by the insurance commissioner, including a fine or loss of license Disclosure ✔✔An adjuster must disclose all financial interests in any direct or indirect aspect of an adjusting transaction. For example, an adjuster cannot refer a claimant to his brother's auto repair business without first telling the claimant that the business is owned by a relative Discoverable ✔✔Capable of being demanded and handed over as evidence in a court of law; during litigation proceedings, the adjuster's claims file is discoverable DP- 1 ✔✔"Basic Form" of Dwelling Policy. Covers direct physical loss to property caused by only three perils: fire, lightning, and internal explosion (coverage for other perils can be added by endorsement). DP- 2 ✔✔"Broad Form" of Dwelling Policy. A named peril policy that covers everything on the DP-1 Basic from, as well as 9 Extended Form perils and the Broad Form perils.

DP- 3 ✔✔"Special Form" of Dwelling Policy. Unlike DP-1 and DP-2, DP-3 offers open- peril coverage for the property's structures (but named peril for personal property). Dwelling Policy (DP) ✔✔Property coverage for people and businesses who are not eligible for homeowners insurance or do not need the extensive coverage of the homeowners policies. Electronic Data Processing (EDP) ✔✔An endorsement that covers the loss of computer equipment, data systems, information storage media, and expenses or lost income related to EDP losses. Eligibility ✔✔Eligibility Requirements are found in some insurance policies. They identify the conditions that must be met by the policyholder in order to qualify for coverage under a policy. End of Insurance Date ✔✔The date that crop insurance coverage will end. It is the earliest of the following: total crop destruction, harvest of the crop, final adjustment of a loss, abandonment of a crop, or a date predesignated by crop type. Endorsement(s) ✔✔An optional provision that can be added to a policy to increase, reduce, or modify coverage for specific property types or perils Errors and Omissions (E&O) ✔✔Liability insurance that indemnifies professionals for errors or oversights on the part of the insured that caused harm to their clients Estoppel ✔✔A legal principle that bars a party from asserting something contrary to what has been implied by his previous actions or statements. This is a form of "implied waiver"; for example, if the insurer regularly accepts late payments, it waives its right to deny coverage due to late payment Ethical ✔✔Adhering to moral laws and to principles of fairness Equipment Floater ✔✔An uncontrolled form that covers heavy machinery and equipment needed to conduct business. Protection on this form includes loss by fire, landslide, theft, and other perils to equipment that is being

stored, on its way to the job site, or at the job site itself. Coverage is available on an open peril or named peril basis for all equipment, whether rented, owned, or borrowed. Evaluation ✔✔The process of determining the approximate value of damages relevant to a claim (i.e. total of medical bills, costs of repair & replacement of damaged property) and considering the financial provisions of the insurance policy to decide on a fair settlement amount. Excess Policy ✔✔Pays for a loss only after the primary policy's limits have been exhausted. See also: "Primary Policy." Exclusions ✔✔A section of an insurance policy that reduces coverage by listing specific individuals, property, or perils that the policy does NOT cover Exposure ✔✔The extent to which an item is open to damage or loss. More exposure means a loss is more likely, so this is a determining factor in an insurer's underwriting decisions Fair Credit Reporting Act (FCRA) ✔✔This act regulates how companies collect, share, and use consumers' personal and financial information. It is enforced by the US Federal Trade Commission and civil lawsuits. False Advertising ✔✔Presenting something to the public in a deceptive or untrue manner; misrepresentations in advertisements Farm ✔✔A property where a farmer or rancher both resides and conducts commercial business. Farm Liability Coverage Form ✔✔A form added to a farm insurance policy that provides coverage for injury and damage to a third party. Farm Property Coverage Form ✔✔A form added to a farm insurance policy that provides coverage for the dwelling, other structures, farm structures, and both household and farm personal property. Farmer ✔✔Someone in the business of growing, harvesting, and selling crops for profit. In farm insurance, a farmer must reside and do business on the same premises.

Federal Crop Insurance Act ✔✔Legislation passed by Congress that established the federal crop insurance program. Federal Crop Insurance Corporation (FCIC) ✔✔A government-owned corporation that manages the federal crop insurance program. Federal Emergency Management Agency (FEMA) ✔✔A branch of homeland security that coordinates relief programs when disaster strikes an entire community. Federal Employees Compensation Act (FECA) ✔✔Federal program that provides insurance for civilian employees of the federal government. As a workers' compensation program, FECA covers disability or death sustained while the employee is on the job. Pays medical expenses and two-thirds of normal monthly salary while the employee is unable to work. Additional payments may be made for permanent injuries or to dependents. Federal Employers Liability Act (FELA) ✔✔Federal program enacted in 1908 before most state workers' compensation laws. FELA protects only interstate railroad workers and their families, by allowing workers who are not covered by regular WC laws to sue their employer Fiduciary ✔✔One of the terms that describes the adjuster's relationship with the principal (the insurer). As fiduciary agent, the adjuster acts for the benefit of the principal, rather than for his own benefit. Fiduciary Duty ✔✔A legal relationship in which one party represents the best interests of another. As the insurer's fiduciary agent, the adjuster makes financial decisions on behalf of the insurer and must uphold the insurer's financial interests in all transactions,while ensuring that claims are settled fairly according to their insurance contracts. This means the adjuster must perform her job with honesty and "utmost good faith" at all times.

Final Planting Date ✔✔In crop insurance, the last day to plant crops in order to receive the full insurance yield and/or revenue guarantee selected. First Named Insured ✔✔The first person or entity named as insured on the declarations page of a policy First Party Claim ✔✔A claim that a policyholder files with her own insurer (as opposed to a third party claim, which the claimant files with someone else's insurer). Floater ✔✔A term for inland marine policies that cover mobile property. See also: "Controlled Lines Floater" and "Uncontrolled Lines Floater." Flood ✔✔An overflow of inland or tidal waters; an unusual or rapid accumulation of runoff or surface waters from any source; mud flows; collapse or subsidence of land along the shore of a lake or other body of water. Flood Insurance ✔✔Provides relief following flood damage to communities who participate in the NFIP floodplain management system; covers damages to the building and its contents Floodplain Management ✔✔Maps out areas with high risk of flood, so that communities will avoid building in these areas Fraternal Benefit Societies ✔✔Non-profit, mutual aid organizations that engage primarily in charitable or benevolent activities. They offer their members insurance against death, disease, and disability. Also known as Fraternal Associations Fraud - Hard ✔✔Deliberately faking or causing an incident in order to collect money Fraud - Soft ✔✔Inflating the gravity or the extent of claims in order to receive a higher indemnification. Free on Board (FOB) Destination Point ✔✔A term used in Ocean Marine insurance. It means that the title to the property being shipped remains with the shipper until it arrives at the buyer's destination and the buyer accepts the property Free on Board (FOB) Shipping Point ✔✔A term used in Ocean Marine insurance. It means that the title to the property being shipped transfers to

the buyer as soon as the property leaves the shipping dock. Full Release Settlement ✔✔A settlement option whereby the insurer pays all damages at once in an immediate "lump sum" and the claimant signs a "full release form" which releases the insurer from any further liability. This is the most common settlement option. Good faith ✔✔Acting honestly and fairly, with good intentions and full disclosure. Government Insurance ✔✔An insurance program where risks are transferred to a government agency. Also known as social insurance. Government insurance usually exists in situations where the exposure to loss is too high for private insurers to reliably insure risks. Group Risk Income Protection ✔✔A form of Crop Revenue Insurance that protects a whole county or area instead of individual farmers. Automatically indemnifies if county income falls below a certain level. Guaranteed Renewable Policy ✔✔A disability or life insurance policy that cannot be canceled by the insurer until the insured reaches a certain age. The insurer may increase the premiums over the life of the policy Guaranty Association ✔✔A non-profit association of insurers from similar markets that handle and pay claims for insurers that have been declared insolvent Hazard ✔✔An instance, behavior, or condition that increases the chance of incurring a loss, or increases the severity of the loss Hazard -- Legal ✔✔Any legal action that increases the chance of a loss Hazard - Moral ✔✔Conscious and deliberate action on the part of the insured that increases the chance of a loss. All conscious acts committed with a hope to defraud the insurance company are moral hazards Hazard - Morale ✔✔Unconscious tendency of insured people to engage in riskier behavior Hazard - Physical ✔✔Any physical condition that increases the chance of a loss.

Health Insurance Portability and Accountability Act (HIPAA) ✔✔A 1996 US law protecting consumer privacy, regulating collection, use and storage of private medical information. Deals mainly with the portability of health insurance and dictates that all employees must be eligible to participate in health insurance coverage when they join a new company, regardless of current health status Health Maintenance Organization (HMO ✔✔A managed care organization that provides health insurance to individuals through a provider network. Provides a broad range of comprehensive medical care. HO- 2 ✔✔The "broad" form of homeowners insurance; a basic, named-peril HO form that nevertheless is less limited than the HO-8. H0- 3 ✔✔"Special form" of homeowners insurance; all-peril coverage for structures, named-peril coverage for contents. H0- 4 ✔✔"Contents broad form"; named-peril renter's policy covering only personal property and any structural improvements made at the tenant's own expense. H0- 5 ✔✔"Comprehensive form" of homeowners insurance; provides all-peril coverage for both structures and contents. H0- 6 ✔✔"Condo" or "unit owner's form"; named-peril homeowners policy covering personal property and the surface structure of a condominium. H0- 8 ✔✔"Modified coverage form" of homeowners insurance; named-peril coverage for structures and contents, fewer perils covered. Homeowners Policy ✔✔An insurance policy that combines property coverage with liability coverage for a person's home. Hospital Expense

Insuranc ✔✔Provides coverage for a variety of hospital expenses, including room and board, medical expenses, lab fees, and nursing care. Hospital Indemnity Insurance ✔✔A supplemental coverage that provides a flat amount of indemnification per day for hospitalization Impaired Property ✔✔Property that is defective because the insured's deficient or incomplete additions or work Income Protection (Crop Insurance ✔✔A form of crop revenue insurance. Relatively inexpensive, it provides a fixed revenue guarantee based on early commodity prices for the crop type. Indemnification ✔✔Reimbursement for a loss, which leaves the claimant in the same financial position that she was in before the loss. Indemnify ✔✔To restore by payment, repair, or replacement Indemnity Insurance ✔✔Insurance that indemnifies loss as opposed to liability Inducements ✔✔Actions, items, or promises made to someone in order to motivate them to act in a certain way. Examples of inducements include kickbacks, gifts and bribes. Inherent Vice ✔✔A characteristic in a thing itself that causes gradual deterioration or self-destruction. Losses or damage related to inherent vice are not insurable Inland Marine Insurance ✔✔Insurance that covers property being transported over land, or property that is involved in the transportation of goods Instrumentalities of Transportation and Communication ✔✔A term used in Inland Marine insurance that refers to property directly related to transportation and communication, including bridges, tunnels, roads, dams, piers and docks, oil pipelines, power transmission lines, and radio and TV towers

Insurable acreage ✔✔All of the acreage of the insured crop, for which a premium rate is provided in the actuarial documents, in which the insured has a financial interest, and which is planted in the county listed on the application Insurance ✔✔A financial device that transfers the risk of unexpected, catastrophic losses from one party to another. Insurance Commissioner ✔✔Most states have an insurance commissioner who is responsible for regulating many aspects of the insurance industry (especially those concerning the financial solvency of the insurers doing business in the state). The commissioner oversees the financial stability of insurers and regulates the rates that insurers charge Insurance Company ✔✔Company which sells insurance policies to individuals or to other companies. Insurance Fraud ✔✔Using insurance to obtain money unlawfully. This can be done by a policyholder, or by an insurer or an insurer's employees. There are two kinds of insurance fraud: soft fraud and hard fraud Insurance Information and Privacy Protection Act (IIPPA) ✔✔Regulates how an insurance company can use consumers' private information. Deals specifically with how insurance companies collect, use and share personal information about their policyholders and gives the consumer the opportunity to prevent certain information from being shared. Requires that insurers tell consumers why insurance coverage was declined or why insurance claims were denied. Insurance Policy ✔✔A contract wherein an insured pays premiums to an insurer in exchange for financial protection in the event of a covered loss. Insurance Rating Systems ✔✔Methods of evaluating the risk involved in insuring a person, property, or a corporation. Insurers use rating systems to calculate premiums Insured ✔✔A person or entity who is covered under an insurance policy Insured crop ✔✔The crop in the county for which coverage is available as specified by the policy.

Insurer ✔✔The person or entity providing coverage to one or more insureds Insuring Agreement ✔✔A section of an insurance policy that summarizes the insurer's promise to pay. Includes list of covered property and perils Interest ✔✔Direct financial interest in protecting a unit. Intervening Cause ✔✔A separate occurrence that "intervenes" between a defendant's actions and damage or loss to another person. An intervening cause may decrease the defendant's liability, if the defendant can show that it was the intervening cause (rather than the defendant himself) that caused the damage or loss Joint Liability ✔✔Liability shared by two or more persons. Jones Act (Merchant Marine Act) ✔✔Protects injured seamen by allowing them to sue for damages and to choose a jury trial. Seamen are covered by the Jones act instead of by workers' compensation insurance. Judgement ✔✔An official court ruling forming a final decision resolving a dispute or forming a final decree. Kickbacks ✔✔Any sort of reward or remuneration for referrals or favors; for example, a body shop giving money to an adjuster for referring customers. This is unethical behavior. Landlord ✔✔One who has leased property to a tenant Late Planting Period ✔✔25 days after the final planting date, during which the yield and/or revenue guarantee drops by one percent per day Law and Ordinance Coverage ✔✔Covers the repair or upgrade cost when new building codes, laws, or ordinances go into effect. A common endorsement in both residential and commercial policy packages. Also known as Code Upgrade Coverage. Leased Worker ✔✔Worker hired through a labor leasing firm.

Legal Purpose ✔✔One of the four qualifications of a legally binding contract. The purpose of the contract must be legal (e.g. no contracts for illicit drug deals). Liability ✔✔An obligation to do or not to do something; responsibility for an action. Liability Insurance ✔✔Liability insurance indemnifies a third party for damages caused by the insured's negligence Liability - Employer ✔✔Protects employers from claims not covered by workers' compensation for damages and bodily injury caused to employees while performing under the scope of their employment. Liability - Product ✔✔Protects a policyholder from legal liability for damages to third parties caused by the manufacturing, merchandising, distributing, or operation of a product Liability - Professional ✔✔Professional Liability Coverage protects professionals such as doctors, lawyers, engineers, architects, etc. It includes two types of coverage: malpractice insurance and errors and omissions insurance Liability - Public ✔✔Protects individuals and commercial venues from any property damage or personal injury they may cause to the general public Libel ✔✔Damage to another's name or reputation in print. See also: "Defamation." Liberalization ✔✔The liberalization clause in an insurance contract is a condition that states that the insurer can add or broaden coverage at any time without writing up a new contract. This clause guarantees that, in the case of legislative action that broadens insurance coverage without any increase in premiums, this additional coverage must take effect in existing policies as well as in new policies. License ✔✔A document that shows that a person has been granted authority by the state to act as an insurance agent, broker, or adjuster Limit ✔✔The limits of an insurance policy represent the highest amount an insurer will pay. Any cost above the limits of insurance is the responsibility of the policyholder.

Limit - Aggregate ✔✔The total amount the insurer will pay for all losses during the policy period. Often appears preceded by an occurrence limit (e.g. 100,000/1,000,000). The first number indicates the maximum payout for covered losses in any single occurrence, and the second number indicates the total amount the insurer will pay for all covered occurrences during the policy term Limit - Single ✔✔Establishes 1 maximum limit for liability damages caused by the policyholder. Contrast with split limits Limit - Split ✔✔An insurance provision that specifies different coverage limits for different parts of a claim. The most common example is split limits in a personal auto policy, which includes 3 different limits of liability: (1) maximum limit for bodily injury for any one individual, (2) maximum limit for bodily injury to multiple people in any one accident or occurrence, and (3) maximum limit for property damage in any one accident or occurrence. Litigation ✔✔An action brought in court. Litigation takes place when an insurer and a policyholder disagree about a settlement amount and cannot resolve their differences through any sort of negotiation. Livestock Floater ✔✔Optional farm insurance coverage. Provides stand-alone protection for six kinds of domesticated animals on a scheduled or unscheduled basis. Includes coverage for animals while in transit. Longshore and Harbor Workers' Compensation Act ✔✔Federal program that provides compensation and medical care to employees who are injured while on the job on navigable waters of the United States. Loss ✔✔Bodily injury, property damage, or damage caused by the insured's negligent acts; loss is the the basis for an insurance claim. Loss can also mean the sum the insurer will have to pay. Loss - Direct ✔✔Physical harm to tangible property caused by a peril. Loss - Indirect ✔✔An economic loss that results from the direct, or physical, loss. Mail Coverage ✔✔A controlled Inland Marine coverage form providing open peril coverage for property sent by registered

mail. The shipper is responsible for reporting the value of property shipped with this coverage. Major Medical Coverage ✔✔A helath insurance plan that does not restrict the policyholder to a network, provides limited coverage but high medical coverage limits, and involves high deductibles and coninsurance rates Machinery ✔✔Machines or the parts of a machine Malpractice ✔✔Negligent or improper actions on the part of doctors, lawyers, and accountants etc., resulting in damage, injuries, or losses to the person receiving their services Marine Insurance ✔✔Covers items that are being transported, as well as the vehicles used for transportation. Market Value ✔✔The price something will sell for in the open market, or "fair market value." McCarran-Ferguson Act ✔✔1945 US Law exempting insurance from most federal regulation, and placing it under the authority of the individual states Mechanical Breakdown Insurance (MBI) ✔✔Covers losses due to breakdown of motor vehicles Mediation ✔✔A method of negotiation that utilizes a neutral third party adviser to reach a mutually-agreeable solution. Mediation differs from Appraisal in that the decision is not binding to the opposing parties. Misappropriating Salvaged Property ✔✔When an adjuster takes possession of salvaged property for his own use or the use of another. This is unethical behavior. See also: "Salvaged Property Misrepresentation ✔✔Any false or misleading statement Mobile Agricultural Machinery and Equipment Coverage Form ✔✔A commercial property form that provides coverage for farm machinery and equipment when it is the only exposure, or when coverage must be written separately

Motor Truck Cargo ✔✔An uncontrolled inland marine coverage form that protects the carrier of shipped goods while the shipment is in transit Multi Peril Crop Insurance (MPCI) ✔✔A form of Crop Yield insurance that offers broad coverage for a multitude of perils. MPCI is subject to federal regulation because it is subsidized by the government. Coverage applies per unit. Mutual Insurance Company ✔✔An insurance company that is owned by its policyholders who participate in dividends. These companies have no shareholders and are not traded publicly. Named Peril Policy ✔✔A policy that names all perils that will be covered. Contrast with open-peril policies National Association of Insurance Commissioners (NAIC) ✔✔A non-profit coalition of state insurance agencies that works to protect consumers and harmonize state laws and regulations National Association of State Departments of Agricultural Research Foundation ✔✔A non-profit association of public officials representing the Commissioners, Secretaries, and Directors of Agriculture in the fifty states and four territories National Center for Agricultural Law Research and Information ✔✔Independent agricultural and food law research and information center created to address the complex legal issues affecting American agriculture National Crop Insurance Services (NCIS ✔✔A non-profit international organization specializing in statistical data analysis and reporting related to crop insurance risk management. National Flood Insurance Program (NFIP) ✔✔A program that provides insurance for communities that suffer flood damage and are willing to participate

in the FEMA's floodplain management system. National Resources Conservation Service ✔✔A federal agency within the USDA that works with private landowners and operators to help them protect their natural resources Negligence ✔✔The failure to exercise a reasonable degree of care in a particular situation. Negotiations ✔✔Negotiations take place when the insurer and the claimant do not agree about an indemnification amount. The insurance adjuster is often the one who will carry out the negotiations Non-Commercial ✔✔Non-Commercial insurers are not-for-profit insurance companies that return profits to policyholders by reducing premiums or expanding benefits Nonconcurrency ✔✔The situation in which 2 or more policies covering the same risk have different inception and expiration dates. Since the policies operate on different calendars, losses on the base policy may not count toward the limit which triggers the excess policy's coverage. Non-Waiver Agreement ✔✔An agreement that the insurer asks the claimant to sign which states that the insurer's investigation of the loss can't be used later on as proof that the loss is covered under the policy. No Release Settlement ✔✔A settlement option whereby the insurer simply pays the bills submitted by the claimant, but the claimant does not sign a release form to verify the payment. Usually, the checks issued to indemnify the claimant act as a substitute for a release form. Also known as "Walk-away" Settlement Obligee ✔✔The party in a "surety bond" that wants a guarantee that the principal will perform as promised, and is the recipient of the contractual obligation. See also: "Principal" and "Surety (Guarantor)." Occurrence ✔✔An unexpected event or circumstance that causes injury or damage Occurrence Form Policy ✔✔A liability policy in which the insurer covers losses that occur during the policy period, no matter when the claim is filed. The opposite of a claims-made form. Ocean Marine ✔✔Insurance designed to protect property being transported overseas