1952 - 2009
Fifty-Seven Years
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"Born in the community - To Serve The Community"

 

The following glossary of insurance terms is for information only. Glossary terms do not alter any proposal or insurance policy issued by James & John Turco Insurance Agency, Inc. or its affiliated insurance companies. All coverage's will be subject to policy exclusions, conditions and limitations.

* * Please read your policy for specific details * *

Glossary of Insurance Terms & Common Artisan Contractor Terms

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Acts of God: Perils that cannot reasonably be guarded against, such as floods and earthquakes.

Actual cash value (ACV): The replacement cost of property less allowance for depreciation.

Actuary: An individual, often holding a professional designation, which computes statistics relating in insurance. Actuaries are most frequently used to estimate loss reserves and develop premiums. Professional designations are awarded by the Casualty Actuarial Society and the Society of Actuaries.

Additional Insureds: Persons who have an insurable interest in the property/person covered in a policy and who are covered against the losses outlined in the policy. They may receive less coverage than the primary named insured.

Aggregate: The maximum amounts payable by an insurance carrier on behalf a policyholder during any given annual policy period.

Aggregate limits: A yearly limit, rather than a "per occurrence" limit. Once an insurance company has paid up to the limit, it will pay no more during that year.

Agreed Amount:: An optional property coverage under which the insured and the insurance company agree on the stated value for the property. If the insured and the insurance company agree on the stated value for the property. If the insured purchases coverage in the amount of the agreed value, no coinsurance applies.

Agreed Amount Clause: Aprovision in fire insurance policies covering certain classes of property, whereby the coinsurance clause is suspended if the insured carries an amount of insurance specified by the company (usually 90 percent or more of value).

All-risk agreement: A property or liability insurance contract in which all risks of loss are covered except those specifically excluded.

Arbitration: A method of settling disputes between two parties of a contract in lieu of litigation. Usually each side selects one party and agrees upon a third to hear the evidence and render a decision.

Attractive nuisance doctrine: A legal doctrine that increases the degree of care owed to a child; greater than ordinary care is required to a child who is a trespasser.

Audit: Asurvey of the insured 's payroll and/or gross receipts records to determine the premium that should be paid for the coverage furnished. Used in Workers ' Compensation and General Liability policies.

Basic Form: a standardized cause of loss form naming 11 basic perils that may be insured against. It provides the most basic package of covered causes of loss.

Bid Bond: a bond filed with a bid for a construction or other project which guarantees that if the contractor has the low bid and is awarded the job, he will furnish the required Performance Bond.

Binder: a legal agreement issued by either an agent or an insurer to provide temporary insurance until a policy can be written. It should contain a definite time limit, be in writing, and clearly designate the company in which the risk is bound as well as the amount, the perils insured against, and the type of insurance.

Blanket coverage: Property at several locations or all property at a given location is insured under a single item.

Bodily Injury: The injury to or death of another person.

Bodily Injury Liability: A legal liability that may arise as a result of the injury to or death of another person.

Bodily Injury Liability Coverage: protection against loss arising out of the liability imposed upon the insured by law for damages due to bodily injury, sickness, or disease sustained by any person or persons (other than employees). This is one of the types of coverage's (property damage liability being the other) provided by general and auto liability insurance.

Boiler and machinery insurance: Coverage for explosions caused by steam boilers, compressors, engines, electrical equipment, flywheels, air tanks, and furnaces. Prevention of loss is emphasized even more than indemnification of loss.

Bond: A three-party contract guaranteeing that if one person, the principal, fails to perform as specified or proves to be dishonest, the person to whom the duty is owed, the obligee, will be financially protected by the insurer of the bond, the surety.

Burglary: The unlawful taking of property from within premises, entry to which has been obtained by force, leaving visible marks of entry.

Cancellation: Termination of a contract of insurance in force by voluntary act of the insurer or insured in accordance with the provisions in the contract or by mutual agreement.

Care, Custstody, and Control (CCC): A standard property damage liability exclusion found in most liability insurance policies. This exclusion precludes coverage for property which is in care, custody, or control of the insured. This exclusion may be worded so that it applies either to personal property only or to all property. Some companies will occasionally consider removing or modifying the exclusion on a specific or blanket basis.

Cash value: The savings element that accumulates with some life insurance policies.

Certificate of Inspection: A legal certificate that states that specified installation, alteration or repair work has inspected and is approved by the appropriate governmental body.

Certificate of Insurance: A document which evidence that an insurance policy has been issued and shows the amount and type of insurance provided. Certificates of Insurance are often required by lenders to show that financed property is insured. Contractors and subcontractors providing services to the business manager should also be required to provide insurance certificates. it is important to note that an insurance certificate is not a contract and does not place any obligations on the insurance company. Certificates are only a statement that insurance policies are in effect on the date they are issued.

Certificate of Occupancy (C.O.): A document that certifies that a structure meets all appropriate ordinances and codes and is ready for its designated use.

Claims-made policy: A policy wherein the insurer pays for claims made during the year. The event giving rise to the claim may or may not occur in a prior year.

Coinsurance: A clause that requires the insured to insure to value or share the loss with to insurance company.

Collision: Upset of the covered auto and non-owned auto and/or its impact with another vehicle or object. Coverage applies no matter who causes the accident.

Commercial general liability: A business liability policy designed for a wide variety of business uses, covering premises operations, product liability, completed operations, and operations of independent contractors.

Completed operations liability: The liability of a contractor for completed work that the owner has accepted or for work abandoned by the contractor.

Comprehensive: Coverage on an auto policy that pays for damage to or loss of your car, less any applicable deductible resulting from perils such as fire, theft, vandalism & glass loss.

Concealment: The failure of an applicant to reveal, before the insurance contract is made, a fact that is material to the risk.

Conditions: Circumstances under which an insurance contract is in force. Breach of the conditions is grounds for refusal to pay the loss.

Consequential losses: Losses other than property damage that occur as a result of physical loss to a business-for example, the cost of maintaining key employees to help reorganize after a fire.

Consideration: In an insurance contract, the specified premium and agreement to the provisions and stipulations that follow.

Contributory negligence: Partial guilt or negligence in a civil lawsuit where both parties are to blame.

Declarations: The section of an insurance policy, usually the first page, that provides information such as the policy number, the insured's name and address, the agent's name, etc.

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

Deductible: A definite dollar amount to be borne by the insured before the insurer becomes liable for payment under the policy

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

Dwelling: The structure on the residence premises shown in the declarations, used principally as a private residence, including attached structures.

Dwelling policy: Covers dwellings that are not owner occupied, have up to five rooms for boarders, and are ineligible for a homeowners' policy.

Effective Date: the date on which the protection of an insurance policy or bond goes into effect.

Employers Liability Coverage: A coverage which becomes effective when, for one reason or another, an injured employee 's claim is not covered under workers ' compensation law.

Exclusive Remedy: A doctrine that states that workers ' compensation is the sole remedy doctrine stood for more than 60 years, but has since been eroded by the "dual capacity" doctrine and "third-party-over" suits.

Endorsement: An addition made to an insurance policy. It usually adds coverage and an additional premium may be charged.

Exclusions: Restrictions of the coverage provided by an insurance policy.

Fair claim settlement laws: Laws establishing minimum standards for insurers in handling loss claims.

Floater policy: An inland marine insurance policy that covers property subject to movement from on location to another.

Flood: (1) An overflow of inland or tidal waves, (2) unusual and rapid accumulation of runoff of surface waters, (3) mudslides, (4) excessive erosion along the shore of a lake or any other body of water, or (5) erosion or undermining exceeding its anticipated cyclical levels.

Frequency: How often a loss occurs or is likely to occur.

General Liability Insurance: a form of insurance designed to protect owners and operators of business from a wide variety of liability exposures. These exposures could include liability arising out of accidents resulting from the premises or the operations of an insured, products sold by the insured, operations completed by the insured, and contractual liability.

Guaranteed replacement cost: Insurer agrees to pay for replacing property without policy limit. Used in homeowners' program.

Hired Automobile: autos the insured leases, hires, rents, or borrows, but not autos owned by employees or members of their households.

Incurred Loss Ratio: the percentage of losses incurred to premiums earned.

Independent Contractor: one who agrees to perform according to a contract and who is not an employee.

Insurance Policy: the printed form which serves as the contract between an insurer and an insured.

Insured: the party to an insurance arrangement whom the insurer agrees to indemnify for losses, provide benefits for, or render services to.

Insuring agreement: The part of an insurance contract that states what the insurer agrees to do and the conditions under which it so agrees.

Invitees: Individuals, such as retail store customers, who are invited onto the insured's premises for their own benefit and that of the insured.

Lapse: Termination of a policy because of failure to pay the premium. In Life Insurance, the term refers to nonpayment before the policy has developed any nonforfeiture values. If it has, and the premium is not paid, it is said to have lapsed "except as to nonforfeiture benefits that may apply."

Liability Limits: The maximum amount for which a Liability Insurance Company provides protection in a particular policy.

Lien Waiver: A form of receipt that is completed and signed by a subcontractor or distributor when he is paid for his labor or materials.

Line of Credit: The limit a bank will lend a contractor at any given time. It is also referred to as a contractor 's borrowing capacity.

Liquidated Damages: a sum stated in a contract, as the measure of damages suffered by an owner due to the failure of a contractor to complete the work within a stipulated time. This usually figured as a fixed amount per day.

McCarran-Ferguson Act: A federal law giving states the right to regulate insurance, subject to certain limitations. This act allows insurance companies to work together to collect loss and expense data and gives insurers limited antitrust protection.

Mechanics Lien: a type of lien issued in favor of persons supplying labor or materials for a job. With it, clear title to the property cannot be obtained until the claim is settled.

Minimum Premium: the lowest premium that may be charged for an insurance policy.

Moral hazard: A hazard resulting from the indifferent or dishonest attitude of an individual in relation to insured property.

Morale hazard: A hazard resulting from the mental attitude of a careless or accident-prone person.

Mortgagee Clause: A clause in insurance contracts that gives first right of recovery to the mortgagor of property that is covered.

Named Insured: An individual in whose name the insurance contract is issued and who is specifically identified as the person being covered.

Negligence: The failure to exercise the degree of care required by law.

Non-Admitted Insurer: An insurer not licensed to do business in the jurisdiction in question.

Non-Owned Auto Liability Coverage: protects an employer against legal liability resulting when employees use their own autos for the employer 's business purposes.

Occurrence Policy: A clause in liability insurance policies under which covered acts must satisfy certain conditions; the results must be accidental and unintended, but the occurrence itself can be a deliberate act of an insured.

Open Rating: a system whereby a state allows an insurer to use rates without prior approval.

Peril: A specific contingency that may cause a loss.

Performance Bond: this bond is used to indemnify the project owner (or general contractor) for any loss that arises out of a contractor 's ( or subcontractor 's) failure to perform the work in accordance with the contract 's term and specifications. If this happens, the surety must either arrange for completion of the contract or pay the project owner or general contractor the cost of completing the work up the amount of the bond limit.

Peril: the cause of loss (e.g., fire, windstorm, explosion, hail, riot, vandalism, strife, malicious mischief, earthquake, flood, sinkhole collapse, volcanic eruptions, etc.)

Permanent Disability: A worker is entitled to compensation based on the rated degree of disability. Benefits are based on the earning capacity of the disabled worker. For disability ratings between 70% and 100%, a life pension is granted.

Personal Injury: Injury other than bodily injury arising out of false arrest or detention, malicious prosecution, wrongful entry or eviction, libel or slander, or violation or a person 's right to privacy committed other than in the course of advertising, publishing, broadcasting or telecasting.

Personal Property: Anything that is subject to ownership other than real property.

Personal Umbrella: A liability insurance policy that broadens coverage for comprehensive personal liability and personal auto liability. Provides limits of liability of $1 million or more.

Physical Hazard: A condition stemming from the material characteristics of an object, e.g., icy street (increasing chance of car collision) and earth faults (hazard for earthquakes).

Policy Period (or Term): The period during which the policy contract affords protection, e.g., six months or one or three years.

Policyholder: The insured in an insurance policy.

Policy Year: The period between policy and anniversary dates.

Premium: The total cost of insurance, found by multiplying the rate by the number of units covered.

Proof of Loss: A formal statement made by a policy owner to an insurer regarding a loss. It is intended to give information to the insurer to enable it to determine the extent of tangible property.

Property Damage: Refers to physical damage to tangible property and to loss of use of tangible property.

Property Damage Liability Insurance: protection against liability for damage to the property of another, including loss of the use of the property, as distinguished from liability for bodily injury to another. In the majority of causes it is written along with Bodily Injury Liability protection.

Property Insurance: insurance that indemnified a person with an interest in physical property for its loss or the loss of its income producing abilities.

Rebating: A practice, usually prohibited under state law, in which a sales agent in insurance returns part of the commission to the purchaser.

Reinstatement: (1) restoration of a lapsed policy, (2) restoration of the original amount of a type of policy that reduces the principal amount by the amount of claims.

Reinsurance: Insurance in which one insurer, the reinsurer, accepts all or part of the exposures insured in a policy issued by another insurer, the ceding insurer. In essence, it is insurance for insurance companies. It allows insurers to spread the risks of one policy among themselves and thereby write limits higher than one company would feel comfortable doing alone. Facultative reinsurance involves a one-time reinsurance transfer arranged specifically on a single policy. Treaty reinsurance involves an agreement in which a certain amount of the exposures of all policies written by the ceding company are automatically reinsured; in return, the reinsurer receives a percentage of all premiums on the reinsured book of business.

Renewal: The automatic re-establishment of in-force status effected by the payment of another premium.

Renewal Certificate: A short form certificate which is used to renew a policy. It refers to the original policy, keeping all of its provisions, but does not restate all of its insuring agreements, exclusions, and conditions.

Rental value: Consequential coverage that insures the loss of rents in the event of the destruction of the insured property.

Replacement cost: Property insurance that pays for the current replacement cost of property without deduction for depreciation.

Risk: Uncertainty as to economic loss.

Risk transfer: A risk management technique whereby one party (transferor) pays another (transferee) to assume a risk that the transferor desires to escape.

Scheduled coverage: Insurance in which property at two or more locations is listed and specifically insured.

Severity: The extent of a loss; how serious it is.

Subrogation: The assignment to an insurer by terms of the policy or by law, after payment of a loss, of the rights of the insured to recover the amount of the loss from one legally liable for it. After the insurer pays the insured 's claim, it subrogates against the party that caused the loss to recover the amount paid. Business managers should make certain that subrogation recoveries from third parties are subtracted from loss data used in experience rating or retrospective rating calculations.

Subrogation Waiver: A waiver by the named insured giving up any right of recovery against another party. Normally an insurance policy requires that subrogation (recovery) rights be preserved. In commercial insurance, a written waiver of subrogation rights is permitted if it is executed before the loss occurs.

Surety Bond: a bond guaranteeing that a principal will carry out the obligation for which he is bonded. A surety bond is most often issued to a contractor, a person seeking a license or permit, or someone involved in a court case.

Underinsured motorists endorsement: Coverage that will pay damages when the other party's limits are lower than the insured's and the other party is at fault.

Umbrella Policy: The broadest form of excess insurance combined with the equivalent of "all risks" liability coverage. The umbrella agrees to provide: (1) additional limits of protection over the underlying schedule, i.e., excess liability insurance, (2) primary coverage if the underlying limits are exhausted, and, (3) primary coverage for some otherwise uninsured risks, subject to a retention.

Underwriter: The employee of an insurance company or managing general agency who has the responsibility for determining whether or not the insurer will write insurance that has been applied for, the amount of coverage the insurer will write, and the premium that will be charged.

Underwriting: All activities carried out to select risks acceptable to insurers in order that general company objectives are met.

Uninsured motorist insurance: Pays for your bodily injures that result from an accident with another vehicle if the other driver is negligent and does not have any insurance (or has insurance less than that required by law).

Utmost good faith: A legal doctrine in which a higher standard of honesty is imposed on parties to an insurance agreement than is imposed through ordinary commercial contracts.

Workers' Compensation: compensation - required by law in all states - to workers injured while on the job, whether or not the employer has been negligent. Benefits vary according to state laws but generally require the payment of medical expenses and partial wage continuation. The workers ' compensation laws apply to all individuals except those specifically excluded. Employers are required by law to purchase insurance for their exposure unless they file for and obtain permission to become qualified self-insurers.

 
 
 

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