Glossary of insurance definitions
Burglary
Legal Definition:
Generally defined in policies as breaking and entering the premises of another, with felonious intent and with visible signs of the forced entry, while the premises are closed for business.
Translation:
When someone breaks in and damages or steals your property while your business is closed.
Cargo Insurance
Legal Definition:
Insurance covering goods being transported, as on ships, motor trucks, railroads or airplanes.
Translation:
Coverage for transported goods
Certificate of Insurance
Legal Definition:
Evidence that an insurance policy has been issued, showing the amount and type of insurance provided.
Debris Removal
Legal Definition:
Coverage for the cost incurred in the removal of debris on property covered resulting from damage caused by an insured peril.
Translation:
Insurance that pays for the cost of removing debris from an insured.
Deductible
Legal Definition:
Specifies an amount to be deducted from any loss, or makes the company only liable for the excess of a stated amount. This is used largely on risks where many small losses may be expected, such as scratches or dents to automobile bodies (collision insurance).
Translation:
The amount the insured must pay for a loss before the insurance company will make claim payments.
Effective Date
Legal Definition:
The date on which an insurance binder or policy goes into effect, and from which time protection is provided.
Translation:
The date your insurance coverage begins.
Endorsement
Legal Definition:
There are many circumstances which require that a policy be changed, e.g., change of name, addition of property, change in coverage. Such changes are made by attaching to the policy an endorsement, a form bearing the language necessary to record the change.
Translation:
Any written change to a policy that states certain terms and, when attached to the original policy, becomes a legal part of that policy.
Exclusion
Legal Definition:
A provision of an insurance policy or bond referring to hazards, circumstances or property not covered by the policy.
Translation:
Conditions or circumstances, listed in the policy, for which the insurer will not provide coverage.
Hold Harmless Agreement
Legal Definition:
A contractual agreement that specified that one contracting party will assume specified legal liabilities of another party.
Translation:
A contract that says one party can't be held responsible for the acts of another.
Indemnify
Legal Definition:
Many insurance policies and all bonds promise to “indemnify” the insured. Under such a contract, there can be no recovery until the insured has actually suffered a loss. He is entitled to be compensated for the damage, which has occurred, i.e., to be restored to the same financial position he enjoyed immediately before the loss.
Translation:
To compensate for an actual loss.
Lapse
Legal Definition:
The termination of an insurance policy due to nonrenewal.
Translation:
When your insurance coverage ends because you don't renew your policy.
Malpractice
Legal Definition:
Departure from ordinary standard of care in the performance of a professional service. A practitioner is liable for damage or injuries caused by malpractice. For some professions, this type of liability can be covered by insurance.
Translation:
Alleged professional misconduct.
Named Insured
Legal Definition:
Any person or firm or corporation, or any of its members, specifically designated by name as insured(s) in a policy, as distinguished from others who, although unnamed, are protected under some circumstances.
Translation:
Any person, firm, or organization, or any of its members whose names are on the insurance policy.
Policy
Legal Definition:
A printed document that is issued to the policyholder by the company stating the terms of the insurance contract.
Translation:
A written contract of insurance.
Product Liability
Legal Definition:
Liability imposed for damages caused by accident and arising out of goods or products manufactured, sold, handled or distributed by the insured or other trading under his name. The accident must have occurred after possession of goods has been relinquished to others, and away from premises owned, rented or controlled by the insured. In the case of food products, the accident does not have to occur away from premises (restaurants, etc.).
Translation:
This is the liability a merchant or manufacturer has to assume if some defect in the product sold or manufactured injures a third party or damages his/her property.
Reinstatement
Legal Definition:
The resumption of coverage under a policy that has lapsed. A provision is usually made for reinstating the policy to its original amount. Depending on policy conditions, it may be done automatically, either with or without premium consideration, or it may be done at the request of the insured.
Translation:
When a lapsed policy is restored and becomes active (in force) again.
Salvage
Legal Definition:
The amount received by an insurer from the sale of property (usually damaged) on which the insurer has paid a total loss to the insured.
Translation:
The value of property after it has been partially damaged by fire or other perils.
Subrogation
Legal Definition:
An insurance carrier may reserve the "right of subrogation" in the event of a loss. This means that the company may choose to take action to recover the amount of a paid claim if the loss was caused by an unrelated or outside party. Subrogation clauses usually describe how proceeds from a recovery will be distributed among the interested parties, usually the insured business and its insurance company.
Translation:
The named insured's intentional relinquishing of the right to recover damages from another party who may be responsible.
Term
Legal Definition:
The length of a policy period. It also may refer to the length of time for which a specific coverage is provided, as in those situations where the term of the coverage is less than that of the entire policy.
Translation:
The period of time for which a policy provides insurance.
Termination
Legal Definition:
The cancellation of an insurance policy because of nonpayment
Translation:
When your insurance policy ends because you don't make the premium payments
Umbrella Insurance
Legal Definition:
Insurance that extends your coverage beyond the limits of your basic insurance policy.
Translation:
Insurance that kicks in once you've reached the limit of your basic policy. For example, if you suffered a $1 million dollar loss, and your property insurance covers $500,000, an umbrella policy could cover the remaining $500,000
Underwriter
Legal Definition:
Any individual in the insurance business who has the responsibility of accepting risks and of determining the amount of insurance the company will write on each acceptable risk.
Translation:
The person at an insurance company who decides whether or not to provide insurance to a business, how much insurance and at what cost.
