Click on the initial
letter of the term you wish to find
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Natural occurrence such
as earthquake or typhoon. These can be specifically included in most
insurance policies contrary to popular opinion. |
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A professional usually
involved in the life insurance industry, who applies mathematical
theories of probabilities and statistical techniques in risk
calculation. Actuaries are becoming increasingly involved in general
insurance in relation to loss reserving and premium calculations. |
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Inspection and
engineering work done to help remove potential causes of loss. Loss
prevention is also referred to as safety engineering, accident
prevention, accident control, or loss prevention. |
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"Actual Cash Value" is
the replacement cost of property damaged or destroyed at the time of
loss, with deduction for depreciation. Actual cash value cannot exceed
the applicable limit of liability shown in the declarations of the
policy, nor the amount it would cost to repair or replace such
property with material of like kind and quality within a reasonable
amount of time after a loss. |
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An individual or entity
that is not automatically included as an insured under the policy of
another, but for whom the named insured's policy provides a certain
degree of protection. An endorsement is typically required to effect
additional insured status. The named insured's impetus for providing
additional insured status to others may be a desire to protect the
other party because of a close relationship with that party (e.g.,
employees or members of an insured club) or to comply with a
contractual agreement requiring the named insured to do so (e.g.,
customers or owners of property leased by the named insured). |
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1. An individual or
entity, other than the first named insured, identified as an insured
in the policy declarations or an addendum to the policy declarations.
2. An individual or entity who is added to a policy with the status of
named insured after the policy is written. Such an individual or
entity would have the same rights and responsibilities as an
individual or entity named as an insured in the policy declarations
(other than those rights and responsibilities reserved to the first
named insured). In this sense the term can be contrasted with
additional insured, an individual or entity added to a policy as an
insured but not as a named insured. The term additional named insured
has not acquired a uniformly agreed-upon meaning within the insurance
industry, and use of the term in the two different senses defined
above often produces confusion in requests for additional insured
status between contracting parties. |
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A limit in an insurance
policy stipulating the most it will pay for all covered losses
sustained during a specified period of time, usually one year.
Aggregate limits are commonly included in liability policies. While
not often used in property insurance, aggregates are sometimes
included with respect to certain catastrophic exposures, e.g.,
earthquake and flood.
The dollar amount of reinsurance coverage during one specified period,
usually 12 months, for all reinsurance losses sustained under a treaty
during such period. |
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An insurance policy
that covers everything not specifically excluded. Most often
associated with property coverage. An All-Risk policy is the opposite
of a Named Perils insurance policy. |
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Structures that are
also on the property covered by an insurance policy. Examples might be
a storage shed or barn. Most property policies have a limit they will
pay for other structures based on a percentage of the main buildings
value. |
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A method to provide
insurance to the uninsurable. In mandatory insurance states, everyone
must have insurance regardless of their risk or record. These states
require that each company writing insurance in their state must take a
number of clients that they would not insure otherwise. |
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The minimum limits of
liability as required by state or local law. |
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For property insurance,
a blanket sets a single limit (maximum payout) for multiple buildings
or risks. |
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Blanket insurance
provides coverage under a single limit for the following:
Two or more items (e.g., Building and/or Contents)
Two or more locations (e.g., Location A and/or Location B)
A combination of items and/or locations |
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A three part contract
in which one party guarantees the performance, act or behavior of
another party for a third party. The two most common types of bonds
are Surety and Fidelity. These are a guarantee issued by a bank or
insurance company that an individual or company will meet various
obligations.
Under a construction contract a contractor may be required to
obtain:
A bid bond. - This will protect the developer against the failure
of the contractor to proceed with a project at his bid price.
Prepayment bond. – This guarantees any advance payment made by the
developer for the contractor’s mobilization.
Performance bond. – This guarantees that the contractor carries out
the project properly and the developer will be compensated for any
breach of contract.
Retention bond. – Often a developer will retain a small amount from
the contract price for a period to ensure that any defects in the
project discovered after completion are corrected in a timely manner.
This can adversely effect the contractor’s liquidity. A retention bond
will guarantee that any corrective work is carried out and allow the
developer to settle in full with the contractor immediately the
project is complete.
Other bonds may also be required in business, such as customs bond. |
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Indemnifies for loss of
or damage to a building under construction. Insurance is normally
written for a specified amount on the building and applies only in the
course of construction. Coverage customarily includes fire and
extended coverage and vandalism and malicious mischief. Builders risk
coverage can be extended to a "special" form as well. The builders
risk policy also may include coverage for items in transit to the
construction site (up to a certain percentage of value) and items
stored at the site. |
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An official document
created by an insurance carrier or agent to prove insurance coverage
to a third party. |
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The formal request by a
policy holder or claimant to be paid under the terms of the insurance
policy. |
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A method of providing
liability insurance in which the insurer agrees to cover all claims
asserted against the insured during a specified date period regardless
of when the claim occurred. All claims-made policies have a "retro"
date which specifies the beginning date for claims to be considered. |
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Commercial General Liability Coverage (CGL)
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An all encompassing
type of insurance policy which covers all liability exposures for all
locations and causes of loss except those specifically excluded in the
policy. |
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Describes a type of
package policy which covers more than one peril or cause of loss in a
single policy. Should not be confused with a commercial package which
provides several types coverages in a single policy. |
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Commercial Property Coverage |
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Protects against
physical damage to buildings, contents, stock, and equipment. The
terms and conditions of coverage are determined by the limit of
insurance chosen by the policyholder. The limit is based on the items
that the policyholder wishes to insure; i.e., buildings, stock,
machinery, valuable papers, etc.
Business Interruption and Extra Expense Coverage can also be provided
under a Commercial Property policy. Business Interruption protects the
policyholder against lost profits as a result of direct damage to the
facility. Extra Expense provides payments for those extraordinary
expenses necessary to continue operations after physical damage to the
policyholder's facility. |
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Comprehensive General Liability Coverage
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Under this form of
insurance and regarding a covered occurrence, the company will pay all
sums the insured becomes legally obligated to pay as damages due to:
1. Bodily injury (Coverage A)
2. Property damage (Coverage B)
The insurance company has the right to defend any suit against the
insured seeking damages for bodily injury or property damage, even if
any of the allegations of suit are groundless, false, or fraudulent,
and to make such investigation and settlement of any claim or suit as
it deems expedient. However, the company is not obligated to pay any
claim or judgment or to defend any suit after the applicable limit of
the company's liability has been exhausted by payments of judgments or
settlements. |
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Consequential Loss or Damage |
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Consequential loss or
damage -- as opposed to direct loss or damage -- is indirect loss or
damage resulting from loss or damage caused by a covered peril, such
as fire or windstorm. In the case of loss caused where windstorm is a
covered peril, if a tree is blown down and cuts electricity used to
power a freezer and the food in the freezer spoils, if the insurance
policy extends coverage for consequential loss or damage then the food
spoilage would be a covered loss. Business Interruption insurance,
extends consequential loss or damage coverage for such items as extra
expenses, rental value, profits and commissions, etc. |
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Contents includes just
about anything in the home (including garage and outbuildings)
belonging to the policyholder or a member of his family living in the
same house, or to resident domestic servants. It also includes
property, which is not owned by the policyholder but for which he is
responsible, such as rented property. Furniture, furnishings,
household goods, electrical appliances, food and drink, clothes, and
money up to a specified limit all count as 'contents'. Also included
are movable fixtures and fittings, for example, special lighting
fittings which would be taken away on removal. Fittings, which would
be left in the house, such as built-in furniture, count as part of the
'buildings', although fitted carpets are classed as 'contents'.
Certain types of property are excluded. The cover applies principally
to contents actually inside the home, although there is some cover
under a 'standard' policy for contents temporarily away from the home.
Some policies also include theft of household contents from the garden
or immediate vicinity of the home. |
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Contractors' Liability Coverage |
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(1)Premises/Operations
The "premises" portion of your liability insurance provides for
payment on your behalf of all sums you become legally obligated to pay
as damages resulting from bodily injury and/or property damage caused
by an insured peril and rising out of the ownership, maintenance, or
use of premises and your operations in progress.
The "operations" portion of your liability insurance covers operations
in progress and is intended for situations where your principal
business operations are performed away from your premises.
(2)Completed Operations
This portion of your liability insurance covers you for possible
liability for bodily injury and/or property damage after your work is
complete and you have left the job site. |
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Contractors' Protective Liability Coverage
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This insurance coverage
provides for payment on behalf of the insured of all damages the
insured becomes legally obligated to pay due to bodily injury or
property damage caused by an occurrence rising from the following:
Operations performed for the named insured by independent contractors.
Acts or omissions of the named insured in connection with his/her
general supervision of such operations.
This does not include maintenance and repair at premises owned by or
rented to the named insured, or structural alterations at such
premises that do not involve changing the size of or moving buildings
or other structures. |
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Contractual Liability Coverage |
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It is common in
construction and other agreements (written or oral) for one party to
"assume" the liability of another. This is sometimes referred to as a
"hold harmless" agreement. The extent to which one holds another
harmless varies from contract to contract, job to job, etc.
To assume the liability of another, regardless of extent, is a
voluntary undertaking which increases your exposure to loss. A
standard Commercial General Liability policy does cover this
additional exposure subject to certain exclusions. |
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This pays
for the insured's expenses to remove debris of covered property caused
by a Covered Cause of loss. This does not include "pollutants" and
must occur during the policy period and reported within 180 days of
the occurrence. |
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An excluded
amount or threshold for payment on an insurance policy. A $500
deductible would mean the insurance policy will start paying after
they have deducted the first $500 the owe you. |
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A public
liability policy provides cover for liabilities an Insured may incur
as a result of business activities. This policy may be extended to
include “goods sold or supplied” or “products liability”. Even when so
extended, a basic policy will not cover losses incurred by third
parties due to the defective design in the products. To provide such
defective design cover a further design extension is required. |
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Difference In Conditions (DIC) Coverage
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DIC
insurance provides coverage designed to close specific gaps in
standard insurance policies and is usually available only for larger
industrial or commercial risks. It allows coverage to be customized to
extend to such exposures as water damage, flood, collapse, earthquake,
landslide, etc., according to the insured's needs. DIC coverage may be
provided by means of a separate insurance policy or it may be added by
endorsement to the basic policy. |
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Directors and Officers (D&O) Liability Coverage
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Almost any
day to day decision or action by anyone in the organization can
trigger a lawsuit. Of all the lawsuits brought against nonprofit
organizations, more than 50% involve employees. Even with the most
diligent efforts to prevent employment disputes, the following claims
can and are often alleged against businesses:
Discrimination due to race, sex, age, national origin, religion,
disability, or sexual orientation
Wrongful termination
Sexual harassment
Promotions and compensation
Interference with employment contract
Hiring decisions
Conflicts of interest
Libel, slander, and defamation of character
Failure to supervise employees
Invasion of privacy
Copyright infringement, misrepresentation of ideas, and unauthorized
use of logos |
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Protects against damage
by earthquakes and earth movement. Deductibles are typically a
percentage of the property value. |
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A document which
changes or alters the basic insurance policy |
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Errors & Omissions Coverage |
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Coverage for liability
resulting from errors or omissions in the performance of professional
duties. Applicable as a general rule to professional business
activities such as banking, accounting, law, engineering, insurance
and real estate. |
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Also known as property
insurance, this coverage protects against property losses by fire or
lightning. Also covers smoke and water damage from a fire. |
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An insurance policy
that doesn't have a deductible and begins paying on the first dollar
of loss. |
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An insurance policy
that "floats around" with whatever is insured regardless of where. |
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Highly Protected Risk (HPR) |
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Insurance plans
available to large commercial properties which meet stringent safety
standards to qualify for lower premiums. |
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When
insurance policies are written on an "indemnification" basis, the
insurance company will reimburse the insured for claim costs already
paid. Technically, the insured must not only suffer a loss, but must
also pay the loss before being reimbursed (indemnified) by the
company. |
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To
reimburse or otherwise pay for an incurred loss. |
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Making
whole. The act of reimbursing or otherwise paying an injured party for
an incurred loss. In life insurance, the amount paid to the
beneficiary is referred to as indemnity. |
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A contract
to pay or reimburse a third party for failure to perform or fulfill
contractual obligations named in the bond. |
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Sometimes factors that
enter into determining appropriate premiums for insurance coverage
can't be known in advance; therefore, accurate premiums for the
coverage provided can't be billed by the insurance carrier. This often
is true in the case of Worker's Compensation and Product Liability
insurance, where such things as payroll and sales can't be determined
ahead of time. An audit serves as an examination of the insured's
records after the fact to adjust the initial premium billed to reflect
the actual coverage. |
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Insurance for your
screw ups. A liability insurance policy will pay up to a stated limit
for events resulting from the insured's negligence. A liability policy
will also usually pay for property damage and medical expenses
incurred by the injured party. |
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The maximum amount to
be paid by an insurance policy. Many policies have split limits
meaning they'll pay one amount per person and another amount per
accident. A third split may be included to indicate the maximum amount
the policy will ever pay regardless of the number of people or
accidents. |
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Inspection and
engineering work done to help remove potential causes of loss. Loss
prevention is also referred to as safety engineering, accident
prevention, accident control, loss control or loss prevention. |
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A property used for the
processing or manufacturing of goods. |
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An insurance policy
which provides more than one coverage in a single policy. Also known
as a Package Policy. |
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An insurance policy
that insures more than one peril or cause of loss. An All-Risk policy
is an example of a multi-peril policy. This is not the same as a
Multi-Line policy which includes more than one type of coverage. |
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An insurance carrier or
provider which is owned exclusively by its insureds. A mutual
insurance company has no stock. Any operating profit is paid to their
insureds in the form of a premium rebate. |
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The person or persons
designated as the insured in an insurance policy. |
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An insurance policy
which covers only defined perils or causes of loss. This is the
opposite of an All-Risk policy which covers all perils except those
specifically excluded. |
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A government regulated
type of automobile insurance in which each party's own insurance pays
for their damage and injury regardless of who is at fault. |
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A type of liability
policy in which a insurance provider is liable for any claim which
occurred during the policy period regardless of how far in to the past
it occurred. This is the traditional type of liability policy but has
lost favor because of lawsuits being brought years after the fact.
Large liability risks are typically covered by claims-made policies
which are responsible only for claims submitted during the covered
policy period. |
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Ordinance or Law Coverage |
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Coverage for Loss to
the Undamaged Portion of the Building.
Pays for the loss of value of an undamaged portion of the existing
building which must be demolished and/or removed to conform with
municipal ordinance, code, etc.
Demolition Cost
Pays for the cost of demolition of the undamaged portions of the
building necessitated by the enforcement of building, zoning or land
use ordinance or law.
Increased Cost of Construction
Pays for any increased expenses incurred to replace the building with
one conforming to building laws or ordinances, or to repair the
damaged building so that it meets the specifications of current
building laws or ordinances. |
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A single insurance
policy which combines many different types of coverages resulting in a
lower price than if each were purchased individually. Business owners
packages typically combine automobile, liability and property
coverages in to a single insurance policy. |
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The cause of a loss.
Examples of perils are fire, wind, an accident and acts of vandalism |
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The amount
you are asked to pay for an insurance policy. |
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A formal
contract outlining the terms and conditions of the insurance provided
by an insurance carrier. |
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Pollutants Cleanup and Removal Coverage
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This is an
aggregate first party coverage that applies to your expense in
extracting "pollutants" from land or water at your location, if the
release of the pollutants is caused by or results from a covered loss. |
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Pollution Legal Liability Coverage |
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Coverages
Pays on your behalf all sums you are legally obligated to pay as a
result of emission, discharge, release, or escape of any contaminants,
irritants, or pollutants into or on land, the atmosphere, or any water
course or body of water, provided this results in "environmental
damage."
Additionally pays to reimburse your expense for reasonable and
necessary cleanup costs incurred in the discharge of a legal
obligation validly imposed through governmental action, provided such
expense is incurred because of "environmental damage."
Pays for defense of any claim or suit that is the subject of this
insurance.
Coverage Response
"Claims made" coverage response (i.e., responds only to claims first
made during the policy period and only for incidents that have
occurred after the effective date of this coverage).
Pollution "Environmental damage" is defined in the policy as "the
injurious presence in or on land, the atmosphere, or any water course
or body of water of solid, liquid, gaseous, or thermal contaminants,
irritants, or pollutants." |
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Products Liability Coverage |
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The liability for
bodily injury or property damage incurred by a merchant or
manufacturer as a consequence of some defect in the product sold or
manufacturered or the liability incurred by a contractor after he has
completed a job as a result of improperly performed work. The latter
described part of products liability is called Completed Operations. |
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Professional Liability Coverage |
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Consultants and
companies providing advice and services of any kind have exposures
that are not usually insured by a Commercial General Liability policy.
Among the more common types of organizations that have professional
exposure are accountants, lawyers, computer consulting firms,
investment advisors, insurance agents, data processing service firms,
publishers, third-party administrators, teachers and anyone providing
consulting services. A variety of Professional Liability and Errors &
Omissions Liability policies are designed to protect individuals and
companies for claims alleging negligence in the providing of
specialized services. |
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Protects against loss
of or damage to buildings and personal property. |
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Property Damage Liability Coverage |
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Protects against loss
caused by your negligent damage of someone else's property. |
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Punitive damages are
awarded in civil law suits to discourage intentional wrongdoing,
wanton and reckless misconduct and outrageous behavior. The majority
of courts in the United States, including those of New York hold that
punitive damages are not compensation for injury, but, instead, are
private fines levied by civil juries to punish reprehensible conduct
and to deter its future occurrence. |
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Replacement Cost Coverage |
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This form of insurance
provides coverage on the basis of full replacement cost without
deduction for depreciation on any loss sustained, subject to the terms
of the co-insurance clause. This coverage applies to both building and
contents items as specified on the face of the policy.
No deduction is taken for depreciation in arriving at the proper
amount of insurance needed to comply with the co-insurance clause. |
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For a claims-made
policy, the retroactive date is the earliest date for which a loss
will be considered. It is typically the effective date of the first
year the policy was provided by an insurance carrier but can be moved
with money. |
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The amount of premium
that is returned to you by an insurance carrier after a policy is
cancelled during the policy period. |
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What makes you buy
insurance. It is anything you don’t want to lose or have damaged
including yourself. |
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The entity in charge of
identifying, evaluating and managing the potential perils facing a
risk. |
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Insures a third party
against non performance by a contracted party or organization. Common
in the construction industry and to guarantee ongoing payments. |
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Time element insurance
provides insurance for a covered incident resulting in loss of use of
property for a period of time. The loss is considered to be time lost,
not actual property damage. Examples of time element coverage are
Business Interruption, Extra Expense, Tuition Fees, Rents and Rental
Value, Additional Living Expenses, and Leasehold Interest coverage. |
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A tort is an
unintentional violation of another person's rights, usually due to
negligence. It is different than a crime, which generally is an
intentional violation of another's rights. A tort is subject to civil
action and subsequent judgment for damages payable to the wronged
party, whereas a crime is subject to criminal action and subsequent
penalty. |
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Umbrella Liability Coverage |
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This type of liability
insurance provides excess liability protection. Your business needs
this coverage for the following three reasons:
It provides excess coverage over the "underlying" liability insurance
you carry.
It provides coverage for all other liability exposures, excepting a
few specifically excluded exposures. This is subject to a large
deductible of $10,000.
It provides automatic replacement coverage for underlying policies
that have been reduced or exhausted by loss. |
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