The records of money owed to an individual or organization which, if lost, stolen, or destroyed, could prevent their collection; the value of these records can be insured under Inland Marine Insurance.
Act of God
An unpreventable accident or event outside of human control that is the result of natural causes for which no one can be held responsible; for example, floods, earthquakes, or lightning.
Actual Cash Value – ACV
A form of insurance that pays damages equal to the cost of replacing lost, stolen, or damaged property after taking into account its “used” condition, wear & tear, etc.; usually considered the “depreciated value”.
Actual Loss Sustained Business Interruption Insurance
Form of coverage used in Boiler & Machinery Insurance that pays the amount of business income loss actually incurred following an insurance property loss.
An insurance professional skilled in the analysis and management of statistical information used in the evaluation of insurance firms’ reserves, as well as the determination of rates, rating methods, and other business and financial risks.
Additional Living Expenses
Extra expenses covered under a homeowner’s policy and incurred by the insured over and above his/her customary living expenses when temporary shelter is required due to damage by a covered peril that makes the home temporarily uninhabitable.
An individual employed by a property/casualty insurer to evaluate losses and settle policyholder claims. These adjusters differ from public adjusters, who negotiate with insurers on behalf of policyholders, and receive a portion of a claims settlement. Independent adjusters are independent contractors who adjust claims for different insurance companies.
Assets recognized and accepted by state insurance laws in determining the solvency of insurers and reinsurers. Usually limited to assets that can be easily sold in the event of liquidation or borrowed against, and receivables for which payment can be reasonably anticipated.
The tendency of those exposed to a higher risk to seek more insurance coverage than those at a lower risk. Insurers react either by charging higher premiums or not insuring at all, as in the case of floods. (Flood insurance is provided by the federal government but sold mostly through the private market.) In the case of natural disasters, such as earthquakes, adverse selection concentrates risk instead of spreading it. Insurance works best when risk is shared among large numbers of policyholders.
Companies that market and sell products via independent agents.
There are two types of agents that sell insurance: 1) Independent agents are self-employed, represent several insurance companies and are paid on commission; or 2) Exclusive or captive agents represent only one insurance company and are either salaried or work on commission. Insurance companies that use exclusive or captive agents are called direct writers.
Agreed Amount Clause
Formerly Agreed Value Option., it is an optional clause for Property & Business Income policies that waives the Coinsurance Clause on a year by year basis based on the filling, and accepting by the insurer, of a statement of actual values on which the amount of insurance for the coming year is based. It is important to note that failing to file a new statement within the required time results in reapplication of the Coinsurance clause until a new statement is filed and approved.
A contract in which one party provides something of value to another party in exchange for a conditional promise that a stated act will be performed upon the occurrence of an uncertain event. Insurance contracts are aleatory: The policyowner pays premiums to the insurer in return the insurer’s promise to pay benefits if an event insured against occurs.
The former name for coverage that applied against all risks of loss not specifically excluded. However, the term “All-Risks” is no longer used because it suggested to insurers that more coverage was being given than intended.
The tendency of individuals who believe they have a greater than average likelihood of loss to seek insurance protection to a greater extent than do those who believe they have an average or a less than average likelihood of loss.
When two or more insurers cover a risk, the cost of the loss when an event insured against occurs is proportionately divided amongst them.
A survey conducted by a claims representative or appraiser to determine the property’s insurable value, the amount of the complete loss to the property, and the total cost to repair the property. It is also a means to resolve claims disputes. Each party to the dispute elects an Appraiser. If the two appraisers are unable to reach an agreed settlement for the loss, they select an umpire. Then, the three panel members (the two appraisers and the umpire) discuss the scope of damages and the cost of repairs and attempt to reach a consensus. However, only two parties on the panel need agree and sign the award, which is binding on all parties.
A proceeding in which a claim dispute is resolved by an impartial adjudicator whose decision the parties to the dispute have agreed will be final and binding.
The monetary worth of real or personal property established as a basis for its taxation. However, this value, which is established by governmental agencies, is rarely used by insurers to determine indemnification.
Liability apportioned/assessed to an insured condominium owner, cooperative apartment tenant, or others for the cost to pay for improvements, repairs, etc., for the common good. Insurance can be purchased to cover this exposure.
Authorized Control Level Risked Based Capital
The theoretical capital amount and surplus that an insurance company should maintain.