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| Absolute Liability: Liability that occurs where one has a duty to fill no matter what the circumstances may be. Absolute Liability is often found in cases involving explosives and in many automobile laws an insured or insurance company may be responsible to a third party irrespective of any statutory faults, negligence or breaches on the part of the insured.
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| Accident: An unusual unexpected result, attending the performance of a usual, necessary act; and unexpected event which happens by chance or which does not take place according to the usual course of things. This definition is very simplified. Many pages have been written in judgments defining "Accident" if the matter is likely to become involved or complicated such definitions are readily available in juris-prudence. Generally however this definition broadly covers the interpretation of the word as given by the Courts today.
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| Accident and Health (Sickness) Insurance: A form of insurance compensating an individual for loss as a result of an accident or illness. It may pay certain or all expenses for medical and similar services and a weekly or monthly indemnity for loss of income. The amounts and items covered vary from policy to policy and depend to some extent on what coverage is purchased by the insured. |
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| Accident Prevention: Methods insurers and their insureds use to reduce accidents, e.g., removing hazardous condition. |
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| Accidental Means: Unintended, unexpected and unforeseeable cause of an injury. Accidental means requires that the cause of the injury be accidental as distinct from the result being accidental. For example, a man while painting his house falls because his ladder breaks. |
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| Accommodation Line: A risk which is not desirable in itself but is accepted by an insurer to maintain good relations with a valuable agent/broker or insured. |
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| Accounts Receivable Insurance: Coverage which protects business against their inability to collect their accounts receivable because of the loss of supporting records. See Credit Insurance |
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| Acquisition Cost: The cost of putting business on the books. The items involved are not standard with all insurers but generally may include such items as agents'/brokers' commissions, field representatives' costs, premium tax and perhaps some of the relevant head office |
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| Act of God: A direct and violent and sudden and irresistible act of nature, such as could not have been foreseen or, if foreseen, its effect could not have been prevented - an inevitable accident. e.g. Flood, Earthquake, etc.
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| Actual Cash Value: The actual or current value at the time of the loss. This may be the cost of replacing the article with a similar model and in similar condition. It may however involve the price of the article plus any appreciation since its purchase and less depreciation.
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| Actual Damage: Damage which really exists in fact, as distinguished from potential or possible damage.
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| Additional Insured: A person other than the names insured who is protected by the items of the policy. Most automobile policies, for example, insure a specific individual as an insured but also insure anyone driving with that insured's consent. The additional insured may be "named" or "unnamed." |
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| Additional Living Expenses: A provision in many policies to provide reimbursement for costs above the normal living expenses, incurred because the insured is forced to live away from home while the home is being repaired because of fire or other damage. It applied to such expenses as restaurant meals, hotel rooms, transportation, etc. The company however is bound only to pay to maintain the insured's usual standard of living.
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| Additional Premium: An extra charge, during the policy period, for an alteration which increases the hazard of the insurer's liability. |
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| Adjudicate: To settle; to decide by means of a Court or other legal proceeding. |
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| Adjuster: One who investigates and tries to arrange settlement of claims.
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| Adjustment: The process of arriving at an amount of settlement in a claim. It may consist of a series of computations to arrive at the amount of a loss as for example, in an uncomplicated fire loss or it may involve discussions of liability, quantum and other such matters as might be the case in a problem liability claim. It may contain both.
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| Adjustment Expenses: Expenses paid in connection with the settlement of claims, both internal (company) and external (consultants). |
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| Administrator: A technical (legal) title given to a Court appointed person who manages the estate of a third party or of a deceased person. |
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| Administrator de bonis non: An administrator who legally replaces a prior administrator who died, resigned or was removed. |
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| Admiralty Bond: In a marine law action against a ship, an Admiralty Bond takes the place of a ship as security and guarantees payment of whatever amount may be awarded to the claimant. Upon posting of the bond the ship is released. |
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| Admiralty Courts: Courts of law which deal with matters pertaining to the sea. |
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| Admitted Company: Insurer or reinsurer licensed or approved to conduct business in a particular jurisdiction (provincial, territorial or federal). |
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| Affidavit: 1) A sworn statement. 2) A written statement in the name of a person known as the "dependent," who has voluntarily signed and sworn or affirmed to such a statement. |
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| Agent: 1) A person who is employed to act on behalf of another. 2) An insurance agent is one who contracts with one or more insurance companies to sell their insurance policies to the public and is paid a commission on or receives compensation for such business |
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| Agent of Record: The agent indicated on and for each insurance policy, binder or acceptance. The agent on a particular policy or bond. |
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| Aggregate: Total sum of insurance payable during the term of the policy.
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| Agreement: Where two or more persons come to a mutual understanding with respect to their rights and duties. |
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| Agricultural Equipment Floater: An inland marine policy tailored to insure the equipment found on a farm or ranch. Available on an "all risks" or "named perils" basis. |
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| Air Cargo Liability Insurance: Coverage for the legal liability of an air carrier for loss or damage to cargo while in its care, custody or control. |
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| Air Carrier Bond: A bond required of charter flight operators guaranteeing that passengers will not be left stranded. |
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| Aircraft Hull Insurance: Coverage for any loss arising out of physical damage to the actual aircraft itself either in flight, on the ground or both. |
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| Aircraft Liability Insurance: Coverage protecting the insured for both bodily injury and property damage liability arising out of the ownership or use of the insured aircraft. |
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| Aircraft Passenger Liability Insurance: Coverage for the liability resulting from bodily injury, sickness or disease suffered by any passenger, arising out of ownership or use of the insured aircraft. |
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| Aircraft Product Liability Insurance: Coverage required by a manufacturer of aircraft, components or equipment. Also those involved in selling aircraft, parts or fuel, or engaged in repair or maintenance of aircraft. This policy protects these various parties against claims arising from injury or damage caused by defects in the products sold or manufactured or from improperly completed operations. |
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| Airport Liability Insurance: Covers the liability arising out of the ownership, operation or maintenance of an airport or of a hangar located at an airport. |
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| Alarm Valve: A valve in automatic sprinkler systems, which automatically operates an alarm; sometimes a loud gong, and sometimes a signal directly to the fire department. This is an alarm valve. It operates if and when a sprinkler head has opened. |
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| All Risk Policy: A name given to an insurance policy which covers against the loss caused by all perils except those which are specifically excluded by the terms of the policy. Frequently, a policy if insurance is written to insure damage to property caused by specific "named perils," which are listed on the policy. However, policies may be issued in certain cases to insure against "all risks of loss or damage" and are then called "all risks" policies. The term excludes insurance against certain hazards. |
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| Amortization period: Amount of time required to extinguish a financial obligation. |
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| Amount of Insurance: The limit of payment for which an insurer is liable under a policy. |
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| Amount Subject: The amount of exposure in any one loss from the peril against which insurance is issued. Underwriters and company inspectors are responsible to see that the amount subject is in order. For example, in the case of fire insurance it is necessary to know the construction of the building, the fire protection afforded, whether a fire is likely to be confined to a small area or destroy the entire building, and if confined just what are the relative values in the areas most likely to be subject to fire. Attached and adjoining buildings and property must also be considered, both with respect to any possibility of there being a fire hazard to the insured premises and conversely whether insurance is carried by the same company on such property so that in the event of a fire at the insured's premises an adjoining or nearby building also insured in the same company may also be a loss thus increasing the amount of potential loss from a fire at that particular location.
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| Appeal: Any proceeding brought before a higher Court seeking a review to a decision of a lower Court or quasi-judiciary that is deemed erroneous in the interpretation or application of the law and/or facts. |
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| Appeal Bond: A bond filed in Court by party against whom judgement has been rendered, to stay execution of judgement pending appeal to a higher Court. It is a guarantee that the appealing party will pay judgement if appeal fails. |
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| Applicant: The person or firm requesting insurance. |
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| Apportionment: The process through which one determines how much each policy on a risk must pay when there is more than one policy involved in a loss. |
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| Appraisal: The monetary valuation on a property.
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| Appraisers: Are persons who because of their special knowledge are vested with authority in determining the real value of the property or damage.
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| Arbitration: An arrangement for reaching agreement between two sides by which both sides submit their case to a committee or a person who generally is vested with the authority of giving a final answer to the dispute. In fire policies this is now commonly referred to as "appraisal". The arbitration may be voluntary between any two persons who make up their own terms of reference and generally decide beforehand, whether or not they will be bound by the ultimate ruling. Where arbitration exists because of an agreement, the terms of reference for arbitration appear in the agreement.
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| Arbitration Clause: A clause in an insurance policy, reinsurance contract, or other contract that provides arbitration in the event of a disagreement. |
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| Architects' and Engineers' Professional Liability Insurance: Coverage provides compensation on behalf of architects and engineers for claims arising out of their professional services caused by error, ommision or negligent acts. |
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| Arson: At common law, the deliberate and intentional burning of property by its owner or by another person. |
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| As Their Interest May Appear: Phrase commonly used in the loss payable section of an insurance policy where the insurable interest in a property is either unknown or presently unascertainable, e.g. "Loss payable to A and B as their interest may appear" This leaves the whole question of title to the insurance monies to be settled between the insured and the person whose name appears in the loss payable portion of the policy. |
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| Assets: Property of all kinds, real or financial, that belongs to a person or corporation or to the estate of a decedent. |
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| Assignment: Legal transference; the transfer of an entire interest from one party to another. Insurance policies are personal contracts and are not transferable except to spouse unless special consent of the insurance company is granted. |
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| Assume: 1) To undertake or promise. In insurance, a company or an underwriter "assumes" a risk when he agrees to insure it. That is when insurance attaches. 2) Common usage pertains to acceptance of a risk by a reinsurer from an insurer. |
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| Assumption of Risk: 1) The legal doctrine of assumption of risk, also know as "volenti non fit injuria," where a person knows of the facts and existence of a dangerous condition and voluntarily exposes himself to it. 2) The accepting of a risk by an insurance company. |
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| Assured: The entity which the insurance company has undertaken to indemnify and protect against loss from certain perils. It is interchangeable with the word "insured".
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| Attach: A policy "attaches" when it comes into force, e.g., when its term starts. |
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| Attest: 1) The witnessing of signatures. Where a document is signed a witness who has seen the document signed before him may "attest" that the signature on the document are genuine. 2) Audited financial statements are said to be "Attested", i.e. the auditor attests the corporation's representations. |
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| Attorney-in-Fact: A private person who has been given legal power to act in one's stead. The power of attorney may be in general, namely to act in all matters, or may be specific authorizing the individual to act on behalf of another only in a specfic matter. |
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| Attractive Nuisance: The leaving of something attractive to children but dangerous to them, such as a piece of contractor's equipment, supplies, etc., near the road, even though on private property is known as an "Attractive Nuisance." Property owners are liable when they knowingly leave a dangerous instrument or create a dangerous situation in a place apt to be frequented by children who do not realize their peril and are attracted to the situation probably to play, but are injured.
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| Audit: Is the examination of a set of books by specially qualified independent individuals to attest to their accuracy. Insurance Company's books are subject to audit by their own auditors as well as the Government. Some forms of policy are based upon a percentage of the payroll and the insurance companies may also "audit" the insured's books to check and confirm the reports on the gross earning or payroll of the insured upon which the premiums have been based.
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| Authorized Company: An insurance company licensed to do business in a province by the authority of the provincial insurance department. |
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| Automatic Reinstatement: Most insurance policies insure against loss of property up to a certain amount. If half that amount has been paid in one loss, during the policy year, then only the other half remains as the amount of the insurance for the balance of the year. The policy, however, may be brought up to the full amount by paying an additional premium. In some policies, however, the amount of insurance is automatically reinstated immediately after the loss so that the amount quoted for insurance remains the same even though the insured, in a series of losses, may have collected an amount totally in excess of the principal amount named in the policy.
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| Automobile Fleet: A group of automobiles under the same ownership and management which may, because of the number, justify a discount in the insurance premium. |
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| Automobile Insurance: Insurance coverage that provides indemnity and/or compensation for injury or physical damage which ensues from the ownership, use or operation of an automobile. |
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| Automobile Sprinklers: A device to protect property from damage by fire in which water is piped to devices called "sprinkler heads," which melt with heat and release water to extinguish a fire. |
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| Average Clauses: Clauses which estimate the proportion of actual compensation for the loss which is to be paid, having regard to the total amount of the loss, and the relation of this amount to the value.
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| Aviation Insurance: Insurance related to aircraft. Aircraft hull insurance insures the aircraft itself and indemnifies with respect to the aircraft insured arising out of certain perils. |
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| Bad Faith: 1) Design to deceive or mislead another. 2) Conscious wrongdoing. 3) Constructive fraud.
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| Bailee: A person to whom goods are entrusted. A gratuitous bailee is one who has the property of another without consideration. e.g., a neighbour stores a wheelbarrow in the winter without payment and merely for convenience of the owner (bailor). A bailee for hire is one who makes a profit or charge for his services in storing the goods of the bailor (customer). e.g., a furrier (bailee) storing a fur coat for a customer (bailor). A greater degree of care is required in the case of the bailee for hire.
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| Bid Bond: A bond insuring a contractor submitting a bid on a job will, if the bid is accepted, enter into a contract to do the job and if required to do so, to supply a contract bond (or performance bond).
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| Binder: A temporary agreement with anew insured granting certain coverages pending the issuance of the insuring policy.
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| Bodily Injury: Bodily injury is the injury or damage to the physical body of an individual or the destroying of it. It does not include the inanimate injury such as hurt feelings, embarrassment, false arrest libel, slander, etc. (see also personal injuries which includes these further perils).
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| Bonds: A guarantee or surety bond is not necessarily carried by an insurance company, although many insurance companies do use their corporate structure and strength in the value of becoming surety to another even though strictly it is not insurance. A bond issued by an insurance company generally protects an individual or corporation known as an obligee from loss arising out of the act or failure of another known as the principal. A fidelity bond is one in which the obligee is usually an employer and the principal an employee and protects against the principal's fraudulent acts, such as embezzlement, conversion, theft, etc. A surety bond - the surety, which may be an insurance company, protects a company or individual known as the obligee against failure of performance of another individual or corporation known as the principal. e.g., a municipality is building a building and lets a contract to a general contractor. The municipality would probably require a bond on the contractor to establish the ability to complete the contract. There are, of course, many other applications. A penalty bond is one in which, in the event of default of the person bonded (principal) the entire amount of the limited bond is due tot he obligee to protect from this and other losses.
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| Bordereau: Detailed information supplied on large sheets in tabulated form is commonly referred to as "Bordereau." It is commonly used in transmitting information on a large number of policies from a branch office to a head office, or from a prime insurance office to a reinsurer. It is more commonly thought of as a means of reporting a large number of insurance policies at one time. It is, however, frequently used for many other purposes, as for example a record of the claims paid by a particular branch, etc.
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| Broker: An insurance broker is one, generally acting as an independent business person and on behalf of prospective insured's and places insurance with the insurance companies. In difference to the "Agent" the broker acts on behalf of the customers but is paid commission by the company.
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| Builder’s Risk: Insurance covering real property during the course of construction when there is generally a greater hazard and where the values are changing daily. |
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| Burglary: The breaking and entering into a premises. Insurance policies usually require that physical signs of such forcible entry are required - e.g. broken window, forced lock or the like.
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| Business Interruption: A policy that protects against loss of earning and pays certain continuing expenses, for an insured who has suffered a loss form the peril insured, e.g. a factory may be shut down for several months as the result of a fire. Business interruption insurance as applicable to the risk would pay for the loss of profits during that period (and sometimes the depletion of profits for a period after resumption of operation) and pay the cost of keeping certain key personnel. Also known as "Use and Occupancy" insurance, although the coverage is slightly different.
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| By-Laws: Laws made by Corporations, Trading Companies, County Councils, Railway Companies, Public Libraries, etc,. under powers granted by Act of Parliament. By-laws are binding unless they are contrary to the law or unreasonable.
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| Cancellation: The termination of the policy before the end of a policy period. Usually if the company cancels the policy, the insured is entitled to a pro rata return of premium for the unused portion of the policy. If the insured cancels the policy, they are entitled to a short rate (as set out on the policy) return of premium.
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| Capacity: The limit of the amount of insurance set by a company as to what it will write on a single risk.
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| Cargo Insurance: Protection against loss to merchandise in transportation.
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| Casualty Insurance: Loosely used to describe an area of insurance not particularly or directly concerned with life insurance or fire insurance. It is applicable particularly to personal injury forms of insurance but generally also includes crime insurance, robbery, burglary, aviation, and in many instances the surety business.
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| Catastrophe: A catastrophe as related to insurance is a large and multiple series of losses beyond the normal expectation or reasonable anticipation of loss by that particular peril. e.g. hurricanes causing very substantial damage, extended damage by flood, fire involving large areas, etc.
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| Catastrophe Cover: Some major medical expense policies are referred to as Catastrophe Policies. They bear no relation to Catastrophe Hazard. They are policies to protect the individual against the contingency of suddenly being required to pay a portion of the remaining amount, usually in the form of a percentage. The policy, however, does protect from extremely large losses at a very modest price.
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| Catastrophe Hazard: A risk which might involve a large number of insureds at one time. For example, a tornado may damage many homes in a certain area. If one insurer carried that type peril insurance, they might carefully underwrite their business so that they carried only one or two in each block, but in total might have a very substantial loss.
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| Catastrophe Reinsurance: A type of insurance against events that are not normally foreseeable in size, e.g. large earthquake or flood.
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| Cede: To assign or transfer over where a company, because of the size of the risk, or because of other concentrations in the particular area find that they are carrying more exposure that they care to in the particular circumstances they may buy insurance for another company and accordingly place apart of the risk with that other company. The insurance so placed is ceded to the reinsurer.
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| Ceded Reinsurance: Where a prime company reinsures a risk or risks with another insurance company, the insurance company accepting such insurance from another company is known as the reinsurer and the amount of insurance transferred is "Ceded Reinsurance." The prime underwriting company may require to know not only the amount of ceded reinsurance with respect to a particular risk but they also require to know the total amount of ceded reinsurance to the particular reinsurance company and a total amount of the insurance ceded to all companies. Where a policy contains a co-insurance clause with which the insured has not properly compiled, the insured also becomes a co-insurer in the loss. In bonds, it is one of a group of companies sharing the bond.
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| Civil Code: The reduction of law to a set of rules. In some countries as for example, France, most of the laws of the country were at one time reduced to a set of rules after the style of the Roman Code although these too have subsequently been subject to certain new statutes. In some jurisdictions, certain sections of the law are reduced and simplified to a "Civil Code".
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| Claim: Strictly speaking, claims are the exercising of the rights of insureds to be indemnified by their insurance company, It is frequently used, however, to indicate the amount of claim they are making. In practice, it is any notification of a possible loss under an insurance policy whether any payment is likely to follow or not. For every claim that is reported, the insurance company must set aside in a reserve a sum equal to the figure which it is anticipated the claim will cost. This monetary figure or combinations of them are often referred to as "claims," e.g. "that is a $50,000.00 claim" or "We have $2,000,000.00 in automobile claims."
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| Claim Expense: Claims expenses for work on a particular file are commonly charged to that file, thus the cost of an independent adjuster, the lawyer's fees, expert fees, etc. may be allocated tot he particular claim.
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| Claimant: One who makes a claim. It is most commonly used in identifying a third party who is making a claim against the insured. Technically, however, it also applies to an insured who is making a claim against the insurance company.
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| Co-insurer: One of two or more persons or companies who may be sharing a loss. Any company whose policy has application to a loss as with one or more other companies, are co-insurers whether the policies are written separately or together. Many rules were formulated in feudal time. During the reign of Henry II (beginning 1154 AD), The King's Courts became organized and common law began to evolve. The Courts met frequently and when one court became the law unless modified by statute by gradual evolution. This has been followed by the courts of al the Colonies and in due course after the revolution by the United States of America. The law established by precedent is known as "Common Law" as distinct from laws made up to meet certain conditions and printed in statues.
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| Collusion: A secret agreement between persons to defraud anther, e.g. an insured and his passenger may misrepresent the facts of an accident in order to get money paid to the passenger under the insured's automobile insurance policy.
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| Commercial Property Policy: A combination policy designed for mercantile risks and covering fire risks with burglary and other similar risks.
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| Commission: Compensation based upon amount of production, e.g. Independent Insurance Agents are compensated on the basis of a percentage of the premium. The percentage varies with different lines of insurance.
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| Common Law: American, Canadian and British law derives its force and authority from the universal consent and practice of the people over the years. Certain aspects of the law are written into statutes. The underlying principles and usage's and rules of action which do not rest for the authority on this statutory or legislative law are to be found in principles set forth by decisions of the courts over the years.
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| Completed Operations: Where a contractor has work to perform at various locations and has liability insurance, that liability insurance normally would have application to the work at that particular job during the currency of the job. It protects against liability as the result of accidents in the performance of the work on that job resulting in third party damage. Coverage normally ceases on the completion of the job or the abandonment of the job. If insurance is required beyond that time, the policy may be endorsed to cover "completed operations".
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| Conditions: The general terms or requirements upon which the insurance is based, the conditions will commonly include such matters as to the mutual understanding of the parties as to how the policy can be canceled or renewed, provisions with respect to change of the insured's interest, provisions as to what an insured should do in event of a loss, and conditions as to what he should do subsequent to a loss. A condition precedent is a condition that must be fulfilled prior to the general fact at stake. The insured for example is required to give notice of a claim and fulfill certain other obligations as a condition precedent to his receiving a settlement. Conditions subsequent are conditions which are applicable subsequent to the event, as for example, the insured is required to co-operate in the disposition of the claim and to co-operate other than in the monetary way, to assist to recover from anyone who is responsible for the loss.
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| Consequential Loss: The word "consequential" means something following as an effect of result. It is an indirect result of the occurrence that causes the loss. The difference between a direct loss and a consequential loss can b seen in the destruction of a power station by wind. The damage to the power station is a direct loss by wind. There is actual physical damage directly resulting. The destruction of the power station also interrupts the generation of power by the station. For example, a cold storage plant is without electrical power. Foodstuffs spoil as a result or as a consequence. This is a consequential loss, not a direct loss.
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| Contract Bond: Is a guarantee of the performance of a construction job at a set price and may include the payment of labour and material required to achieve the completion of the job.
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| Contributory Negligence: Where there is some negligence on the part of each of two or more persons resulting in an accident, each is known to be contributarily negligent or the accident occurred as a result of the contributory negligence of both. The degree of negligence for each is usually apportioned on a percentage basis thus, where one person is 25 per cent contributarily negligent and the other 75 per cent contributarily negligent, between the two, there is a total of 100 per cent of the negligence causing the accident.
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| Deductible Clause: A clause defining the amount of loss for which the insured is liable; defines insurer's and insured's contributions to cover losses.
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| Deposit Premium: This is often called "advance premium" and is a premium paid at the inception of a policy in which there is likely to be a substantial variation in values from time to time. At the end of the term, the actual premium is calculated and adjustment made with the insured by either charging the insured for the additional premium required to make up the proper premium or refunding the difference to the insured.
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| Depreciation: The decline in value of property from any cause - such as use, wearing out, obsolescence, etc. Depreciation should be taken into account in all consideration of value, when arriving at the proper amount to be insured, or the amount of loss to be paid, unless insurance is on a valued or replacement cost form.
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| Disability: Loss of income - usually associated with Accident Health policies. Workmen's Compensation or Employer's Liability policies. Certain benefits are payable for the period of disability. Total Temporary Disability is where the disability is such as to make the party unable to carry out any part of their normal work, but for which recovery is expected. Partial Temporary Disability is where the party is unable to put in a full time job but in a full time job is nevertheless able to perform one or more of their normal work obligations. Full recovery in due course is to be expected. Total Permanent Disability is a disability that permanently disables the party from resuming their normal gainful employment. Partial Permanent Disability is the impairment of the use of some function of the body as for example the loss of a finger which lessens the efficiency of the individual but nevertheless does not preclude them entirely from earning a living.
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| Discovery, examination for: In some jurisdictions the parties to a suit (Plaintiff and Defendant - not the witness) may be examined for discovery which is a semi informal forum usually in rooms of an authorized examiner in which the parties present their documents and answer question as asked by lawyers for the opposing side under oath. The questions and answers may be read into the evidence at the trial. The purpose is to get the facts and issues to save time at trial or to avoid unnecessary trials. |
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| Distribution Clause: Used in a property policy for the distribution of the insurance amount over the several locations of objects covered, in proportion to their value.
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| Earned Premium: The premium for the amount of insurance used. The amount of premium which would pay for insurance from the inception date of the policy until the particular date at which it is desired to calculate the earned premium. It is the expired portion of a premium.
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| Endorsement: An amendment added to a written document, particularly an agreement between parties, altering its provisions.
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| Errors & Omissions Insurance (E&O): Professional, semi-professional and the serviced type of work may place an obligation on the part of the individual to see that the task is properly performed and any error or omission in the performance of a particular duty may make the individual responsible in damages. Errors and omissions insurance is designed to protect the individual in such a situation.
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| Estoppel: A rule of evidence which precludes a person from denying the truth of some statement made earlier by him, or by others in cases where the conduct of the person himself has led the innocent person to believe the statement to be true. If, for example, a statement is made in front of the individual and the individual does not deny it, and by such statement he leads the innocent party to believe the statement to be true, he is held to the statement. e.g., if A owns a pen and stands by and watches B sell the pen to C, claming that the pen belongs to B, then A cannot later reclaim the pen, arguing that it was his.
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| Exclusion: A type of loss that the policy specifically sets out as not being covered.
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| Facility: A pooling agreement between all automobile insurers (now replace in most provinces by the Facility Association) in which a market is guaranteed for all licensed drivers and registered owners. The results of the total industry pool are shared by all members of the agreement.
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| Facultative Reinsurance: Also called specific reinsurance. It is an arrangement made with respect to a specific risk for the purchase of reinsurance as distinct from treaty reinsurance. In facultative reinsurance, the company accepting the reinsurance has the right to accept or reject the risk or to make whatever other arrangement might be desirable in connection with the particular transaction without being already bound by a pre-existing treaty requiring the reinsuring company to accept the risk.
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| Fidelity Bond: An agreement (not an insurance contract although Fidelity is getting to have more insurance features) whereby the surety, or insurance company agrees to reimburse an employer (obligee) for a loss growing out of a dishonest act by an employee (the principal).
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| Fiduciary: A relationship between two persons where one is required to perform in good faith certain acts for the benefit of another e.g. a relationship between an executor of the estate and the beneficiaries of that estate. It is common in relationship of certain types of bonds issued by insurance companies.
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| Fiduciary Bond: A bond guaranteeing the fidelity of persons handling the money or affairs of another, e.g. trustees, receivers, executors, etc.
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| Fire Department Service Clause: A provision in a fire insurance policy agreeing to pay the cost of bringing a fire department to the location of the property insured in event of a fire. It is valuable where the insured's property is not in a built up area with their own fire department or where the risk is sufficiently large to require the possible need of fire department services.
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| Fire Insurance: Coverage for losses from fire and lightning and also the resultant damage caused by smoke and water. Usually supplemented by Extended Coverage Insurance.
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| First Surplus Treaty: A reinsurance agreement of the amount immediately above the prime insurance carrier's assumption.
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| Fleet Policies: A commercial enterprise may own a great many motor vehicles with an appropriate premium adjustment on each occasion. More often, however, the policy provides automatic coverage on newly purchased vehicles and the premium either adjusted on a reporting basis or one of the other methods used to avoid frequent computations for each change.
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| Floater Policy: A policy covering the same risk at a number of perhaps unspecified locations over a wide area (even world wide); usually includes suggestions of goods being frequently moved from one location to another. E.g. Fur Floater, Jewelry Floater, Contractors Equipment Floater, etc.
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| Franchise: A provision in an insurance policy whereby the insured pays all claims up to the amount set in the franchise. If, however, any loss exceeds that amount the insurance company assumes full responsibility for the full amount of the loss including the e franchise amount.
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| Fraud: 1) Methods used to deceive to cause unwarranted favourable decision for one's own benefit. 2) Deliberate misrepresentation or misstatement. 3) Concealment of facts which should at the time be made known.
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| General Average (Marine): That contribution which is made by all who are parties to the same adventure, toward a loss arising out of extra-ordinary sacrifices made, or extra-ordinary expenses incurred by some of them, for the common benefit of all. E.g. where some goods have been sacrificed to save the balance, the loss is "averaged" or spread over the entire cargo.
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| Gross Negligence: The degree of negligence somewhat greater than ordinary negligence. It may be reckless wanton and willful misconduct causing bodily injury and/or property damage.
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| Gross Premiums Written: Total premiums received from all sources including reinsurance assumed from other companies.
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| Group Insurance: Insurance policies which have a considerable number of persons under one contract. It is most frequently found in life and accident and health insurance policies. Simcoe Erie does underwrite Habitational and Auto group insurance.
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| Hail Insurance: A type of insurance generally purchased by farmers to protect against loss of their crops because of damage to the crop by hail. E.g. Hail Insurance on tobacco crops.
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| Hangar Keepers Insurance: A form of insurance protecting hangar keepers from their legal liabilities arising from personal injuries or property damage as related to the use of a hangar.
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| Hazard: 1) A risk or probability that the event insured against might occur. 2) Condition which engenders or increases the chances of a loss.
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| Hazard, Moral: Hazard arising from character, interest, habits and lack of integrity of the insured or person concerned. |
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| Hazard, Physical: Hazard arising from physical condition or characteristics of the object that is insured, e.g., using and storing volatile materials and substances on the premises. |
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| Hold-up: The taking of money or property from another by putting the victim in fear of personal violence. The case of a man with a gun threatening the life of an individual if he does not surrender his cash is a typical hold-up, however, a knife or some other instrument which might threaten an individual would still leave the act as a hold-up. In fact, it is quite possible that no instrument at all may be used and if the victim is afraid that the man either has something concealed or may use his fists or anything else to cause him concern for his physical welfare, the act is still considered a hold-up.
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| Home Owner’s Policy: A policy designed to cover the various risks of a home owner in one policy. It is very flexible and may cover little more than fire and extended coverage plus some additional living expenses, theft, vandalism and malicious mischief. It is designed, however, to also extend, if required by the insured to cover seasonal residence, a broad form of personal liability, voluntary property damage, outboard motor and boat, etc. |
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| Hostile Fire: A fire which occurs in or escapes to a place not anticipated, e.g., a fire in a fireplace becomes uncontrollable and ignites something externally.
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| Hull Insurance: Insurance policies written on a ship covering the ship itself or on an aircraft covering the aircraft itself is known as "Hull Insurance".
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| Improvements or Betterments: A fire risk may be written for one or three years. During that time, many changes may take place and an insured may himself improve or enlarge the building, change the roof, install new flooring or a tenant may install a new air conditioned office space which would eventually accrue to the benefit of the real property owner. These are known as improvements or betterments and the amount of insurance should be adjusted accordingly.
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| Incurred but not Reported Claims: Insurance companies are required to put up reserves on all claims. This even includes claims that have not yet been reported to the company. It is the sum added to the total of claims reserve and is usually determined by means of an estimate based upon the actual claims reported late one year earlier, two years earlier, etc., with proper adjustment made for increase in premium income and inflation.
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| Incurred Losses: Total of losses paid and loss reserves. The "incurred losses" are calculated by adding the paid losses (less recoveries by subrogation or salvage) to the reserve for unpaid claims at the end of the period, and subtracting the reserve for unpaid claims at the beginning of the period.
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| Indemnity: An indemnity is a contract, express or implied, to keep a person who has entered into or who is about to enter into a contract, or incur any other liability, indemnified against loss, independently of the question whether a third person makes default. An indemnity is a valuable consideration.
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| Indirect Damage: Damage which is not the immediate direct consequence of the peril against which insurance has been taken but flows nevertheless, somewhat remotely from that peril. E.g. a fire may damage a business premises and somewhat more indirectly interrupt the business. The business interruption claim is indirect damage. Similar situations occur where a property is rented and the income for the rent is required in order to meet a mortgage or where the property is rented from another and is destroyed by fire. The loss of rent is indirect damage.
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| Inland Marine Insurance: Marine underwriters generally divide their general class of risks into "ocean marine" and "inland marine." Inland marine insurance is insurance developed by the marine underwriters other than ocean marine insurance. It affords transportation for goods and materials in the inland waters, or by train, bus, truck or plane and extends to cover other moveable property under such policies as jewelry and fur floaters, personal effects and personal property floaters and similar policies.
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| Insurable Interest: "To make insurance policies legal and valid, the insured must possess such an interest in the subject of the insurance as may be sufficient to involve him in a monetary loss, should the subject be damaged or destroyed." In other words, if he has a direct monetary interest in the property to be insured, he has insurable interest. This interest may be of various character; it may be that of an owner, of a lessee, of a guardian, a bailee, an executor, administrator, bailiff or sheriff, a creditor. As long as there is a real monetary interest, there is an insurable interest.
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| Insurance: A contract in which one party, the insurer, for monetary consideration agrees to reimburse another, the insured, for loss or liability for a loss on a defined subject caused by specified hazards or perils.
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| Insured: The person receiving the agreement of indemnity from an insurance company (or person) affording them indemnity from loss from perils as set out therein. Interchangeable with assured.
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| Insurer: The insurance company or the individual who has agreed to supply the indemnity to an insured against loss by certain perils.
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| Insuring Clause: Describes the intent of the policy, just what insurance coverage is provided by the policy and in what limits.
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| Intermediary: 1) The agent/broker negotiating insurance or reinsurance contracts for another. 2) Any party representing another party, in negotiation with a third party.
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| Kidnapping insurance: Insurance against loss of money in which kidnapping is a means of getting access to the money. The insurance covers named employees for individual or aggregate amounts with deductibles requiring the insured to participate to a defined extent in any loss.
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| Lapse: Where a policy has been allowed to run for its determined time and has not been renewed, the policy is said to have Lapsed.
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| Lead Company: The lead company, when a large risk shared by a number of insurers, is usually the insurer with the largest share of the risk. The lead company would also normally be responsible for appointing loss adjusters in the event of claim, although the other participating companies would not necessarily be bound by the lead's decision.
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| Liability Insurance: The type of insurance which covers an insured for their legal liability for injuries or damage to others.
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| Libel Insurance: The type of insurance written for the protection of persons in the communication media such as TV or radio broadcasters, newspaper or magazine publishers and such. The policy in effect holds such parties indemnified with respect suits arising out of libel, slander, violation of copyright, invasion of privacy, etc.
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| Livestock Insurance: Insurance against loss (death) of horses, cattle, hogs, sheep, dogs, etc. owned by the insured. The cover can be on all risk or a specified perils basis and includes loss by theft. The insurance is usually written by a specialist livestock insurers.
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| Lloyd’s: A London market for insurance and reinsurance. Lloyd’s is not a company but an association of members, or names, grouped in syndicates, each syndicate being headed by an underwriter. |
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| Loss of use: Insurance protection against loss due to the inability to use a property because of its damage or destruction. For example, a truck may be badly damaged in an accident and take 2 weeks to repair. The Insured may need to rent another truck during that time to maintain their normal business. They have therefore lost not only the damage to the vehicle for which they have to pay but for the loss of use of it until they are put back in the position they were before the incident.
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| Loss Ratio: The ratio of losses incurred to premiums earned.
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| Loss Reserve: For every claim that is made against an insurance company that company must estimate the probable ultimate cost of that claim and set the sum of money aside in a "Loss Reserve."
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| Losses Incurred: All losses which happened within the period under study, including both those that have been paid and the others which have not yet been paid, but will become payable.
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| Losses Outstanding: Losses which took place but which have not yet been paid. These are usually recorded in two ways; either (1) the number of incidents of losses in the various classes of business, and (2) the amount of money involved in these classes, which would appear as a "Loss Reserve."
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| Maintenance Bond: A bond guaranteeing the performance of a contractor in a maintenance contract. e.g. a contractor builds a building and guarantees it against defect in workmanship and material for a period of one year. The bond guarantees that the contractor will remain financially sound and will properly perform the maintenance understanding on the building during the required period.
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| Malpractice: A performance by a professional which is deficient in skill from what might ordinarily be expected of a professional person. The standard of performance to which a professional person will be held is necessarily higher than the standard which an unskilled person would be expected to display.
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| Manufacturer’s Output Policy: Broad form of all risks coverage on the property of a manufacturer after such property leaves the insured’s premises. |
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| Marine Insurance: Marine Insurance is a form of insurance generally related to the transportation of goods. Originally most goods were transported by ship and across seas or oceans (Ocean marine) but this was gradually extended to include the transportation by train, motor transport, (inland marine) and now extends to include inland water ways, shipping and shipping by air. Marine insurance is therefore, divided into two general classes; (1) ocean marine and (2) inland marine.
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| Market Value: The value of assets (stocks, bonds, debentures, real-estate, etc.) cased on a current market valuation.
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| Minimum Retained Premium: A premium specified on an individual policy which will be the minimum amount retained by the insurer in the event that the policy is canceled midterm by the insured.
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| Misrepresentation: An incorrect statement made about a material fact. Misrepresentation can be innocent, e.g., arising from an oversight; fraudulent (in other words, a deliberate untruth with intent to deceive) or the result of extreme carelessness where a statement is made without regard to whether it is true or false. When a misrepresentation is discovered, the insurer may either continue the contract or treat the contract as void with a full return of any premiums paid. In order for the insurer to successfully treat a policy as void, the misrepresented fact must be material to the risk.
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| Mutual Insurance Company: An insurance company which is owned by its policyholders who formed an association for the purposes of insuring one another against the possibility of fortuitous loss. Each policyholder pays a premium for his or her own policy. If at the end of the fiscal year the mutual insurance company declares a profit, the profit is shared amongst all the policy holders. If the company declares a loss there is also a provision for the policy holders to be assessed a levy to make up for this shortfall.
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| Named Perils Policy: A policy in which the perils insured against are listed, as opposed to one which insurers against "all risks."
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| Negligence: Failure to use the degree of care expected from a reasonable and prudent person.
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| Net Line: The amount of insurance the company carries on a risk and retains for its own account. Amount of insurance minus reinsurance equal s the net line.
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| Non-Disclosure: A contract of insurance is based on utmost good faith. An applicant for insurance is required to disclose to the company all material which are necessary to underwrite a policy. I f the applicant does not disclose all these facts, he/she is guilty of non-disclosure and may risk having coverage voided from inception.
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| Non-Owned Automobile Policy: A policy which protects the insured against Third Party claims arising out of some other person using their cars in the business of the insured.
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| Obligor: An infrequently used term usually intended to meant the "principal" in a bond, e.g., and employer arranges for a bond on his various employees to protect the employer against the infidelity of employees. The employer is the obligee under the bond, and the employee is the principal or the obligor. Since the obligor may also mean the surety company, it is generally better to express specifically the intent by indicating either the insurance company or the principal, and not use the phrase obligor.
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| Occupancy: Occupancy is the act of holding possession of property or premises. The term implies the use of the building for the purposes described in the policy, and no other. Vacating a building by removing the furniture and not using it for the general purposes of dwelling, would for example, bring about unoccupancy, which if not assented to by the company, may void the policy. The same applies to mercantile premises.
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| Occurrence: A happening or event. Casualty policies are usually written on either an accident or occurrence basis. For coverage on an accident basis, the loss or damage must be due to accident whereas on an occurrence basis all that is required is the happening. In such policies, "occurrence" is often limited by definition.
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| Ocean Marine: A type of insurance coverage on cargo and ships on the high seas.
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| Optional Settlement Clause: A clause in an insurance policy permitting the insured under certain circumstances to have a choice of benefits. In accident and health policies the insured may have a choice of payment of various amounts as periodical indemnity for a certain period of time or a lump sum settlement of a predetermined amount set out in the policy. In a fire policy a swelling owner who carries insurance to 80 per cent of the value may have repairs made to damage resulting from a peril insured, without charge for depreciation and of course providing the repairs do not exceed the actual value of the property.
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| Paid Losses: Total payments made by an insurance company to discharge obligations made under policies issued within the particular period.
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| Payment Bond: A bond guaranteeing the payment of labour and material used in the construction of the particular structure identified in the bond.
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| Performance Bond: A bond guaranteeing the performance of a contract but not covering labour and material. If coverage is required for labour and material, a separate labour and material bond will be required, or a contract bond which would cover both.
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| Personal Injuries: All injuries to the person, including non-physical or neo physical injuries such as false arrest, libel, slander, etc., as well as the physical injuries set out under "Bodily Injuries". Personal Property - Most commonly used personal property is property in which a person has an interest and which is personal, moveable, or separable from real property. E.g. tables, chairs, desks, clothing, jewelry, etc. are personal property. It does extend, however, to include a building standing on leased ground. Such as a building would be personal of the lessee (if the land and building on the land are owned by the same person, it is real property or realty).
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| Policy Fee: Flat amount added to the basic premium rate to reflect the cost of issuing a policy, establishing records and other expenses.
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| Pool: A group of insurance companies who unite to underwrite some particular risk. The collecting of premiums and the paying of losses and expenses involved are shared between the companies on a prearranged ratio.
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| Premium: A sum of money paid by an Insured in consideration of the protection afforded by the insurance policy.
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| Prescription: In law, a limitation of time within which legal action can be taken by a claimant. In insurance, the period of time in which a claim may be brought by the policyholder. Also Proscription.
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| Products Liability Policies: Policies which indemnify a manufacturer, wholesaler, distributor or merchant against suits brought by persons who are injured or who have suffered damages by reason of the product sold. A chair leg may give way when someone sits on the chair; hair dye may cause damage to the skin of a customer in a beauty parlour; a foreign substance may be found in a bottle of ginger ale; a pen may leak and ruin a lady's expensive dress; or dye in a new hat may drip in heavy rain all over an expensive raincoat. All such cases subject the manufacturer and the various persons handling the article to a possible claim or suit and protection against such a risk is found in the Products Liability Insurance Policy.
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| Professional Liability Insurance: Protects professionals against liability for damages and cost of defense based upon his/her alleged or real professional errors and omissions or mistakes.
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| Proof of Loss: A statement made tot he insurance company under oath setting out the basis of the insured's claim under an insurance policy. A form of Proof of Loss is supplied by Insurance Companies and is usually found convenient for the purpose. The Proof of Loss, however, does to have to be on the insurance company's form. Details as to what information is required to appear on the Proof of Loss are printed in the policy.
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| Protection Liability Insurance: Insurance against liability which arises because of some secondary cause, such as the act of o a subcontractor or agent.
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| Proximate Cause: The immediate and effective cause of the loss - not necessarily the last event before the occurrence which, in a chain of circumstances leads naturally and directly in the ordinary course of events t the loss. Note difference from "causa causans". The well known firecracker case perhaps best illustrates the difference between proximate cause and causa causans. It will be recalled that a boy lighted a firecracker and threw it to another boy in the group. The recipient fearing an explosion, quickly tossed the firecracker to another and so on until it eventually exploded and a boy was injured. The causa causans is the last boy who threw the firecracker to the boy who was injured. The proximate cause, however, is the boy who started the unbroken chain of events that resulted in the injury.
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| Rate: A rate is the unit of charge made by the insurer against the property owner. It is based on the experience of the class of risk (incidence and frequency of loss), and is fixed at a level which will enable the insurance company to accumulate sufficient funds from all like risks to pay the losses for the fewer within the class who have losses, and at the same time provide sufficiently for the expenses of collecting and disbursing the fund.
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| Reinsurance: The placing of part of insurance company with another insurer. Thus where an insurance company has a larger portion of the particular risk that they feel wise to carry themselves, they may buy insurance from another insurer thus "reinsuring" part of their risk. The common types of reinsurance are as follows: Assumed Reinsurance - Risks or part of risks accepted from other companies. Ceded Reinsurance - Risks or part of risks given to other companies. Surplus Reinsurance - Reinsurance of a portion of a risk or risks. Excess Reinsurance - Reinsurance arrangements to recover losses over a specified amount, or over the limit of certain policy or policies. Facultative Reinsurance - Reinsurance arranged on an individual risk basis. Treaty Reinsurance - Reinsurance arrangement for the continuous systematic placing of risks with another company or group of companies. The reinsurer automatically accepts reinsurance on all risks of nature described in the agreement as soon as they are written by the prime company.
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| Renewal: A certificate which attests to the fact that an insurance policy has been extended for another term.
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| Reserve: Insurance companies are required to put up sums of money which are identified for particular purposes. Such monies are known as "reserves." A reserve is required for unearned premiums and the reserve is required for all unpaid claims. The object of these reserves is to protect the insuring public against any possible financial loss.
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| Return Premium: This is the amount of premium returned to the insured, usually because of the early termination of a policy. It may be a pro-rata return premium or short rate return premium, depending upon the circumstances involved.
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| Rider: A rider is a separate policy attached to an extending another policy. Extensions of a policy within the general terms of the policy are normally made by endorsements. Where however, this extends to additional form of coverage it is performed by the addition of a "Rider" to the policy. Note the difference between "Rider" and "Endorsement."
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| Risk: The chance of loss. Specifically the possible loss or destruction of property or the possible incurring of a liability. Sometimes refers to the subject of an insurance contract.
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| Salvage: The value of property after a fire or other peril which value is used to reduce the total loss. Some of the property may be undamaged and quite salable, some may be partially damaged and repairable and then salable. It is also used to mean the removal of goods during the course of a fire to prevent damages or the removal of the goods after the fire to prevent further damage. In marine insurance, it also means the cost of avoiding the loss of the property by the particular peril insured. In bond or suretyship, it is the amount of money paid back to the principle to reduce the loss before payment by the bonding company and the amount paid after the payment of the loss to the insurance company reducing their loss with respect to that claim.
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| Self-Insurance: The term describes the assuming of one's own risk instead of buying conventional insurance.
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| Settlement: An agreement between concerned parties. In insurance, the agreement is usually on the money changing hands to discharge an insurance claim.
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| Shock Loss: A loss much larger than anticipated, usually large enough to have an impact on a company's underwriting results in any given territory.
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| Sprinkler: A fire protection system in which sprinkler heads are installed at the ceiling level of the building and at certain regular intervals. A fire automatically activates the sprinkler in the particular area involved.
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| Statutory Conditions: Special prescribed and standardized conditions that the Provincial Insurance Acts require to be included in fire, automobile and accident and sickness policies.
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| Subrogation: The substitution of one person or company, for another so that the rights and duties of the original person or company becomes operable by the other. In insurance, it applies more particularly to indemnity policies. Where an insured is fully indemnified by an insurance company for a loss, the company so indemnifying the insured will, in some instances, have the right to benefit financially from an y claim made against a third party who was responsible for the damages in the first place.
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| Subscription Policy: A policy usually in a fire insurance field in which two or more insurance companies may all subscribe to the one policy and indicating on the policy, the apportionment to be borne by each company. The advantages to an insured are mainly that all companies offer exactly the same wording and he has only one policy instead of many.
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| Substandard Risks: Insurance risks that are more hazardous than the standard risks and accordingly require somewhat higher rates.
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| Surety: A person (or generally an insurance company) who undertakes to agree to be responsible for certain acts or performances of one party to another party.
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| Surety Bond: An agreement (not an insurance policy) by which the person or insurance company (known as the Surety) guarantees or agrees to be responsible for certain acts or performances which one party is undertaking to perform for another. the person for whom the work is being done is known as the obligee and the person who is required to perform the work is the principal. E.g. A contract bond in which an insurance company as surety guarantees owners of the building under construction (the obligee) that the contractor (Principal) will have sufficient money etc. to perform their undertaking under the contract.
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| Term: The period of time from the inception to the termination of an insurance policy or bond.
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| Third Party: The first person referred to outside the particular transaction involved. In an Insurance Liability policy the third party is a person who may be injured or whose property may be damaged other than the insured or the insurance company. There maybe many parties in one case.
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| Tort: A wrong ,or a breach of duty, committed by some person as regards some other person, which gives rise to a cause of action at the hands of the injured party. Some of the forms of Torts are as follows: Trespass on Land - The act of entering on the property of another without permission on or invitation from the owner. Trespass of Goods - The improper retention of the property of another. Trespass of Person - Assault, battery, false imprisonment, malicious prosecution, etc. Some forms of Pleading in Tort actions are as follows: Dentiue - An action asking for the return of the plaintiff's property or its value. Replevin - Sometimes an article in itself is virtually irreplaceable and an action in replevin demands the return of that particular article. Again if it is not possible to return the article then judgment is given on its value. Distress - Sometimes the goods of another might be held as security even without the actual owner's consent. e.g., Personal property of a tenant may be seized to secure rent. At one time this could only be held as security but it is now possible that in event of the rent due not being paid goods may be sold and the proceeds credited toward the rent. If such goods are improperly held it is said to be wrongful distress. Conversion - The wrongful changing of property to which one is entrusted to one's own personal uses. e.g. A company automobile is taken by the employee and sold and the proceeds used in the personal affairs of the employee. Negligence - Doing something a prudent man would not do or not doing something a prudent man would do, the result of which results in loss by damage or injury. Nuisance - An act unlawfully interfering with the person's use or enjoyment of land including the interference of easements and allowing or causing the escape of obnoxious things on the land of another. Some of the defenses to a Tort action are: (1) The denial or dispute of the alleged torts. (2) Volenti non fit injuria or Scienti non fit injuria. (3) An inevitable accident or an act of God. (4) An act authorized by statue. (5) An act of necessity. (6) An act in defense of one's own property.
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| Umbrella: An insurance policy usually basically affording a high limit excess coverage but frequently extending to pick up many forms of coverage that may be missed between the prime policy companies.
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| Underwriter: The insurance company or group that underwrites or insures a particular risk. It is also used as the identification of the identification of the individuals within the company whose responsibility it is to accept or reject business in the particular line in which they specialize and in this way choose risks their principals are prepared to underwrite.
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| Underwriting Profit (or Loss): The excess of earned premiums over incurred losses and expenses shows the underwriting profit. The reverse would show an underwriting loss.
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| Unearned Premium: The part of the premium which has not been used or earned, and which must be returned to the insured in the event of cancellation of policy by the company prior to its full term.
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| Unoccupied: Where the premises is complete with its content except for the human beings, such persons being temporarily away from the premises, as for example on vacation or any other reason, the premises are said to be unoccupied. Premises that are unoccupied or vacant, present a greater hazard and standard fire insurance policies permit unoccupancy of the premises for only a certain period of tie. I f the unoccupancy is going to extend beyond that time, it is necessary to have and endorsement added to the policy. In protected areas, it is not usually difficult to obtain such an endorsement and an additional charge can be expected. It is distinguishable form "vacant" in that in vacancy, the contents have been moved out leaving nothing but the building whereas in unoccupancy, only the persons occupying the premises are not there.
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| Utmost Good Faith: A phrase in a legal document calling for the highest standards of integrity on the part of the insured and the insurer.
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| Vacant: A property is vacant when the normal occupant is absent and the contents have been removed. It is distinguishable from "unoccupied" by the absence of the contents.
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| Vandalism: Vandalism is the intentional damaging or destroying of property.
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| Vicarious Liability: Liability imposed upon a person even though he is not a party to the particular occurrence, e.g. the owner of a motor vehicle is vicariously responsible for injuries even though he is not driving the car at the time of the occurrence.
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| Waiver: The intentional relinquishment of a known right. A waiver under a policy is required to be clearly expressed and in writing.
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| Warranty: A guarantee or assurance. A stipulation I n a contract, the breach of which nullifies the contract, such as certain warranties in an insurance policy. Also, used as a guarantee of condition, such as, "warranty of fitness." Warranty is essentially a guarantee. Warranty of the contents of a formula guarantees that the formula contained in the bottle conforms with the statement on the outside. A warranty against defects in workmanship and material is a guarantee that if the product is defective, the manufacturer will replace the part or perhaps the product itself. In insurance, a warranty is the general atmosphere of facts upon which the policy is rated and written.
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| Without Prejudice: An action taken during claims negotiations designated as "without prejudice" is intended to be without detriment to the existing rights of the parties.
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| Wrap-Up Policy: One policy covering all involved interests of a big construction project, e.g., the owner, contractor, sub-contractor, suppliers, etc.
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| Written Premium: The total amount of premium collected on the class of business or on all classes of business or on all classes of business.
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